The dark side of the boom

Rock-bottom interest rates have made big mortgages look less expensive, lighting a fire under house prices. But for many homeowners, when rates start rising, it won’t end well.

A recent survey by Manulife found that one-quarter of people have just $1,000 set aside for emergencies, a dismally inadequate amount by any standard of financial planning.

.. “You’re arguing with success on a huge scale,” says Moshe Milevsky, finance professor at York University’s Schulich School of Business and author of several books on personal finance and investing. “There’s nothing that people could have done that would have resulted in a better return than housing over the past five years.”

.. The credit-monitoring firm TransUnion reported recently that 718,000 people with debt would be seriously affected if interest rates rose just 0.25 of a percentage point, and one million people would struggle to cope with a rise of one percentage point.

.. Canadians owed a record $1.68 for every $1 in after tax income.

 

Trump’s pick of Ben Carson is beyond baffling

IT WAS less than a month ago that a spokesman for retired neurosurgeon Ben Carson told reporters that the erstwhile GOP presidential candidate would not be serving the Trump administration in anything but an unofficial advisory capacity. “Dr. Carson feels he has no government experience,” Armstrong Williams said, “he’s never run a federal agency. The last thing he would want to do was take a position that could cripple the presidency.”

.. Mr. Carson, however, comes equipped with little more than the generalities about abolishing “dependency” that he spouted on the campaign trail.

.. Certainly it would help if the next HUD secretary were an expert on the housing market capable of weighing in against the more dubious plans being floated for Fannie and Freddie.

.. Mr. Carson needs to be given a thorough, searching examination by the Senate over his approach to housing policy, which, though certainly not brain surgery, does present complexities that would challenge a nominee far more experienced than he.

What effect the Trump administration will have on the housing market

At a meeting of the National Association of Home Builders in August, Trump said that “there’s no industry, other than probably the energy industry, that is more overregulated than the housing industry.” However, changing those regulations may be beyond his scope.

.. “He could try to use his power to ease it, but a lot of the problems are at the state and local levels,” Goodman said.

.. Goodman said the two biggest issues the housing market faces are supply constraints and credit availability.

.. But Trump’s stance on immigration could have a detrimental effect on housing supply.

“Immigration plays a big part in the labor force for construction,” Smoke said. “It’s one of the constraints we have in new construction.”

.. Something to watch under Trump could be what happens to Fannie Mae and Freddie Mac. Reform efforts have stalled the past several years. But hedge-fund billionaire John Paulson, who is part of the president-elect’s economic policy team, could push for action. Paulson bought shares of Fannie and Freddie in the hope of cashing in when they regained their independence. Since being placed under government control, the mortgage-backers have sent nearly all their profits to the U.S. Treasury, not investors.

“Paulson cares passionately about this, given his positions,” Goodman said.

Explaining it all to you: The persistence of Vox…

In fact, people nowadays have lots of information. Too much, even. No, your problem is the opposite. Your problem is that you cannotinterpret the information you have. You lack the guiding hand of expertise. You need a vox dei, a little Voice of God whispering in your ear, helping you along, telling you what it all means.

.. Klein rejects what he calls the “More Information Hypothesis,” the idea that a better-informed citizenry could have more productive political debates. In fact, because we see facts through partisan lenses, facts alone are useless. People are irresponsible with knowledge; facts just make them “better equipped to argue for their own side.”

.. Vox is therefore an exercise in the simultaneous having and eating of cake; it wishes to both make strong value-laden assertions and be trusted as neutral and dispassionate. This means that Vox inherently practices a crude and cruel form of rhetorical dishonesty: it treats matters of profound complexity as if they are able to be settled through mereexpertise. If anyone disagrees with what the wonks have concluded, they must be dumb, delusional, or both.

.. As Fredrik deBoer says in his critique of Vox, the “explainer” stance is insidious, because it disguises partisanship as objectivity, falsely assuming that there can be such a thing as a “view from nowhere.”

.. He shows how Vox used selective and highly unreliable empirical data in order to attack Bernie Sanders, while cultivating the illusion of rigor and neutrality. For example, by producing a calculator showing people how much each candidate’s policies would cost households in taxes, without disclosing how much these policies would save households elsewhere, Vox made it look as if Bernie Sanders was simply planning to drain families of all their money.

.. “The whole notion of ideology-free explanation of complex subjects is of course itself ideology-laden… The pretense of neutral explanation simply deepens the potential dangers of bias.”

.. It should be no surprise that the main thing these explainers love to explain is “policy,” the more complicated the better. Policy wonks love policies because they get to explain them. Everyone else hates complicated policies, because everyone else has to be subjected to them. The more inscrutable and byzantine the policy (and the more confusing and misery-inducing those policies are for ordinary people), the more jobs there are for wonks.

.. Whenever I meet a progressive wonk-type, I always make sure to ask them: “If you could wave a wand and fulfill your every political goal, what kind of world would you build?” The answers inevitably consist of more policy. “A nationwide jobs program,” “universal pre-K,” or “guaranteed annual income.” (And those answers are from the true dreamers and visionaries among the wonks. Frequently their utopias consist of things like “a 2% drop in the unemployment rate.”)

.. Focusing on “the weeds” is sly, because it carefully avoids having to discuss and defend your underlying moral assumptions. And by keeping the focus on “explanation” rather than “discussion,” one can avoid difficult questions that might force the interrogation of one’s preconceptions.

.. Vox’s factual unreliability is not merely a product of Klein’s sloppy oversight, however. It is in many ways inherent to the site’s model of content production, which depends entirely on having incredibly young writers assume a position of omniscient expertise.

.. James Fallows, in his deliciously scathing 1991 look at The Economist, suggested that the magazine’s intentionally anonymous bylines “conceal[ ] the extreme youth of much of the staff,” quoting Michael Lewis’ observation that “if American readers got a look at the pimply complexions of their economic gurus, they would cancel their subscriptions in droves.”

.. Yglesias is perhaps the man whose work is most synonymous with the “#SlatePitch,” the intentionally irritating, click-hungry denunciation of some perfectly innocuous truth or convention (hence “The Case Against Eating Lunch Outside“).

.. Immediately after the 2013 collapse of the Bangladesh garment factory that killed over 1,000 people, Yglesias took to Slate to explain why workplace safety regulations actually inhibited the operation of free markets. Yglesias explained that high-risk jobs have high compensation, and just like people might choose to be lumberjacks, they might choose to work in highly dangerous garment factories for a premium. Thus “it’s good that different people are able to make different choices on the risk–reward spectrum.” The article was accompanied by a photograph of Bangladeshis loading dead bodies onto a truck.

The column was classic Yglesias, in managing to be both ignorant and appalling.

.. I once attended a public talk Yglesias gave on housing policy to promote on his (62-page) book The Rent Is Too Damn High. Yglesias was placed in conversation with Yale Law School professor Robert Ellickson, a bona fide expert on housing and zoning with approximately four decades of experience in the field.

.. But watching Ellickson flay Yglesias, I was most struck by the fact that Yglesias was completely unfazed. Far from being ashamed at his humiliating defeat, Yglesias did not even seem to acknowledge that he was even being defeated or humiliated. He didn’t attempt to defend himself. He just… kept talking, as if the numerous arguments that had been made proving him wrong simply didn’t exist.

.. This refusal to back down or admit fault is apparently characteristic of Yglesias generally.

.. When confronted, instead of apologizing, Yglesias doubled down, falsely accusing others of twisting his words. Yglesias is an enthusiastic practitioner of one of the most obnoxious tendencies in the human character: the belief that if people hate you, it must be because you’re right rather than because you’re an asshole.

.. Thus when people criticize you for taking the opportunity of a deadly factory disaster to explain why workplace safety standards are Actually Not As Good As You Think, your default reaction is not contrition or self-doubt but annoyance that people fail to recognize your rationality.

.. It is the same tendency that afflicts mansplainers generally: the refusal to entertain the possibility that it could be you who is wrong. “Explanation” implies certitude. For the explainer, information flows in a one-way channel, from the mouth of the explainer to the ear of the explained-to. Vox does not need to listen; Vox knows.

.. and of course it will survive. It will survive because we are all insecure and confused, and promises of explanation and certitude are appealing in a chaotic world. Ezra Klein is right that we do not know what to do with the barrages of information we encounter every day, and his let-me-explain-it-to-you business model is savvy.

.. But the more Vox persists, the less hope there is for American politics. The Vox model is premised on the idea that people shouldn’t think for themselves, that the important parts of political thought and decision-making should be outsourced to experts. Inevitably, these experts will produce solutions nobody likes, because the moment one is convinced that all opposition must be founded in ignorance, one will always be right no matter how many people are hurt or how many people complain. The point of politics is no longer to help us live together and understand one another. The point is policy, and our job is to listen to the explainers. After all, they have the facts. They’ve got them here in 5 charts. It’s everything you need to know.