Back in July, I did two posts (here and here) on it Progressive Public Policy by my friend and former colleague Jonathan Lipow.
Sometimes I’ll hit highlights from later parts of the book. This one caught me.
It turns out that countries with high levels of home ownership suffer from serious social ills. And of this, the most important thing is that high rates of home ownership are associated with high rates of unemployment.
Lipow gives credit for this discovery to British economist Andrew Oswald. The idea is that the right job may be somewhere far away from where you live. If you lose or quit your job and you are an employer, it is easy to give notice to your landlord and move to that new job. However, if you are the owner, the labor costs are very high. Most people will not have the wealth left over to simply rent a house or condo and move; they will need to sell, and anyone who has sold a house can tell you how much work it is: high realtor fees, waiting for the right buyer, etc. So you will be looking for a long time for a new job and you may find a job that is less than the one you would move to.
Why is this a problem? Can’t people consider this in their decision to own or rent. Yes. But what Jonathan is saying is that the government is putting its finger on the scale by helping homeowners.
Jonathan is therefore advocating that the government move away from encouraging and subsidizing home ownership. I agree. He encourages continuity by building millions of student housing units, making available the millions of rental properties that are now occupied by students. I wouldn’t do that. I’m disappointed that Jonathan didn’t just advocate for the withdrawal of the housing supply, as former blogger Bryan Caplan did Build, Baby, Build. But maybe that’s one of the many reasons I’m not a progressive.
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