Before we begin to implement any changes that will reverse and/or fix the foreclosure crisis, we need to understand the causes of the crisis. There are direct causes and correlative causes. The most direct causes have been discussed ad nauseum in the media. Some of these direct causes include; high (property) taxes, loss of jobs, resetting adjustable Rate mortgages, loss of credit rating (due to other causes that result in the inability of the borrower to pay bills on time or at all), medical bills (also a leading cause of bankruptcy) and an overall spend-thrift zeitgeist. These direct causes are easy to spot, but I believe that they are a distracting muse for our ire. The real causes for the foreclosure and overall financial crisis have more to do with laissez faire market system in general.
Now laissez faire market theory in and of itself is not the problem, but it only works when land ownership is a right, not just a goal. It also only works when the money system follows this paradigm. Basically sovereignty must return to the people. The people must own the land thus control the money and the means of production. When corporations own land and control the means of production the system works in direct opposition to the needs and best interest of the people. A corporation, by its very construction and operational charter is in the business of extracting more from the system than it puts out. This will invariably lead to a contracting of public equity, concentrating equity into a handful of stakeholders. And as liaises faire goes, eventually there will be less and less competing corporations thus more and more equity concentrated into the hands of fewer and fewer stakeholders. (A statistic shows, as of this writing 1% of the U...
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... main way to fix the foreclosure crisis; education. A concentration on education doesn't mean spend more tax dollars on public schools. I mean increase the quality and target of the curriculum in the schools that do exist. Americans learn of Paul Revere but do they know about Louis McFadden. We learn about capitalism and democracy but do we know how it is sustained. Do we teach and require from ourselves and our children the common sacrifice needed to maintain our way of life. Do we know and understand our rights, not in some superficial manner but in a substantial internalizing way. I think if we did, we would be greater demanders and defenders of such. Property, due process, legal vocational pursuits, and contract rights are such that if not protected, will not only foster more and deeper foreclosure and financial crises, but could end our democracy as we know it.
The laissez- faire policy refers to the lack of government intervention and regulation of the economy, the ideology lies in the belief that the government would not aid nor hinder businesses (“Business of America. Laissez-Faire Capitalism and Government”). Presidents and a vast number of Americans before the 20th century supported the absence of the government in the economy, since it promoted competition and economic growth. For instance, during the late 19th century the U.S economy prospered from the lack of government intervention, resulting in a 400 percent increase in the economy ("Laissez-Faire.”). Although, the laissez-faire policy expands the economy; a lack of government interference and regulation of the economy grants companies with an opportunity to take advantage. Consequently, it enables for companies to control an entire industry and increase prices that hinder the consumer and eliminate
...onstitute injustice. Nosick favors a state in which the dominant protection agency as the only form of "government" serves to protect those who chose to freely participate in the service. The individual is free to go about his life so long as he does not violate an individual or worsen the conditions of the land for others. Having the right to ownership does not mean the right to harm, but rather the right to exclude. Just as I would not steal property from another individual (without fear of the protection agency), how is it just for anyone, including the government, to take earnings from individuals in the form of distribution or taxation? If just acquisition arises from the just history (any form you see fit), than wealth and free spending are simply functions within society with discretion falling under the responsibility of the buyer and seller of the goods.
...the land enclosures, which increases the value and productivity of the land, everyone benefitted. What seemed like a bad thing without values, turned out to overall be a good thing with values present (Polanyi 1957, 33). This embodies Polanyi’s idea that, unlike what Hayek thinks, regulation is a good thing for economic growth if it safeguards the welfare of the community (Polanyi 1957, 33).
Laissez-faire was a practice forced into place by businesses during the Industrial Revolution. It was put in place to keep businesses as free from government regulation as possible. However, it had many downsides. Due to Laissez-faire, peasants suffered horribly, wages were kept as low as possible and working conditions were never improved. However, I firmly believe Laissez-faire was an important, albeit horrendous, step in the industrial revolution. Without Laissez-faire, the Industrial Revolution never would of happened and we never would be living in the advanced, technological, world we call home.
In a laissez faire market, the market does not self-correct to prevent the economy from sliding into a deep recession as its proponents suggested. In fact, if the market is left to its own accord, during difficult times the economy will further weaken because manufactures will cut production, which will lead to higher unemployment, which will then lead to less disposable income, which will lead to a drop in consumer consumption, which will lead to a drop in sales and eventually another cut back in manufacturing. This is known as the Multiplier They are constantly advocating for less government in the market place. But to me it appears as if the 1% with 99% of all the money, are simply advocating for themselves. Without government interference they are free to create monopolies, gouge consumers, and sell products that are hazardous to the public.
Laissez fair economics remained popular for many years after their creation during the Enlightenment era. Many governments had seen the benefits of allowing their people to govern their own economic policies business grew providing concrete evidence of its effectiveness. The lower tax rates associated with a hands off approach remained popular with the people of any nation as did the increased in personal privacy. Laissez-Fair economics allows the free spread of ideas and the motivation that any man can make his tomorrow better than today. It is this motivation that causes men and women to rise from poverty to head of a multi-billion dollar business. No one will hand this sort of opportunity to you and there will be obstacles but the beauty of such a system is the possibility for growth and self betterment despite where you start from.
There is a solution to the Foreclosure Crisis. I do not propose that this is my own answer, but that it is born out of Love. The love for all my family and friends and the country as a whole is the reason for this proposal. Their fates and indeed the fates of our way of life in America depend on what we do at this time in history. The admiration and love for the foundation on which this country was established is an additional motivating factor. Needless to say we can neither turn our backs on all those who have shed blood and even given their very lives for the principles of our America. To allow this jewel of freedom and prosperity to falter and deteriorate would be the most monumental political plunder ever recorded. We can not afford to blow this opportunity.
The subprime mortgage crisis is an ongoing event that is affecting buyers who purchased homes in the early 2000s. The term subprime mortgage refers to the many home loans taken out during a housing bubble occurring on the US coast, from 2000-2005. The home loans were given at a subprime rate, and have now lead to extensive foreclosures on home loans, and people having to leave their homes because they can not afford the payments. (Chote) The cause and effect of this crisis can be broken down into five major reasons.
Should our economy be run by a doctrine that was made popular by a group of French writers called physiocrats in the mid-1700s? This doctrine is called laissez-faire and it literally means to let or allow to do(The Family Education Network). It is a theory of economic policy which states that government generally should not interfere with decisions made in an open competitive market. These decisions include policies such as setting prices and wages. According to the doctrine of laissez-faire, workers are most productive and a nation's economy functions most efficiently when people can pursue their own economic interest freely. The economy of the United States is no where close to being a laissez-faire system. In fact, government spending and intervention in the economic sector has ballooned. According to the Federal Money Retriever, in 1998 alone, the government spent over $37,733,526,000 in agricultural commodities, loans, marketing, and stabilization. The role of government has grown to a point where the benefits of government intervention are far outweighed by the negative effects on the economy as a whole.
The central thesis of The Wealth of Nations is that capital is best employed for the production and distribution of wealth under conditions of governmental noninterference, or laissez-faire, and free trade. In Smith’s view, the production and exchange of goods can be stimulated, and a consequent rise in the general standard of living attained, only through the efficient operations of private industrial and commercial entrepreneurs acting with a minimum of regulation and control by the governments. To explain this concept of government maintaining laissez-faire attitude toward the commercial endeavors, Smith proclaimed the principle of the “invisible hand”: Every individual in pursuing his or her own good is led, as if by an invisible hand, to achieve the best good for all. Therefore any interference with free competition by government is almost certain to be injurious.
The concept of perfect market allocation of resources was in W. Baumol's (1988,631), view largly theroretical. Baumol believed that economic models relied upon the concept of the invisible hand first discussed by Adam Smith. In these models, the perfectly competetive economy was able to allocate resources efficiently, without the need for market intervention by outside agents, including governments. However, there were significant weaknesses in these models particuarly in the area of ensuring equity of acess, social objectives and in the provision of public goods.
In micro-economics market failure is characterized by resource misallocation and subsequent Pareto inefficiency. Just as the invisible hand falters, so is the case that the unregulated markets are incapable of solving all economic problems. In laissez-faire economy, market models mainly monopolistic, perfect competition and oligopoly are expected to efficiently allocate resources for the “welfare benefit” of the society. However individualistic and selfish private interests divert the public benefits thereby prompting government intervention to correct the imperfection which may lead to disastrous economic impact. Although corrective intervention policies by government may not necessarily address the underlying imperfection induced by private sector inefficiency, it still becomes a necessary remedy to benefit the wider public if private entities are not allocating efficiency. Furthermore, as the largest contributor of the Gross Domestic Product, poor and untimely corrective measures could signal the failure of both the private and public interests. Effectiveness of the policies and mechanisms designed by the state in market intervention are fundamental in correcting any perceived market failure. Intervention however does not guarantee effective remedies expected by the economy and could lead to deeper market failures if the regulations “crowd out” the private sector but is the viable approach to address market failure.
Today, more than ever, there is great debate over politics and which economic system works the best. How needs and wants should be allocated, and who should do the allocating, is one of the most highly debated topics in our current society. Be it communist dictators defending a command economy, free market conservatives defending a market economy, or European liberals defending socialism, everyone has an opinion. While all systems have flaws and merits, it must be decided which system is the best for all citizens. When looking at the financial well being of all citizens, it is clear that market economies fall short on ensuring that the basic needs of all citizens are met.
The world’s economies continue to be divided on how their means of production benefit, supply, enrich, and protect. Many debates and altercations have been a result of disagreements between capitalists and socialists. Socialists believe the government is essential in providing equality for all and the allocation of capital goods. But the strength of capitalism can be attributed to an incentive structure based upon the three P’s: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights.
Within these countries, a large number of the country’s land is owned by a small fraction of the population. These could be owned by strongmen that are within the “in” group of the political power. Or these lands could be owned by the political power themselves as well, such as Brazil. Within Brazil, the top 10% of farmers own 85% of the land. (Duffy) Land reform will allow people the chance to grow their own food which they also could be unable to afford due to a poor economy and other factors. There is currently a movement that is pushing for land reform within Brazil.