Wednesday, November 30, 2016
Bill Fischel at Dartmouth's Department of Economics has posted The Rise of the Homevoters: How the Growth Machine Was Subverted by OPEC and Earth Day on SSRN. Bill prepared the paper as part of a conference at the Kreisman Initiative on Housing Law and Policy at the University of Chicago. It will be included in a publication emerging from that conference. Here is the abstract:
In the 1970s, unprecedented peacetime inflation, touched off by the oil cartel OPEC, combined with longstanding federal tax privileges to transform owner-o ccupied homes into growth stocks. The inability to insure their homes’ newfound value converted homeowners into “homevoters,” whose local political behavior focused on preventing development that might devalue their homes. Homevoters seized on the nascent national environmental movement, epitomized by Earth Day, and modified its agenda to serve local demands, thereby eroding the power of the prodevelopment coalition called the “growth machine.” The post-1970 shift in the American economy from industrial employment to knowledge-based services rewarded college graduates and regions that specialized in software and finance. Residents of suburbs in the larger urban areas of the Northeast and West Coast used existing zoning and new environmental leverage to protect the growth rate of their home values. The regional spread of these regulations has slowed the growth of the economy and perpetuated regional income inequalities. I argue that the most promising way to modify this trend is to reduce federal tax subsidies to homeownership.