Wednesday, June 15, 2011

Your Government at Waste, or Worse.

Oh my goodness, holy cow, and UNBELEIVABLE!!!

You may have noticed that The Hedged Economist starts the day with a review of a few newspapers or new magazines. Today that review brought me up short. It was in the WALL STREET JOURNAL. It was not a story or an opinion piece, although there was an opinion piece focusing on Government waste. It was an ad.

Before you proceed, think about the WSJ’s U.S. audience. Their website says “affluent:” their average household income is $257,100, and average net worth is $2,616.000.

On page D6 of Wednesday’s print edition there’s a half page ad for “FREE” Government assistance in avoiding foreclosure. The ad is brought to you from the U.S. Department of Housing and Urban Development in partnership with the National Fair Housing Alliance. Let me ask: How fair is this effort to reach out to an audience with WSJ’s demographic when entire blocks of some cities are close to foreclosure? Half page WSJ ads aren’t cheap. For those who never inquired, the cost of a WSJ ad could probably keep a lot of people out of foreclosure. If outreach (Government speak for advertising itself) is the issue, a lot of street corner signs in depressed areas could have been bought with the money.

The ad notes that US law prohibits discrimination based on “race, color, religion, national origin, sex, family status or disability.” Do we really want to add wealth to the list of characteristics when it comes to this particular outreach? It’s a waste at least, but maybe worse.

There are alternative, more sinister interpretations. Here’s one suggested to me. Now, we all favor “fair,” and we all abhor the types of discrimination US law prohibits. In this case, one can question the fairness. It seems reasonable to assume that among people with those demographics, foreclosures aren’t real common. Then the logic goes: Is it fair to tax the readers in order to taunt them with an in-your-face ad highlighting that their tax dollars are being used to help others who haven’t paid their mortgages?

Yet another explanation goes as follows: the WSJ reaches the financial service industry. The ad was designed to reassure the financial service industry (especially bankers and investors holding mortgage bank securities) that the Government won’t leave them holding the bag. Let’s face it, no one wants their loans to default, and no one wants to own the foreclosed properties. Why even the people in the foreclosed properties don’t want to pay for them, and in many cases they just want out. If that’s the reason, how anxious do you think the average taxpayer is to pay taxes in order to reassure bankers and investors that taxpayers will bail them out of this mess? Is that reassurance, even if true, worth the cost of the ad? Is that reassurance even desirable? Seems worse than waste.

The opposite explanation also seems reasonable. It goes: the ad was designed to intimidate bankers and mortgage holders who might be thinking about foreclosing: sort of, “not so fast.” “You’ll have to get through us before you can foreclose.” Well, some people might not like big brother trying to intimidate people in order to benefit their particular favorites in a negotiation. We all know Government does it, but perhaps not advertising it might make sense.

A similar explanation is that HUD just wanted to reassure the public that they’re working on the foreclosure issue. If that’s the case, the ad is just stupid. Anyone who reads the WSJ or listens to the news knows they’re working on it. They probably also know how incredibly ineffective they have been. The ad will just create the impression they are failing because they are wasting money. We all know governments sometime waste money, but paying for an ad to demonstrate waste is downright weird.

Not the sharpest arrow in the quiver was another explanation. Perhaps so, but this seems to be more than just a run-of-the-mill mistake. Another is an ego trip. Bragging rights for big spread ads in the WSJ are often the motivation. The Hedged Economist’s take: big spread ads in the WSJ are often a sign that someone has too much money. That's especially when it's somone else money.

In any case, ‘tis a quandary. Perhaps Congress ought to ask HUD what it was thinking. While a WSJ ad is expensive in most individual’s terms, it is chicken feed in Government waste terms. So, more than an inquiry probably isn’t warranted.

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