A New Rendition of Social Housing and Credit

While I understand that we need to increase savings and discourage borrowing, making it harder for people to own a home will only further gentrify the population by maintaining the elites stranglehold on property. What society needs to do is make it easier for lower/middle-income families to purchase property so that they can build equity rather than be a slave to landlords. Ban refinancing, put limits on credit card debt, ban payday loans and other nefarious lending practices. Lower school debt. These are things that would help stability in the debt markets. However, making it harder for people to build equity is only going to further the rich’s centralization of money. Because they can afford those mortgages. I can’t. The solution would be to interject non-market based housing which is affordable for low/middle-income people to purchase so that they can get out from under the thumb of landlord dictators.

[I was then accused of attempting to bring in a George W. Bush style of credit collapse. I of course disagree with this assertion and revealed the person’s entrapment into an archaic economic thought.]

George W. Bush advocated for bank elites to swindle the poor, incompetent and hyper-consuming masses. I am in no way advocating this. In fact I wouldn’t even allow the private banks to touch the mortgages I am talking about. The problem with your theories is that they are based in the dead dogma of classic neo-liberal laissez-faire economics. Our economy is a complete social construction which does not have any a priori legitimacy. We can formulate it how we want. Markets do have certain economic realities to which they adhere but not everything must succumb to markets. Markets should not dominate our economic reality, they should only be a part of it.

Firstly, I do not want housing prices to fall as that destroys wealth which becomes a downward spiral. The depression of the 1930s illustrated this clearly. The credit collapse in the US birthed itself because of banks which gave a $400,000 mortgage on a $200,000 house. A bubble of wealth was created, millions were swept up in this credit bubble, and when it collapsed people were left with massive debts which crippled them. This credit collapse was based on the irrational idea that a well funded, yet irrational, credit and consumer market will expand ad infinitum and thus, so will the rest of the economy; a classic conservative ideology. When credit dried up because wages did not increase with credit housing prices began to fall. Suddenly people had $300,000 in debt with only $100,000 in equity. Such a collapse in wealth would not help anyone, even the lower-income earners, because their wealth would fall with everyone else’s. Jobs would be lost and mostly by lower income earners on the bottom rung of society. Thus, collapsing housing prices is not the answer housing affordability and credit debt.

We need to put limits on credit card debt, ban payday loans, home refinancing and other nefarious lending practices to stabilize our credit markets and create a non-consuming eco-friendly lifestyle. What I advocate for is free markets surrounding a tightly controlled and regulated environment in which non-market housing allows people to build equity.

Houses should be built which are affordable to lower/middle-income families and they should be interspersed in economically diverse communities; i.e. not coral all the poor, or less rich, into their own little area. These places would be financed through a government bank (not Bush style private profit interest) at interest rates around 2% over prime. Purchasers would have to clearly show that they can afford this mortgage. If they cannot prove this they would be put on a program to get their debt in order so that they could afford the mortgage, thus encouraging debt reduction and stability. The price of these houses would be outside of the market and be index to inflation. Thus a low/middle-income earner could build equity in a home and, if they so choose, use that equity to one day buy a market priced home. Since these homes would be indexed to inflation they would not lose their investment, but it would always be in range of low/middle-income earners. This allows a “free”-market to keep working but does not make the market: GOD OF ALL. Thus you would have a “free”-market for housing surrounded by a strategic wealth creating housing market based on community, equality, equity and accessibility.

Now you probably will call me a dreamer. “This is INSANE” you will say. Yet for society to progress we must dream. I am in no way saying I have all the answers, or even that this IS the answer; but your economics is old, tiresome and perpetuates the slavery to the landlord. We have flown to the moon, cracked the human genome, broken the sound barrier, split the atom and yet we still rely on 18/19th century economics. Why? Because it keeps people in power and centralizes their wealth. Simply put, the corporate aristocracy is why our economics have not changed. It wouldn’t be to their benefit.

Such policies as I described would teach good money management, would inhibit hyper-consumption, which is detrimental to the planet, and would create a more equitable, safe and crime free society. Jails do not deter crime. Giving someone a stake in their community and life, does deter crime.

Or we could continue what we are doing. Seems to be working so far :P.