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Americans Are Addicted to Homeownership, and the Government is the Pusher

December 22, 2017 in Economics

By Doug French


By: Doug French

Americans loved their houses. Their four walls and a roof always went up in value, until it ended. But, now housing is back: 2008 was just a bad dream. Jared Dillian has written a dandy piece for Bloomberg making the case for housing to be taken from its preferred status in the tax code. Mr. Dillian has the website The Daily Dirtnap and wrote the wonderful book Street Freak.

Eliminate deductions for mortgage interest and property taxes and tax any capital gains the way Uncle Sam does on stocks and other assets, says Dillian. Encouraging people to go into hock for 30 years to buy an illiquid asset is nonsense, he says. This makes the economy “more fragile. We should instead think about ways to make it more anti-fragile,” Dillian writes.

He continues,

So, sure, it's nice that homeownership forces people to build equity in an asset, even if it is a profoundly crappy asset, because left to their own devices, they probably wouldn’t save anything at all. But, ideally, wouldn’t we want people diversified across a range of assets, instead of having all their eggs in one basket?

The real nub of his argument is people should be encouraged to save and invest, not consume and take on years of debt. However, this continues to be the age of Keynesianism, where saving is bad, while consumption is good for the economy.

Gregory Bresiger explained Keynesian fallacies on mises.org, “Yet penalizing thrift, the lifeblood of job creation and better tools that make current workers more efficient, has hurt the nation’s ability to grow and employ millions of young people looking for jobs. That’s because Keynesianism, according to its modern interpreters, amounts to a celebration of consumption. It is a belief that government spending combined with low savings rates lead to permanent booms.”

“The growth in wealth, so far from being dependent on the abstinence [savings] of the rich, as is commonly supposed, is more likely to be impeded by it,” John Maynard Keynes wrote in The General Theory of Employment, Interest and Money.

“The more virtuous we are, the more determinedly thrifty, the more obstinately orthodox in our national and personal finance, the more incomes will have to fall,” he writes. “Saving,” Keynes wrote in his Treatise on Money, “is the act of the individual consumer and consists in the negative act of refraining from spending the whole of …read more


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