We will probably see a trend towards multigenerational families living together (again). Old folks will move in with their adult children because living expenses will become too high. Or adult children will move their families in with their parents since the younger generation can't afford the housing, and the older generation's house is paid off and larger than they need.

We may even seen unrelated families sharing quarters as was common in the USSR.

--- Policies not Politics
Daily Landscape

I wish as much as you do that we could reliably trust the press. But when you want to take the nation's pulse, scanning the press seems to be one of the best methods available to a mere blog contributor. Since such pulse-taking is an important part of reasoning about policy, I must put aside my disgust and do the best I can do.

And that may be quite realistic, for a very small percentage of us. Here are the conditions under which it might be a successful strategy.

1. One has to own a house in a valuable location. This probably means on or near one of the coasts, within commuting distance of a major city, or within weekend distance of same, or with an appealing view. The house itself need not be anything special, but the location must be. (There are folks who will tear it down and replace it; all they need is a good place to build.)

2. One has to be willing to leave that highly desirable location and move to a place that others don't particularly want to live. They may not want to live there because of the climate, the risks of extreme weather, the lack of good medical care (however one perceives that), the lack of good schools or colleges, the lack of an airport served by a discount airline, etc. This may put one a long way from friends and relatives.

3. One must have a lot of home equity that has not already been tapped through refinancings or home equity loans or a reverse mortgage. (So one has to have bought, a long time ago, in a place where appreciation has been stronger than average.)

For those who are fortunate enough and whose life circumstances (e.g., good health insurance throughout the years, no children with special needs, no relatives with health or other needs that required one partner to stop paid work for a while, not too many children to put through college, local public schools that were of satisfactory quality) were all good, the home equity they have built up (there's that muscular term again, for value that has actually been created mostly by the community, not the individual homeowner) may be sufficient to meet their needs in some inexpensive part of the country, as long as energy costs don't rise too high and health care is reasonably covered, and they live frugally and not have huge expenses in the first-to-die partner's last years.

Is this any way to run a society? The big benefits are going to the wealthiest among us, and the rest of us are thrown the bone of our home equity -- if we don't have to tap it to respond to situations in our lives.

There is a better way, but few of us see it, and it is difficult to persuade people that the unknown is better than the known. It is sort of like the parable of the tree of sorrows: we each bring our own set of sorrows to the tree, and hang them on a branch. We walk 'round and 'round it, looking at the sorrows others have hung there, and eventually choose our own set, because at least we're used to dealing with them.

But it is worth recognizing and remembering that we are all labor, and those of us who can save a bit are also capital, and that labor and capital are both due a whole lot more than our current traditional ways of doing things give them. As we do things now, Land gets to keep what land produces, and that just ain't right, because none of us can make land, and we need to share justly the land that already exists, or, more precisely, share its economic value among us all.

What's happening today is that the economic value of our most valuable land is privatized, and sits in the portfolios of a few of us, just as if they had created it, when in fact they had no more -- and no less -- to do with its value than you or I, and therefore are not rightly entitled to privatize that value. They aren't breaking any laws -- our laws and traditions just aren't right.

And then, because we allow the privatization of land value, we must "socialize" wages and tax buildings and tax sales, all of which is pretty close to being theft of what is legitimately private property. No wonder so many of us are poor. And no wonder some of us are SO RICH! Have you looked recently at the data about the concentration of corporate assets? Google "Currents and Undercurrents" for the 2004 data from the Federal Reserve Board. Google "Recent Changes 2001 2004" for more from the same source. And while you're in the latter one, look at the assets of retired people -- not the mean, but the median, the typical, middle-of-the-distribution, family.

How can we keep doing this to ourselves?

I'll return to my favorite quote:

He who sees the truth, let him proclaim it, without asking who is for it or who is against it. This is not radicalism in the bad sense which so many attach to the word. This is conservatism in the true sense.

I'm that kind of a conservative, but most conservatives would not appreciate it. We need to be radical, to seek the roots of our most serious social and economic problems and then pull them out by the roots.

LVTfan -- That's Land Value Taxation

http://www.wealthandwant.com ... if you'd like to see an end to poverty

You mean sort of like a "Why are you looking for your keys under the lamp post" problematic?

Here in Florida a homeowner who hasowned the same home for many years enjoys a property tax rate that is frozen at older levels far lower than his more recent neighbors. If he sells and buys a new (even if smaller) house he will be hit by the full current rate, and for many people, especially older people, that is simply not affordable. Hence we have "house-lock"

Jim wrote,

Older folks are sometimes using "reverse" mortgages to "cash in" on their equity. What it does is leave a legacy of debt to the next generation.

Reverse mortgages don't create debts for the next generation, but they may well use up a significant portion of the home equity they had hoped to inherit. If the person who takes out a reverse mortgage lives to 110, there may not be any home equity left, but no debt is created for their heirs. The limit is the value of the property at the time of their death.

A better alternative would be for some fraction (even 100%) of the local property tax to be deferred, WITH INTEREST, as a lien against the property. This would be a lot less expensive than a reverse mortgage, would not feed the FIRE (finance, insurance and real estate industry) sector, and not burden the elderly resident's young working neighbors to subsidize their older neighbors (rich and poor, by the way, but particularly the land-rich), as things like California's Proposition 13 and Florida's Save Our Homes do. Yes, the elderly person's heirs get less than they would have gotten had their neighbors subsidized them, but neither the elderly nor their heirs did Thing One to earn that appreciation in the land value, so I don't feel too bad for them.

lvtfan

http://www.wealthandwant.com ... if you'd like to see an end to poverty

Jim,

Are you saying that those who make use of reverse mortgages aren't rational?

Are you saying that those who use home equity to provide for spending that supports their lifestyles are somehow being unjust to their individual heirs?

Are the heirs of landed folks entitled to something that the heirs of nonlanded folk aren't? How on earth did the landed folks "earn" by holding land? They didn't contribute anything by sitting on that land that tenants didn't contribute.

We're all equally entitled to share the economic value of land, but since our traditions pretend that we're not, most of us seem to buy into weird ideas of who is entitled and who is not. Go figure. Go "build some home equity." Muscular work, don't you think? Work for which one is entitled to be compensated? Hunh?

Wearily,

lvtfan

http://www.wealthandwant.com ... if you'd like to see an end to poverty