[quote=jstoesz]You guys are missing the core issues here.
Nobody wants all the money concentrated in the hands of the rich (well
maybe a few rich people do). But by and large, conservatives want a
larger middle class and fewer poor people. The disagreement is not
over the goal, it is over the solution.
Redistributive policies may temporarily achieve the goal, but at
substantial unintended costs. In many people, they have a reverse
effect creating a culture of dependency. If we are serious about
solving the disparate income problems, we must be serious about the
unintended consequences.
Housing is a perfect example of where our social policy produced an
unintended consequence. We said, “look people who own houses are more
involved in their communities, value education more highly, have
better marriage rates and few single parent households. We should
encourage more people to buy houses so that they will be better
citizens.” It was the classic correlation is causation fallacy.
People who owned homes had all those characteristics because they had
the personal and financial skills to achieve home ownership. Home
ownership did not bring about those attributes. And now look at the
unintended consequences.
I think too many people believe that if we support the poor to enable
them to live like the middle class, they then will acquire the life
skills to then self sustain that lifestyle and eventually the support
can be removed. I think again the opposite occurs, people lose the
impetus to acquire those necessary skills.[/quote]
You are totally correct about the previous relationship between home ownership and personal responsibility, but the truth behind the housing bubble had nothing to do providing people with the opportunity to buy their own home. That was the cover provided by those who wanted to see unchecked credit expansion. The bubble was pushed by people in the financial industry who saw an opportunity to expand creditat an incredible pace, and make money on each transaction. Look at transaction volume over that time:
If people were only encouraged (even allowed!) to buy a *single* home as a a primary residence, the housing bubble would have been much, much smaller. What pushed things over the edge were speculators competing with traditional buyers, increasing demand at an accelerated rate via loose lending, and pushing up prices as a result. Loose lending, by itself, did not cause the housing bubble/bust. It was the combination of loose lending and speculation that caused the problem to become so large and damaging.
