I have heard the leading lights of the economics profession speak contemptuously of farm price supports and trade protection for the last three decades. According to these great minds, we would have overhauled our system of agricultural price supports 50 years ago if not for the power of the agricultural lobby. It is easy to use a simple economic model to show the waste and inefficiency of farm programs that keep the price of wheat, corn, and other farm commodities above market-clearing levels.

The same models can also be used to show the foolishness of trade barriers that are designed to protect the jobs of steel workers, textile workers or other manufacturing workers in the United States. That is why all right-thinking people are against such protectionism.

Since such views are so deeply held among mainstream economists, it is hard not to be amused by the support of several leading economists for a program of house price supports.

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There are some folks in Congress who apparently think that the best thing that government can do for low and moderate income families is to impose a special 18 percentage point tax on their income. Of course they don’t call it an income tax, they call it being a homeowner in a home on which families have no equity.

Yep, you guessed it -- this is yet another twist on those wild and crazy bailout schemes that the bankers’ buddies are devising to use government money to buy up their mortgage debt. Prior posts have focused on the money going from ordinary taxpayers to incredibly wealthy investment bankers. This one focuses on how badly these plans screw the moderate income families they are supposed to help.

It’s a simple story. The key fact to remember is the current ratio of sales price to annual rent: 20 to 1.

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