Sunday, May 18, 2008

Say What?? -- Bob Shiller plunges into the deep end of the pool

In his Sunday's NY Times op-ed, "The Scars of Losing a Home", we find the following passage:

Homeownership is fundamental part of a sense of belonging to a country. The psychologist William James wrote in 1890 that “a man’s Self is the sum total of all that he CAN call his, not only his body and his psychic powers, but his clothes and his house, his wife and children, his ancestors and friends, his reputation and works, his lands and horses, and yacht and bank account.”

Homeownership is thus an extension of self; if one owns a part of a country, one tends to feel at one with that country. Policy makers around the world have long known that, and hence have supported the growth of homeownership.

What? Holy Crap, people, "belonging to a country"? Homeownership is about political indoctrination?

And man, where did that quote come from? we are making an argument based on one sentence of opinion by some dude from the 1890s?

Even granting the premise "homeownership is an extension of self" (whatever that may mean), it in no way implies, proves or relates to what's cooking up in the second clause of that sentence.

If I could summarize, the argument appears to be this: some guy 118 years ago said your home is part of your self and that proves that owning a home gives you solidarity with your country, so we should bail out the foreclosees before they become unpatriotic.


Just a Thought said...

It is important to remember that the current "housing crisis" arose from the irresponsible fiscal policies of Alan Greenspan (among others). When he took his seat at the Fed in the late '80s, he leveraged debt to push growth. Through the '90s it worked because his excessively cheap lending practices allowed both companies and individuals to expand their ownership too quickly. Individuals purchased homes that were more expensive than they could afford, and companies expanded too quickly (look at Linens and Things VS Bed Bath and Beyond for an excellent example). The organizations that benefited from this expansion the most were the investment banks, that were making profits as if they were just printing their own money (which, in a sense, is what the Fed allowed them to do).

Now that we have bailed out Bear Sterns "for the good of the economy" why should we oppose legislation that would help individuals out of a problem caused by their banker's bad advice? It seems like the government has a responsibility for making up to its citizens the misdeeds of individuals put into power not by democratic action, but by appointment.

More to the point of your argument. It doesn’t matter whether something was said in 1890 or 10,000 BC, truth is truth. Voting and serving in the military are two of the most patriotic acts any citizen can perform. Yet, we bring our vets back from foreign wars, fail to give them the medical care they need (both mental and physical), and watch then tragically descend into mental disease and homelessness. But, how many homeless people vote? The percentage of homeless individuals who are vets is outrageously high (so they were patriotic at one point), and yet they refuse to vote (they not longer take part in patriotic activities). Seems like there is some correlation between homelessness and patriotic activity.

Just a Thought said...

To put some stats behind the argument above:

There are ~760,000+ homeless people in America.

There are ~ 750,000+ veterans in America.

~200,000 (29%) of the homeless in America are Veterans. Doesn't that just turn your stomach? They were fit enough individuals to fight and risk injury or death for our country, but now we allow them to live on the streets, pathetic truly pathetic.

But it gets worse. All but 9 states require a mailing address to register to vote, severely limiting access to homeless individuals, and the strict voter ID laws recently affirmed by the Supreme Court keep homeless people from voting just as they keep octogenarian and nonagenarian Nuns from voting. Now our veterans, who were fit enough to fight and risk injury or death for their country are among the most disenfranchised.

br said...

I'm relieved to see it's not a new trend for psychologists to draw ridiculous conclusions from their research. But if we take his word for it...

People with 99% mortgages are 1% homeowners.
People with 110% mortgages are 10% anti-homeowners.
Banks are the biggest homeowners in the country.
Therefore, the policy of bailing out Bear Stearns and not foreclosure "victims" is pro-America.

Anonymous said...

It's unfortunate that 200,000 of the homeless are veterans (if that's true), but I'd say it's understandable. Based on the experience of the lower middle class neighborhood I grew up in, a lot of people join the armed forces because they don't have a lot of other options. Becoming a soldier or sailor may teach some discipline, but it doesn't raise your IQ or confer ambition where there was none in the first place. Is it any wonder that some of them drift into homelessness when they get out of the service?

Just a Thought said...

If you do a quick search, you will find that all of my stats are based on the gov'ts own numbers. 200,000 is accurate based on the VA's statistics:

There are certainly a number of reasons for the homelessness of our vets. My guess is that some do learn useful skills, but many others do not, leaving them with few options once they leave the military. My second guess is that many of them are wounded, physically and mentally, and unable to hold a job as a result. My third guess is that the GI Bill has been systematically under-funded (well that isn't a guess, it is a reality) making college still too expensive for troops even when they finish their service. All three of these problems can be addressed, and will certainly reduce the number of homeless helpless vets. Considering them to just be lazy and incompetent is an unacceptable excuse.

br said...

I think I know why this post turned into a discussion of homelessness. It's symantics. When TV's talking heads say "people are losing their HOMES", they really mean "people are losing the HOUSES they can't afford." Most people don't become HOMELESS when they lose their HOUSES.

Prosperity is a ladder. First you're a dependent, then you rent an apartment, then you finance a home you can't afford (making you think you're on a higher rung than you really are), then you go back to renting an apartment. It's not really like Candyland.

Just a Thought said...

"br": this discussion started as a response to Angus' post discussing homeownership and patriotic indoctrination. Can anyone be more patriotic than serving in the military and risking their life for the country? If we are allowing the most patriotic members of our society to become homeless, then we are failing as a society.

Angus suggested that home ownership and patriotic indoctrination was a ridiculous correlation to make.

If I could summarize, the argument appears to be this: some guy 118 years ago said your home is part of your self and that proves that owning a home gives you solidarity with your country, so we should bail out the foreclosees before they become unpatriotic.

I turned it around and suggested that we as a society were allowing our most patriotic to go homeless, showing that there is a correlation between home ownership and patriotic behavior, albeit not what most would like. Maybe we should help those who are losing their homes, because they are not the incompetent louses that many around here seem to suggest.

Unfortunately the argument I am making is not “candyland”, but it requires one to think, understand, and empathize with others in our society. "br" clearly you do not realize how financially devastating going through foreclosure really is, it strips “forclosees” of savings, credit, and future earnings (because you are liable to the bank for the difference between the final sales price of the house and the value of the mortgage). You need money, savings, and future earnings to rent.

br said...

JAT, You're right. That was a blatantly unfair and inaccurate suggestion on my part.

To be explicit, you're suggesting there is some truth to Schiller's claim because:
Homeless vets were inherently patriotic at some point, but now many of them don't vote due to despair and/or systemic exclusion.

From 10 years in banking and 6 years renovating houses in 're-emerging' neighborhoods, I do know a bit about foreclosures. They're expensive and healthy learning experiences for both the bank and the borrower. But, they don't need to be expensive for the vast majority of us who have behaved responsibly.

Losing your house, having a lot of debt, declaring bankruptcy, being homeless, etc do not represent the end of existence. They are merely circumstances people find themselves in as a result of a series of unfortunate decisions. According to (which benefits from making homelessness look as bad as possible), ~3.5 million people become homeless every year, but only ~800K at any point in time. Every year, literally millions of people are hitting rock bottom and somehow turning things around. I would rather live in a place that would allow/force me to take responsibility for my mistakes. Hell, I could have been born in a grass hut in Nigeria with no one around even capable of patronizing me.