It's time to take back The American Dream

Economically-speaking, inexpensive housing is a wonderful thing.

Economically-speaking, a large percentage of our population would be much better off renting.

Government programs like FHA, Fannie Mae, Freddie Mac, HAMP, Tax-Credits, etc, were all designed with the goal of making homeownership more attainable…meaning that more people can now attain a limited supply of homes.  Increased demand leads to higher prices…meaning these programs just made housing less attainable. Economically-speaking, we’d be better off if they never existed in the first place.

It sounds almost un-American to say such things…and that’s a big part of the problem.

Even while acknowledging that high home prices actually harm the economy, Yale economics professor Robert Shiller wrote a piece in The New York Times, making a case that the Government should continue supporting the programs that cause them.  He specifically mentions the F.H.A., Fannie Mae, and Freddie Mac, but all supporting programs were implied.

His reasons for supporting Government actions were basically:

1. Home prices would fall more if the programs ended
2. “The American Dream” is essential to our “sense of national identity”

From the article:

…But what is the long-term justification for putting taxpayers on the line to subsidize homeownership? Is this nothing more than a sacred cow in American society — a political necessity because so many voters own homes and are mindful of their resale value?

In fact, there is much more to the history of subsidizing housing. While the crisis in the housing market shows that our current approach is far from perfect, there is a certain wisdom behind it, related not only to economic stimulus but also to the preservation of a sense of national identity. It’s important to remember this as we consider re-engineering our institutions as the crisis ebbs.

…

This time, the best answer isn’t found in traditional economics but rather in American culture: a long-standing feeling that owning homes in healthy communities is connected to individual liberties that embody our national identity. Historically, homeownership has been associated with freedom, while renting — often in tenements or mill villages — has been linked to the oppression of a landlord.

In his classic 1985 book, “Crabgrass Frontier,” Kenneth T. Jackson of Columbia University delineated the complex train of thought that over the last two centuries has produced the American belief that homeownership encourages pride and good citizenship and, ultimately, preservation of liberty. These attitudes are enduring.

Back in 1899, in “The Theory of the Leisure Class,” Thorstein Veblen described homeownership, particularly of large and expensive dwellings, as “conspicuous consumption.” By that, he meant that it was undertaken substantially for the purpose of impressing others by showing the amount of money one can afford to waste on space one doesn’t need.

What is specifically American here — though it’s increasingly seen in other countries, too — may be the modern sense of equal citizenship, engendered by the illusion that we can sustain conspicuous housing consumption even among a majority of the people.

In short, this all has a great deal to do with culture, and little to do with financial wisdom.

On home prices, Shiller writes:

If many of these homes needed to be converted to rental units, home prices might well drop.

The Emperor’s clothes are beautiful indeed.

Though the policies are economically insane, they are worth the cost in order to perpetuate “a long-standing feeling that owning homes in healthy communities is connected to individual liberties that embody our national identity.”

In other words, the concept of “The American Dream of Homeownership” is worth spending trillions to uphold because it is a central to our culture.

Really?

Is our National Identity really defined by lust for a material good?

Consider the alternatives…

Americans: Smart and Hard-Working

Americans: Gracious and Strong

Americans: Helping Each Other

Americans: Character and Perserverance

No, we’re Americans: People who want to Buy Houses

How twisted and materialistic have we become as a culture to openly define ourselves by something we own?

As a renter, I am offended.  As a citizen and a taxpayer, I am outraged.

Shiller suggests that The American Dream is too sacred…that our fragile national ego would collapse if its credibility were threatened.  But, he’s wrong.  The jig is up and the public knows it.  In fact, they are asking for it, desperately wanting to find some financial purity after a decade of decadence. Social mood is shifting.

Shiller mistakenly suggests that home prices are worth propping up.  But the problem isn’t that home prices are falling, it’s that home prices are still too high. Falling prices and foreclosures aren’t the problems, but the solutions, not the illness, but the cure.

The time has come to shout out that the Emperor has no clothes: The American Dream is simply a marketing campaign, a gimmick, perpetuated by industry groups and their lobbyists.  That a home can define one’s success or national identity is simply a symbollic, mutually-shared illusion.

Consider the actual, original American Dream by James Truslow Adams:

“that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

Somewhere along the line, corporate marketing departments changed The American Dream to exactly “high wages and motor cars (houses)”.

Somewhere, our heros changed from men-of-character to men-with-credit-cards.

Now, the false American Dream is becoming an American Nightmare.  Many of our friends, neighbors, and family members are in their darkest hours and being forced to re-examine their paths and priorities.  One-by-one, they are emerging from the darkness and rebuilding lives to be recognized by what they are, not what they have.  Their stories are spreading, giving hope and courage to others who are struggling financially.

Social movements are born from crisis such as this. The opportunity is here to redefine American Culture.

It’s time to take back The American Dream.