The bastardization of the American Dream

“Can you imagine what it would be like if we plowed that much money and focus into education and training and the creation of quality jobs?” Time Magazine is on the march again with another call for government to decide what we as citizens want and should have. Another call to redirect our resources by wealth redistribution. Another call to control what citizens want, buy and hope to achieve. Time continually strives to be on the cutting edge of early 20th century socialist thinking.

And what is your suggestion as to how a nation achieves a “social order in which each man and each woman shall be able to attain the fullest stature of which they are innately capable, and be recognized be others for what they are, regardless of the fortuitous circumstances of birth or position.”

What does “fullest stature” mean? And how does a nation measure the degree to which it has achieved that state? If we’re not yet there, how far are we?

It’s ever so pious to sniff at home ownership, car ownership, fancy clothes, yachts et al, but is it possible that dreaming about these things and reaching for them is what built America?

By the way, Barbara, where do you live? Mortgage?

Rodger Malcolm Mitchell

Beautifully succinct.

Rodger Malcolm Mitchell

“We” doesn’t mean the government. “We” means all the individual actors that make up the economy. That’s what GDP measures. Another point of fact: the government already exerts great influence over the decision about whether or not to buy a house. Consider the home mortgage interest deduction, which is worth some $100 billion a year. In 1986, all other interest stopped being deductible from personal income. Why, then, mortgage interest?

Education and quality jobs = socialism

Amazing what these teaparty whack jobs come up with.

The fact they don’t like education is evident. The fact they don’t realize that the whole home ownership industry is propped up by government is evident as well.

You raise a good point, which I flick at above. We are naturally drawn to metrics of success that are easily measurable. Whether or not what is measurable is necessarily what is most important is interesting to think about.

Asking, “what are our priorities, and why, and how might things change if our priorities were different?” is not tantamount to national socialism.

Tax exemptions for mortgage interest, credits for buying homes, etc are massive government subsidies aimed at a specific industry. I, for one, think that a rational and minimalist government should be brought to task and constantly required to justify such redirections of taxpayer money.

To turn a blind eye to the status quo is nothing but statism. That’s how these programs get created and then never go away.

I’ve been a homeowner for just about all of my adult life, mostly because it’s something that seems expected in the US. As I think about the next stages of my life, I have my doubts, and I think it’s right and appropriate for us to question the assumption that ownership is an unalloyed good.

Currently there is a significant fundamental bias toward home ownership. The government supports it to the tune of hundreds of billions of dollars a year (mortgage deduction, Frannie, special loan programs, and the like). It’s worthwhile debating whether this bias is in fact good policy for our government and us as citizens.

Barbara does that debate a service by pointing out that one of the emotional connections that we’ve used to support ownership is false in its origins. Stripping away the emotional context lets us view the question more rationally. However that debate at the national level turns out, it is clear that many of us as individuals are already asking that same question.

Mr. Adams seems to be right on when he calls Opportunity the dream. Thats really what we want and expect of our lives is opportunity to better ourselves.
This depression has set us back and out home atm machine is out of order, but even when or if things get back to “normal”, is there opportunity?
Modernization seems to be a process where less hands on is needed and machines do more and those labor intensive jobs not yielding to machines have been exported.. Alright thats nothing new, but it maybe possible to put togeather a mathamatical model to prove opportunity is diminishing in America. I suppose we don’t need a model we can extrapolate from the loss of jobs vs. the population growth even without taking into effect this recesion/depression. This downturn is just a wake up call telling us opportunity as we knew it is leaving the station. There are much smaller opportunitiys left to come for most of us. Even those highly educated will feel the “automation” of the future.
On the mortgage interest deduction for home ownership I wonder who it helps more the buyer or the institution who lends out the money?

“another call for government to decide what we as citizens want and should have. Another call to redirect our resources by wealth redistribution.”

Uh, I’ve got to agree with Rick. Further, isn’t it true that the government’s current and former utilization of Frannie, the mortgage deduction and the tax credit accomplished the very thing you seek to prevent.

I’m all for houses, but the government shouldn’t be in the housing business. Government is for things which require a national interest. Like encouraging innovative technologies, enhancing and providing education so that people can be productive to whatever degree they desire and setting up minimally invasive regulatory structures to permit business to exist, thrive and compete on a level playing field while protecting consumers and the economy as a whole. Simply said, but not easily accomplished. What directives and policy initiatives are supporting those goals today and which are inhibiting those goals? It seems that our housing policy is very close to inhibiting what the government’s goals should be.

Rodger,
If I might be so bold, I wouldn’t mind seeing merit-based educational grants on a massive scale (think $1 Trillion). Our smartest students if they want to go to school should not have costs be an issue. Heck, even our smartest adults who need job re-training. Fundamentally, a well-trained work force that innovates and develops is our only way out of this mess. We need to generate value and permit folks the opportunity to fill the market needs.
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We’ve got far too many functions of the national machine trapped in the idea that housing has to make up 17-18% of our economy or that health care must make up 25% or whatever sector it is that we think is written in stone.
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We need to find a way to get America to be flexible and ready to react to changing circumstances. In short, as we used to say in the military, adapt, adjust and overcome.

Some people object to the mortgage tax deduction. Others object to the capital gains tax deduction, the medical tax deduction, various business tax deductions, etc.
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For every tax deduction, there are sure to be objectors who often call these deductions “loopholes.” The objections mainly have to do with fairness, as in: “Why should homeowners receive deductions but renters don’t?” Or, “Why is there a deduction for medicine, but not for food?
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An unfair deduction is one you receive and I don’t.
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The “solution” to unfair tax deductions (or loopholes) is not to eliminate them but to expand them. Or, does the federal government have first claim on all our money, and only through “deductions” and “loopholes” we are allowed to keep it?
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In a monetarily sovereign nation, the federal government neither needs nor uses taxes. The U.S. government is monetarily sovereign. Federal spending is not constrained by taxes.
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Rather than eliminating the “unfair” mortgage deduction, why not expand it to include renters?

Rodger Malcolm Mitchell

Home ownership is a gateway to economic opportunity for a variety of industries. Look at all the fees paid just to “close” a home purchase. Homes need to be insured, rooms need to be furnished and decorated, appliances, must be bought, grass mowed, granite countertops installed, landscaping must be done, etc. Big box stores in the metroplex serve these “needs”. By the way we all need gasoline powered cars to get to and from these places and where we work and send our kids to school. Most politics is local, as they say, and local developers contribute a lot to local political campaigns to line up the spoils of home ownership and the opportunities it creates. Much economic growth has been fueled by exapnding the suburbs for decades. this model is breaking under tremendous strain. It is high time we thought about replacing this model with something more durable and sustainable.

Per-pupil spending has tripled over the last 30 years, while the quality of education has declined. It’s not from a lack of investment that we aren’t getting desired outcomes. And is homebuilding not a “quality job”?

The issue is that 35 years ago Congress and the Department of Housing and Urban Development decided that homeownership was the end-all of the American Dream and engineered programs that would enable more people to achieve it. They completely missed that owning a home was a symptom of financial stability and wealth, and thus reflective of having achieved a certain amount of success. Instead government policy encouraged anyone who could scrape together a few hundred dollars to buy a home that many were not be able to afford.

Any government intervention in a market creates unintended consequences – the questions are how great and when will the impact be felt. In many cases it is absorbed and few really notice. But in the case of housing, HUD used Fannie and Freddie to manipulate a multi-trillion-dollar market that touches nearly two-thirds of Americans, with predictable results.

An excellent point! I hope we can soon discard the special interest politics that drive married couples & gay couples to demand extra rights, benefits, and privileges based on marital status, making them super-citizens favored by government over mere, lowly singles. Our government lards tax breaks on homeowners while pressing vagrancy charges for the homeless. Next year, Uncle Sam will resume seizing 55% of wealthy Americans’ estates in utter disregard for rewarding achievement and blatant contempt for what part the rightful heirs might have played in making that success possible or desirable. Our government has entirely failed to ensure musicians earn royalties for copies of their work, and the entire music industry has collapsed into a cesspool of pirate consumers who routinely steal music online. Uncle Sam continually softpedals Chinese theft of American intellectual property. Our government devalues legal American residence with proposals like the Dream Act, in which Americans and legal residents would be rejected from college admission in favor of illegal immigrants, swarming into our public universities like scholastic cuckoos.

While promoting the socialist agenda that dictates anything you have belongs to everyone, we’ve forgotten to reward Americans for their talent and effort.

I beg to differ. We have no idea how these government incentives are going to pervert the free market. As with Frannie, you try to help a few more percentage of people become homeowners and then you get Mrs. O’Leary’s cow.
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The more sensible thing to do is to eradicate all of these forms or perturbations from the natural flow of capital. They create what seem like isolated dislocation but when viewed in aggregate, all heck breaks lose when the dam starts to fail.
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Further, it creates derision over a policy which is unnecessary while the government loses focus on its more natural duties and obligations.

There is nothing inherently American about the wish and striving for home ownership. Millions of young people the world over are feeling frustrated with the dawning realization that with the steep price-increases of housing they may never own a home of their own, that in fact they are experiencing downward mobility and may indeed never attain the finacial security enjoyed by their parents and previous generations. This is true in Britain, Spain, Italy, Australia, Israel and numerous other modern countries. Why do you think these young people have been coined “the renting generation”?

I watched the two hours of video on C-SPAN yesterday as well as a lot of testimony in front of the Financial Crisis Inquiry Commission and there is a consistent point being made by many that home ownership is oversubsidized in this country (for many of the reasons mentioned by brian1to1). But this approach to economic growth has probably run its course (as evident in a policy which pushed even people who could not afford a home into one and thus steal some unsound economic growth during an election cycle).

The leveraging (20/80 equity against debt)and wealth building aspects (hoped for appreciation) of homeownership need to be rethought as social and economic policy. Zero taxes on capital gains(say for individuals earning under $200,000) and tax deductions on college expenses might encourage some people to pursue wealth accumulation through other means. Tax deductibility might help deal with some of the costs, like college expenses, people are trying to cover with home equity (thus good social policy).