Bailouts Wanted — All Taxpayers Solicited!
Business spends around the world almost $1 trillion annually, seeking to sell its goods and services. These communiqués are focused almost exclusively on influencing the choices that consumers make. Logical, of course, since failure to sell one’s products in the private world means bankruptcy. But, in today’s world, sustainable profitability requires also that businesses find ways of reducing costly political predation (excessive regulation, government support of competitors, high taxes, direct governmental agency competition). And business does spend a minor fraction of its overall communication budgets on political advertising. Unfortunately, these ads tend toward rent-seeking — increasing the overall burden of government on others — not on reducing the firm or sector’s vulnerability to such predation.
A recent example was a full-page ad by the National Association of Realtors in Politico [PDF] calling for a number of expanded housing subsidies. Now realtors have suffered to varying degrees by past housing promotion policies. The FHA, Fannie and Freddie and a wide array of other special provisions pushed far too much capital into this capital investment sector, rather than allowing capital to flow where it would yield the greatest societal returns. Moreover, the failure of housing markets to clear, for the excess supply to quickly be absorbed at discounted prices (via foreclosures, bankruptcies, lowering sale price, etc) have been slowed by political efforts to delay these adjustments. Thus, one can sympathize with realtors, home owners and others but be saddened by this latest attempt to delay the recovery of the housing markets.
Wouldn’t the housing market be far more stable, far more efficient, if current regulatory and other government interventions disappeared? Wouldn’t realtors be better — once the transition pains were overcome – in that more entrepreneurial world? Perhaps, but clearly that is the path not taken by the National Association of Realtors or other business groups today. Their more entrepreneurial members suffer, too many incompetents remain cluttering the field, and their comparable advantage in wealth creation suffers while their rent-seeking skills expand. Gradually, realtors (like health or flood insurers) can be expected to be little more than state employees. Sad.