“Having to manage a complex home produces a deadweight loss to both society and the individual.” - John Tamny and Jack Ryan (2024)
A man’s home is his castle, says the old adage, but John Tamny and Jack Ryan thumb their nose at the sacred “American Dream” of home ownership in their new book Bringing Adam Smith into the American Home. They are not the first to do so—the great Florence King derided it often and with pleasure—yet, to still do so, makes this book a rare breed. In this telling, one of the holiest of America’s cows is gored by pointing out that the housing emperor has no economic clothes.
“The book isn’t so much a polemic against housing as it’s a call for reason,” the authors announce straight off. They don’t pull any punches, mocking “the emotional and almost patriotic call to own a home” and the “housing jingoism” that fuels it. They do a fine job of pointing out that home ownership, in the long run, trails equity returns and that owning a stock portfolio doesn’t require you to waste time wandering a Home Depot looking for that perfect wood fastener.
Their argument is based upon Adam Smith’s observation that, in the authors’ words, “what limits our movement, restrains our progress,” and therefore they urge the removal of all impediments to mobility—and this leads them to question the very idea of home ownership itself: “ownership of property quite simply makes us less mobile.” Besides the lost opportunity of being able to pull up stakes and go, they ask if the average American buyer bothers to factor into their calculations all the maintenance, labor, opportunity cost, and loss of leisure they will pay, in addition to the mortgage and taxes. And here, in terms of dollars and cents, they are on solid ground.
However, a house is far more than just an investment; it’s the place where we lay our heads and make our memories with family and friends. It is, in other words, priceless. It cannot be measured on a spreadsheet because you can’t put a number on it. The safety, security, and pleasure from putting your family into a home in an area full of other family and friends can easily outweigh all the negatives that home ownership undoubtedly brings, but they are given too little weight in the reckoning here. The authors offer instead a cold, calculated “having to manage a complex home produces a deadweight loss to both society and the individual,” and that just seems a bit harsh.
Most importantly, the authors leave out the answer to the great question raised by this book: what’s so great about “progress”? I harp on it because that is the foundation of their argument, this idea of evermore for everyone. Right off, in the book’s introduction they promise to show “why home ownership may not be the best answer if the goal is progress” (emphasis mine). So why should progress, however defined, be the goal? What are the dangers to a greater mobility that sends families and friends flying apart, abandoning each other to chase the highest paycheck? How is that good for society? What about the enervating effects of wealth on both individuals and societies? Is the road to perdition not paved with the Sears catalogue and Amazon.com? Is this endless pursuit of economic growth a dangerous decline from republican simplicity?
The authors display both fine minds and writing talent; they exhibit economic good sense, offered in portions both large and small. It was a pleasure to swim among “what suffocates market signals blinds us,” “consumption doesn’t boost economic growth; rather, it’s the consequence of it,” and “falling prices...signal economic progress.” The book successfully pushes its ideas on how to make housing cheaper, Americans wealthier, and everyone more mobile, but it takes the foundation of its argument, the religion of “progress,” for granted.
Yes, there’s a cost to one’s mobility, ease, and wealth from owning a home, just as there is a cost to one’s mobility, ease, and wealth from getting married and having children. He who travels alone travels fastest is an old truism, but it can be taken too far. And building upon the authors’ call for reason and restraint when it comes to how much we value housing, my takeaway from this book is that the value which modern man puts upon progress could also use some reason and restraint.
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