An article in the Sunday, March 15 edition of The Birmingham News, entitled “Lots crumble and mud flows”, discusses some of the complications resulting from the plethora of unfinished housing projects that have been put on hold in the current economic crisis. The problems include excessive runoff and mud flows, crumbling roads without a final seal coat, empty houses in various stages of construction, construction debris posing safety hazards, and other various forms of pollution. Curiously, nowhere in the article does its author acknowledge that most of these housing construction projects are the result of a housing bubble. That is to say, too many houses have been built or contracted to be built, and with a combination of excessively high prices and the lack of demand for houses, these unfinished new developments are causing all kinds of unintended consequences to the environment and to the well-being of nearby property owners.
Our supposedly “progressive”, forwarding-thinking leaders in Washington want to stimulate the building of even more housing, and continue the vicious cycle of more inflation and more bubbles. It seems to me, though, that progressives who care about the environment and land conservation should be showing not only a concern for the toll these projects are having on the environment, but also should be considering the positive benefits of a true, free-market approach to housing on the environment.
We first have to call to mind that we do not have a true free-market economy in our country. What we have is a market economy that is distorted by the creation of credit out of thin air by a central bank, which of course is the Federal Reserve. The creation of money and credit out of thin air (as opposed to responsible use of credit through a reliance on savings and proper capital investment), leading to excessively low interest rates, always leads to distortions in the economy that are referred to as bubbles. We are coming out of such a bubble, known to us as the housing bubble. If we had a true, free-market economy without the distortions of a central bank creating credit out of thin air, we would not be having these bubbles. Likewise, we would be suffering a lot less of the kinds of environmental problems and pollution associated with these unfinished projects cited in the Birmingham News article.