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Corrupted Capitalism and the Housing Crisis


               
2014 Apr 18, 1:56am   25,830 views  94 comments

by hrhjuliet   follow (1)  

http://www.acton.org/pub/commentary/2012/02/15/corrupted-capitalism-housing-crisis

As Robert Bridges wrote in the Wall Street Journal last year, “we have put excessive emphasis on owner-occupied housing for social objectives, mistakenly relied on homebuilding for economic stimulus, and fostered misconceptions about homeownership and financial independence. We've diverted capital from more productive investments and misallocated scarce public resources.” This misallocation laid the foundations for the housing crisis.

#housing

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1   hrhjuliet   @   2014 Apr 18, 2:34am  

Capitalism is (or was) an “economic system in which capital was privately owned and traded; owners of capital got to judge how best to use it, and could draw on the foresight and creative ideas of entrepreneurs and innovative thinkers.” The main dynamic of the market system is the relationship between the producer and the consumer. Corporatism, by contrast, brings to the fore the role of the “managerial state,” in which the government takes on an increasingly larger task in telling producers what they should produce and consumers what they should consume. This can be done in many ways, some more implicit and others more aggressive. Corporatism is distinct from socialism, because under corporatism the means of production (capital) remain in private hands. But the private firms are not simply free to respond to market signals. Instead, under a corporatist structure, the government directs firms in the ways in which they should employ their resources, sometimes through moral suasion, but more often through regulation, tax policy, and legal directives. Fascism, which uses coercion, bullying, and demagoguery to control private firms, is an extreme form of corporatism.

2   drew_eckhardt   @   2014 Apr 18, 2:47am  

hrhjuliet says

But the private firms are not simply free to respond to market signals. Instead, under a corporatist structure, the government directs firms in the ways in which they should employ their resources, sometimes through moral suasion, but more often through regulation, tax policy, and legal directives.

Or the private firms have the government operate on their behalf to provide tax breaks, limit competition, make below market rate loans, buy their product, subsidize their sales, and compel purchase of what they sell.

To quote wikipedia

Corporatism (or corporativism[1] ) is the socio-political organization of a society by major interest groups, or corporate groups, such as agricultural, business, ethnic, labour, military, patronage, or scientific affiliations, on the basis of common interests.[2] Corporatism is theoretically based upon the interpretation of a community as an organic body.[3][4] The term corporatism is based on the Latin root word "corpus" (plural – "corpora") meaning "body".[4]

where the direction of influence is unspecified.

With real estate it's easy to figure out - RPAC ranked first in donations to candidates for every election since 1998 where the open secrets data stops. The Mortgage Bankers Association (the guys who walked away from their headquarters building) and National Association of Home Builders are also significant players.

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