In his book “American Dream,” author Jim Cullen writes how well we are doing on the great American ideal, the American Dream. He resolves that it has morphed over time, it means different things to different people, and that it remains elusive for many.
But according to Cullen, one part of the dream works: home ownership. As the author points out, two-thirds of the population owning a home is an accomplishment that our forefathers would never have fathomed.
One explanation is that home ownership fits so well with our ethos of individuality, what better expression of self than our homes. Owning them gives us the freedom to define ourselves distinctly from our neighbors. Landlords have rules, homeowners make their own.
Now, what about President George Bush’s Ownership Society, his idea that owning homes, businesses and our social security accounts represents the next level of economic and political freedom? He frames it as an anti-big government, pro-small business, pro-homeowner and pro-individual idea. And the success of home ownership is proof that his political vision works.
What people may forget in this grand idea is that big government subsidizing big business and middle-class families drives the success of the home-ownership dream.
Face it; the massive home-ownership subsidy is more akin to the thinking of John Maynard Keynes, the great liberal economist, than conservatives like Milton Friedman.
Start with Fannie Mae and Freddie Mac, created by liberal Democrats in the 1960s to subsidize the housing market. Even today, both entities benefit from an implicit government guarantee, which explains part of their success providing an endless source of cheap mortgage capital to home buyers.
Then there is the mortgage interest and the property tax deduction, giving homeowners billions of dollars in annual subsidies. And zoning laws, which the U.S. Supreme Court has held up time and time again, give homeowners the right to behave like NIMBYs (not in my backyard activists) without constraint. The net effect is higher home values.
Home ownership is one of the greatest social policies in the history of the world. But it was not created by the invisible hand of the free market but by the deliberate and expensive heavy hand of the federal government.
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