Is free money from home ownership the new American Dream?
The American Dream used to symbolize the rewards from hard work and sacrifice. During the housing mania, it became associated with conspicuous consumption, sloth, immediate gratification, and entitlement.
The American Dream?
Many people want to immigrate to the United States so they too can have a chance at obtaining the American Dream. Can you imagine the stories that recent immigrants must have relayed to those in the “old country” when the housing boom was going on? How do you explain to someone who comes from a stable (or practically non-existent) housing finance system that doesn’t “innovate” what went on in America in 2004, 2005, and 2006?
Immigrant: “In America, they will give you a house with no job and no savings.”
Back Homey: “We have government housing too.”
Immigrant: “No, here in America, they give you the home. You own it.”
Back Homey: “No way!”
Immigrant: “It gets better. After a little while, the house goes up in value, and they give you that money too.”
Back Homey: “You’re making this up. That sounds just like our government housing and welfare. Who pays for all that?”
Immigrant: “The market. You see, house prices always go up, so the market pays for the house. The government doesn’t pay anything.”
Back Homey: “Wow! Those Americans are really smart and sophisticated. I wish our bankers were half as innovative as the Americans are. I want to come to America too.”
That was clearly the American Dream as realized by millions of people. When viewed from the outside, the insanity is apparent, but at the time, everyone embraced it as righteous truth.
What is the American Dream really?
According to Wikipedia:
The American Dream is a national ethos of the United States, a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility achieved through hard work. In the definition of the American Dream by James Truslow Adams in 1931, “life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement” regardless of social class or circumstances of birth.
The idea of the American Dream is rooted in the United States Declaration of Independence which proclaims that “all men are created equal” and that they are “endowed by their Creator with certain inalienable Rights” including “Life, Liberty and the pursuit of Happiness.
The American Dream became perverted during the housing bubble. Americans began to define themselves by the size of their house.
Wealth became confused with debt.
Appreciation became confused with income.
Credit became confused with savings.
Rather than viewing the road to prosperity as one that required hard work, Americans came to believe they could have success by simply purchasing the right house and living off the increase in its value. No work, experience, or expertise was required.
These perverted views of what it means to be American are so engrained in the collective consciousness of Californians, that few remember the real American Dream.
Work hard, save money, pay off a mortgage, and live in your debt-free house on the investment income from your savings in your golden years.
Which America do you want to live in?