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And some magazine pieces I find helpful:
Finally, some excerpts of pieces directly keying off news of President Obama’s net neutrality announcement:
But the Internet cannot function as a public utility. First, public utilities don’t serve the public; they serve themselves, usually by maneuvering through Byzantine regulations that they helped craft. Utilities are about tariffs, rate bases, price caps and other chokeholds that kill real price discovery and almost guarantee the misallocation of resources. I would know; I used to work for AT&T in the early 1980s when it was a phone utility. Its past may offer a glimpse of the broadband future. Innovation gets strangled.
Bell Laboratories—owned by AT&T—invented the transistor in 1947, the basic building block of today’s telecommunications and computing. But AT&T was one of the last businesses to use the innovation. Why? Because the company had a 10-year supply of the old technology—vacuum tubes—and waited until they ran out before converting to using AT&T’s own invention. It was much the same with touch-tone dialing, which was invented in 1941 but not rolled out until the 1970s. Though touch-tone was easier to use than rotary-dial phones, and cheaper, AT&T charged $10 a month extra for the service—because the company could. Bell Labs funded a study to decide the size, color and coding of the touch-tone buttons. The study’s director received a report with hundreds of ideas but didn’t like any of them. Instead, he insisted on gray buttons, and just 12 of them.
More utility follies? The first cellphone call was made in St. Louis in 1946 with AT&T’s Mobile Telephone Service, but the company let the innovation wither. It took until 1983 for Motorola to introduce the now comically unwieldy DynaTAC, a cellphone that weighed more than 2 pounds—but that private-sector effort is what ultimately led to today’s 4-ounce iPhone. Oh, and data. I worked in a group at Bell Labs that developed the early 300 and 1200 bit-per-second modems. We wanted to test them by sending data from our Western Electric factory in Illinois to our site in New Jersey. But no luck, because Illinois Bell hadn’t set tariffs for data. We had the technology, but regulators lagged far behind.
If the Internet is reclassified as a utility, online innovation will slow to the same glacial pace that beset AT&T and other utilities, with all the same bad incentives. Research will focus on ways to bill you—as wireless companies do with calling and data plans—rather than new services. Imagine if Uber had to petition the FCC to ask for your location. …
The beauty of competition is that you get network neutrality for free. AT&T cut long-distance rates in the 1980s when MCI and Sprint started competing fiercely. Calling from San Francisco to New York became cheaper than calling from San Francisco to San Jose, because California tariff prices were still highly regulated. The same thing happened to international rates once Skype offered voice and video connections free online. And it is no surprise that AT&T hurried to offer its own gigabit Internet connection in Austin, Texas, as soon as Google Fiber showed up. Now everyone in Austin has access to a fast lane.
If the FCC—an independent regulatory agency—does what the President envisions, the change will represent a stark reversal of decades of deregulatory Internet policy pursued by Congress and FCC commissioners of both political parties. The application of Title II—sometimes called utility or common carrier regulation—would result in value-destroying government oversight of the Internet. Among other damaging effects, broadband Internet would be subject to rate regulation, taxes, and fragmented regulation by state commissions.
Further, many advocates who cheer this announcement have made no secret that their aims stretch beyond economic regulation of the Internet. They also seek government oversight of media, websites, and political speech online. To that end, Title II instantly politicizes the Internet and puts significant power over this dynamic technology in the hands of unelected FCC officials, lobbyists, opportunistic industry players, and well-funded activists. Market participants in Silicon Valley and at technology companies would increasingly rely on their risk-averse regulatory compliance officers instead of their creative engineers and designers. The complex Title II proceedings that ensue will be largely invisible and unintelligible to the public and their representatives in Congress.
Title II reclassification would impose upon a vibrant Internet a legal regime designed in the 1930s to control the old AT&T monopoly. Indeed, the proposed ban on paid prioritization is more stringent than the obligations we once shackled on Ma Bell. The White House’s proposal to homogenize broadband Internet access is inconsistent with an increasingly diverse marketplace and would deprive Americans of countless innovative business models currently proliferating worldwide. Individualized bargaining allows for experimentation and testing of potentially more efficient business models that could get consumers the content and services that they need better than existing practices.
Broadband policies turn upon a host of highly technical issues, in both fixed and wireless markets, that cannot be reduced to political sound bytes. This is why these policy decisions are firmly vested in the hands of an independent agency with the technical expertise to understand the nuances of these policies, insulated from the very political pressure that the White House is attempting to bring to bear on the Commission. There are numerous potentially pro-consumer alternatives to one-size-fits-all broadband access. Whatever rules the Commission ultimately adopts should allow for innovation that provides consumers with the services they desire online, wherever that innovation occurs in the Internet ecosystem.
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One message from the midterm exit polls is that Americans are skeptical of government. A clear majority, 54%-41%, say government “is doing too many things better left to businesses and individuals.” And a whopping 79% trust Washington to do what’s right “only some of the time or never.” In that context, President Obama’s decision to push for strong and unprecedented internet regulation looks particularly ill timed. From Reuters:
U.S. President Barack Obama asked the Federal Communications Commission on Monday to set the ‘strongest possible rules’ to protect net neutrality as agency writes new Internet traffic regulations. In a statement, President Obama outlined a plan that he hopes the FCC will implement to keep the internet open and free.
“I believe the FCC should create a new set of rules protecting net neutrality and ensuring that neither the cable company nor the phone company will be able to act as a gatekeeper, restricting what you can do or see online,” President Obama wrote. Obama urged the FCC to prohibit so-called paid prioritization, deals in which content providers would pay Internet companies to ensure smooth delivery of traffic. He also asked the FCC to stop the practice of ‘throttling’—when internet service providers intentionally slow down some content while speeding up others.
The internet is the ultimate free enterprise zone. Do we want internet-driven innovation to be choked by cronyism? As Reihan Salam and Patrick Ruffini write in a 2012 collection of technology policy essays, “For now, the internet represents the great exception to the rising tide of state-guided capitalism, in which the government favors politically connected firms and industries.”
Net neutrality would begin to change all that by having Washington pick winners and losers. AEI’s Jeffrey Eisenach: “For all the arcane talk about “Title II” and “common carriage,” this is not complicated. The rules favored by net neutrality advocates would ban or restrict payments from one type of business – “edge providers” – to another type of business – broadband ISPs – while placing no limits on what ISPs charge consumers.” In a strictly net neutral world where prices were fixed at, essentially, zero, the operators would pay — before passing costs along to consumers.
Like many public policy debates, underneath the high-minded rhetoric – “Keep the internet free and open, man!” – is a simple economic question: who pays? For instance: as YouTube and Netflix traffic grows and gobbles up more and more bandwidth, who should pay for equipment upgrades and expansion by internet service providers? Venture capitalist Marc Andreessen puts it this way: “Suppose Netflix traffic grows 3x? 10x? 100x? Would Comcast still have to eat the cost of back-end connections all on its own? Strict net neutrality would kill investment in infrastructure, limit the future of what broadband can deliver.”
Keep in mind that the Obama plan would give the FCC, according to R Street’s Steven Titich, “the widest range of alternatives for economic and technological regulation of broadband.” And, of course, make the agency an even more attractive target for the lobbying class. Indeed, as George Anders writers in MIT Technology Review, “It’s worth noting that much of the lobbying in favor of net neutrality is coming from large, publicly traded companies that make momentary allusions to the well-being of garage-type startups but are mainly focused on disputes that apply to the Internet’s biggest players.”
All this, then, just to lock in “net neutrality” – a situation that does not exist and never existed — despite the risk of limiting new investment and innovation, Obama wants the FCC to treat the internet like a public utility. But the Obama proposal is based on flawed model of how the internet operates. Half of the internet’s traffic comes from just 30 content providers such as Google and Facebook. And they’ve already made special arrangements by plugging directly into the ISPs. “Fast lanes” already exist. Again, R Street’s Titch: “There’s nothing about network neutrality to “preserve.” A regulation that pretends there is would serve to remove an economic incentive needed to ensure that broadband infrastructure is sufficiently robust to support the demands contemporary applications have placed on it.”
The internet needs to remain a place of “permissionless innovation” where market incentives are not distorted by government. The internet needs more competition. Andreesen: “Imagine there are five competitors to every home for broadband: telcos, cable, Google Fiber, mobile carriers and unlicensed spectrum. In that world, net neutrality is a much less central issue, because if you’ve got competition, if one of your providers started to screw with you, you’d just switch to another one of your providers.” Less government is the answer here, not more government. R Street:
Perhaps the ideal solution is being missed because it is so obvious. Reduce or repeal taxes, eliminate outdated regulations and bureaucracy, and broadband investment will increase. Competitors will be willing to enter a market against entrenched incumbents. Incumbents will raise investment.
Google Fiber makes a great case for revisiting the decades-old tax and regulatory structures that may have worked in the monopoly era, but are counterproductive now. To lure Google, cities are waiving long-cherished revenue mechanisms. At some level, they understand the economic gain from greater broadband exceeds the loss from these obsolete models.
But what’s good for Google is good for everyone—incumbent and newcomer alike. Furthermore, research shows that states and cities who took initiative to reform franchise fees, reduce taxes and streamline construction and permitting processes saw better outcomes in terms of broadband growth. A multi-million dollar municipal system is not necessary for universal broadband. The private sector is well-positioned to do the job. All it needs is the right climate for investment. That includes a local government willing to do its best to work with prevailing market forces, not against them.
I don’t want Washington regulating the internet and quashing its dynamism, and I don’t want just one or two choices for internet access. This from Brent Skorup of Mercatus sums things up nicely:
Designating ISPs as telecommunications providers subject to Title II regulations would contradict the intention of Congress that the Internet remain free from regulatory burdens. As the FCC rapidly moves away from common carrier regulatory models of networks, net neutrality supporters are trying to drag large parts of the dynamic Internet under a rigid regulatory rubric. Mandating Title II obligations for ISPs would be legally unsound because ISPs do not hold themselves out as common carriers. Further, Title II risks harming consumers and competition with neutrality mandates.
The Internet has never been neutral, and priority traffic management has been used for years. “Fast lanes” benefit consumers every day, and restricting their use would stymie future innovations and competition. The FCC also cannot ignore the undesirable ancillary effects of Title II, namely, the increased risk of greater ITU and foreign regulation of the global Internet.
The Internet and mobile broadband industries are one of a few bright spots in the US economy and a source of global freedom of expression. Given all the legal and economic uncertainties, the FCC should exercise regulatory humility and permit markets and innovation to continue to operate in broadband unimpeded.
The US job market is healing. The 214,000 net new jobs created in October mean the economy has produced 200,000 or more new net jobs for nine-straight months, the longest such streak since 1995. And the 1.4%-point decline in the unemployment rate over the past year is the fastest such decline since the early 1980s, according to JPMorgan.
So good news on the job front, not that it seemed to help Democrats. Voters were in a bad mood. According to midterm exit polls, 65% said the country was “seriously” off track, 79% were “very” (38%) or “somewhat” (41%) worried about the economy’s direction over the next year, and 70% said the economy was “not so good” or “poor.”
Here’s the problem, as IHS Global Insight put it: “‘Jobs’ isn’t really this issue. It’s ‘good’ jobs, and improved pay for those already punching the clock.” Wage growth is barely beating inflation. Although job growth has picked up, there remains, according to IHS, “a bias toward creating lower-paid jobs [with] nearly one new job in eight created in the past year … in the leisure and hospitality sector.” Real median household income — at least as measured by the US Commerce Department in the above chart — is lower today than in 2007. American workers are living “secular stagnation.”
In a 2013 Wired magazine interview, business guru Clayton Christensen offered his take why the recovery has been so bad for the 99.9%:
It looks like the economy is emerging from the recession in an exciting way, but we’re not creating more jobs or income for the average person. And in all humility, I think I articulated a simple model that explains why. The bad actors are business school professors like me who have been teaching people what I call the Doctrine of New Finance. We’ve encouraged managers to measure profitability based on a return on net assets, or return on capital employed. That encourages companies to liberate their capital, so they invest in efficiency innovations, which means they can make more money with fewer resources.
But what the economy ultimately needs are empowering innovations—like the Model T, the transistor radio. Empowering innovations require long-term investments, which tie up capital for years and years. So companies are using capital to create more capital, and consequently the world is awash in capital but the innovations we need to advance aren’t there. …
I believe solutions exist. The government can’t dictate, “Oh, that’s an empowering innovation and that’s not.” But what government can do is create tax rates that transform what I call migratory capital into productive capital. Migratory capital flows to investments that will maximize the speed with which it can then be withdrawn, which plays to the doctrine of new finance. Productive capital wants to stay on the job and not go truant after 366 days. .. The idea would be to peg a tax rate to the length of time the capital is deployed. The longer the capital is invested, the lower rate it’s taxed at, until it gradually approaches zero and maybe goes negative.
Yeah, tax rates still matter. And Christensen has also since suggested that executive pay structure may be playing a role. To that, I will add the alarming decline in high-impact entrepreneurship, which means less innovation for the economy and less competition for incumbents. So is anyone in Washington offering an agenda to directly deal with these problems?
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The 2016 Republican presidential nominee should probably talk more about education than business tax cuts, at least if he or she wants to occupy the Oval Office. Mitt Romney’s 59-point economic plan from 2012 mentioned “college” just once and “higher education” not at all. (Pretty sure folks know the GOP is the business tax cut party.) Here are a few suggestions from Ramesh Ponnuru and Yuval Levin in the WaPo to deal with higher ed’s “higher costs, lower value, growing debt and lack of better alternatives”:
1.) To improve incentives in the student loan system, conservative reformers should place limits on currently unlimited PLUS loans for parents and graduate students, and, as the American Enterprise Institute’s Andrew Kelly has argued, require colleges to pay back a percentage of any loans on which their graduates default — giving schools more of a stake in their students’ futures. They should also create the legal space for new student-aid arrangements, including income-share agreements, by which private institutions or individuals fund a student’s education in return for a fixed share of his or her income for some period following graduation.
2.) To ease the entry of new competitors into higher education, conservatives should allow states to experiment with approaches to accreditation that look beyond the standard brick-and-mortar campus and allow credit hours to be pursued more flexibly. Sens. Mike Lee (R-Utah) and Marco Rubio (R-Fla.) have each offered promising approaches to this problem, allowing students (including those with federal loans) to accumulate credits in new and cheaper ways, using competition to put downward pressure on the cost of higher education more generally.
3.) Conservatives should also clear the way for professional certificates, apprenticeships and other paths to gaining skills for well-paid employment that do not require a college degree.4.) And finally, conservatives should help make the data the federal government possesses about the value of different degrees more available to students and parents. A federal law barring the merging of student loan records with wage and employment information should be repealed, and families should have access at least to graduation and expected-earnings data broken down by degree program. Rubio and Sen. Ron Wyden (D-Ore.) have proposed legislation along these lines.
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In our last annual check-up of the U.S. economy, we project future potential growth at only 2 percent in the coming years—a significant step down from the average potential growth rate of over 3 percent that we have seen over the past one or two decades.
So what’s going on? Two main sources for this weaker outlook: a slower expansion of the labor force and a slowdown in productivity. … Containing the decline in potential growth depends crucially on the will of the U.S. administration and Congress to adopt a policy agenda that encourages productive investment and innovation, reverses the downswing in productivity growth, and boosts the labor supply.
Our “Top Five” list to achieve that goal includes:
- Infrastructure investment to reverse the downward trend in both the quantity and quality of the public capital stock in the United States.
- Tax reform to simplify the code, broaden the base, and lower marginal rates—particularly for the corporate income tax.
- Encourage innovation and improve education outcomes by reinstating the research and development tax credit, promoting and funding early childhood education, and providing greater support to science, technology, engineering, and math programs.
- A comprehensive, skills-based immigration reform to ensure that the U.S. maintains a work force that meets employers’ needs for highly-skilled, educated, and innovative workers.
- Active labor market policies that improve training programs, provide more effective job search assistance, improve family benefits (including childcare assistance), expand the Earned Income Tax Credit to younger workers so as to encourage work, modify the disability insurance program to ensure that those working part time do not lose their benefits, and provide incentives to those that hire the long-term unemployed.
Many of these policies come with a price tag—with the notable exception of immigration reform, which would likely reduce fiscal deficits modestly. However, the overall costs are not that large—we estimate around ⅓ percent of GDP per year for the next 2–3 years. However, part of this fiscal cost would be offset by the faster growth that results from these policies. Ideally, these measures should be taken in conjunction with a broader and much-needed medium-term fiscal consolidation plan.
I don’t agree with everything but this is not a terrible list. And actually, the sharp decline in the budget deficit makes this a lot more doable then when it was at 10%. I think where it undershoots is regulatory reform — including finance, energy, and intellectual property — and entitlement reform, which is bringing a deluge of debt in coming years. But not bad, Dr. Igan.
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In my new The Week column, I outline a number of possible Obama-Republican compromises on issues such as corporate tax reform, infrastructure spending, and expanding the Earned Income Tax Credit. In his own column, Glenn Hubbard — Bush II economist, Romney campaign economic adviser, and Columbia business school dean — hits many of the same themes. His bit on infrastructure is particularly interesting since GOPers have been so down on the idea:
Federal infrastructure spending and corporate-tax reform should top the list of policies capable of attracting bipartisan agreement, because they promise significant long-term productivity, income, and employment gains, while also supporting short-term growth. A commitment to a multi-year federal infrastructure-spending program, for example, could increase demand, private investment, and employment, even though projects may not be immediately available. And such a program, normally proposed by Democrats, can and should be crafted to secure Republican support as well.
To that end, an infrastructure program should give states and localities a key role in selecting the projects to be funded, and these governmental units should have “skin in the game” by funding part of the costs. Policymakers should also give serious consideration to regulatory reforms that would reduce the expense of new projects and assure their timely completion.
An infrastructure program oriented in this way – as opposed to a grab bag of politically expedient shovel-ready projects – should be able to muster conservative support. And, done properly, federally funded infrastructure projects should provide substantial benefits to lower-income Americans. Better transport infrastructure, for example, would not only create jobs, but would also reduce the costs of commuting to work.
Moreover, any increase in spending on infrastructure or any revenue loss from tax reform should be offset elsewhere. For example, future growth in Social Security benefits or the home-mortgage-interest tax deduction could be scaled back for more affluent individuals, as progressive indexation, proposed by conservatives in the US, and the adjustment of mortgage-interest tax deductions in the United Kingdom, started during the Thatcher administration, attest.
Hey, I had the bit about means testing in my piece, too! Again, there is room for compromise and progress if Washington has an interest.
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The positives in the October employment report are worth pointing out. With 214,000 net new payrolls last month, the US economy has now scored 9-straight months of 200,000-plus job growth. The unemployment rate fell to 5.8%, its lowest level since July 2008. That, despite a 416,000 increase in the size of the labor force (which was countered by a 683,000 rise in employment in the household survey). The labor force participation rate was up, the employment rate was up (see above chart), the underemployment rate down. Good stuff all around.
Not so good was take-home pay. Where is the wage growth? Average hourly earnings for all employees on private nonfarm payrolls rose by just 3 cents to $24.57 , meaning that over the year earnings have risen by just 2.0%, barely above inflation. And as economist Douglas Holtz-Eakin pointed out in a morning note. “October in isolation was even weaker, with growth at 1.5 percent annually.” Barclays put it this way, “Earnings were the soft spot in the October employment report.” As this chart illustrates, it is hard to call this a “recovery” when wages are going nowhere:
As I have written before, these numbers at least hint that the US economy might be moving further into an automation-driven, “average is over” scenario where the labor market splits between high-skill, high-wage jobs and low-skill, low-wage jobs — with the latter seeing little wage growth despite GDP growth. Of course, I would sure love to see much higher GDP growth and observe what happens. This IHS Global Insight analysis gets at this issue:
Looking at the establishment survey, a bias toward creating lower-paid jobs still exists. No doubt, this is at least partially linked to the surge in teenage employment. The leisure and hospitality sector gained 52,000 employees – nearly a quarter of the monthly total. Of these, 41,800 jobs were in restaurants and bars. Most of the remaining jobs can be traced to the “amusements, gambling and recreation” sector. It’s theoretically possible to trace the recent decline in gasoline prices and the money saved at the pump to increased spending and employment in these areas, but it is unlikely that most employers could react so quickly to hire additional workers in reaction to changing spending patterns. The leisure and hospitality sector has generated 319,200 jobs over the past year, so October’s gains are consistent with this trend. Nearly one new job in eight created in the past year has been in the leisure and hospitality sector.This jobs mix issue remains an important factor in average hourly earnings growth remaining stuck at 2.0% (on a year/year basis). “Jobs” isn’t really this issue. It’s “good” jobs, and improved pay for those already punching the clock. The recent third quarter productivity data showed output/hour increasing at a 2.0% annual rate in the nonfarm business sector. Business investment to spur productivity can allow for this faster wage growth without triggering inflation worries.
The continued weak wage numbers may also shed some light on the midterm election results. Here is what Democratic Pollster Celinda Lake told The Washington Post: “We have a huge problem: People do not think the recovery has affected them, and this is particularly true of blue collar white voters. What is the Democratic economic platform for guaranteeing a chance at prosperity for everyone? Voters can’t articulate it. In the absence of that, you vote for change.” Voters may agree with Democrats on issues like the minimum wage or universal preschool, but they may also view these policies as woefully insufficient when dealing with the magnitude of the challenges facing America. An economy with almost no wage growth in a decade is certainty one big challenge.
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Yesterday, AEI’s Jim Pethokoukis appeared on CNBC’s “Closing Bell” to talk about the GOP’s Senate victory and what it means for American innovation, the middle class, and inequality. Watch the clip to hear his thoughts.
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The GOP has now taken control of Congress. In his column today for The Week, Jim Pethokoukis puts together a list of “3 deals Obama and the GOP should make in the post-midterm world.” After all, “just because another two years of unproductive trench warfare is the most likely result doesn’t mean all hope should be abandoned.”
1.) Job creation: Work together to create good-paying jobs through the public investment Democrats want and the business tax reform Republicans want. According to a Third Way proposal, Democrats could boost spending on public investments — including infrastructure and worker-training programs — by $400 billion over 10 years, creating jobs on all these projects. Meanwhile Republicans could cut the uncompetitive US corporate tax rate — the highest among advanced economies — from 35% to 31%, allowing businesses to hire more freely.
This would also require Democrats to find savings in mandatory spending programs, and Republicans to limit itemized deductions to $50,000 for couples making over $250,000.
2.) Improving working-class incomes: While Obama wants to raise the federal minimum wage, Republicans don’t want to raise it all. Consider meeting in the middle: raise it to $8.50 an hour. You could even index it for inflation from that level going forward. And expand the EITC for low-income workers.
Additionally, Democrats would have to accept pro-work reform of the Social Security disability program. Letting SSDI recipients of prime working age keep some of their benefits if they find a job could help nudge them back into the labor force. Greater effort to help the long-term jobless through relocation subsidies or work-share programs could reduce the incentive to seek the SSDI option.
3.) An energy deal: Obama could approve the Keystone XL pipeline to bring Canadian crude oil to refineries on the American Gulf Coast. This would solidify America’s energy partnership with Canada and create thousands of high-wage manufacturing and construction jobs. The GOP, in return, could approve more funding for basic clean energy research.
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Everybody makes mistakes. You, me, nations that are supposed to be the last best hope of Earth. But we are to learn from those mistakes, yes? At the very least, we are not to repeat them pretty much the next day. But here we go again. After the Financial Crisis, Rep. Barney Frank conceded, “It was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.” Now this, via the Chicago Tribune:
Fannie Mae and Freddie Mac are close to allowing consumers to buy a home with as little as a 3 percent down payment and still have the mortgages backed by the two agencies. More details are expected to be announced in coming weeks, but the move from a 5 percent down payment could increase the ability of creditworthy but cash–strapped consumers to become homeowners and help a faltering housing market regain its traction.
And this, via The Economist:
This week a consortium of federal agencies also announced new standards that would permit banks to securitise and sell mortgages without retaining a 5% stake—leaving them little incentive to maintain high lending standards. In 2011 these agencies had suggested that such securities should only include mortgages with a minimum deposit of 20% and monthly repayments of no more than 35% of the borrower’s income. In the end they raised the loan-to-income ratio to 43% and dropped the minimum deposit entirely. The reason for the weaker standard, they said, was the concern that “additional constraints on mortgage-credit availability” might “disproportionately affect LMI (low-to-moderate-income), minority or first-time homebuyers.”
Two things are going on here. First, you have a classic example of crony capitalism where government picks winners, in this case, notes AEI’s Peter Wallison, “real estate agents and home builders, who want to increase borrowing and sell ever-larger and more expensive homes.”
Second, you have left-liberals again, as I have written, “trying to stream the welfare state through the housing market via government subsidized and enabled mortgage credit.” Social scientist Monica Prasad has termed this approach “mortgage Keynesianism.” And the new Obama-appointed head of the Federal Housing Finance Authority, Mel Watt, seems to be a big believer in this approach. Look, if we think getting more low-income people into homes is important, a better way than loosening lending standards might be a new sort of fixed-rate, 15-year loans that build equity much faster than a 30-year mortgage.