Robert Schiller (the man who called the dotcom bust and the recent US housing crisis spot on) argues in the US context that homeownership is not as beneficial to a country as it many thinks it is – the American belief that homeownership encourages pride and good citizenship and, ultimately, preservation of liberty. These attitudes are enduring.
He cites Switzerland: Switzerland, for example, is a country with strong patriotism, a fighting spirit of national defense, a commitment to freedom and tolerance, and a low crime rate. Yet its homeownership rate is just 34.6 percent, versus 66.2 percent for the United States, according to the two countries’ 2000 censuses.
Time for the government to rethink its homeownership policy?
Swiss national identity doesn’t depend on homeownership. Instead, Riccarda Torriani, a historian at the Swiss Federal Department of Foreign Affairs, links the country’s sense of identity to such things as its system of direct democracy, which enforces popular participation in government; the idea that its citizens are frontier people (living in or near the rugged Alps); and a history of collective courage in defense of freedom, even when outnumbered.
Update on 27th March 2010
Been asked what has this post to be with value investing or being cynical.
Answer: Question periodically the underlying assumptions of any piece of “conventional wisdom”. Juz because a genius like MM thinks that something is correct,doesn’t mean that the underlying circumstances may have changed since he made the initial decision. Take the “Stop at two policy”. Circumstances changed, and the policy shld have reversed earlier.