Question: What is your solution to the foreclosure problem in the U.S.?
Answer: I do not support the concept of allowing people who could not afford a house to be subsidized to stay in the house as owners. Nevertheless, houses should not remain vacant for long periods of time simply because of physical deterioration issues. One solution would be to have the owners who upside down give the lender a deed in lieu of foreclosure, and then remain in the house as renters with a contract to buy. Realistically, it will probably take five years or more for the market value to catch up or come close to the value of the property. The rent should be based on the current market for rental of similar properties in the area. If the current upside down owner cannot pay market rent for the property then the lender should foreclose and place the property on the market for sale or rent. And let us get back to some personal finance fundamentals. Generally, a person should not pay more than about 38 percent of his or her income for mortgage or rent payments. Otherwise, it is a setup for failure.
Q. What do you think of the Solyndra case?
A. Loan programs, grants and other types of subsidies to certain types of companies are nothing new. In this case, Solyndra filed for bankruptcy not long after receiving $535 million in low-interest loans for the company. Political favors, bad investment and poor judgment aside, the thing that is downright scandalous to me about this case is that taxpayers were moved from a first to a second position after the loan was restructured. Hopefully, the investigators will not discount that aspect of what happened.
Q. Are you a Mac or a PC?
A. I am a Mac in a PC world. The computer supplied by my employer is a PC, but my personal choice is a Mac. After my MacBook was recently stolen I replaced it with an iPad. I can see why the iPad has the highest consumer satisfaction rating of any consumer product ever sold. If I could afford it I would buy a MacBook Air as my primary computer. By the way, I wrote this column on my iPad, using Pages software, emailed to my PC, and then did the final editing using MS Word. Not very efficient.
Q. How can you live in Jackson?
A. This is a question asked of me by Mississippians who live in other towns. They see Jackson as a crime-ridden city. It is no wonder. The local news seems to always feature crime reports. Jackson is a relatively big city so there are some wonderful and not-so-wonderful neighborhoods. Fortunately, I live in a wonderful one. I cherish the diversity and cultural opportunities available in Jackson. It is also comforting to know that I am in a city where there are world-class medical facilities. I also enjoy the convenience. It is a 10-minute drive to my office and a four-minute drive to the grocery store.
Q. Do you really drive a red sports car?
A. Yes. One reason this question gets asked is because of an exercise that I do at retreats. I ask people to guess whether I drive a Ford 150, a new Buick Lucerne or a Nissan 350z. Typically, 45 percent will guess the truck, 45 percent will guess the Buick and one guy always guesses the Z just because he thinks I am trying to pull a fast one. It’s not a mid-life crisis. I’ve always driven sporty cars. I just enjoy driving. The reason that I ask this question is to demonstrate that people make instant assumptions about other people. A good discussion always follows. Obviously, I do not look like the sports car type.
Q. What is the future of Mississippi?
A. If we do not change our culture, it is not good. I was glad to see the state economist bring up that subject at a recent economic outlook conference. Look at the trends. We are making little progress relative to other states. We have had out-migration during the past 10 years. We are afraid to say that poor people, especially poor teenagers, should stop having babies. Instead, we try to help them. That is certainly not a bad thing, but it seems we focus on the cure instead of the prevention. Stop and think about it. We are perfectly positioned for the society that we have in Mississippi. We do not value reading for example. Maybe I should say education. I hope others will take up the charge to change our culture. I do see optimism in what the Mississippi Economic Council and its Blueprint Mississippi is doing. It is critical to Mississippi’s future.
Q. Are you an economist?
A. No. I am just interested in the subject. Being in the economic development arena I think that it is critical for people to understand their local economies, i.e. where their money comes from and where it goes.
Phil Hardwick is coordinator of capacity development at the John C. Stennis Institute of Government. Contact Hardwick at email@example.com.