Owning a house has long been an integral part of the American dream, and for nearly a century the U.S. government has pursued policies to encourage and assist homebuyers. For example, there are myriad tax breaks associated with buying and selling a home, and the government now backs a jaw-dropping 97 percent of all new mortgages. But the real estate bubble has demonstrated just how misguided — and, in fact, "un-American" — this approach is, say Don Watkins and Yaron Brook at Forbes. It was a textbook case of what goes wrong when the government distorts the marketplace and meddles in private economic decisions. Here, an excerpt:
America's distinction is that it was the first nation founded on the principle that you have a right to pursue your own happiness without government interference. But the government's homeownership crusade means it gets to decide how you should live, and stick-and-carrot you into living that way.
Take the mortgage interest deduction. It so happens that Yaron has a mortgage and Don rents. Both of us have good reasons for our respective choices, but because the government has decided everyone should buy a home, for each dollar Yaron pays on his mortgage, he saves a few pennies on taxes, while Don does not. Instead of playing the role of impartial umpire, the government is playing the role of paternalistic master: "To keep more of your money, do what I want."