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Friday, July 01, 2005

U.S. as Nazis and Jews as Terrorists?

Frontpagemag.com in The Left Revealed provides a transcript of a debate hosted by Michael Medved between David Horowitz and Nation writer Daniel Lazare on the issue of whether the Left's anti-war movement is headed by people who are overtly sympathetic with the Mulim radical terrorists and are America-haters. While Lazare denies this charge by Horowitz, the following short exchanges support the Horowitz claim:

Daniel Lazare: Of course, absolutely. The insurgents in Fallujah are repelling a foreign invasion. They have every right to do it. Now, I’m not going to support every last action by every last fighter there, obviously, but certainly they have a right to repel a foreign invasion of their country.

David Horowitz: The people Lazare is referring to are the terrorists, of course; they're not the Iraqi people. They're a tiny minority of Sunni Muslims who are really upset because a monster has been taken down – their monster. This is the same ruse leftists used to rationalize their support for a Communist victory in Vietnam. Ho Chi Minh – an operative of Stalin’s Comintern who spent most of his life in Paris – was alleged to be the “George Washington of Vietnam.” Here we have a classic example of how the Left operates. Daniel Lazare is defending the Sunni terrorists in Iraq – the oppressors of the Iraq people – and pretending that he's doing it in the interest of the Iraqi people. The Iraqi people – the Shiites, the Kurds, the vast majority of the Iraqi people – hate the “insurgents” that we're fighting in Fallujah, but the American Left is choosing that side, the terrorists’ side, of this war.

Michael Medved: Okay, Daniel Lazare?

Daniel Lazare: Are you aware, David, that the other Nazis routinely referred to members of the French Underground as terrorists during World War II?

Michael Medved: Wait, are you just comparing….? We have to take a break. When we come back, Daniel Lazare, I want you to think very carefully about whether you want to compare the people in Fallujah, who do regularly blow up Americans, civilians, schoolchildren, power plants, women, and children, if you want to compare those people to the French resistance to the Nazis, which you just did. If Daniel Lazare stays with that, I'll be surprised, but I've been surprised before. We'll be right back with David Horowitz, author of
Unholy Alliance, and Daniel Lazare.

Later, Medved allows Lazare to explain his point:

Michael Medved: Daniel Lazare, would you like to see the elections scheduled for January 30 in Iraq fail?

Daniel Lazare: I'm totally opposed to what the U.S. is doing in Iraq. Therefore, I would no more support U.S. elections than I would support German elections in France during World War II.

Michael Medved: So you're sticking with this comparison of the United States to Nazi Germany?

David Horowitz: He is, because he believes it in his soul.

Daniel Lazare: I believe it. I believe it entirely.


As a Jew, I find this admission obscene but enlightening of a movement that has lost touch and has allowed their moral equivalence philosphy to destroy their cognizance of morality.

Contributor Andrew Skip March adds the following:

Daniel Lazare's logic (generous term) is convoluted and frankly hurts my hair it is so bad. (I'm in a lot of pain these days with my shorts in a knot and my hair hurting.) Let's see if I follow this. It was OK for the Soviet Union to invade Afghanistan to fight radical fundamentalist muslim terrorists, but its OK if these same terrorists win in Fallujah. And it's not OK for the US to fight or confront any of these guys. Huh??

The problem here is that the only country or people that can't extend power is the United States, according to Lazare. There's a closer parallel between President Bush and Hitler than between a Soviet leader (pick one, any one) and Hitler or a murdering barbaric terrorist who cuts people's heads off and slaughter's innocent people? And where do these Fallujah liberators largely come from? Answer, Iran, Syria, Taliban from Afghanistan. Now there's an assembly of countries and regimes that support freedom and democracy around the world, right? He has in fact embodied David Horowitz's thesis in his book "Unholy Alliance" You really do have to hate America to come to the conclusions that Lazare does.

Thank You Professor Sowell

Thomas Sowell just celebrated his 75th birthday. In a tribute to Sowell in Townhall.com, Trevor Bothwell notes many of Sowell's books that have affected him over the past 4 years. Like Bothwell, the gift of a Sowell book (thanks Rosemary) almost 10 years ago did not so much change my thinking as it changed my method of thinking.

In his latest economics book, Applied Economics, Sowell discusses the common error of "first-stage" thinking. A public policy initiative is presented by a politician to the public and its immediate effects are touted and accepted by the public. What is needed, explains Sowell, is to ask "And then what will happen?". The likely cause and effect nalaysis is never analyzed. We never get from journalists or politicans the second, third or fourth stage of consequences. When the consequences eventually occur over a long period of time (longer than the politicians next-election time frame or the journalists next deadline), the new crisis created or exacerbated by that very program receives much of the same medicine (usually more money and government bureaucracy) that caused the problem. Why do we not follow the various stages of "And then what will happen?"

The economists way of thinking that I learned from Sowell was, of course, not invented by him. He is carrying the ball handed to him by the Ludwig Von Mises, the Hayeks, the Friedmans (his U of C professor) and going way back to Adam Smith. But he is able to, as written by Bothwell, uncannily "explain the most complicated topics in such succinct and understandable language" that a non-economist can fathom the arcane issues of economics and public policy.

Happy birthday, Professor Sowell. Thank you for opening up my mind.

P.S. Read his autobiography. He is not a stiff.

Founders: Protection of Property Is Paramount

Thanks to Mark Alexander who carried the following quote from John Adams in his column "The Founders' Cornerstones":

The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. If 'Thou shalt not covet' and 'Thou shalt not steal' were not commandments of Heaven, they must be made inviolable precepts in every society before it can be civilized or made free.

There is a lot in that quote. First, we must recognize the relevance of the 10 commandments to a moral and ordered society. Second, the protection of property is not something to just help "fat cats". It is inherent in our being that the rewards from our sweat cannot be taken from us. If our lives consist of time, then theft of the rewards (and I include over-taxation and trade protectionism) of labor is removal of a piece of our lives. Last, laws enacted to protect those rights provide expectations of order that, when removed, produce anarchy and tyrrany. Courts routinely over-ride laws and contracts (voluntarily derived laws) to reach their view of justice. What is just is allowing people to order their own lives without inserting the interpretations of those not in privity to effect a result never intended.

The concept of law protecting property rights has eroded during the 20th Century. On this up-coming July 4th, remember those who are sacrificing their lives, limbs and time to protect these values.

Thursday, June 30, 2005

Hating Kelo and Loving What It Will Bring

I was asked my opinion on the Kelo case by a liberal friend who apparently does not hang on every word published in this blog (and I call this person a friend?).

The ruling makes me at once incensed, appalled, saddened, disgusted, happy and confident.

I am incensed over the arrogance of the taking by city electees in league with businessmen in broad daylight.

I am appalled that 5 of the 9 SCOTUS justices who are sworn to protect the Constitution could reach such a decision.

I am saddened that these homeowners are faced with losing their homes for no reason of their own doing.

I am disgusted that there are some MSM cheerleaders who can support the decision with a straight face.

I am happy that the usual behind the scenes sell-outs by public officials was so overt that it cannot be explained away.

And I am confident that this decision will finally educate voters about the propriety and protection that a strict construction of the Constitution brings.

Sometimes we need to be jolted from the lethargy induced by the low frequency of the MSM-academic-liberal establishment. This may be a judicial 9-11 that will waken the public that had been sleep-walking on the “Road to Serfdom” where statists have been leading them. If I am right, just like the slap to our psyches brought on by the attacks of 9-11 that rousted many Americans from their slumber regarding radical Muslim-terrorism, we now see in real terms the damage done to the American frame-work of liberty sundered by the majority jurists on the Court.

Forcing Corn On Us

Economist Alan Reynolds destroys the new energy bill and its ethanol subsidies in "Energy Piracy". Not only does this bill (supported by both sides of the aisle) remove the competition that drives the creation of new technologies and products, it also saddles the taxpayer with the cost of $42 billion over the next 5 years. And the whole science behind this "new" source of fuel is "quixotic".

Reynolds quotes a source that in order to convert corn into fuel oil, it takes 7 gallons of petroleum oil to produce 8 gallons of ethanol. That 1 gallon gain comes at the further cost of all the man-hours and machinery wear and tear that clearly exceeds that single gallon gain. Now, maybe you think that it is better to use a replaceable ear of corn versus a gallon of irreplaceable oil. But then what is the need of the oil if it becomes a discarded commodity? Why is it worth preserving if there are better alternatives? Anyone saving a ton of coal in their basements these days?

Reynolds also advises us that ethanol gets roughly 25% less mileage than gas. While the price of ethanol is subsidized at the pump (and who pays for that?), people will have to buy ethanol more often. More trips to the pump. How does that help poor people get to work?

Using government money, excuse me, our money, to subsidize Archer Daniels Midland and corn farmers for an uneconomic, inefficient product is wasteful and redirects capital from private industry where the real creativity always occurs. That is another way of saying the government is taking our money from us while charging us more for something we do not want!

Did He Say "More Guns Less Crime?"

Professor John Lott , author of "More Guns Less Crime", analyzes the stats on crime in the U.S. since the end of the federal assault weapons ban of Sept.13, 2004. Rather than seeing an increase in violent crime, as predicted by Sarah Brady, the statistics tell us a different story.

Writes Lott:

"Last week, the FBI announced that the number of murders nationwide fell by 3.6 percent last year, the first drop since 1999. The trend was consistent; murders kept on declining after the assault weapons ban ended.

Even more interesting, the seven states that have their own assault weapons bans saw a smaller drop in murders than the 43 states without such laws, suggesting that doing away with the ban actually reduced crime. (States with bans averaged a 2.4 percent decline in murders; in three states with bans, the number of murders rose. States without bans saw murders fall by more than 4 percent.) "


Gun control in England tells us the same story of increased violent crime. In an article by Miguel Faria, we learn:

And while robberies rose 81 percent in England and Wales, they fell 28 percent in the United States. Likewise, assaults increased 53 percent in England and Wales but declined 27 percent in the United States. Burglaries doubled in England but fell by half in the United States. And while motor vehicle theft rose 51 percent in England, it remained the same in America.

To make matters worse for England – and this is also true for Canada – in those countries where citizens are disarmed in their own homes, day burglary is commonplace and dangerous because criminals know they will not be shot at if caught flagrante delicto. Not so in the U.S., where burglars not only prefer night burglaries but try to make sure homeowners are not in to avoid being shot at by the intended victim.


With the recent assault on our Constitutional right to our private property, we need to demand our Constitutional right to own a gun or that will also be taken from us by this SCOTUS.

It Wasn't The Child, It Was The Knife

BBC News reports how a "perfect child" in England stabbed his parents to death and went on a shopping spree with their credit cards. Brian Blackwell, 19, stabbed his father Sydney, 72, and mother Jacqueline, 61, at their home in Melling, Merseyside, Liverpool Crown Court was told. A great student, he had obtained A grades in his maths, chemistry, biology and Spanish A levels and was accepted into Nottingham University.

While all evidence clearly proves he did the killing, there is hope for the kid. Shrinks say he suffers "narcissistic personality disorder". Blackwell's personality disorder meant he fantasized about unlimited success, power and brilliance.

So he has a disorder that may save him from the crumpet slicer. His problem is that he feels too good about himself. That high self-esteem will get you every time.

If he is freed on a successful psych defense, let's hope he is taught to cope with his acts and not feel too responsible for his parents "tragedy".

Said a detective on the case:

"Throughout this investigation we have found almost overwhelming evidence of two caring parents who doted on their son Brian and had ambitions only for him to fulfil his undoubted potential."

Well, he did. And if only they were alive to see it.

Wednesday, June 29, 2005

"Public Use" Is Giving Wealthy People Your Shore Home

Reason's interview with attorney Scott Bullock of the Institute for Justice, who represented the plaintiffs in Kelo v New London, mentioned some imminent property take-overs. The following is one of the scariest instances of the new power of the government over citizens:

Reason: Can you give some examples of other eminent domain abuses among the 10,000 cases you guys have cited?

SB: I'll give you one primary example that's brewing in Long Branch, New Jersey right now, where a group of people want to hang on to their working-class beach homes. They've worked very hard to get their modest bungalows along the shore. These houses were purchased by working class folks in Newark and other places, and now many of the elderly residents live there full-time; these are their dream homes. And the City of Long Branch is just proposing taking these people's homes and transferring them to wealthier home-owners. They want to tear them down and build million-dollar condominiums for people right along the shore in northern New Jersey. And so it's a case of taking the property of poorer folks and giving it to wealthier folks, and using it for the same purpose. It's just a transfer of wealth between home owners. It's a classic example of eminent domain abuse and one that I think will be litigated in the very near future.

1+1+1+1= 9/11

Andrew “Skip” March provides us the following:

When I hear the argument made that Iraq had or has nothing to do with 9-11, my shorts get all in a knot. I often ask those who make this argument and other programmed liberal arguments, “what was the price of minimal, limited or no response to the first WTC bombing, to the bombing of US embassies, bombing of the USS Cole and yes even Iraq? Answer: 9-11”

Our response to the first WTC bombing was prosecution of a local cleric and a few guys driving a U-HAUL. Hhhmmm…didn’t Mr. Rove recently articulate exactly that problem with the Left’s desired response to 9-11?? I distinctly recall President Bush addressing Congress and the World and saying that either you are with us or against us; that we will attack terrorism in its local cells and in its harboring patron countries. I also remember the whole of Congress standing and applauding these very words. President Bush was doing nothing more than articulating existing decade old US policy which also extended to regime change in Iraq.

Ooohhh, you mean we have to do something now…..that’s different. First we have to take a global test…would that be a multiple choice or essay test? We can’t rush into these things you know…it’s only been a decade of attack on the United States and the civilized world by radical muslim terrorists and a declaration of war by Osama Bin Laden.

Then the Left and MSM asks, why aren’t we attacking North Korea or Iran, who have more developed nuclear weapons programs? As if they were going to take any real action there anyhow. Well the answer is that the World had specifically cited Iraq as the major threat to peace in the Middle East and the World articulated through numerous UN resolutions. Further, we were all too busy bribing those other countries not to develop the nuclear capabilities they claimed they were not developing. Sounds like policy and execution failure to me. Does anyone really believe that the inaction in Iraq and being duped by Saddam Hussein and other blood thirsty dictators was lost on OBL and his merry band of liberators?

In this whole war on terror, and it is a war by the way, Iraq is the linchpin to success. If it wasn’t, the whole of the radical Muslim terror movement wouldn’t be amassing their efforts there. We have seen the fruits of success from this policy in Libya, the Palestinian territory, Lebanon and yes even Iraq. Since the Iraqi election I haven’t heard Senator Kennedy talk about how the terrorists are winning the hearts and minds of the Iraqi people. I wonder how well received the Senator would be by our troops in Iraq….don’t see him hurrying over for a visit. Senator, isn’t it time for you to resign?

The world has changed and the Left just doesn’t get it. Evil is confronting us in a completely different way, although we have had plenty of evidence during the past decade. Iraq is practically and symbolically the focal point with terrorists drawn out in the open more than they have ever had to be. In doing so we will defeat them if we all remember that Iraq is very much about 9-11.
___________________________________________________________________

Skip's sentiment was seconded by Ben Johnson in his piece in Frontpage today. Quoting President Bush last night:

“This nation will not wait to be attacked again. We will take the fight to the enemy. We will defend our freedom.”

Says Johnson:

Each Democratic charge designed to place the President beyond the pale has the ricochet effect of wounding our troops’ morale. An emotional President Bush, flush with gratitude, teared-up at the end of his speech when he looked these enlisted men and women in the eyes and told them, “Thank you. And may God bless America.” Fox News’ Carl Cameron said the troops, who had been instructed not to cheer, were riveted to the president throughout. MSNBC’s Donna Gregory reported another set of soldiers watching the speech on TV were “decidedly pro-Bush.” Bush’s simple words showed them, despite the poison partisan rhetoric, Americans love them, and that they are the human agents protecting freedom at home and extending liberty into the darkest regions of the globe. In any other era in American history, they would have never doubted this. Last night’s address was the best speech President Bush should have never had to give.

Brendan Miniter in "The Defeatist Caucus" in the WSJ see the Left as trotting out their game-plan from Vietnam. He says:

[T]he Vietnam metaphor is apt today because the U.S. is in a war it can win and is winning, if only those inside the Beltway would stop preferring defeat to victory and disgrace to honor...

But walking away from the overarching moral struggle proved disastrous across the world. After Congress shut off funding to the Republic of Vietnam, U.S. influence receded in the face of communist insurgency, and South Vietnam quickly fell in 1975. The emboldened Soviets were then free to press their interests in Africa, South America and, yes, the Middle East. The shah of Iran fell just a few years after Saigon. Radical Islamic terrorism got a big push from the Soviets.

This history is worth running through because some of those who led the effort to shut off funds to South Vietnam are in Congress today and are among the critics of the war in Iraq. It's not that Massachusetts's Sens. Ted Kennedy and John Kerry learned nothing from the defeat in Vietnam. It seems that they learned all the wrong lessons and still have no problem with watching the U.S. lose an eminently winnable and moral war.




The Irish Are The EU Giants!

Thomas Friedman writes today about the Irish economic miracle. Friedman writes:

Ireland went from the sick man of Europe to the rich man in less than a generation... It tells you a lot about Europe today: all the innovation is happening on the periphery by those countries embracing globalization in their own ways - Ireland, Britain, Scandinavia and Eastern Europe - while those following the French-German social model are suffering high unemployment and low growth.

To Friedman the story is all about globalization. But the reason companies are in Ireland is their corporate tax rates! The story of Europe is the move of companies from France and Germany to Luxemborg and Ireland because they can increase profits and invest that additional capital into the business or distribute dividends to investors. It is no secret.

Michael Dell, founder of Dell Computer, explained to Friedman:

Ireland has an industrial and tax policy which is consistently very supportive of businesses, independent of which political party is in power. I believe this is because there are enough people who remember the very bad times to de-politicize economic development.

That is an important statement. A low tax economic policy need not be a political issue. It has been made a political issue in the U.S. because the Democrats have chosen to pursue erroneous economic policies that rely on high taxes, a welfare Leviathan of theft and redistribution and minimal personal responsibility. That has caused free marketers to join the only party connected to the views of Adam Smith, David Ricardo and what is now called libertarians. That does not mean that libertarians have no issues with the Republican Party. But, even looking at the liberal treatment of our rights by the Supreme Court, there is no way people who value individual liberty and natural rights can support the Democratic Party.

Just after Bush became president and began pursuing tax cuts, I was discussing with a liberal friend the positive developments such economic proposals would have on the recession. He told me he disagreed with my politics and did not support the tax cuts. I said, this was not politics. It was economics. In a sense, he was correct. And I guess his political views are wrong.

Basically, Ireland and the U.S. prove the truth of a free market economic approach. Those in opposition look foolish in comparison.

Tuesday, June 28, 2005

West Point Golf Outing

Contributor Evo Riguzzi, retired Army general, sends us this request:

I run a golf outing at historic West Point. Consistently the feedback has been this is a fun day.
For those of you who do not play or who cannot attend, I ask you to sponsor a hole. Co-sponsorship of events are welcome.

For those of you who can attend, please send to the address on the flyer your reservation form. If you are by yourself or a twosome, we will pair you up.

AFRFAF- Armed Forces Reserve Family Assistance Fund is a 501 c 3 charity as approved by the Internal Revenue Service. Donations are tax deductible. Funds are used to assist families of deployed reservists, all branches, with short term financial needs.

I thank you for your support.


AFRFAF 5th Annual Golf Tournament
The West Point Golf Course
August 22, 2005
12 pm Shotgun Start
Call 914 948 4990, email ERiguzzi@Optima-Security.com
Visit the West Point Golf Course Website at www.usma.edu/activity/golf

Religious Displays

Great line by George Will today: "Nowadays many people delight in being distressed".

The context is the ahistorical decision by the SCOTUS applying what Will calls "hairsplitting" rules in deciding the legality of religious displays on public property.

That people are offended by religious displays is their own problem. They should "get over it." I grew up in a non-religious home where statements demeaning religions, both Christianity and Judaism, were common-place while the "religion" of Marxism (oh no, not the USSR variety but the softer version espoused by the New Deal) was lauded for its fairness. Ignorant of the factual basis underpinning such attitudes, over time I have learned that though practitioners of both religions have deserved criticism for many bad deeds throughout history, the religions were not the cause of the bad acts. The people were.

As we know, the Commandment 'You shall not take the name of the LORD your God in vain' stands for that. The command prohibits claiming God's support for bad acts. That is a serious sin.

So, removing the moral compass of the Ten Commandments from public view, a vision that has led billions to follow a just path in their day-to-day activities, one that moored the Founders and that lends a common-sense approach to an ethical life is a foolish decision by the SCOTUS. To people who value personal liberty, the SCOTUS is on a real losing streak this week.

Public Use Is Not A Developer's Project

Just read Justice Thomas's opening in his dissent (as suggested by Jude Wanniski):

Long ago, William Blackstone wrote that the law of the land . . . postpone[s] even public necessity to the sacred and inviolable rights of private property. The Framers embodied that principle in the Constitution, allowing the government to take property not for public necessity, but instead for public use. Defying this understanding, the Court replaces the Public Use Clause with a [P]ublic [P]urpose Clause, (or perhaps the Diverse and Always Evolving Needs of Society Clause), a restriction that is satisfied, the Court instructs, so long as the purpose is legitimate and the means not irrational. This deferential shift in phraseology enables the Court to hold, against all common sense, that a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation, is for a public use. I cannot agree. If such economic development takings are for a public use, any taking is, and the Court has erased the Public Use Clause from our Constitution, as Justice O’Connor powerfully argues in dissent.

Wanniski properly deems this a communist decision:

Except that the government must still provide monetary compensation that another court would ultimately decide, there is nothing different from a communist expropriation of private property with the good intentions of making things better for the “community” at the expense of the landowners. The New York Times, which predictably hailed the decision under a headline, “The Limits of Property Rights,” sounded more like Pravda in its conclusion: “New London’s development plan may hurt a few small property owners, who will, in any case, be fully compensated. But many more residents are likely to benefit if the city can shore up its tax base and attract badly needed jobs.”

Churches pay no taxes. They are ripe for the bulldozer. Low-income level homes provide little in tax revenues to the Cities. They are ripe for the bulldozer. The 5th Amendment, as with all of the liberties contained in the Bill of Rights, is a rein on government action. To quote Thomas Sowell:

"What are these rights supposed to protect the citizens from, if not the government?"

Monday, June 27, 2005

Really Good "Feel Good" News

Whenever I get emotionally down from unconstitutional Supreme Court decisions, ignorant statements from pundits and citizens critical of the Bush's tax cuts, the Laffer Curve and supply-side economics (reports show increased state and federal revenues and a decreasing deficit like we said would happen) or anti-American/anti-Semitic policies pandered by leftists, I turn to the salve of the "CivilianGun Self-Defense Blog". There are always a number of heart-warming stories to make you realize there are some real smart Americans still out there.

Here is the latest post. Enjoy it with me:

From the Houston Chronicle of June 27, 2005
Homeowner kills 1, critically wounds another

A northeast Houston resident shot and killed one man and critically wounded another after reportedly catching them breaking into his house early today. The man told police he returned to his house on Lakewood near Jensen just after 1 a.m. today and found four men trying to break in.

He opened fire on the would-be burglars, who fired back before fleeing to a house on Willie near Terrell, about a mile a way, authorities said. One man died at the house on Willie and another man with gunshot wounds was taken to Ben Taub Hospital, where he is listed in critical condition. Neither of the victim's names has been released yet. Police are still questioning the man who shot them.

Give the Kelo Homeowners The Profits

Back to my earlier post on the speculative benefits claimed to be the expected result of the eminent domain takings by the City of New London, successfully received by the Court in Kelo, economist Don Boudreaux of Cafe Hayek suggests the following:

So why not base the calculation of the just compensation (owed by the thief-politicians of New London to their victims) on the City’s own estimate of the dollar value of these "appreciable benefits" that its thievery is expected to yield?

That is, if the City expects that its thievery will yield $X million in economic benefits, just compensation (given that the theft now enjoys the Supreme Court’s approval) is approximately .95 ($XM). Let the City keep about five percent of the additional value it expects to be created. Given current low interest rates and the fact that the City (ostensibly) is a not-for-profit outfit, the City should be quite content to keep a full five percent of this booty.

I like this idea that the price people will receive from the forced sale and move should contain a large premium. Besides the emotional trauma of any move, the financial set-back of moving expenses, the time expended in finding a new home in an escalating real estate market and the fact that this was not an intended move in the first instance, the government should pay people for the coercive removal. I believe Ariel Sharon is doing the same for its Gaza citizens being removed.

Sunday, June 26, 2005

Greedy Renters

The NYT Real estate section advised us of the plight of rent-control tenants being removed from their homes in "Everybody Out? Owners Won't Renew Leases" (sounds like a description of the Kelo decision).

ent-control law, that allows tenants to remain in apartments for life that are renting at 10% to 25% of the market value, is when an owner seeks to make the residence his primary own home.The focus story, indicative of the greed of landlords, is a landlord's desire to reside in his building in, now popular, Borough Park. The owner wants the tenants, paying on average around $600 per month rent, to move out so he, his wife and infant child can live in 11,600 square feet.

Without saying the owner is lying, the writer expresses shock at the amount of room being sought by so small a family. The message is poor renters are being forced out of their homes due to the misuse of this rent-control exception. The assumption is the owner will eventually choose to leave and can then rent those apartments at the true market price, making too much money in his investment.

Rent-control is a device that rewards the initial renters at the cost of many families who are forced out of the rental market due to a shortage of apartments available for rent. Does rent control assist the poor to find affordable housing? Only when the poor are the first renters after enacting rent control. A study in San Francisco finds over 25% of the renters in rent controlled apartments earn over $100,000 (remember how Mayor Ed Koch held onto his Village apartment all through his mayorship while being provided free digs at Gracie Mansion?).

Thomas Sowell in "Applied Economics", advises that the result of rent control, like any other price control is a reduction of supply. Every big city that has these laws has no market for the new families looking for the "affordable housing" because the rent controlled tenants never move out. The owners see no need to maintain or renovate because there is no increase in revenue. Builders will refuse to build new structures without a profit in sight. With no profit in existing buildings owners will likely abandon them for assumption by the city.

Citing Sowell, 44% of San Francisco's buildings were more than 70 years old.Rent control then reduces supplies, destroys the quality of the buildings and creates a black market where under-the-table payoffs are made to either leaseholders or landlords.Remember, these "victims" are renters with no expectation of permanence in residing in these buildings. That is why people choose to own in the first place. And do not forget those families willing to pay market rents for the benefit of avoiding the 3 hour commutes to and from work. They are willing to pay more to see their families.

Going back to that 2001 San Francisco study, half of the rent-controlled apartments were occupied by one person with many of the apartments having more than one bedroom. The NYT article shows sad-faced tenants living in what looks like multi-room apartments. In NYC, this is a luxury far in excess of what they are paying.End rent control and watch the builders cease erecting just luxury apartments, the most common exception to the law. Builders will pursue the lower-end markets if there is money to be made there. Dr. Sowell's Econ 101 class is that simple.

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