Morning Reading on Political Economy
By Arnold Kling
First, Jesse Larner on Hayek.
So to Hayek, the common law is a spontaneous phenomenon, without obvious human direction. In a sense law is related to custom in this manner, but there is no guarantee that honoring this concept of the nomos leads to an enlightened condition of liberty. Isn’t the barbaric (I use the word with no relativistic embarrassment) practice of female genital mutilation derived from this sort of nomos? Hayek is susceptible to this mistake precisely because he is distrustful of all human attempts to define authority and so prefers a mystical, holistic origin for it.
Next, The Washington Post,
Mortgage programs that helped nearly 79,000 people buy homes using government-insured loans last year would be eliminated as part of a broader housing package…Under these programs, nonprofit groups provide buyers with money for down payments. Home sellers then reimburse the organizations and pay an administrative fee…using loans insured by the Federal Housing Administration…Borrowers who take part in these arrangements go to foreclosure at nearly three times the rate of borrowers who put their own money down, according to the agency.
It sounds to me as though the nonprofits were guilty of predatory lending. But don’t worry, the nonprofits aren’t losers in the housing bill. An op-ed notes,
One proposal is to have government buy distressed properties, then turn them over to private, nonprofit groups for use as low- and moderate-income housing. Some such programs have worked well, and the Senate housing bill includes $3.9 billion to expand them dramatically, with the money to be distributed via state and local governments.
The use of agricultural products, in particular maize, wheat, and vegetable oil, as feedstock for biofuel production has expanded dramatically in recent years. Between 2005 and 2007, i.e. in the period when food prices began to explode, nearly 60% of the growth in global consumption of cereals and vegetable oils was due to biofuels…In a situation of depleted stocks and very low demand and supply elasticities, this gap between use and output growth has pushed prices up very strongly.