The failure, and harm, of simpleton answers to complex problems is well illustrated here with this post -- New Frames: Peak-oil and Measure 37

My quick rebuttal goes something like the following:

Just cut any and all mortgage subsidies above say 100,000 in home value, at roughly 3 to 4 times the median pay for non-governmental workers.

Suburbia has sprung up from a philosophic treatment of homes as an investment, one that does not follow economic principals, more so than through artificially cheap oil.

A bank can consider the sale price of a home as the definition of the value of the home as collateral for a mortgaged backed loan. They do not need to make an immediate adjustment to reflect an increase in the interest rates that translates into an immediate reduction in purchasing power for local folks and a corresponding decrease in real home values (or potential future sale price). It is a gross error to view the modern urban-renewal stuff as anything other than a price support mechanism for the benefit of bankers, against the local folk's desire for a market driven home price that is free from the injection of federal printing press dollars.

This country bumpkin witnessed the decline of the farm-associated enterprises 30 years ago, around the time of SB 100. While I initially set out to take Agricultural and Resource Economics it soon became clear, even to this idiot, that farming as a means to raise a family was dead. The notion of farming is a dreamy kind of thing can only live in the minds of folks who have not studied it from an economic perspective.

If I could drive an old International pick-up or GMC flatbed into Gresham to deliver berries or broccoli and get enough money to cover the cost of fertilizer, and perhaps some water, and labor . . . and just break even, it would be a miracle. Pests and bad weather are bad enough, but the financial market, the one that has converted housing into an investment for the extraction of interest payments and as an artificial tax base from which to tax for the benefit of others, has added a new and final blow to subsistence farming.

I have looked at this thing from every angle I could. My analytical tools are aided by lots of developmental economics courses. I attempted to write on Urban Reserves some fifteen years ago as part of my land use seminar class. I was too “folksy” in my review. Well, yes, my perspective was that of a folksy kind of person . . . perhaps it was not clouded by artificial and inaccurate beliefs that well-intentioned dreamers have built into their minds.

The poor farmer is being portrayed as an evil villain in this sordid tale of Measure 37. I am in my forties and childless and still hold a desire to go quietly farm and raise a family; but I carry a huge student loan debt for my efforts to pretend to be smart enough to become a good lawyer, the door to farming had already been slammed shut and I had to try to do something else.

When folks like Rex Burkholder (from metro) start barking out plans to try to capture the increase in value of farm land that gets put to higher and better use I could just puke with disgust. There are like two parallel economic worlds. The farmer has been left behind in the inflationary blast in home prices and medical costs that make the next generation of farmers, at least those who would like to farm, look like a modern day transient. They, the class of persons experienced in the art of farming, are financially powerless to withstand the march of economic progress, or at least what passes as the the assumed benefit of progress by those folks with a large number of voters who are driven by populist demands.

If you want to stop sprawl do not blame oil. If you want to stop sprawl do not blame Measure 37. If you want to stop sprawl then stop the home price pyramid that starts with concepts like “first time home buyer” and “starter home” that are premised on the presumed inflation of the price such that a person can leapfrog, with their asset inflation equity, into a larger home in suburbia. Capping home mortgage assistance from Greenspan style money, and ending the federal reserves' tolerance for crazy derivatives on home mortgage backed securities, will go a very long way toward halting the attack on farm land. It is a solution that is so close to home (pun intended) and the pocket book's of middle america (a home as risk free investment) that it is just too obvious to see as the cause of the loss of farm land.

If idiocy were looked upon as a resource itself then one is free to look upon the net outflow of interest payments on overpriced homes as pegged to a sustainable yield of roughly one-third of the populations' wage income, notwithstanding any fluctuation in home prices. The loss of farmland is just a secondary consequence, and it cannot be blamed on the farmers that stand in the way of progress, at least as progress is defined by some folks.

Artificial asset inflation, in an even larger sense, is incompatible with both capitalism and a sustainable economy. Of course, one would need to go re-examine original economic arguments favoring modern monetary policy that date back nearly a hundred years, or more, to begin to describe today's economic problems. Yet that would leave most readers even more puzzled than they might already be from this post as it is.

Would any local politician openly end the price support scheme for home prices? Not likely. (Oh! . . and yes, that would be viewed as harmful to school finance, which is dependent upon the belief in the realness of artificially inflated home values for tax purposes. Measure 5 contains a component, just as with banks, that prohibits the reduction in appraisal value on property that might have been boosted during any economic cycle for whatever reason, even urban-renewal.)