Monday, August 11, 2008
Samuelson on Homeownership
"The real lessons of the housing crisis have gotten lost. It's portrayed as the financial system run amok; the housing market became a casino. ... But it ignores a larger and more important truth: our infatuation with homeownership, embedded in dozens of government policies, has turned housing--once a justifiable symbol of the American Dream--into something of a National Nightmare. As a society, we're overinvesting in real estate. We build (and buy) too many extra-large homes, McMansions, if you will. ... But when you subsidize something, you get more of it than you otherwise would. That's our housing policy", Robert Samuelson (RS) at Newsweek, 4 August 2008.
I agree with RS, the US government has caused us to overinvest in housing to the detriment of productive assets and we will soon pay the price for these "Misean malinvestments".