A case for too much moderation?

from sodahead.com

It would seem that now represents as clear a time as any when the public’s and the President’s interests converge. The public would like to see issues relating to the housing market, labor market and something like the market for egregiously iniquitous behavior improve while the President, as much as I do think he mostly has the public interest in mind, would like to see himself, as all Presidents would, in office for another term.

It’s getting obviouser and obviouser that these two interests are directly proportional to one another. Which is one reason why the President’s apparent lethargy in this regard has been so puzzling. If the incentives match up why does he seem to be whatevering these issues so frequently. Like refinancing home-mortgages, getting American eyes off the help-wanted sections and aggressively prosecuting corporate fraud.

To be fair to the President, he is running up against a political opposition too often infused with moral irrationality than reasonable policy motives. And also, I don’t want to lean too far into the individualist fallacy wherein the malfunctioning of diffuse and extremely complex bureaucratic systems gets pinned on one individual.

Regarding these issues and the housing crisis more specifically, The WaPo recently had an interesting article outlining some of the competing issues/tensions facing Obama when he assumed office w/r/t the housing crisis.

There were both those within the administration that were pulling for more direct assistance to homeowners and those pulling for assistance in other directions. Take this quote describing Geithner’s counter-cyclical inclinations:

Generally, the Treasury secretary did not regard direct homeowner aid as the best use of taxpayer dollars. He favored expanding the economy by spending money on construction projects or programs to keep teachers and other workers employed, which would help the housing market. In meetings, Geithner would tell the president that if he suddenly had $100 billion more to spend, he would never advise spending it on housing.

Geithner’s argument here seems to be that providing mortgage relief doesn’t come close to stimulating the economy to the same extent that something like infrastructure spending would in that too much of the former money is saved while most of the latter money is directly spent and thus directly, as in immediately, impacts the economy. Also, if people have jobs they are more able to afford their mortgage payments so you get two birds (jobs and housing) with this approach. Similar arguments are often given as to why in recessions governments should spend more than they relieve in taxes. Money returned to the tax-payer is usually saved and not spent or invested.

Of course the anti-counter-cyclical class argues that for every dollar spent by the government is offset by a dollar not-spent by the private sector reducing the “Keynesian multiplier effect” to basically zero.

I don’t want to pretend to know too much about the efficacy of these ideas. I just keep finding myself thinking that it’s too bad that when the President had a chance to go for it, he chose instead moderation. And though sophrosyne is one of the traits I most admire about this President, it appears that it wasn’t the best approach under the circumstances.

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