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May 08, 2008


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I very much enjoyed this debate and I think this is a very valuable and interesting idea. I was hoping you would elaborate more on what kind of regulations you would impose on the H20 investors. You mentioned in this recent post that regulating these investors would not be more difficult than regulating homeowners or landlords. My impression is that regulating homeowners with the intention of preventing them from discriminating is much more difficult than regulating landlords.

Most states have landlord/tenant laws that protect against discrimination and offer avenues through which one may file complaints. How do government regulations prevent homeowners from moving out of neighborhoods when a minority family moves in?

Accordingly, how would regulation prevent investors from investing in homogenized suburban areas? Even if homeowners' fears were quelled after living with minority families and acted less fearfully, investors, wouldn't investors want to put their money (or at least most of it) in low risk areas? How would regulators discern whether this investing is animus-based discrimination?

I would bet that lease holding, with all of the protections that come with landlord/tenant laws, is the system in which regulation to prevent discriminatory practices can be most effectively implemented. Though I see that H20 has many desirable aspects, sustaining thriving diverse communities is not one of them.

Michael F. Martin

So it appears that even Charlie Munger hasn't noticed what Prof. Lee Fennell has pointed out -- viz., that we would have a more stable system if positive and negative externalities were bundled at the source of our price signals, individual consumers.


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