Doug French — Walk Away: The Rise and Fall of the Home-Ownership Myth

DougFrench

Doug French, the President of the Ludwig von Mises Institute, has a new book just out, to follow Early Speculative Bubbles & Increases in the Money Supply. I haven’t had time to read his new work yet, about the collapse of the US housing market, but from the smoothly written introduction it certainly looks very good and I’m very much looking forward to completing the whole book over the next few days.

Douglas E. French

Walk Away: The Rise and Fall of the Home-Ownership Myth

Introduction

The idea that “a man’s house is his castle” is attributed to American Revolutionary James Otis from 1761, and his idea was that government should never be permitted to breach its walls. It is a good thought, in context; one that sums up a dogged attachment to the right of private property.

In the 20th century, however, government got behind the idea that every citizen should be provided a castle of his or her own. This is the essence of the good life, we were told, that very core of our material aspirations. The home is the most valuable possession we could ever have. It is the best investment, even better than gold. Government would make us all owners, one way or another, even if it meant violating rights to make it happen.

This became an article of faith, a central tenet of the American civic religion, and one that led to additional spin-off doctrines. We should fill our valuable homes with vast amounts of furniture, large pieces especially, things that suggest permanence and roots. If there were any doubt as to where to put our money, an answer was always ready: put it into the mortgage, where it will surely pay the highest return.

The home itself could provide full-time employment for half of the American citizenry, as all women became “home makers” who devote themselves to cooking, laundry, and cleaning, while all extra time that the man had should be devoted to lawn care, household repairs, and landscaping. The home was the very foundation of community, of freedom, of the American dream. It embodied who we are and what we do.

Beginning in 2007 and culminating in 2008 this dream was smashed as home values all over the country plummeted, wiping out a primary means of savings. Some homes fell by as much as 75-80%, instilling shock and awe all across the country. The thing that was never supposed to happen had happened. This meant more than mere asset depreciation. An article of faith had fallen, and there were many spillover effects.

The home was the foundation of our financial strategy, our love of accumulating large things, the core of our strategic outlook for our lives. Once that goes, much more goes besides. The things in the home suddenly become devalued. We look around us in astonishment at how much stuff we have, and we are weighed down by the very prospect of moving. We are longing for a different way, perhaps for the first time in a century.

We are beginning to see the response in the new behavior of some younger people. The New York Times, the Wall Street Journal, and other major media outlets are starting to cover the trend of what we might call the new mobility. Young couples are selling off their possessions: their large furniture, their china and crystal, their enormous bedrooms suites, and even their cars. They are lightening the load, preparing for a life of mobility, even international mobility.

The collapse of the housing market — which has occurred despite every effort by the government to prevent it — coincides with the highest rate of unemployment among young people that we’ve seen in many generations. Economic opportunity is dwindling, at least in traditional jobs. The advance of digital technology has made it possible to do untraditional jobs while living anywhere, and perhaps changing one’s location every year or two.
Millions have walked away from their mortgages. Those who have swear that they will never again be tricked by the great housing myth that this one asset is guaranteed to go up and up forever. The new source of value is not something attached to the biggest thing we own but rather in the most fundamental unit of all: ourselves, and what we can do. This change represents a dramatic change not just for one generation but for an entire ethos that has defined what it means to be an American for about a century.

To walk away might at first seem like a post-modern activity, one that disconnects us with history and community. We might just as easily see it as a recapturing and redefining of an older tradition that shaped the American ethos from the colonial period through the latter part of the 19th century: the pioneer spirit. Our ancestors moved freely, across great distances, beginning with oceans and then continuing across great masses of land, from New England to the West, all in search of economic opportunity and the fulfillment of a different American dream, defined by freedom itself.

This change begins with a single realization: I’m paying more for my house than my house is worth. What precisely is the downside of walking away, of going into a “strategic default”? I lose my house. Good. That’s better than losing money on my house. But what are the economic and ethical implications of this? Americans haven’t faced this dilemma in at least a century. But now they are, by the millions. They are awakening to the reality that the house is no different from any other physical possession. It has no magical properties and it embodies no high ideals. It is just sticks and bricks.

This book examines the background to the case of strategic default and considers its implications from a variety of different perspectives. The thesis here is that there is nothing ominous or evil about this practice. It is an extension of economic rationality.

But what about the idea that our home is our castle? My thesis is that the essence of freedom is to come to understand that the real castle is to be found within.

Here’s the free-to-download PDF.  See if you can beat me to reading the whole thing.

2 Comments

  • Capt. A. says:

    The banally contrived adages are “boned wisdom for weak teeth,” as noted by Doug French, by individuals that created the horrendous worldwide problems exemplifying “moral turpitude” in the first place. This made me think of “Denny Crane!”

    “Morals were invented by the elite to keep the hoi polli inline.” ~ Denny Crane, of Crane, Poole & Schmidt

    To “game the gamer” is an affront to the gamer! The fact is that governments, politicians, the elite and the Establishment … are morally threadbare when you carefully check their fabric. They are essentially amoral or immoral unless it’s their ox… To trace the problem back to its origin, the progenitor of exclusivity in the use of force … does not reside with individuals. It is the exclusive purview of the collectives’ government that legitimizes the correctness of “legalized use of force,” right or wrong, having nothing whatsoever to do with “its” conjured morals!

    Gaming the gamer is a turnabout that the man on the other side of the table who plies the three-shell game does not expect. Government is the single most immoral invention of man! Think not? Think again!

    And then, the supposed dupe (the vic!) grabs the two outside shells together, raising them both to note nothing underneath either shell … the pea therefore had BETTER be under the last shell in the middle … or else! And finally the “gamer” has NO choice (if he values his life) but to turn over the middle shell only to discover the pea! Gaming the gamer! This applies to life, as a whole! (Where is Mordecai Jones, Mr. Flim-Flam man when you really need him?)

    Hiding behind hackneyed platitudes and spurious truisms, this is the method and manner of the collectives’ government, the elite, the entire Establishment, all via the voting booboisie, “We the people!” Yeah, right! And finally when the dupee becomes the dupor, governmental charlatans and corporate miscreants raise stink to the high heavens! My, my how the tide brings change! Now, one of the few remaining questions is whether those leaving the collective will continue to think critically to regain true and real individuality instead of continuing to fall back under the master’s yoke (tax slaves) and feel the master’s lash (you will do as you are told … or else!).

    History at length unfortunately does not favor the individual over the collective and its never-ending troupe of thugs that endeavor to keep the slaves on their knees, replete with, “Yes master!”

    C’est la guerre,

    Capt. A.
    Principaute de Monaco
    UTC +1:00 CET

  • dizzyfingers says:

    Have been collecting every article and story I can find about what happened and have come to realize that if no one owned property, this wouldn’t have happened, and no one would be paying real estate taxes (one of the bigger scams of government). Yes, we should just walk away.

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