Professor Sugrue’s “The New American Dream: Renting”(The Wall St Journal 14 August 2009) is a must read for anyone interested in shelter or in solving the Affordable and Accessible Housing Crisis or shelter in general. The article can be accessed at http://online.wsj.com/article/SB10001424052970204409904574350432677038184.html#mod=article-outset-box
Sugrue makes it very clear that:
1. The emergence of,
2. The overwhelmingly dominate run of, and
3. The crash of
What the real estate industry likes to call “The American Dream,” and
What many others call “The 50 Year American Nightmare,”
was NOT the result of free market decisions by well informed consumers.
It was NOT citizens voting with their dollars for what they love and want to experience with respect to human settlement patterns. That is especially true over the last 36 years.
The so-called “American Dream” is the vehicle that the real estate industry and land speculators have fashioned to make the most money fastest and will have a devastating long term impact on economic prosperity, social stability and environmental sustainability of contemporary society.
Sugrue argues that The American Dream / Nightmare has been made possible by the misunderstood and largely hidden role of Federal Agencies. Further, the Federal role did not start with the New Deal and did not end with The Fair Deal or The Great Society. It was a major component of The Ownership Society.
In Sugrue’s view Single Household Detached Dwellings would not be “The American Dream” but for Federal Agency intervention in the shelter and land markets. In addition, there would not have been repeated housing / land development bubbles without Federal Agency initiative and resources.
“Land Development Bubble?” Yes! You may recall the REIT Crash and the Savings and Loan Crisis. They cost investors and tax payers billions.
The most recent of these recurring housing / land development bubbles has caused the current Global Financial Meltdown. The Meltdown was caused by the fabrication of fraudulent securities based on bad mortgages. But the underlying factors – loans to poor credit risks, crooked appraisals, illegal lending practices, out of control compensation schemes, faulty regulation and Wrong Size House, Wrong Location dwellings – that fueled the BOOM and the BUST were all part of a grand scheme to drive Mass OverConsumption and speculation in shelter.
As EMR noted in the comments to the “Ignoring the Real Issues” post, Sugrue has put together great quotes, interesting data and a narrow perspective to come to a faulty conclusion. (As also noted in that string, Larry Gross gets a hardy vote of thanks for providing the link to the Journal coverage.)
Sugrue comes to the wrong conclusion because of three major discontinuities in his shelter-centric Conceptual Framework:
1. Without massive Federal (and state) Agency subsidies of the Autonomobile, most of the disastrous cumulative consequences of The American Dream / Nightmare would never have occurred.
In other words Federal Agencies can be blamed for dysfunctional human settlement patterns due to TWO mutually reinforcing Agency strategies. Sugrue blames dysfunctional a human settlement pattern on shelter strategies but that is only half the story. We will return to this point below.
2. It is NOT citizens owning a DWELLING that is the ROOT cause of the problems Sugrue cites but the configurations of the lots upon which the vast majority of the dwellings were built. We will return to the ownership issue, but first the third discontinuity.
3. Widespread use of rental housing is NOT a ‘solution’ to the shelter problem or to the Affordable and Accessible Housing Crisis.
Most shelter professionals agree there is great economic, social and physical value in ‘ownership.’ However, as RH points out in the earlier string, a nation-state of landlords would be no ‘dream.’ He also notes that landlords could write off the cost of money as an expense of doing business and so they would have an advantage when the mortgage tax deduction goes away as it must. (Even if Federal Agencies had more money than they knew what to do with it, the mortgage tax deduction should be limited to those at the bottom of the Ziggurat as noted in Chapter 22 – Without Shelter: The Affordable and Accessible Housing Crisis of TRILO-G.)
Absentee ownership is an ancient and universal generator of shelter dysfunction especially in Regions with market economies. Renting dwelling units ONLY in owner occupied buildings is a solution applied in some Cluster-scale and Neighborhood-scale Institutions posing as quasi-Agencies.
Now back to the larger ownership issue raised as point two above.
The central issue is not the ‘ownership’ of the DWELLING, it is the location of the dwelling in the middle of a lot and the resulting cumulative disaggregation of human settlement patterns that raises the cost and causes most of the dysfunctions that Sugrue correctly decries.
Lewenz does a nice job of spelling out the benefits of settlement patterns that do NOT contain individual lots – and do not provide space to drive and park Autonomobiles within the Urban fabric – in How to Build a Village. The cumulative economic, social an physical impact of ANY homogeneous configuration of single Household detached dwelling is a major focus of Part Two, Chapters 5 through 14 of The Shape of the Future.
In addition, many who live on a separate lot also live with the delusion that can do what ever they want on their ‘land.’ The cumulative result is dysfunctional scatteration and disaggregation of Urban society – and 95 percent of the population is Urban.
Over the past 200 years Industrialization and application of complex technology has resulted in the collective impact human habitation to intensify exponentially. Humans now have the ability to warp and destroy Regional, Continental and Global natural systems. One needs to go no farther than the Chesapeake Bay to understand this reality. The dysfunctional scatteration caused by extensive monocultures of individual lots exacerbates the problem. On-site mitigation of some impacts – sanitation and storm water for example – only make the problem of cumulative dispersion worse.
In other words the central issue is not “home ownership” but rather human settlement pattern.
It turns out that too many well intended and thoughtful citizens have been frightened by Garrett Hardin’s 1968 essay “The Tragedy of the Commons.” There can be tragedy in commons but that is a problem of management, not of ownership patterns. Solving the over-use of the commons is just one aspect of need for Fundamental Transformation in the way land the planets resource is managed and maintained. This is the topic of PART FOUR of TRILO-G – THE USE AND MANAGEMENT OF LAND.
As pointed out in this PART, ownership, control and management are separate functions impacting land.
Some have used the existence of bad public or shared land ownership, control and management as an excuse to over sell “the miracle of private ownership.” There is an important role for private ownership. However, there is also and important role for joint ownership – for example by a husband and wife – and for a whole range of shared-ownership options.
Intelligently applying a full range of ownership options is key to evolving functional land use patterns made up of Balanced organic components of human settlement. The issue is NOT private ownership vs public ownership, it is finding the appropriate role for individual ownership within the wide array of joint ownership options and paring that option with the appropriate land management strategy.
There are many ownership options for ‘non-free-standing’ dwellings. One is attached dwellings. In Planned New Communities (Balanced components of Urban fabric at Alpha Community-scale) built between 1967 and 2000 in the US of A, the majority of dwellings are ATTACHED, not DETACHED dwellings.
Condominiums, cooperatives and other arrangements come to mind as a way to “own” a home and not have a free-standing dwelling on an individual lot. Condominiums in particular have become poster children of ineffective Cluster-scale governance and management. That is because states have failed to use their ‘reserved powers’ to evolve functional governance structures below the municipal level. Current governance structures fail to reflect the evolution from an agrarian society to an Urban society. Condominium and Homeowners Associations are notorious examples of bad governance in large part because they have no role the formal governance structure. There are, of course at this time no functional Regional / SubRegional governance structures that reflects economic, social and physical reality in the US of A.
Agencies have also – especially Federal Agencies in the West – given ‘public’ ownership of land a bad name due to bad management. This gross failure has been intentionally use to wrongly condemn all shared-ownership arrangements.
It is axiomatic that the scale of the land bay and the proximity of the Urban enclaves should determine the level of ownership, control and management of Openland. See Adirondack land use control system and PART FOUR – THE USE AND MANAGEMENT OF LAND in TRILO-G.
The importance of shared land ownership in functional human settlement patterns and in solving the Affordable and Accessible Housing Crisis is mirrored in the importance of shared-vehicle systems in solving the Mobility and Access Crisis.
Finally lets us turn to the last of Sugrue’s oversights with respect to the causes of settlement pattern dysfunction (aka, The American Dream / Nightmare):
By focusing on just the Federal role in the subsidy of scattered dwellings, Sugrue masks the problems with Federal subsidy of Mobility and Access.
The fact is that, but for Large, Private Vehicles with which to access the dispersed dwellings on individual lots, most of the problems Sugrue sites would never have arisen.
It is not just the government subsidy of the dwelling – the process of building and financing shelter – that is at the root of the problem but the Federal Agencies’s role in subsidizing the dominance of the Autonomobile as the primary option for Mobility and Access – what is good for GM is good for America.
There is a long history of Federal dominance in transport infrastructure. It started with post roads, stage routes and canals during the Confederacy and expanded after the adoption of the Constitution to railroads and then to Roadways (aka, Motorways) and finally to Air travel facilities.
A place to get a good summary of the Federal role in Autonomobile is Weyrich and Lind’s 2009 book Moving Minds: Conservatives and Public Transportation. Weyrich and Lind have taken on what they calls “the anti-transit troubadours” (including Winston and Shirley profiled in the earlier post METRO FINGER POINTING 24 June 2009, and the subject of QUACK, QUACK, QUACK 18 August 2009.)
In order to establish a base from which to attack myths about ‘transit’ (aka, shared-vehicle), Weyrich and Lind needed to destroy the illusion that “Automobiles pay their own way but public transit is ‘subsidized.’
They document that from the 1890s on, Federal Agencies were spending more to support Roadways than railways. There had been – past tense – huge subsidies, especially in the form of land grants from before the Civil War to the completion of the transcontinental railways but by the end of The Long Depression in 1896 the focus was on Roadways.
Federal Agencies never did aid Urban rail transport. In fact, as Weyrich and Lind point, out the Federal role was to hobble the privately owned Urban rail systems (subways, trolley lines, streetcars, interurban lines and commuter rail) by turning a blind eye to the municipal and state regulation and rate control.
As the Urban fabric morphed from Agrarian society ‘cities’ to Industrial Centers and then to New Urban Regions the municipal and state regulatory regimes did not allow the private suppliers of shared-vehicle services to evolve new rate structures, equipment and infrastructure to meet the changing shape of travel demand.
On the other hand, there is a Federal revenue source for support of Roadways that only recently has been extended to Agency owned shared-vehicle systems. This came long after a settlement pattern that favored Autonomobiles was dominate over the majority of every New Urban Region in the US of A.
There was also the well documented role of the Autonomobile Industrial Complex – not just the car companies but all those who benefitted from use of internal combustion engines on Roadways – petroleum, rubber, insurance and of course land speculators – to buy up and then tear up the Urban rail systems in order to promote the use of Autonomobiles and buses on the subsidized Roadways.
The bottom line is that Sugrue provides an import part of the picture, but not the whole picture. One would hope he fills in these gaps in his forthcoming book on “the history of real estate in modern America.”
EMR