The people who bought more house than they needed for more than it was worth with loans they couldn’t pay back, even if the introductory interest rate stayed the same, already know that. What they probably don’t know is that it’s been a scam since the early nineties when our financial engineers decided, after the cities had been emptied to populate the suburbs during the seventies and eighties, that the equity Americans had built up in their homes needed to be “liberated” for the market. Indeed, Alan Greenspan, the long-serving chairman of the Federal Reserve Bank, a private corporation, so advised Congress when he pushed for the elimination of the tax on the capital gains people realized from the sale of their homes. Tax free money was supposed to “incentivize” homeowners to uproot themselves and move on up.
The incentive worked like a charm. Suburban subdivisions and gated communities continued to sprout and filling up all that additional space with foreign-made junk kept freighters plying the Pacific. “Free trade” was supposed to make furnishing all those new homes cheaper and, once the local manufacturers had been “liberated” to go play golf, it was hardly noticed that the “benefits” of cheap foreign labor had been totally swamped by the cost of increased transportation, storage and homeowner time lost. One reason the last went unnoticed, was probably because people who could afford to have consultants and coordinators “decorate” the houses, weren’t bothered by the fact that it’s no longer possible to buy furnishings off the floor of a well-stocked store. All they knew was they they didn’t have time to be bothered doing what generations before them had done for themselves. Who knows how much of the explosion of middlemen is a substitute for what people used to do for themselves?
In Germany, where they keep better track of trends, the temporarily unemployed investing in their neighborhoods is cited to account for growth in the underground economy. You know, that nefarious trend which in Greece is reputed to make up 30% of their DGP. Why is it referred to as underground? Because it’s untaxed. Trade and exchange from which government doesn’t get a cut is bad. Trade and exchange from which the investor class doesn’t get a cut is also bad. So, Wall Street and Washington not only have that in common, but when taxes are cut, Wall Street believes that its revenues will automatically increase, unless the money disappears into the shadow economy.
Anyway, by the time George W. Bush pronounced America the ownership society it was clear that the well of traditional homeowners had run dry and it was time to target a new population. Which is why my first thought was “homeownership is not a ship that will take you anywhere you want to go.” Obviously not bumper-sticker material. But, an accurate assessment, even if the initial thrust was to relieve dividends from being taxed as capital gains and increase the circulation of money through the economy. As it evolved, ownership of property wasn’t just touted as a panacea, but as the rationale for chucking all social obligations (for housing, health and our elders) and setting people up to be fleeced under the umbrella of “individual responsibility.”
Since the people being targeted for homeownership hadn’t been paid enough through two decades to save up even a down-payment, the ownership George W. Bush promised was, more than ever, a sop to help them forget the extent to which they’d been deprived. The ownership society was a cynical ploy, as had been the Greenspan/Wall Street agenda from the start. But then, ownership has long trumped the rights of the person. Respect for human rights has taken a back seat to property rights ever since people who had been purchased were designated as 3/5.
That owning a house can insure the security of a person is an illusion — a lesson that millions of Americans have had to learn again. A person’s security depends on rights being respected and social obligations being met and resources being shared.