The housing market collapsed a few years ago, lending for new housing is tightened up and the home values are plummeting. Yet, America is the country with the highest homeowner rates in the world, i.e. 67% of the population.1 Housing is one of the most important growth engines of the US economy, accounting for roughly 17 or 18% of the GDP and one-fifth of all jobs. 2 The housing market collapse, therefore, means that the entire economy is pulled into an anemic recovery, unemployment rate stays high, wages are cut, public employees are laid off, everything is down except Wall Street and corporate profits 3, and the government is divided over a debt-ceiling debate (which I believe is a big pretense used to wring out more tax breaks for the wealthy financed by steeper cuts into social services). It is now easy and understandable that middle class people, who have seen deep hits into their paychecks, fearful of whether or not they will be able to keep their homes, or sell it for a decent price without having their home values reduced to nothing, now demand that the government should do something about keeping the housing system stable. The reality seems to be that after decades of overborrowing in the housing industry, the time has come to pay off the debts plus interest, which is not to be expected from the middle class people, who have taken sharp wage reductions. Some may ask what we should do in order to solve the housing crisis, and make the American Dream, ie homeownership, a continuing reality for all.
With all those negative repercussions on the economy, I want to pose the larger, more pertinent question, and that is why it needs to be that all Americans should become homeowners. The historical narrative will have us that back in the 1930s, the US was in the Great Depression and FDR wanted to give the American people a sense of stability and security by promoting home ownership. 4 More importantly than in economic terms, homeownership also had a social value, as Ben Lisle indicates, “Ownership provided, at the very least, a small-scale autonomy, and thus aligned itself with the American ideal of individual sovereignty.” 5 Homeownership underlines the American ideal of sovereignty and individuality, which only Americans as descendants of poor European immigrants would choose. This definition in itself, the nationalization of individualism, the broad consensus in terms of what Americanism and individualism consists of is a collectivist rather than an individualist concept. A truly individualist society would open up lifestyle choices based on individual parameters rather than overarching social conceptions like homeownership. Evidently, about two-thirds of the American people despite massive indebtedness own a home, so there is something to the collectivist ideology of the American people.
I maintain that homeownership has little to do with the individualist desire to be “on your own”, because to be on your own requires to make choices independent of those that society prescribes. Homeownership is rather a fetishized notion of empowering people, which is undergirded by government policies like the homebuyer tax rebates or the mortgage-interest deductions, which in turn make it materially more reasonable to acquire a home than to rent an apartment. Renting an apartment certainly is not a cost-effective solution, since just like the government subsidizes homeownership it does not greatly subsidize public apartments except the very shoddy ones in the city, which we call the “projects”, the worst one of which (with residents dependent on welfare, very poor and high crime rates) is probably located in Chicago. 6 But this is a general dilemma in American policy making that it tends to create only welfare policies for the poor people, who in turn are detested for their alleged laziness by tax-paying middle class people, instead of expanding welfare policies to middle class people, who develop a form of solidarity to the poorest people in the country and more genuinely level the playing field, as is done to a larger degree in Europe. 7
So there are economic incentives for home ownership, and I will not say that paying rent out of meager paycheck is a convenient, long-term solution for working class people. But we also need to remove ourselves from the faulty fetish, i.e. to make something a magical, worshipped object, of homeownership. Homeownership delivers the impression of freedom, when it, in fact, increases the bondage of working class people. The fetish for a home is not the equivalent of overcoming class structures and oppression, but the enhancement thereof. The landlord-tenant relationship is merely replaced by lender-homeowner relationship, producing unneeded economic stress. And this faultiness of endlessly expanding US homeownership has certainly accelerated the harm, which the American people are exposed to. Not only do people face fewer wages and fewer benefits, but they also have to work permanently so as not to lose their homes, which makes the concept of “enjoying” the house, a property one has worked for to acquire, laughable.
The chief beneficiaries of homeownership are not the middle and working class homeowners, but the rentiers of the society. Rentiers, according to Paul Krugman, are those that derive lots of income from assets, who have unwisely lent large sums of money and are now protected from loss by almost everyone else. 8 The people that control the giant money flow in relation to the speculative bubble in the housing market are the wealthiest people in the world, and can thereby easily use a fraction of that amount to buy themselves their mansion with their huge dividend checks, which is a massive subsidy from the working and middle class people, who are removed from grasping this essential economic reality at surface. What has happened to the economy and to the housing market is what David Harvey called the “accumulation by dispossession” 9, i.e. not the creation of new value which could benefit anybody (according to Adam Smith), but the enrichment of one group of people by stealing from or dispossessing another group. The debt bubble based on the housing market was merely a strategy to distract the public from this accumulation process, because the home owning middle and working class was lulled into the consumer spree, whereas Wall Street and the lenders have received huge interest fees. Now that this strategy is exhausted, the real causes of the bubble and the recession are covered up, and debates over inessential things like the debt ceiling are taking place (that is not to say that there are no grave consequences for not raising the debt ceiling, but that the gravity of the serious economic issues lie elsewhere). What neither Europeans stricken with austerity budgets and currency issues nor Americans stricken with an anemic and weak economy want to acknowledge is that in order to prevent an economic crisis in the future, one has to remove the massive power that has been granted to the rentiers, and restore economic well-being to the people.
Finally, I am not saying that within the American context striving for a home is a wrong-headed solution, since given the misguided incentives of the government it seems to be the most reasonable thing to do to make a living. One person swimming against the currents of society is not stirring up anything. In fact, we have millions of people in this country, who are homeless, yet it doesn’t alter the fact that there is still two-thirds of the US population that owns a home regardless of their financial turmoil. But that is why I think it makes it even more important to organize on a national basis, and demand an alternative housing policy, which would be economically more affordable and could be made safe, secure and comfortable. This housing policy would only partly be based on pushing for homeownership, reserving most of the government’s involvement to a public housing/apartment policy to make low-cost living a reality in the richest country on earth.
1 A very instructive article comes from Samuelson, Robert. “The U.S. Housing Fetish Hurts the American Dream.” RealClearMarkets. 23 Aug. 2010. Web. 18 July 2011. http://www.realclearmarkets.com/articles/2010/08/23/the_us_housing_fetish_hurt_the_american_dream_98635.html.
2 Ganz, Bryan. “Fixing the Foreclosure Crisis.” Scudder Bay Capital. 3 Mar. 2011. Web. http://www.scudderbay.com/pdfs/Op_Ed_-_Fixing_the_Foreclosure_Crisis_-_Bryan_Ganz_-_March_4x_2011.pdf.
Additionally consider the currently harmful impacts of the housing crisis. “The statistics surrounding this crisis are staggering. Since 2007, over 3.2 million Americans have lost their homes to foreclosure, causing housing prices to fall 27%. However, this is just the tip of the iceberg. An additional 2.2 million homeowners are currently in foreclosure. A further 4.7 million borrowers are at least 90 days delinquent on their mortgage and it is only a matter of time before foreclosure proceedings are initiated against these homeowners. This means that we are potentially not even one-third of the way through the foreclosure process. Moreover, if housing prices stagnate or fall further we could see many more defaults as more than one-quarter of all homeowners in America, about 15.7 million people, have no equity in their homes. As a result, if we do nothing, as many as 12.5 million more homes could potentially be lost to foreclosure.” P2, ibidem
3 Yeebo, Yepoka. “Corporate Profits At All-Time High As Recovery Stumbles.” The Huffington Post. 25 Mar. 2011. Web. 18 July 2011. http://www.huffingtonpost.com/2011/03/25/corporate-profits-2011-all-time-high_n_840538.html. “U.S. corporate profits hit an all-time high at the end of 2010, with financial firms showing some of the biggest gains, data from the federal Bureau of Economic Analysis show. Corporations reported an annualized $1.68 trillion in profit in the fourth quarter. The previous record, without being adjusted for inflation, was $1.65 trillion in the third quarter of 2006.”
4 Lisle, Ben. “The Idealized Home.” American Studies @ The University of Virginia. Web. 18 July 2011. http://xroads.virginia.edu/~MA01/Lisle/30home/idea/idea.html.
6 Economist. “Chicago’s Public Housing Projects.” University of Wisconsin-Eau Claire. 11 July 1998. Web. 18 July 2011. http://www.uwec.edu/geography/ivogeler/w188/articles/chprjcts.htm.
7 “For their tax dollars –or euros — they get universal health care, deeply subsidized education (including free university tuition in many countries), modern infrastructure, good mass transit and far less poverty than we have here at home. Holland, Joshua. “Are We Giant Suckers? While the US Blows Money on the Military, Europe Spends Dough on Social Programs.” AlterNet. 17 June 2011. Web. 18 July 2011. http://www.alternet.org/world/151337/are_we_giant_suckers_while_the_us_blows_money_on_the_military,_europe_spends_dough_on_social_programs/?page=1.
8 Krugman, Paul. “Rule by Rentiers.” New York Times. 09 June 2011. Web. http://www.nytimes.com/2011/06/10/opinion/10krugman.html.
9 “Accumulation by dispossession is about dispossessing somebody of their assets or their rights. Traditionally there have been rights which have common property, and one of the ways in which you take these away is by privatizing them. We’ve seen moves in recent years to privatize water. Traditionally, everybody had had access to water, and [when] it gets privatized, you have to pay for it. We’ve seen the privatization of a lot of education by the defunding of the public sector, and so more and more people have to turn to the private sector. We’ve seen the same thing in health care.
What we’re talking about here is the taking away of universal rights, and the privatization of them, so it [becomes] your particular responsibility, rather than the responsibility of the state. One of the proposals which we now have is the privatization of Social Security. Social Security may not be that generous, but it’s universal and everybody has part of it. What we are now saying is, “That shouldn’t be; it should be privatized,” which, of course, means that people will then have to invest in their own pension funds, which means more money goes to Wall Street. So this is what I call privatization by dispossession in our particular circumstance.
A lot of other things are going on. For instance, look at the way in which lands have been taken away; peasant movements have been destroyed by state action. There are a lot of things of that sort happening around the world, where people are accumulating at other people’s expense.”
“Conversation with David Harvey.” Institute of International Studies, UC Berkeley. 02 Mar. 2004. Web. 18 July 2011. http://globetrotter.berkeley.edu/people4/Harvey/harvey-con4.html.