But the failure of Fannie Mae and Freddie Mac is hardly an indictment of the free market: Fannie and Freddie are “Government-Sponsored Enterprises,” not products of the free market or the private sector.

Moreover, mortgage lending is not exactly an unregulated, free market. Just a few days ago, Pearlstein himself admitted in his column that federal affordable-housing mandates deserved a “good chunk of the responsibility” for the Fannie and Freddie failures that he now blames on the free market. (Earlier, we noted that federal regulations promoting “affordable housing” and “diversity” helped cause the real estate bubble and the mortgage crisis).

You don’t have to be a right-winger to see that government regulation caused, rather than mitigated, the mortgage crisis. An August 5 article in the liberal Village Voice explains how Clinton’s Secretary for Housing and Urban Development, Andrew Cuomo helped pave the way for the mortgage meltdown by ratcheting up federal affordable-housing mandates. Cuomo and HUD forced Fannie and Freddie to buy more sub-prime morgages, as part of Cuomo’s crusade to increase the number of minority homeowners. Now, of course, the crusade has backfired. Many minority homeowners have suffered financially as a result of recent falls in home value that wiped out their homeowners’ equity — a fall that resulted from buying homes during a mortgage bubble fueled by HUD’s pressure on lenders to make risky, high-interest loans to people with little savings (many of whom have defaulted, helping to drive lenders into bankruptcy). And they’ve ended up with costly high-interest mortgages in the process. (Ironically, Cuomo, now New York’s attorney general, blames lenders for causing the mortgage crisis through “predatory lending” — lending he helped promote as HUD secretary).

(By the way, if you want to buy the little two bedroom house that I misguidedly purchased during the real estate bubble for its current assessed value — $590,000 — I’d be happy to sell. Why does the federal government consider homeownership such a blessing, and seek to encourage it at every turn? Home prices aren’t as high as they once were, but they are still ridiculously high in many regions, partly due to all the people vying to buy homes in the recent real estate bubble).

Fannie and Freddie may be nominally private, but they enjoy a a host of privileges and immunities typically enjoyed only by governments, and annually cost the taxpayer about $10 billion a year even before the current multibillion dollar bailout, which may cost taxpayers up to $300 billion. Like the Post Office, Fannie and Freddie are exempt from state and local taxes, and sales and property taxes, and some of their officers are selected by the federal government. And they are of governmental origin: Fannie was officially a federal entity for the first 30 years of its existence, and the federal government sponsored the creation of both Fannie and Freddie.

But that fact seems to be lost on both the Washington Post and the New York Times.

Online ads can be annoying. From pop-ups to flash screens, it’s hard to surf the Web for long without encountering a sales pitch for an unwanted product. A world without these ads might be pleasant, of course, but then who would pay for all the original content websites make available?  Advertising explains why we can browse the Internet without pulling out our credit cards at every turn. But New York lawmakers are now considering a bill that would make this scenario a reality, spelling doom for the advertising models that could fuel the Internet’s future.

Irked by pervasive advertising, some consumers see the Wild Wild Web as a realm warranting legislative assurances that all information stays private, hidden beyond the reach of marketers without explicit consent. They prefer that we opt-in, rather than opt-out.  

But an alternative interpretation of the nature of the cyberspace is that any advertiser may legitimately assemble information that has been transmitted on what is clearly a very public network.  

Even Wikipedia, long funded entirely by private donations, may soon have to place ads on its popular encyclopedic entries. All the server farms and fiber optic cables that power today’s Internet are not cheap, and somebody has to pay. Ad revenues indirectly fund many of the network upgrades needed to prepare for the ever-increasing stream of global Web traffic. And since advertisers are expected to tighten their belts as the global economy slows down, effective advertising models are more important than ever. If the Internet is to realize its full potential, firms must be free to develop experimental new methods of delivering ads. 

Increasingly, today’s “dumb” online advertisements are yielding to “smart,” behavioral ads.  By cataloguing individualized information about a user’s browsing tendencies, behavioral advertisers like Phorm and NebuAd can guess what sort of ads might interest that person, and select which product to promote accordingly.  In this model, advertisers don’t even have to record specific web addresses; rather, browsing habits are stored only under broad subject categories, like automobiles or golf. Sensitive websites like WebMD aren’t logged whatsoever. All this data is tied not to our names but to anonymous identifiers like cookies or IP address, which typically cannot be traced back to a particular individual except by court order.

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