The Examiner reports on a new study from the National Bureau of Economic Research that details the way in which housing policy at the federal level created distortions in the housing market and ultimately led to the subsequent housing bubble and collapse.
This is the common pattern seen when government attempts to adjust markets for political purposes, even when well intended. As the Austrian economists would point out, markets are self-directed and involve so much information that no one person or group of persons can be smart enough to guide it. Free markets use widely distributed knowledge that cannot be known to those who attempt central planning of economic outcomes. Thus any attempt to re-direct markets leads to results that are invariably less efficient that what would have been the case if they were allowed to function naturally.
