Buying into the American Dream

As a renter, I couldn’t agree more with economist Dean Baker’s thoughts on homeownership here.

Politicians routinely hawk homeownership as an end in itself and have pushed policies that are designed to maximize homeownership. (They have also been assisted in these efforts by private foundations that are committed to assisting moderate income families.) This has often meant promoting policies that provide large subsidies to homeowners, and implicitly neglecting renters.

This single-minded promotion of homeownership is now proving to have disastrous consequences for many moderate income families that bought homes at the peak of the bubble. Many of these families will end up losing their homes and whatever savings they had used to buy a home. Their credit record may be permanently damaged and possibly their aspirations as well.

This is what happens when sound policy is subjugated to political ideology. For many people, in many circumstances, homeownership is a good idea. But it is not everywhere and always better for people to own than rent. With the unwinding of the housing bubble, and the millions of tales of families in distress that will be part of this picture, it will be important for the media to examine the policies that got us here. This means that reporters should go after the ownership at all costs crowd. These people have a lot to answer for.

I’ve always assumed the push for homeownership had something to do with making sure that people were invested in their neighborhoods, and in the overall economic system (“buying into the American Dream”) — if you own something big and expensive, like land, you will support state actions undertaken to protect your claim to it. And if you own your house, you’ll have a vested interest in seeing your neighborhood improve. (This seems to be the idea behind the word gentrification — remove the renters (and absentee landlords), who have no incentive to fix anything up, and replace them with a species of landed gentry.) Homeownership is also useful to the state in the way it instills discipline through financial necessity. Just as private-equity buyout firms will load a company with debt to chasten its managers into prudence, so looming mortgage payments ensure that workers continue to prioritize a steady paycheck over having any of their labor grievances addressed.

Another byproduct of more-widespread homeownership is an increase of NIMBYism, which might benefit individual neighborhoods in some ways but harms social welfare overall, making tragedies of the commons more common. Everyone agrees we need to put prisoners and garbage and junked autos and bus depots and nuclear waste somewhere, but nobody wants it near them. Rather than integrate people into the social fabric, it seems like homeownership could do just as much to encourage micro-protectionism — it makes people think, I’ve got my fortress and screw everyone else.

I’m not sure what the alternative American Dream is though, if it’s not having the ability to acquire the space to insulate yourself from the annoyance of other people. The trends in American mores seem to be running toward more convenience, which tends to be understood as the freedom from having to cooperate or consider anyone else on anything but your own terms.