Dollars for Dumps
Borrowing from the combined genius of Jonathan Swift and the guy that came up with “Cash for Clunkers,” I would like to make my own modest proposal for “stimulating the economy.” Initially I suggest that we call it “Dollars for Dumps,” but I believe that the clever people who write the legislation to fund this program will devise a more lyrical label.
Following on the heels of the wildly successful “Cash for Clunkers” program, I think we can apply the same concept to solve the “housing problem.” Like the CARS or “Cash for Clunkers” program eliminated wasteful autos, this one would get rid of unwanted, energy consuming, houses, while, at the same time, creating jobs and improving “the environment.” And, although it will require a lot of paperwork in its final form (another plus for the economy), everyone will see the benefit of this program and jump on the bandwagon.
The plan would require that banks destroy houses that they foreclose. In return the government will reimburse them the amount of the outstanding loan.
Think of the benefits:
- Banks will remove “toxic assets” from their balance sheets with no loss of capital.
- Employment will jump in the demolition industry.
- Foreclosures will no longer drag down house prices in effected neighborhoods.
- Cities could turn house sites into parks—also adding to employment and improving the environment.
- Cities would hire more police to keep gangs out of the new parks.
- Eliminating uninhabited houses would reduce neighborhood blight.
- The reduced supply of “distressed” houses on the market would cause house prices to rise.
- Rising prices would allow banks to make the loans they have been reluctant to make during the “housing slump.”
- Government could set up a new regulatory agency to control abuse of this amazing program—also good for employment.
- Builders would soon start to build again—encouraged by rising prices, the result of artificial shortages, and more artificial monetary expansion.
- Rising prices would also generate a new wave of the “wealth effect,” causing consumers to spend money they don’t have, again.
The list of benefits could go on and on. You probably could think of some of your own.
Based on the initial success of this program—an inevitability—Congress could “reform” it into a more permanent program. For example, when you house reaches a predetermined age a demolition crew would show up and tear it down. Then a builder would arrive to rebuild it (just like before or better). During this process you would stay in a swank hotel. And, all this activity would provide a perpetual stimulation to the economy.
And the government would pay for all of it.
Of course, we don’t ask where government gets its money.
