August 4, 2009

NYT: Let's Burn Down the Economy All Over Again

From an op-ed in the New York Times:
Safe at Home
By DALTON CONLEY

THE financial crisis has given rise to all sorts of wrongheaded ideas, among which is the notion that we should not subsidize the “losers” who can’t make their mortgage payments. In fact, the solution to our troubles is not to restrict homeownership, but to expand it.The timing is right.

Now that prices have collapsed in many areas, low-income Americans might be able to afford to purchase homes for the first time in years. Sales of new homes in June were down 21 percent from last year. This would seem an ideal time to encourage low-income families to buy homes — if we weren’t haunted by misconceptions about the roots of the subprime mortgage crisis.

This “blame the victim” mentality is hardly new. It goes back to the 1960s, when the anthropologist Oscar Lewis wrote an article whose title took root in the American public consciousness: “The Culture of Poverty.” His basic argument was that poor people adopt certain practices that differ from those of “mainstream” society in order to survive. These might include illegal work, multifamily households or serial relationships in place of marriage. Once these survival strategies are in place, the argument goes, they take on a life of their own and lead to missed opportunities.

Personally, I suspect that the main reason that poor people are less likely to pay back their mortgages than rich people is because poor people tend to have less money than rich people, but, then, I'm not the Dean of Social Sciences at NYU like Dalton Conley, so what do I know?
... But Lewis’s theories seem to have gained new life in the notion that a certain stratum of Americans just aren’t capable of homeownership, and that the increase in homeownership rates contributed to the real estate bust. The “natural” rate should be around 60 percent of American households, some analysts say, not the 70 percent it reached in 2004. That’s an unfortunate argument, because owning a home can be one of the best ways for a poor family to save and accumulate assets: recent history aside, the value of a house does typically rise, and its owner avoids paying rent and gets a tax break.

We could improve the housing market as well as the security of poor families by making homeownership more attainable.

Decades of government programs to make homeownership "affordable" only succeeded by 2007 in making homeownership insanely unaffordable, so I guess the plan is to replace the word "affordable" with the word "attainable" and then just rerun the same old stuff.
Currently, the biggest policy to support homeownership other than the mortgage interest deduction is the Federal Housing Administration’s mortgage program, which works by insuring loans made to buyers through traditional lenders (that is, it decreases risk to lending agencies by underwriting the loan). However, many of the most disadvantaged Americans, and minorities in particular, do not qualify for F.H.A. loans because of their low net worth and other factors.

Into this breach stepped a North Carolina organization called Self-Help. In 1998, Self-Help received a $50 million grant from the Ford Foundation. The money was used to insure the mortgages of low-wealth families that aspired to homeownership, but had trouble getting loans in the private market. More than $2 billion in mortgages were guaranteed over five years, making homeownership possible for 27,000 families that might not have qualified for conventional loans.

This experiment of sorts provided evidence that there was a market failure in mainstream lending that was shutting out deserving borrowers. The foreclosure rate of lenders participating in the program was below the national average. This tells scholars of finance that something is not working in the traditional loan market.

Hmmhmm, or maybe it just says that home prices went up in North Carolina from 1999 to 2004, so nobody got foreclosed upon because, if you couldn't make your payments, you could always sell your house for more than you owe. Of course, I'm not one of those "scholars of finance" who have been doing such a bang-up job lately, so don't take my word for it.
... By expanding the Self-Help program “to scale” — by underwriting mortgages for people who are now excluded from F.H.A. — the government could not only support affordable refinancing of existing mortgages but could also extend the dream of homeownership to households now shut out of the market.

The "dream of homeownership" ... whom have I heard that phrase from before? Angelo Mozilo? George W. Bush? Henry Cisneros? Bill Clinton?
Instead of critiquing low-income buyers who may have made reasonable calculations in an upbeat housing market, we should focus on building a more comprehensive system to aid low-income purchasers and repair the housing market in the process. Otherwise, we are squandering an opportunity to move past ill-formed moral discourse about poverty and its causes.

Dalton Conley, the dean of social sciences at New York University, is the author of “Elsewhere, U.S.A.”

This article has been revised to reflect the following correction:

Correction: August 5, 2009
An Op-Ed article on Tuesday, about helping poor families buy houses, misstated the home state of Self-Help, a group that insures mortgages. It is based in North Carolina, not South Carolina.

The North Carolina angle is not insignificant: Self-Help is centered in North Carolina, which has had a Goldilocks housing market -- not too hot, not too cold -- for years. So, the foreclosure rate in North Carolina is below the national average.

My published articles are archived at iSteve.com -- Steve Sailer

38 comments:

Posec said...

"...In fact, the solution to our troubles is not to restrict home ownership, but to expand it.The timing is right."

If that paragraph had concluded with 'end sarcasm', this article would have had the making of a grand satire. It is also laughable that the thrust of the argument for increased rates of home ownership are so the formerly poor people can clutter their spacious houses with assets of hopefully more than dubious value. And here I thought the left deemed covetous capitalism as an unparalleled evil...

Anonymous said...

Idiot.

Dalton's Wiki said...

Dalton Conley is the author of the memoir, _Honkey_, which like most of the books by white people claiming to have grown up among blacks had considerably fewer black people than I'd been led to expect. His _Pecking Order_ about the inequalities within families based on the different experiences of the children was fascinating.

testing99 said...

Pathetic really. If the NYT wanted to increase home ownership, it ought to increase wages by restricting illegal immigration. But that would impact the ability to NYT editors, writers, and readers to have Rosa the illegal alien nanny help raise the kids so parents can live "fabulous" lives of fulfilment.

Nanonymous said...

Unbelievable! This too could have easily been from Onion! Take this, every reader who does not have have a tenure in one of our institutions of higher education: clowns like this have no problem! (And you sponsor them).

agnostic said...

recent history aside, the value of a house does typically rise

It took me less than a minute to locate and load up an Excel file by Robert Shiller that completely refutes this stupid claim, which apparently isn't dead yet.

Google Shiller, click on Online Data tab, then the Excel file for housing prices since 1890. There's no historical rise at all.

The NYT should've had fun:

"recent history aside, the value of a house does typically rise [no it doesn't -- Editor], and its owner avoids paying rent and gets a tax break."

sabril said...

"Idiot."

That was my initial impression, but will you still feel that way when he gets appointed to some lucrative high level position at the national version of "Self-Help"?

Will you still feel he's an idiot when he is awarded a genius grant from the Macarthur Foundation? Or some other big fat grant?

Anyway, the guy is under 40 and he's already a tenured professor and department chair at NYU. Not too shabby, eh?

Do you think he would get far in life by telling the truth, i.e. that for the most part, poor people are irresponsible screwups who should not be owning homes?

Of course not. The way to advance in his field is to scream at the top of your lungs how wonderful the emporer's suit is.

Pat Shuff said...

Homeownership, defined by owner-occupied homes, reached 70% with the help of government policies and programs that weakened lending standards. Actual homeownership, home value minus real estate related debt, sunk to WWII levels,
less than 50%. One could say lending institution home ownership achieved new highs as the average homebuyer's stake in their residences sunk to fifty year lows. In the credit boom the same situation is likely regarding owner occupied refridgerators purchased on revolving credit. And owner occupied vehicles and shoes and shirts and flat screens and lettuce and bananas.

People who spend too much end up being owned by the thrifty. This is what the professor is advocating, a sort of slavery.

The workings of finance and financial history shaping history's course is a vast black hole of ignorance across the broad swath of academia while its graduates populate the public policy machinery, engaging in debate over initiatives and proposals absent the requisite knowledge or experience.

It is very expensive being poor in America and has been getting moreso for a long time. I trust this professor is also a big fan of any and every cost contributing to that, not understanding the degrees of separation, the _chains_ of linkages between where those costs are imposed and where they are borne.

rash:

1. acting or tending to act too hastily or without due consideration.
2. poison Ivy League PhD

Anonymous said...

Little secret about the poor; their values are absolute shit. They save nothing, they spend their money on useless crap, they borrow like drunken sailors if you let them, they're impulsive, etc.

That's why they're poor - either they behave this way, or they're juveniles raised in such a home. Heard a stat on the radio the other day (don't know how accurate it is, given the typical demagogue's level of honesty) that something like 60% of those born to the lower class escape to the middle class.

~Svigor

l said...

It wouldn't occur to this sociology professor that he's wandering into an area he knows nothing about. Oh wait ... this is the sort of thinking that is self-evident for knuckleheads like Conley. Mortgages are not a contractual financial matter between individuals and banks, they're a social justice issue.

Anonymous said...

I'd still like to push my "Rosa the latina nanny is for losers" meme.

Surely part of the reason for having a nanny is not just to take some of the work out of your hands. Its to get the mothering services of someone of your own social class or a close equivalent. That aint Rosa.

nsam said...

blather doesn't matter; housing loans are now tightly regulated. sales are at an all time low in my area, partly due to stricter lending standards and unwillingness of sellers to let go at lower prices. maybe the natural rate will be closer to 50 than it is to 70?

Anonymous said...

outrageously out of touch with reality...but how is that different than anything else on the NYT editorial pages? the sooner we ignore that pathetic rag and let it die the better.

Posting Anonymously said...

You people seem to be [either consciously or unconsciously] dismissing the possibility that these nihilists WANT PRECISELY [either consciously or unconsciously] to see to it that the economy gets burned down all over again.

And again.

And again.

And again and again and again and again until the economy ceases to exist altogether and Mother Gaia reclaims her lawful birthright.

Anonymous said...

WOW! That guy is NUTS!!

Tanstaafl said...

House. Healthcare. College. Is there anything the bolsheviks don't want to give the 6 billion undocumented Americans?

Blame the victim? The victim is anyone who actually pays full price, and to top it off pays the taxes that pay for everyone else's "free" things.

Anonymous said...

steve, would it be possible for productive achievers to sort of opt out of the country? there's always talk about the wave of latino voters and what not, but wouldn't it be easier just to slip the chain and stop paying taxes in large numbers? what would happen? is the right co-dependent?

Anonymous said...

Goldilocks housing market here, too.

Our home prices have dropped 2% since last year and are 3% higher than 2006. Net 1% increase.

Anonymous said...

what's the connection between CONLEY/NYT and GS? after all, GS has some spare cash again (thanks to the tax payer) and is looking for renewed action. nothing like getting your shills to nudge government in the right direction...

albertosaurus said...

I used to be a sort of second rate housing expert. When I was in graduate school I worked for planning agencies in developing mathematical models of housing. That experience is the main reason why I can't get excited about the predictions of climate models.

Government housing policy, housing models and Professor Conley all tacitly assume that home ownership is desireable. Home ownership is desireable for society as a whole - less so for the people involved.

Fly over America on any Sunday afternoon and you will see home owners digging post holes, mowing lawns, and painting sheds. You will see fifty million men sweating on property maintenance.

Where are the renters? At the beach.

What Conley and the others forget is that not everyone wants to sweat on Sunday. For reasons I don't completely understand I do. I really love to struggle to repair my hillside fence. But it was not always so. I was a renter when I lived in Haight during the "Summer of Love".

The history - the very sad history - of federal housing intiatives has always been the continuing failure of the beneficiaries of the housing subsidies to do routine maintenance. In Detroit Section 8 houses were said to have been "abandonned". This meant that the poor people who were given a home were not prepared to work on it every Sunday. The roof soon leaked, the yard became overgrown and the newly created "owners" just walked away.

Being a renter is rational for many people. It affords you more leasure. The landlord can crawl under the sink and fix the plumbing. That was my attitude when I was a hippie. If I had been given a house when I was 21, it would have crumbled into dust. I wanted to be free, not a slave to a property.

Anonymous said...

That's the biggest danger from all the denial about the causes of this collapse. Those who do not learn from history are doomed to repeat it.

Toadal said...

THE financial crisis has given rise to all sorts of wrongheaded ideas, among which is the notion that we should not subsidize the “losers” who can’t make their mortgage payments.

Chinese mythology describes a fierce, protective creature called a Pixiu who creates wealth for its owner. This fat, handsome wingless creature is part dragon, horse, unicorn, and lion and favors eating jewelry, gold, and silver. However while the Pixiu has a mouth, it has no anus, so the wealth it eats remains inside for its lucky owner.

The Pixiu not only embodies many favorable traits of conscientiousness (self control, responsibility, perseverance, and loyalty) its frugal physical nature demonstrates a valuable lesson.

Waste nothing to accumulate wealth.

It is also believed a winged Pixiu helps students in furthering their studies.

Whether conscientiousness, like IQ, is substantially hereditary will be known in the coming years. The smart money has placed its bet on hereditary over environment and if that's so, what solutions will the Dalton Conleys of the world then have for our problems?

Anonymous said...

"I'd still like to push my "Rosa the latina nanny is for losers" meme.

Surely part of the reason for having a nanny is not just to take some of the work out of your hands. Its to get the mothering services of someone of your own social class or a close equivalent. That aint Rosa."



Yeah this is evidence of the growing divide in America. Compare the feminist, leftist, nanny employing career woman to the traditional, college educated homeschool mother with five smart kids.

Both these ladies likely went to public schools and public colleges. The more feminine woman had more children and more interest in cooperating with her spouse than competing with him. The more career oriented woman had fewer children and invested in them by making sure they were in good schools and other programs. The homeschool mom invests her time and talent at home and personally supervises and interacts with her children. Psychologically speaking kids who spend well over 95% of their time with their families bond more closely with them because no one else is available. Likewise kids who spend less than 50% of their waking hours with their parents will also have strong ties with those outside their families.

Most middle class families are somewhere between these two. However 60 years ago, they were all between. The far ends are growing.

The third group is Rosa's kids. Rosa the nanny is not only a poor role model for her employer's children, she doesn't have time for her own children, putting them at risk as well.

Ladies, if you are smart and educated, you are more qualified than most of teachers your kids will have. You also care more and are less likely to ignore your child's needs. Peers are not going to help your kids learn social skills. They can't learn social skills from people who don't have them. Kids can make friends at Little League or soccer, with neighbors, etc. They don't need school to make friends. You will never regret the time spent with your children.

Anonymous said...

Nannies are ridiculous. If a couple can afford to pay a nanny, one of you can afford to stay home with the kid.

"Fly over America on any Sunday afternoon and you will see home owners digging post holes, mowing lawns, and painting sheds. You will see fifty million men sweating on property maintenance.

Where are the renters? At the beach"

Spot on. While I do aspire to homeownership (don't wanna live with my folks or share walls with people in an apartment building) owning a home isn't the be-all end-all of everything. An afternoon mowing the yard sure isn't one ritual I look forward to every Saturday or Sunday afternoon in the summer. I do it, but certainly not one of the high-lights of my life.

-Vanilla Thunder

Anonymous said...

I homeschool and I have a cleaning lady AND a nanny. Do you clean the toilet at your job? Do you put an infant down for naps while you're having meetings? Are you vacuuming your office floor? I didn't think so. Homeschooling is as much work as a "real" job if not more. You all are imagining these fantastic homeschooling mothers of 5 with perfect houses and happy children and wonderful marriages. There are very very very few real people like that. They exist, but they don't need a lot of sleep. Mostly homeschooling mothers either have disaster areas for houses, or they have one child and they ignore their husband, or they make the older girls do infant care and domestic work to an extent that interferes with their schooling, or the children aren't really getting educated. People are completely unrealistic about women's work because they've mostly never done any. It's grueling. It's like Albertosaurus says about doing property maintenance on Sundays, except it's not just Sunday. It's all day, every day. If you guys were real conservatives you'd back me up in having domestic help, but you're just misogynistic whiners.

Anonymous said...

"That was my initial impression, but will you still feel that way when he gets appointed to some lucrative high level position at the national version of "Self-Help"?

Will you still feel he's an idiot when he is awarded a genius grant from the Macarthur Foundation? Or some other big fat grant?"


Yes. I'll even add "fucking" in front of it.

annoyed mom said...

To the homeschooling mom:

Who watches your nanny's kids? Don't you get the point, these are the kids that get into trouble due to lack of supervision.

And how many women can afford to stay home, have a maid and a nanny. You are just making the case for women to drop their kids off at school/daycare because most people can't afford what you are describing.

ben tillman said...

THE financial crisis has given rise to all sorts of wrongheaded ideas, among which is the notion that we should not subsidize the “losers” who can’t make their mortgage payments.


That is a lie. The issue is not whether we should subsidize "the 'losers'". It is whether we should be forced to subsidize "the 'losers'", and, unless you approve of slavery, the answer is an emphatic "NO!"

ben tillman said...

And here I thought the left deemed covetous capitalism as an unparalleled evil...

The Left seeks to establish freedom for aggression -- an absence of a mechanism to enforce moral constraints. In this sense, Capitalism is one manifestation of the Left.

See Tawney's "Religion and the Rise of Capitalism", pages 59 and 146, for example.

Anonymous said...

The synopsis of his previous book, HONKY, is much much much too good not to copy here:

"I've studied whiteness the way I would a foreign language," declares Conley at the outset of his affecting, challenging memoir, laced with the retrospective wisdom of the sociologist (at New York University) he has become. As the child of bohemian, white parents, he grew up in an otherwise black and Hispanic housing project on New York's Lower East Side. At elementary school in the 1970s, he found himself placed in the "Chinese class," after his stint in the black class (where he was the only student not to receive corporal punishment) left him uncomfortable. Despite the family's lack of funds, they had cultural capital in the form of social connections, and were able to transfer young Dalton to a better school, where he began to feel some snobbery toward kids in his own neighborhood. Yet the friend who accepted Dalton most was a black youth from the neighborhood, Jerome, who was tragically disabled in a random act of violence that helped spur Conley's parents to leave the Lower East Side for subsidized housing for artists. Part of the memoir concerns the universality of poverty but a thoughtful examination of the privileges of race and class also emerges. Despite the book's title, the author cites only one major episode in which he was threatened and called "honky." Conley acknowledges that he doesn't know how to account for such successes as gaining admission into the selective Bronx High School of Science: race? parental protectiveness? his own aspirations? It is "the privilege of the middle and upper classes," he observes, to construct narratives of their own success "rather than having the media and society do it for us."

Anonymous said...

Home-ownership can be vastly overrated. I used to live in the DC area in Northern VA. I had a job that on a routine basis required 10 hours actually at work and more than that during busy seasons. Sometimes I worked 7 days a week for weeks at a time.

Public transportation was great in the inner suburbs, spotty or lousy in the outer suburbs or exurbs. On the other hand, buying even a townhouse in the inner suburbs was a very expensive proposition. Townhouses were quite reasonable much farther out but the commute by car - about the only way to get to work - was a disaster, which grew exponentially as time went by. Forget condos. Except during a short period during the housing bubble, you could actually lose money on a condo re-sell.

Trade-off: Rent but have a relatively short commute on the metro with a good book or magazine or "own" farther out and spend 2 or 3 hours driving in hateful traffic. I had no problem renting and have never regretted it.

I put "own" in quotation marks above because I think it is generally misused in this context. If you own your house outright, you are a homeowner. If you and the bank that financed it own it jointly, you are a home-buyer.

It would be interesting to know what percent of people in the US are true homeowners.

David said...

"This 'blame the victim' mentality is hardly new. It goes back to the 1960s, when the anthropologist Oscar Lewis wrote an article whose title took root in the American public consciousness: 'The Culture of Poverty.' His basic argument was that poor people adopt certain practices that differ from those of 'mainstream' society in order to survive. These might include illegal work, multifamily households or serial relationships in place of marriage. Once these survival strategies are in place, the argument goes, they take on a life of their own and lead to missed opportunities."

Does Conley offer any refutation of Lewis's findings or argument's? Or is Conley simply "pointing and sputtering" with moral indignation?

Blame the victim? Victim of what?

A disreputable theory by a bigoted author came out some time ago, asserting that short people are shorter than tall people. This ugly blame the victim mentality is behind us now.

All you need to know about Conley is in his scare quotes around "mainstream."

David said...

I wonder how many large families have been raised without benefit of a nanny, cook, maid, gardener, personal assistant, or husband.

Anonymous said...

Why on earth would I hire a woman to care for my children who had small children of her own?

I was a nanny BEFORE I had children.

My cleaning lady's children are grown.

My nanny doesn't have children. This isn't my fault and failing to employ her won't fix it.

Sorry that someone providing wellpaid, decent employment to two American women ANNOYS you, lady.

Anonymous said...

David:

You're asking the wrong question, because you're a misogynist.

The right question is how many people have tried to raise closely-spaced children without extended family support and had anything resembling a marriage or sanity after infancy?

You don't need paid domestic help (and nice job, misogynist, conflating a woman getting some help with an overwhelming job with luxuries like gardeners) but you do need help. If you don't have extended family around, you need to pay for it.

Eric said...

Government housing policy, housing models and Professor Conley all tacitly assume that home ownership is desireable. Home ownership is desireable for society as a whole - less so for the people involved.

I think this point can't be stressed enough. I bought a home in my mid twenties because I'd been convinced by friends and relatives renting was "throwing money away". After five years of sending money to the bank instead of the government I sold the house to take a job far away.

When all was said and done I'd have been much, much better off financially renting an apartment. I'm convinced the people out there touting a home as a solid investment are either selling homes or just happened to buy a home at the right time to see a large appreciation.

Andrea Nyx Hemera said...

Who's against poor people buying homes? I'm all for it... as long as they work hard, save, put money down, buy a house they can afford and pay mortgage on regularly, etc. I'm all for this. I'm all for poor folks looking forward to buying houses. Indeed, countless poor people in America did just that. They worked, saved, and put downpayments and bought houses.
It's been a great tradition. So, why not just tell today's poor people to do the same? Well, many people today are doing just that, especially immigrants from Asia and Eastern Europe. I know many Polish arrivals who came with nothing and worked as maids. But, they saved and eventually bought a modest house in a nice enough neighborhood.

Why can't liberals expect homegrown black/white/brown trash to do the same? Work, save, make downpayment, and buy house they can afford?

Even as NY Times says we should not see 'poor' people as different than us, it treats them(and tells us to treat them)differently. It says 'poor' people need help, aid, government support, extra-easy loans, and other guarantees to buy homes. They are no different than us BUT the government must treat them with special care!

Of course, by 'poor' people, NY Times editor is not talking about recent Jewish immigrants from Russia, European immigrants(though small in number they may be), or Asian immigrants(or even hardworking Hispanics who are indeed responsible). No, he's talking about the black underclass, the white trailer trash class, and the siesta-fiesta class.

Another thing, the greatest guarantee for sensible home ownership is an intact family. Husband and wife whether one works or both works. Man and woman together can do so much together than on their own. This is especially true when it comes to raising kids. Kids raised by single parent in poor neighborhood suck at school, have attitude problems, and have no work skills.
Well, what has happened to the family? Who pumped our popular culture with filth and trash? Liberal Hollywood. Who denigrated the family as 'oppressive' and 'patriarchal' through college classes and daytime talkshows? Liberals.

If rich NY TIMES liberals--good number of them Jewish--really want to believe their own tripe, why don't they loan their OWN money out to 'poor' people in NY?? I dare all Jewish liberal millionaires and billionaires to lend(invest)most of their money in loans to black underclass for home purchases. Tell George Soros, Mort Zuckerman, and Michael Bloomberg to stop gambling in international finance or fancy real estate and instead to pour all their money into easy lending to the black/brown underclass. Why does the government need to get involved at all? If white and Jewish liberals are correct and if indeed the black/brown/white trash underclasses are such wonderful areas for investment, I say invest all the white liberal wealth--worth 100s of billions more than white conservative wealth--in places like Harlem, Detroit, Baltimore, Watts, and where Illegal Hispanics dominate in the SW. Why get the government involved? Besides, if the liberals are right, the underclass homeowners will pay back their loans and the lenders will grow yet richer!

David said...

Anon. said

"you're a misogynist."

My paternal grandmother raised 7 "closely-spaced" chillens in Pike County, KY in the 1940s-1950s. They ran up and down the holler, and had only one extended relative looking in from time to time. They all turned out to be nice accomplished people, and she was vibrant until the mid-1980s. I'm just saying don't be such a worry-wart and candy-ass. Yeah, I hate her - no wait, you do.