Economic regulation

I am loath to have an opinion about why the recent market crisis happened, as I know little about markets or crises. But it seems to me that the problem does not lie in the fact that the market was too regulated or too unregulated, but rather poorly regulated. I suspect that Richard A. Epstein seems to have gotten it right. In his defense of libertarianism, he suggests something like this (and I may be getting this very wrong): when government subsidizes some loans and guarantees others, who wouldn't want to be a lender or own such a loan? The return is almost guaranteed. And as the law of supply and demand has it, when everyone can now afford to borrow money for homes, the prices will go up. But this is not sustainable for long. How high can prices go, and how many subsidies can be issued? And how long can people live beyond their means? So too many people start defaulting on their loans, the price drops for everyone, and now homes that were bought on the assumption that there was a high demand (and so at a high price) are now worth less because there is now a lower demand. And since the people who buy and sell things like loans are able to spread this risk throughout the system in diversified portfolios, when the mortgage market went bad, lots of portfolios started faltering. When lots of portfolios dip, everyone is scared and pulls their money out of the market. The rest is familiar. Less money in the market, the less business have to work with, and thus the poorer our country and hence investors, become. (How the libertarians get blamed for a problem the government started is beyond me.)

But anyway, it seems to me that the government is not doing a bad job regulating the credit markets, but rather it was undermining the credit markets when it found a way to artificially increase the price of houses temporarily, by making the money used to buy them cheaper and easier to get. So people who could afford less were buying more, and it didn't dawn on too many people that this can only hold up so long because the government seemed to be keeping the money cheap.

Look, we have all had to make sacrifices to get what we want. Modernity generally implies finding ways to do more with fewer sacrifices. The government seemed to think it found a route to home ownership without the sacrifice. It didn't. The government's plan needs work. I hope that we learned a valuable lesson in what sorts of economic policies do not work, so maybe we can get it right next time.

The man who cheats students

Nick Mamatas is the bane of my teaching existence. He calls himself a writer. I suppose he is entitled. He does write and he does make a living off it. He writes term papers for students who can't write their own. He writes mediocre papers and and sells them to college kids who are desperate enough to pay him some $500, so they can spare themselves the half-hour of reading and five pages of writing.

The first amendment allows him to write what he wants. Any wrong doing that comes from what he does come from the students who submit Mamatas' work as their own, not from Mamatas himself. It is a bit annoying that he gets the $500 for a class I am teaching, and not me, and maybe I should get in tot his business, but that is another story. But what gets me is the arrogant self-righteousness in his article.

Though Mamatas really does not need to defend what he does, he certainly manages to get very defensive. He explains that though he might have felt a bit "skeevy" doing this, the blame really lies with the universities:

The students aren't only cheating themselves. They are being cheated by the schools that take tuition and give nothing in exchange.

Clearly if he is doing their work, the students are not being evaluated and forced to learn.

It is hard to imagine where he gets off saying this. The universities accept all sorts of students. We give them instruction and then we evaluate them. If the students manage to bypass our evaluation schemes, then how is that our failure? And the man who manages to do the bypassing for the students is now blaming the university??? Clearly many students are getting nothing out of their college education - he is the reason why. The students should fail. And I have caught many papers that have been ghostwritten and failed many students. Perhaps I should spend less time teaching and more time coming up with ways to make sure that students do their own work.

Fuck him.