Wednesday, August 08, 2007

The important housing sector

The idea that there is some inherent "importance of the housing industry to the overall economy" is so commonplace, it is glossed over in an article on a conservative periodical's website. This idea seems self-evident, and perfectly in keeping with conservative ideals of private property, family, and individual prosperity.

Upon closer examination, however, the idea of "importance" in one segment of the economy implies that the economy can be segmented and those segments, in turn, can be assigned different levels of importance. These ideas, particularly the latter, are mistaken and dangerously close to the flawed reasoning that puts government in the role of protector of the stock market, banks, farm policy, energy policy, air travel, airwaves, and (sadly) more. For if something has primacy in the economy, it cannot be allowed to suffer a downturn or collapse, as some industries do from time to time. Housing is key to the economy, the thinking goes, so if people are defaulting on their loans, losing their homes, and/or unable to take out a mortgage to get a new home, something must be done! Particularly, government must act!

It was government action to try to help out stock investors in 1929 that caused a recession, and government tariffs, wealth redistribution, minimum wage laws, forced employment and such that turned that recession into the Great Depression. One bad policy followed another as new ideas turned a fast-growing, opportunity-rich economy into a shambles in which people were starving as the government bought crops and destroyed them, and the poor couldn't get jobs in a private sector that was terrified of the caprice of the Roosevelt administration (which was even worse than the lamentable Hoover administration).

Some of you are perhaps arguing that the causes of the Great Depression are more complicated than that. The causes of the Great Depression are indeed numerous, as numerous as the interventions Hoover and Roosevelt tried. It is a sad coincidence that the stock market correction of 1929 took place under an interventionist presidential administration. Had Coolidge been president during such a correction, it is doubtful any government action would have been taken, except perhaps to lower taxes. In that case, the correction would have been corrected, recession (let alone the Great Depression) would have been averted, lives would have been saved.

Why did Coolidge take such a passive stance with the economy? Because he viewed it as a whole, capable of adapting and changing to fit its environment. Imagine that Woodrow Wilson said that blacksmiths were an important sector of our economy, and that they had to be saved from wage suppression caused by a move away from horses (and horseshoes) to the auto car. What if he had limited car production to achieve this, or had the government buy horseshoes to destroy them? He would have been considered crazy, wouldn't he? (That seems to testify to the immense propaganda power held by Keynesians and other FDR types, doesn't it?) Government "solutions" have likewise always bound adaptivity and stifled innovation in the economy, and the Great Depression was no different. Doesn't any FDR fan wonder why it was so long?

More to the point, here we are in the 21st century, looking at the housing sector and worrying about the damage that might be done to the economy if this "important sector" is allowed to suffer. Well what damage might be done to the economy if we get the government to fix these problems? Getting government help with a sector of the economy seems to me to be like getting Jason Voorhees to cut your hair, because "it's a disaster." To paraphrase Groucho Marx, if you think the economy's bad off now, just wait till they get through with it.

SRS

1 Comments:

Blogger lansing-zhou said...

"I'm not green, but I could be," reads one. Others have similar messages printed on them, "My Bag", "Use Me and Re-use Me".

Since the Chinese government issued its June 1 ban on free plastic bag handouts, retailers in China have found themselves in the midst of a "green" phenomenon.

They're anxious to turn fashion-conscious customers into eco-aware shoppers.

Under the new regulations, free plastic bags are banned and shopkeepers are required to charge shoppers for plastic bags. The prices vary, but range from 0.2 yuan ($0.03) to 1 yuan ($0.14) depending on the size of the bag.

But, a plain bag is far from satisfactory for the China's fashion-conscious - and this mindset is pushing the country towards a "green revolution" in the closets.

"It is cool to carry a simple colored eco bag to go with my Levi's jeans and sneakers," says 21-year-old Huang Min. "It is a direct way to contribute to environmental protection. And, it is a popular vision for saving the planet."

The Beijing college student wears her new eco bag proudly on her shoulder. It is an important part of her outfit - and has a statement to make.

Eco bags are increasingly being seen as fashionable as more and more celebrities appear on "green issue" magazine covers with the reusable bags matching their outfits.

"Going green" appears to be a growing trend. Stars as big as Madonna have even dazzled "green-oriented" magazines. The artist was chosen to dazzle the cover of Vanity Fair's third annual May 2008 Green Issue.

As environmental issues spill into the fashion world, the "green shopping bag" campaign seems to be a win-win solution for all those involved.

Companies can adopt the bags as a brand-building tool. Consumers see it as an iconic statement against throwaway plastics - which have previously been given away in the billions annually. The "green movement" has been seeping on to fashion runways and marketing strategies - so why not on shopping bags and totes?

Muji, a Japanese lifestyle store established nearly 30 years ago, launched its own version of "My Bag" when it opened its first Beijing store in Joy City this March. The simple yet stylish bags made from linen and cotton threads have sold well over the past few months in the capital, according to Muji staff. Initially, they sold bags ranging from 5 to 100 yuan, but now they only have bags priced from 24 to 100 yuan remaining.

"People of different ages love the bags because they are light, simple and convenient," says one of the shop's workers Chen Weimi.

"To reduce waste and conserve resources, we encourage our consumers to use 'My Bag'," says the store's manager Akita Toru.

Other well-known international brands are also striving to set the eco trend in Beijing. Diesel, Marc Jacobs and DKNY have also released low-priced eco bags made of organic cotton.

And, apart from the big international names, young designers based in Beijing are also working on the green bags.

"Young people in China are aware of the environment and want to do what they can to protect it, especially when it is becoming a trend," says 30-year-old designer Peng Haofeng, from Yunnan province.

Together, with two other friends, the three opened a green-themed store, Kidults, or Tong Huo in Chinese, last November on Dongsi Street. The company aims to promote the green fashion concept among the Beijing people.

According to the store's marketing manager, Gou Chenglong, many people were unaware of the eco bag concept when the store first opened last year.

"People, especially the older generation would not accept the idea because they didn't think about the simple green bag value that much. But, half a year later, more and more people here are becoming aware of the eco-bags or eco-fashion trend, especially when the government issued the ban on plastic bags at supermarkets in Beijing. It is a good start."

With handmade pictures on them, the bags look trendy and self-expressive. The bags generally contain no dyes and are known for their creative trims and decorations made from wood or bamboo.

"The price is normal and acceptable for students and office workers," says 26-year-old Zhou Fei, as she rifled through the bags at Kidults ranging from 15 yuan to 100 yuan. "I am a frequent buyer of green bags and T-shirts."

"It would be fashionable to carry beautifully designed cloth bags rather than monotonous white plastic ones down the street."

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8:15 AM  

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