Interventions into the market are always and everywhere a form of specific welfare, not general welfare. Not everyone will have a chance to partake of the benefits of this program–if they did, the program wouldn’t work. It relies on the fact that everybody pays for it, but only a few take advantage of it. Additionally, it benefits the banks involved and the home improvement contractors, but does nothing for the grocer, the restaurant owner, the retailer, the engineer, or the machinist. This is blatant, coercive transfer of property from some individuals to other individuals, a practice that is easily recognized as criminal and immoral when perpetrated by anyone except government.

Secondly, it doesn’t work. Home improvement, along with most things the government subsidizes, is not investment in capital goods that will be productive and turn a profit, but is instead consumption. Building an addition on your house does not increase productive capacity; it consumes valuable resources.

Even if consuming valuable resources was somehow good for the economy, the government has no way of knowing, at any given time, which are the best resources to consume, what are the best projects on which to consume them, or at what prices they ought to be purchased. All the bureaucrats in the world would not be sufficient to collect and analyze all of the data. The only computing machinery fast, complex, and nimble enough to compute this data correctly is the vast, distributed network of independent actors making myriad decisions in their own best interest–the free market.

The most glaring evidence of this is the very fact that what the government is choosing to subsidize is the housing market! The housing market is the last thing on earth that needs any subsidizing. The bust we are experiencing now is the result of a decade of reckless subsidization of the housing market. The problems we’re seeing today are a result of the fact that far too many valuable resources have been diverted into the housing market, and, because we live in a finite world of real scarcity, this means that these resources have not been available for other industries that have not enjoyed the same special favor.

If it were the mafia extracting protection money from everyone in town, spending it all as they saw fit, and then extolling the virtues of the new workers employed, the businesses they patronized, and the increased protection-money revenue, everyone would recognize the patent ridiculousness of their claims and the fact that the gig was a racket. Why don’t we see it when we elect the mafia bosses?

My theory is that the paper was out to dumb your letter down.

I don’t necessarily mean to defend this particular program, but the general notion is defensible and somewhat common.