Bulldozers: Cheaper than a bailout, faster, and more fair

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No joke: Wall Street Journal columnist Holman Jenkins suggests that bulldozing vacant homes would be a better government policy than the currently brewing stew of bailouts and tax breaks.

‘Knocking down surplus homes would be the most efficient and equitable way to spend taxpayer dollars,’ he writes. ‘It can proceed experimentally. It can be turned off quickly when the need evaporates. It would not be a lesson to Americans that housing debt is not real debt and need not be repaid. It wouldn’t benefit the most irresponsible lenders and borrowers at the expense of responsible ones. The housing market would still have to hit bottom, but the bottom would be higher (and sooner).’

Even if you think the bulldozer option is too far out there, the column is worth reading for its well-reasoned takedown of the thinking behind a bailout. As Jenkins points out, the only way to structure an effective housing bailout -- if that’s really what you want to do -- is to construct a bailout that saves speculators from bad bets: ‘Behind the fig leaves that will be frantically waving, a lending bailout would be effective in stemming foreclosures and propping up home prices only if taxpayer money were used to put speculators’ housing bets back ‘in the money.’ ‘

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