Matthew Yglesias has of late been promoting a slightly different version of the American Dream. He’s backing Hillary Clinton’s proposed Baby Bonds which would give a $5,000 bond to every child born in the U.S. He gives a pretty good support for it:
One of the main policies that made the United States we know and love was the Homestead Act of the 19th century. The question this was intended to address was how to dispose of the vast land mass that the country was in the process of stealing from its native inhabitants. One way to do this would have been to auction it off to the highest bidder. Wealthy investors would have bought large estates and hired overseers and tenants to farm the land while living back home in New York, Chicago, Philadelphia, wherever. Instead, the congress guaranteed a small farm to anyone willing to move west and live and work on the land, building a property owning democracy of smallholders wherein ownership of the means of production (viz. land) was widely distributed.
Baby bonds could and should be a step toward creating a 21st century version of a society lack that -- one in which every citizen who works hard and obeys the law gets to share in the prosperity that’s created by everyone’s labor together.
In a post a month ago he favored capital ownership over homeownership as a way of helping the people achieve the American
If we didn’t subsidize howmownership, people would own less home and own more stocks and bonds instead. Some of that owning "less home" would come from people renting rather than buying, and some would come from buyers simply buying smaller houses. That’s be good for the environment, and more capital would be available for business operating in non-housing sectors. Meanwhile, I feel like if we weren’t specifically encouraging an ideology of home ownership ("American dream" and all that), you might get less of the risky behavior that seems to be causing trouble of late.
I think he’s got a point. The data he throws out on homeownership shows that many of the poorer states have higher rates. Thus its obviously not a panacea. Fair enough. I think the trouble is that he’s only half right. Homeownership matters because of the three basic needs, shelter, clothing, food and drink (health care may well count too, but that’s a separate issue). Michelle Singletary of the Post did a budgeting story a while back and recommended that housing should probably be the largest chunk of your income at 27% (food comes in second at 21%). If you own a house or condo, a good percent of that is going to your assets (with the rest going to interest). Even if half of the payment is going to interest, that’s still a bonus of 13% savings which beats what you’ll get on capital investments.
That said, Yglesias is certainly half right. The mortgage tax deduction should be capped (perhaps set off the median price of housing in the area in question). Helping people buy a house makes sense. Helping them by more house is a poor use of tax policy and makes it less economical to build low-income housing. Happily, Chairman Dingell does have a cap proposal (set at 30,000 square feet houses) which is a bit arbitrary but is a vast improvement over the current situation. Happily, that cap would free up resources that could go towards other ends, such at Baby Bonds.
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