In July I wrote two posts (here and here). Public Policy for Progressives This is written by my friend and former colleague Jonathan Ripow.
Sometimes I highlight the highlights from the latter half of the book. This part caught my attention.
It turns out that countries with high homeownership rates suffer from serious social ills, and the most important of these is that high homeownership rates are also associated with high unemployment rates.
Lipow credits the British economist Andrew Oswald with the idea that the right job for you may be far from where you live. If you lose or quit your job and are a renter, it is relatively easy to notify your landlord and move to a new job. But if you are an owner, the transaction costs are much higher. Most people rent out their homes or condos and don’t have the resources to move. They have to sell their homes, and anyone who has sold a home can tell you how difficult a deal it is. Real estate agent fees are high, waiting for a suitable buyer, etc. So you will spend longer looking for a new job, and you may end up with a job that is inferior to the one you were able to move to.
Why is this a problem? Shouldn’t people consider this when deciding whether to own or rent a home? Yes. But Jonathan’s point is that the government is putting its finger on the scale by subsidizing home ownership.
So Jonathan argues that the government should move away from encouraging and subsidizing homeownership. I agree. He argues that we should build millions of student housing units to further the millions of rental housing units that students currently rent. I wouldn’t do that. I was disappointed that Jonathan didn’t simply argue for deregulating housing supply, as my former co-blogger Brian Kaplan did. Build, baby, build. But maybe that’s one of the many reasons I’m not a progressive.
