Invisible Hand Refuses to Allocate Resources Efficiently
Diane Sweet at Crooks & Liars’ Occupy America presents an interesting statistic:
- 3.5M Homless in the US
- 18.5M Vacant Homes in the US (mostly foreclosed on by banks)
This is what happens when we rescue banks instead of homeowners.
Or, I should say, this is what happens when corporations determine social policy: property rights come first, and human rights come last. And these poor evicted souls are not even sacrificed on the alter of economic efficiency, because there is nothing efficient, or even rational, about forcing 3.5M people to camp outside of 18.5M vacant homes.
The simple solution to this market failure would be to assign empty homes to homeless people until buyers show up. The simple way to do that would be to outlaw eviction when alternate occupancy is not available.
A better solution would be to automatically reduce the amount of everyone’s residential mortgage debt to the fair market value, thereby shifting from homeowners to the banks the losses from the housing bubble, and avoiding the evictions in the first place. This is obviously fair since the bank lending practices caused the bubble, and banks were in a better position to prevent the problem than were home buyers.
But the purpose of this post is not to solve the eviction crisis or to reform the housing market.
I merely wish to point out that Capitalism is generating these outrageous outcomes, which are neither fair nor efficient.
There is an invisible hand at work, but it is not the Market — it is central policy-making by a corporate controlled state for the benefit of the wealthy. That is the true face of Capitalism, not any of the Dogma Premises regarding efficiency, accountability, or just allocation of resources.