Some people may not have read or heard the news that the Obama administration desires to repeat the mistakes of the past and will try to artificially dictate the quantity of “fair housing” for any neighborhood that it deems racist. Fox News reports on the latest Obama scheme to apply affirmative action using government force to get the results that the regime believes are the “right” ones.
In a move some claim is tantamount to social engineering, the Department of Housing and Urban Development is imposing a new rule that would allow the feds to track diversity in America’s neighborhoods and then push policies to change those it deems discriminatory.
The policy is called, ”Affirmatively Furthering Fair Housing.” It will require HUD to gather data on segregation and discrimination in every single neighborhood and try to remedy it.
This is another classic example of what is wrong with the leftist view of the world. Leftists think that they are smart enough to micro-manage society; using every manner of law, tax and regulation to get the citizen to do what he is supposed to do. The leftists imagine that they can do this by fiat and that no more thought is required than what needs to be corrected and that “there ought to be a law” in order to fix the problem.
Of course the difficulty is that the real world does not work that way. People make millions of decisions every day about all manner of things, big and small. Society cannot function unless most of these decisions are made by private individuals because there are so many of them that need to be made in a timely fashion, and because no government agency would be able to process the virtually unlimited information involved. As Hayek would have pointed out, most of the information that drives society is in people’s heads and thus not available to any government to use. He called this “distributed knowledge.”
We use this “distributed knowledge” on a daily basis for all sorts of things. And even big issues like where to live are based on a totality of information that is unique to every individual who is thinking about where they want to move to next. In short, this process is organic and self-organizing. It can’t be forced or duplicated; you can only allow it to function on its own. It is not an accident that neighborhoods tend to be organized into groups of people who tend to be alike in all sorts of ways, including their income levels and affluence. That’s what you get when you allow people to sort themselves out in ways that they want. But that is not acceptable to the mind of the leftist who thinks that he knows best.
But there is a cost to meddling with the laws of nature, as is described in this article from The American Enterprise Institute. We have seen this before. It was a desire to create an artificial move to home ownership by the Clinton administration that brought us the housing bubble and the collapse that followed. The government pushed millions of people into homes that they could not afford and the end result devastated the housing market for years. Indeed, we are still recovering from the damage. But somehow, the left never learns from their past mistakes; they just keep repeating them.
The Clinton administration lost the battle to use pensions to fund low-income housing, but it succeeded in winning the war by drafting Fannie Mae, Freddie Mac and the commercial banking system into the affordable-housing effort. It did so by exploiting a minor provision in a 1977 housing bill, the Community Reinvestment Act, that simply required banks to meet local credit needs.
Bank regulators began to pressure banks to make subprime loans. Guidelines became mandates as each bank was assigned a letter grade on CRA loans. Banks could not even open ATMs or branches, much less acquire another bank, without a passing grade—and getting a passing grade was no longer about meeting local credit needs. As then-Federal Reserve Chairman Alan Greenspan testified to Congress in 2008, “the early stages of the subprime [mortgage] market . . . essentially emerged out of the CRA.”
