Mortgage Mods: Congressman Prefers Coercion over Cooperation
The recent focus in Washington on mortgage modifications once again illustrates one of the most fundamental flaws in current political debate: the notion of using government to threaten or force the “voluntary” transfer of wealth from one group of citizens to another.
Just this week Rep. Barney Frank warned the banking industry if they don’t “voluntarily” do more to reduce foreclosures, Congress will step in and make them do so, by allowing bankruptcy judges to re-write mortgage contracts. This proposal is really nothing more an ex poste transfer of wealth from investors in mortgage backed assets to borrowers.
Of course, Rep. Frank and others respond that they are only trying to “bring lenders to the table” in order to keep negotiations going. In the words of many “consumer” advocates, this is just a “stick” to the motivate the lenders. I could think of few things more offensive to a free society. In a government truly constituted on the notion of the common good or general welfare, it would be no more appropriate to use the stick of the state on lenders than it would be on borrowers. Government quite simply should not take sides in purely private disputes.
One would think that if anyone could understand the principle that government should not interfere in the private, voluntarily entered relationships of consenting adults, it should be Mr. Frank.
Secretary of Behavior Modification
George Will recently accused Obama’s token Republican, Transportation Secretary Ray LaHood, of being the “Secretary for Behavior Modification” because of his support for programs designed to coerce people into driving less. Speaking before the National Press Club on May 21, LaHood pleaded guilty as charged.
In the video of LaHood’s presentation, he was asked if the administration’s “livability initiative” is really “an effort to make driving more tortuous and to coerce people out of their cars.” His answer: “It is a way to coerce people out of their cars, yeah.”
The next question was, “Some conservative groups are wary of the livable communities program, saying it’s an example of government intrusion into people’s lives. How do you respond?” His complete answer: “About everything we do around here is government intrusion in people’s lives.”
Pirates as Proto-Governments? You Bet!
I have to confess I don’t understand why Roger Pilon and Ilya Shapiro are criticizing our colleagues Ben Friedman and Peter Van Doren below. At the risk of being cast as yet another cog in the insidious piratofascist fifth column, I’d like to defend Ben and Peter.
Roger and Ilya reproach Ben and Peter for likening pirates to “pseudo-governments” and mount an impassioned defense of the nation-state as deserving a place in a different category from pirates.
On the distinction between the two, they write: “A tax, at least in principle, and most often in practice, is a charge for a service rendered –- not necessarily a wanted or an evenly distributed service, to be sure…” To be sure, indeed! There’s a term for charging people for an unevenly distributed and unwanted service. It’s called racketeering. Their description of taxation could apply quite well to a mafia.
Roger and Ilya would prefer to keep pirates and governments in two discrete categories but provide little reason why other than the above. But if they dislike the analogy, their problem is not with Ben or Peter or Noam Chomsky or St. Augustine, but rather with a body of well-developed academic literature. In particular, one of the preeminent scholars of the formation of national states, the late Charles Tilly, wrote a famous book titled Coercion, Capital, and European States that would help color in the gaps for them. The short version is that European elites came to form national states as a means for protecting their fiefdoms from other proto-states, which frequently had predatory aims, and that this process sometimes had the incidental effect of protecting the populaces that lived under state jurisdiction and could be used as means for making war against the neighbors.
Tilly also wrote a well-known essay titled “War Making and State Making As Organized Crime” that makes the following claim: “Banditry, piracy, gangland rivalry, policing, and war making all belong on the same continuum.” Tilly went on:
In retrospect, the pacification, cooptation, or elimination of fractious rivals to the sovereign seems an awesome, noble, prescient enterprise, destined to bring peace to a people; yet it followed almost ineluctably from the logic of expanding power. If a power holder was to gain from the provision of protection, his competitors had to yield. As economic historian Frederic Lane put it twenty-five years ago, governments are in the business of selling protection … whether people want it or not.
Governments and pirates both “put the victim to a choice between two of his entitlements — his freedom and his property.” In the literature on state formation, this isn’t a controversial point. I’m really surprised to see that it is for two libertarians.
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