I was reading just now Emily Badger’s piece at The Atlantic, showing that US home ownership rates have been declining for a while. Badger:
As Jed Kolko noted, young people still stuck living with their parents since the start of the recession haven’t been forming their own households at the rate they have in the past. And so many of them aren’t becoming homeowners, either. But homeownership has also been ticking down for some time for all of the demographics above them, including baby boomers, with the lone exception of retirees over 65.
Realtors will likely look at these trends and fret. And as Richard Florida has noted, we have traditionally considered homeownership to be a sign of the health of the economy. But some of these people who would have been homeowners 10 years ago may also have concluded that they would rather rent anyway to preserve their mobility in a different kind of economy.
Yes, that’s my wife and me. We are renting now, and would very much like to buy a house. Our intention is to stay here in St. Francisville permanently. But I have a lot of fear about buying, because I cannot predict the stability of my career. I do work in a field — journalism — that has been in steep decline over the past decade. I’m doing fine now, but I don’t know how things will look two years from now. One of the most stressful times in my life was the six months between moving from Dallas to Philly and selling our house there. I watched our savings account decline steadily from having to pay a mortgage in Dallas and rent in Philly, and sweated bullets until we finally made the sale. Even though we lost a lot of money in the transaction — we sold during the recession — we were just so relieved not to be tied down to a mortgage that we would have struggled mightily to pay had the house been on the market much longer.
I am not eager to repeat that experience. The memory of how it felt during those six months, and the uncertainty of my career path, is keeping me from being eager to commit to another mortgage right now. I wonder, though, what it would take to make me secure enough to make that commitment. Let me be clear: I don’t rent because I want to preserve for myself the mobility to leave here if I want to; I rent because I am afraid some unforeseen event in my tumultuous industry leaving me without job prospects in this place, and having to leave to support my family, and to get health insurance for them. Don’t, by the way, intrepret this as a signal about anything with TAC; it’s just that if you’ve been in the newspaper business over the past 10 years, and have lived through as many gut-wrenching layoffs as I have, you cannot feel secure about anything having to do with our industry.
I say this in context of this provocative piece by Benjamin Wallace-Wells, who posits that the slowing of economic progress and mobility means simply that we are returning to what has been normal for human history prior to two epochal events that changed everything. Excerpts:
Then two things happened that did matter, and they were so grand that they dwarfed everything that had come before and encompassed most everything that has come since: the first industrial revolution, beginning in 1750 or so in the north of England, and the second industrial revolution, beginning around 1870 and created mostly in this country. That the second industrial revolution happened just as the first had begun to dissipate was an incredible stroke of good luck. It meant that during the whole modern era from 1750 onward—which contains, not coincidentally, the full life span of the United States—human well-being accelerated at a rate that could barely have been contemplated before. Instead of permanent stagnation, growth became so rapid and so seemingly automatic that by the fifties and sixties the average American would roughly double his or her parents’ standard of living. In the space of a single generation, for most everybody, life was getting twice as good.
At some point in the late sixties or early seventies, this great acceleration began to taper off. The shift was modest at first, and it was concealed in the hectic up-and-down of yearly data. But if you examine the growth data since the early seventies, and if you are mathematically astute enough to fit a curve to it, you can see a clear trend: The rate at which life is improving here, on the frontier of human well-being, has slowed.
If you are like most economists—until a couple of years ago, it was virtually all economists—you are not greatly troubled by this story, which is, with some variation, the consensus long-arc view of economic history. The machinery of innovation, after all, is now more organized and sophisticated than it has ever been, human intelligence is more efficiently marshaled by spreading education and expanding global connectedness, and the examples of the Internet, and perhaps artificial intelligence, suggest that progress continues to be rapid.
But if you are prone to a more radical sense of what is possible, you might begin to follow a different line of thought. If nothing like the first and second industrial revolutions had ever happened before, what is to say that anything similar will happen again? Then, perhaps, the global economic slump that we have endured since 2008 might not merely be the consequence of the burst housing bubble, or financial entanglement and overreach, or the coming generational trauma of the retiring baby boomers, but instead a glimpse at a far broader change, the slow expiration of a historically singular event. Perhaps our fitful post-crisis recovery is no aberration. This line of thinking would make you an acolyte of a 72-year-old economist at Northwestern named Robert Gordon, and you would probably share his view that it would be crazy to expect something on the scale of the second industrial revolution to ever take place again.
Wallace-Wells’s profile of Gordon is long, but well worth your time. Read the whole thing. I can’t resist adding this little bit:
There are many ways in which you can interpret this economic model, but the most lasting—the reason, perhaps, for the public notoriety it has brought its author—has little to do with economics at all. It is the suggestion that we have not understood how lucky we have been. The whole of American cultural memory, the period since World War II, has taken place within the greatest expansion of opportunity in the history of human civilization. Perhaps it isn’t that our success is a product of the way we structured our society. The shape of our society may be far more conditional, a consequence of our success. Embedded in Gordon’s data is an inquiry into entitlement: How much do we owe, culturally and politically, to this singular experience of economic growth, and what will happen if it goes away?
Every revolution ends sometime. Maybe what the late Ann Richards said of George Bush is true of all of us Americans in this moment of economic history: we were born on third base and thought we hit a triple. Here is Gordon’s TED talk from earlier this year, to give you an idea of where he’s coming from:
According to Gordon, it is simply unrealistic to expect the rate of change to continue as it has for the past century. If Gordon is right, and we are falling into a great stagnation that amounts to returning to normality, in the broad sweep of history, it is interesting to think about how a culture that has been revolutionized by the Industrial Revolution and its successors might change as well to reflect the New Normal. We have been able to loosen traditional beliefs and practices binding us because all this money and technology bought us all this freedom. But what happens to the way we pray, the way we raise families, the way we educate our children — basically, what happens to the way we live if the party is over, and we and our kids will be living through the seemingly endless hangover? Thoughts?
UPDATE: In case you don’t read the whole Wallace-Wells story, please consider this, on the last page. He talks about the broad political and cultural themes we’re living with in the Age of Obama:
The renewed skepticism about capitalism, the urgency of the problem of inequality, the artisanal turn away from modernity, the rapid decline of American exceptionalism. We may be making provisions for the economy that we actually have.