Silly Little Country

Are they even well-intentioned? They are at best ill-informed

I was watching our Parliamentarians today again, in the misinformed belief that the latest gay marriage vote had not happened; it had, and more on that in a later post.
What I did get was an extraordinary ill-informed performance from Olivia Chow, which was also revealing of how knee-jerk NDP policy formulations are frequently an enormous disservice to those they claim to be trying to help.
Her concern was what seemed to be a Conservative proposal to ALLOW private competition in mortgage insurance. I do recall that when I bought my first home and was not really very rich, part of the deal was paying some extra percentage on the mortgage to Canada Mortgage and Housing Corporation (CMHC) - it was likely a quarter percent or so, and it had to do with covering risk that I might default. I had no idea whether this was reasonable - only one vendor was suggested. Interestingly, the insurance vendor was a government Crown Corpotation.
For reasons to become clearer below, I will admit to embarrasssment that I know rather little about this program, and know only that the mortgage vendor made me do it. Well, fine, it did not seem like much.
Stage one in Olivia Chow's outrage was that CMHC had built an enormous surplus on this mortgage insurance program. So I thought to myself, "How can this be?" And the answer was clear, as she reported her concern that the current government was thinking of opening up the market, and not allowing CMHC its current monopoly in this business. Did I hear it right? But the legislated monopoly explained the ridiculous surplus. (Not that Chow got that.)
So Chow sort of seemed to be objecting to this great surplus. Well, and good for her! After all, this surplus was being accumulated on the backs of those whose financial institutions were forcing them, with the connivance of Canadian law, to pay whatever the monopoly provider of this service felt like charging. And who are those people? - the dodgiest borrowers, that is, the poorest. Compared with what they would all have payed in a competitive market, it was the poorest of borrowers carrying significant extra charges.
The simplest solution to this problem would be to drop the state monopoly on this insurance - this would quickly drive the insurance costs down to what the real costs are. Let me ask you all to go read Tim Harford again on the subject of the honesty that pricing can deliver.
But is that what Chow wanted? My question is rhetorical of course; the woman has not a whit of public policy intelligence, any more than her husband who drove Paul Summerfield to Bob Rae.
No, what she wants is to use the surplus to support, among other things, co-operative housing. Now this is fascinating. The Jack Layton Wikipedia entry describes nicely why this is so deliciously funny - and it is quite likely they did no wrong - but, as someone who was very dear to me and knew an awful LOT about CMHC policy once said. "Co-operative housing is one of the great programmes siphoning funds from the poor to the middle class."
And it is one of MANY. Another dandy is subsidized University education. It is amazing how none of the people I know, friends, have not managed to avail themselves of this state subsidy.
Another one is Andy Barrie. I know lots of people who listen to CBC Radio. Amazingly we are all pretty wealthy; we don't have to suffer ads much (we do suffer Andy Barrie, as good as he is at times), because we are making the rest of the country, through our laws, subsidize our tastes (I particularly love the funding of CBC Radio Two, which I love - does it hit even 2% of the population?). My poorer friends listen to private radio. Our government not simply fails to fund them, but funds a competitor to make them even more vulnerable to external control. So I thank them for saving me from paying to keep the CBC going, but despair on the public policy front.
And I despair even more as I watch our supposed defenders of the poor continue to entrench privilege. And of course, they who are doing it are not poor, but, like me, privileged.

posted by Alan Adamson @ 6:30 PM