The Wall Street Journal has reported that Mitt Romney has promised to save Medicare and the housing market. Both ideas fall squarely in line with Rovian Strategy (Thou shall attack thy opponent’s strength). While much has been written of Paul Ryan’s budget goals regarding Medicare (and The RM will address them this week), the notion of Romney/Ryan saving the housing market is at least as much a stretch of reality.
The first important point to stress is that the housing bubble experienced its greatest growth as well as its catastrophic explosion under a Republican administration; an administration that believed that capital markets were both self-regulating and self-correcting. Both Mr. Romney and Mr. Ryan are fierce, unequivocal, and unapologetic proponents of the very same notions; that capital markets are both self-regulating and self-correcting.
Capital markets are unquestionably not self-regulating (a notion that flies with remarkable absurdity directly in the face of the profit motive that drives the marketplace). Neither are they self-correcting, as the size of the Bush Administration’s TARP bailout ought to have confirmed for all Americans. So Romney/Ryan presumes to promise they will save the housing market by doing precisely what got the housing market into difficulty in the first place.
Of course, this has brought me to another question; one thing the marketplace has corrected (because it is one thing that a competitive market does a good job of setting) is price. The housing market is depressed compared to its artificially high peak, which means it has returned to levels closer to what we might expect for a capital asset pool for which we have had good pricing data on for decades. Why, I wonder, would two committed free market capitalists such as Romney and Ryan want to take government action to artificially reinflate the housing bubble?
One final problem for your consideration; the housing market, by all of the accepted (free market) measures, has recovered. Data on housing vacancy rates and prices have shown steady improvement in 2012, an improvement that is marching ahead even of job creation numbers in our painfully slow recovery from the Bush Recession.
So let’s recap:
Mitt Romney and Paul Ryan propose to use conservative policy to fix a problem caused by conservative policy.
Mitt Romney and Paul Ryan propose to contravene a market correction by means of federal action, a step that flies in the face of their own conservative values.
Mitt Romney and Paul Ryan propose to do both of the above in order to fix a market that is already on the mend.
Indeed, the Romney/Ryan ticket is off and running….
And The Rational Middle is listening…