The American Dream Revisited
Long time readers know that Mr. ToughMoneyLove has been a harsh critic of government intervention into the homeownership business, particularly its cheerleading of unqualified buyers into sub-prime mortgages. I’ve written several posts on the topic including: Homeowner Bailouts Destined to Fail, Sub-Prime Memories are Short on Capitol Hill, and Taxpayers Crushed by the Destructive Push for Home Ownership. If you think I’m wrong about the failure of government involvement, read the data cited in those posts.
Now Thomas Sugrue a professor of history and sociology at the University of Pennsylvania is setting the record straight on the evolution of the American Dream. In an essay in the Wall Street Journal, Prof. Sugrue makes historical and practical case that the new American Dream is renting. According to the professor: “We are a nation of homeowners and home-speculators because of Uncle Sam.”
Again according to the historical record, before the government got involved:
Until the early 20th century, holding a mortgage came with a stigma. You were a debtor, and chronic indebtedness was a problem to be avoided like too much drinking or gambling. The four words “keep out of debt” or “pay as you go” appeared in countless advice books. As the YMCA told its young charges, “If you can’t pay, don’t buy. Go without. Keep on going without.” Because of that, many middle-class Americans—even those with a taste for single-family houses—rented. Home Sweet Home didn’t lose its sweetness because someone else held the title.
Thanks to government meddling since then, personal finances have been dictated by the demand for bigger homes and bigger loans. Where the middle class was once stigmatized by debt, now being a renter is looked down upon.
So what does foreclosure rate in the American Dream? A badge of honor? The personal finance Purple Heart?
If you read anything today, read Professor Sugrue’s piece. I was particularly struck by his concluding citations to comments made by another historian:
James Truslow Adams, the historian who coined the phrase “the American dream,” one that he defined as “a better, richer, and happier life for all our citizens of every rank” also offered a prescient commentary in the midst of the Great Depression. “That dream,” he wrote in 1933, “has always meant more than the accumulation of material goods.” Home should be a place to build a household and a life, a respite from the heartless world, not a pot of gold.
Brilliantly pure, isn’t it? Where is that wisdom now?