'Great Reset' Argues Against 'House Passion'
STEVE INSKEEP, host:
We're going to talk a little more about this, now, with Richard Florida. His new book is called "The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity." And Mr. Florida, I go into your book here, and there's a quote from an economist: America needs to get over its house passion.
What does that mean?
Mr. RICHARD FLORIDA (Author, "The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity"): You know, we created this notion of an American dream and somehow, in the 1950s, tied it to home ownership. Historically, it'd been about finding and realizing your economic opportunity and political freedom. But during our era of mass production and American greatness, we really thought that extending home ownership to just about every American was part of the dream.
You know, and I think it's just seen as something people do when they grow up. I mean, all those economic advantages and incentives are there. But it doesnt explain to me why people so irrationally charge into home ownership when it's against their better interest. And you know, some of those things are quite obvious.
You want to fix it up the way you want to. You want to put the paint colors that you adore. But still, in many, many case, it just makes much better sense to leave home ownership alone. And at least now, during this time of economic instability, it may be better for many, many people to rent.
INSKEEP: Mr. Florida, there's another angle to this. We're talking about what makes sense for the individual. There's also the question of what makes sense for the country. Its been presumed that it is better for cities, better for urban areas, better for the country at large if there's greater home ownership. Is that true?
Mr. FLORIDA: Not really. And in fact, some of the research suggests that areas where home ownership is higher, there's less economic productivity, there's higher rates of unemployment. And then in a great study, a University of Pennsylvania professor found that people in cities where people own homes have lower levels of well-being.
So, I mean I'm a big fan of ownership. I own my own house. I think if you can afford it and you love it, you should do it. But on balance, we may have tipped the scales a little bit too far in terms of home ownership. And certainly, we're finding that all of the things that we associated as great economic outcomes associated with homeownership, may not be as compelling.
INSKEEP: Does it also make me less mobile?
Mr. FLORIDA: Well, I think this is the big cost, Steve, and this is what the book really zeroes in on. I think the great advantage that the U.S. has had in being a competitive, innovative and productive country, is that its had great labor mobility. What's happened now is that so many people are just trapped in houses they can't sell. U.S. mobility is at the lowest levels that it's been in decades. And I think this is the biggest long-run constraint on our ability to reset and recover.
Boy, oh boy, if folks are trapped in their homes - they can't get out; they can't sell them; they can't recoup their investment; they can't move - the long-term cost for them - as individual and families, for cities, but most importantly for the U.S. economy as a whole - I think that's really the thing that our president and our policymakers need to take into consideration.
INSKEEP: OK. Well, there's still this gigantic infrastructure of federal policies, federal agencies and tax subsidies that favor homeownership. Would you change some of that?
Mr. FLORIDA: Well, I think the pressure is mounting to change it. And I think we're going to have to invent new modes of rental housing, rental housing that's better, that's more upscale. I think in a more flexible mobile economy, where very few of us have the great good fortune to have a job for life, where many more of us have to be mobile not only within our town but given this reset, perhaps we're going to have to move to where economic opportunity is emerging. I think in that sense, rental makes a lot more sense for a lot more people. And it's more than just a financial calculation.
INSKEEP: Richard Florida's book is called "The Great Reset."
Thanks very much.
Mr. FLORIDA: Thank you, Steve, and thanks for having me on.
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