Sunday, September 21, 2008

Philosophy Matters

I'm on a number of mailing lists where the topic of Fannie Mae has been broached. Oddly, people are advocating throwing the baby out with the bath water. That is, they think we are seeing a failure of the market and are calling for government regulation and oversight. Most of these folks probably unfamiliar with root cause analysis because if you apply the 5 whys exercise to this problem, I think it's clear that the cause is government meddling. 

Fannie and Freddie: Socialist from the Start (Cato-at-liberty)
When the Cato Institute was founded in 1977 one of the first things the board of directors did was set a policy that we would not accept government funding. A simple libertarian principle, really, that money forcibly extracted from people who do not agree with our approach to public policy should not have to fund it. For 32 years, that has been our policy. In 1995 I received a letter from John Buckley, a v.p. for communications at Fannie Mae informing me of the good news that Cato was going to receive a $100,000 grant from his institution. I wrote back, Thanks, but no thanks, we have a policy against receiving money from government institutions like Fannie Mae. Boy, did I ever get a nasty letter back from Buckley stating that in no way was Fannie Mae a government entity.

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