Paying off a mortgage is a wonderful thing, and something that is more remarkable now than it was forty or fifty years ago. Tighter lending standards since the burst of the housing bubble in 2008, and the Great Recession that followed, mean fewer people are qualifying for mortgages now, but the people who currently have mortgages are less likely to ever pay them off because low interest rates mean they will refinance at least once, resetting the clock.
Until the 1930s, mortgages were an uncommon way to purchase a house, and mortgages with 15 or 30 year terms were unheard of. House buyers put as much as 50% down, and the mortgage was for three to five years, all of it interest. At the end of the term, a balloon payment for the remaining principal was due, and it’s not surprising there was a high default rate. The federal government changed the mortgage market in the 1930s by stepping in and insuring lenders against the risk of default on certain approved loans, and later by buying those loans to sell as securities in financial markets.
Mortgage burning party of the Antelope Club of Indianapolis, Indiana, in June 1977; photo by Sheariner.
The modern mortgage market followed from those New Deal policies and the establishment of the Federal Housing Administration (FHA). After World War II, the Veterans Administration (VA) gave another boost to home ownership rates by insuring mortgage loans to veterans with no down payment. The demand for new housing was so great that mass production methods came to house construction and the firm of Levitt & Sons built what would be called Levittown on Long Island, New York, a planned community of over 17,000 houses they built between 1947 and 1951.
The window sign of a mortgage lender in July 2008, offering subprime mortgages; photo by The Truth About.
Housing and mortgage markets stayed healthy through the 1970s, but by the 1980s they turned down when interest rates spiked past 10% nearly to 20%, and wages for middle and working class people started stagnating, as measured against inflation. As home ownership rates slipped, the federal government in the 1980s and 1990s deregulated the financial sector of the economy, loosening restrictions on lending, and especially on the financial instruments related to mortgages. For Wall Street, the doors to the candy store had been flung open.
Home ownership rates hit an all time high by 2005, when the bubble was inflated to its biggest extent. That’s not surprising considering all the shady wheeling and dealing going on at the time. What’s also not surprising was what happened next, when the bubble burst – millions of new homeowners defaulting on their mortgages and the housing market tanking; while the Wall Street financiers, and the federal legislators and regulators who were supposed to keep a watchful eye on them, all walked away with hardly a scratch.
Tennessee Ernie Ford sings his number one hit “Sixteen Tons” in this 1955 television appearance.
The Wall Street people and their media mouthpieces tried to blame the homeowners for taking on more debt than they could afford. Meanwhile, the taxpayer bailout of Wall Street in 2008 and 2009 did almost nothing to help those homeowners. They weren’t bailed out. No trickle down economics for them. Through all that, the wages of middle and working class people that started stagnating in the 1980s have stayed flat. People who acquired a 30 year mortgage in the 1990s, when the market was turning up, still have to make their payments each month.
From the Monty Python’s Flying Circus television show on the BBC in the late 1960s and early 1970s.
Meanwhile, their other costs of living have gone up, such as the student debt for their children who may now be, in the 2010s, graduating from college. That’s assuming they can help their children pay for college; if not, the children will be saddled with such an onerous debt upon graduation they may not feel ready for a mortgage of their own until they are in their 40s. Who can blame current homeowners (in name only, and not in deed), these indentured servants, these wage slaves, for continually turning to their homes as a source of funds by refinancing again and again, to the point they will never have a mortgage burning party? The only economic positives they see are the low interest rates that make refinancing an attractive, and maybe a sole, option for clinging to the American Dream.
― Vita
“For what shall it profit a man, if he shall gain the whole world, and lose his own soul?”
― Jesus Christ, quoted in the Gospel of Mark, 8:36, King James Version.
For many Americans in the growing lower class and shrinking middle class, the American Dream of their parents and grandparents no longer means the same things or presents the same possibilities. How can it, when they have been either treading water or slipping beneath the waves for over a generation now? In 1971, the middle class was 61 percent of the population, and the lower class was at 25 percent. In 2015, the middle class had slipped to 50 percent, while the lower class had increased to 29 percent. What group had increased it’s numbers the most at the expense of the middle class? The upper class increased from 14 percent in 1971 to 21 percent in 2015. Those numbers reflect population shifts within income groups; the shifts of actual income have been proportionally even greater.
We hear a lot lately about American Exceptionalism, as if it was somehow tied in with the American Dream. But that is an unfortunate misconception. American Exceptionalism, as invoked by modern politicians, isn’t much more than the Manifest Destiny of the nineteenth century or the pushy nation meddling and nation building of the twentieth century. We’ve got a lot of crust, telling everybody else what to do and how to live just because we think we’re special. Of course, all that political proselytizing is merely a cover for corporations to grab resources and exploit cheap labor abroad. They don’t “hate us for our freedoms”, they hate us for our hypocrisy and our meddling.
Back home,where we belong, the American Dream is a noble sentiment when it refers to a better life through hard work, education, and civic virtue. According to the Gospels, those are values Jesus Christ spoke of many times. The American Dream has not historically meant “grab all you can and the Devil take the hindmost”. It is truly amazing how many wealthy Americans profess Christian values, yet in their actions do little or nothing to uphold them.
Croesus Showing Solon His Treasures, a painting from the 1630s by Claude Vignon (1593-1670) and his workshop assistants. Croesus was the famously wealthy King of Lydia in the sixth century, BCE, and Solon was a renowned Athenian lawgiver.
Those wealthy hypocrites, the money-changers, are the ones who need their taxes raised to 1950s levels. They are the ones whose overseas tax shelters and corporate headquarters need to be brought back home, where they belong. They are the ones whose profiteering from the military-industrial complex needs to be severely curtailed by bringing the troops back home and closing down the more than 1,000 military installations overseas. Those troops could be put to work in this country repairing infrastructure, and then given a proper GI Bill for their education. There is a long laundry list of other things that need doing to return this country not to when it was “great”, which bespeaks the hubris of the American Exceptionalism that has caused so much trouble for us and the world, but to when the middle class at least was okay, and with a prospect for the lower class of getting better. To start, stop glorifying the wealthy. They don’t need your help, unless it’s to carry their water.
A scene with Harvey Korman and Mel Brooks from Brooks’s 1981 movie History of the World, Part 1, depicts his vision of France before its revolution in the eighteenth century. Twenty first century America is not there yet, but we’re closing in on it. Warning: foul language.
― Vita Special note: To learn more about this subject, watch the 2015 documentary Requiem for the American Dream, featuring Noam Chomsky, or read his book by the same name.
“No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.” ― President Franklin Delano Roosevelt, 1933.
Ms. magazine cover – Fall 2013. Cover by Liberty Media for Women, LLC.
Whether a person works at a computer in an office or scrubs floors in an office building, all honest work has dignity and deserves respect and the worker deserves a just, living wage. This concept, noted in ethical and religious teachings throughout history, and codified in legal and humanitarian documents in the United States and other countries, has been honored more in the breach lately because of growing income inequality which exalts the obscenely overpaid executive over the line worker on whose back the executive rides. The Fight for $15 movement has shaken up the situation over the past few years, but in the current political climate it appears that raising the minimum wage to a living wage will be left entirely up to the states. It’s similar to the situation of addressing human-induced climate change or greed-induced health care reform, where the federal government is paralyzed by ideologues and corporate shills, and if meaningful action is to be taken at all it has to be taken by the states.
It was in the 1980s that we first started to see many adults, and even some retirees, working in fast food joints on the line, rather than just in management. At the time it was jarring to see the retirees working in that environment, wearing the hideous uniforms and taking orders from people less than half their age. We have since gotten used to the sight as another token of the diminished expectations of the new service economy. The statistics on fast food workers show the average age has increased to 29, up from the 1950s and 1960s when the majority of workers were indeed teenagers. Nevertheless the perception clings of awkward youths working behind the counter temporarily for spending money while they lived with their parents before moving on to maturity in the pursuit of a higher wage American Dream. Nowhere is there a mention in law or religion that a worker’s wages are an unimportant, trifling matter because they are not needed for basic support, but that is the justification service sector companies, and fast food companies particularly, use to explain why they pay a majority of their workers the stingy federally mandated minimum wage, or a tiny bit more.
Fast food workers on strike for higher minimum wage and better benefits. Minneapolis, Minnesota, April 14, 2016. Photo by Flickr user Fibonacci Blue.
Charles Wilson at GM, 1948. Wilson was the head of General Motors from 1941 to 1953, when President Eisenhower selected him to be Secretary of Defense, a post in which he served until 1957. In 1950, at the height of American economic power, Wilson was the highest paid chief executive in the country at $586,100, or about $5.6 million in modern terms. He paid 73 percent of that income in taxes – $430,350. General Motors in 1950 was a major driver of American prosperity, and its workforce was highly unionized.
What might have been a fair wage for a teenager in the 1950s and 1960s, one who was decidedly uninterested in joining a collective action to seek a higher wage for his or her temporary job, is not a fair wage for an adult supporting an adult’s responsibilities over the long term in 2017. If fast food executives are going to engage in moral relativism regarding the wage scale for their workers, then they need to apply it even after the demographics have changed and no longer work in their favor. They also need to explain how it is they can’t afford to pay their workers more, yet they can pay the typical CEO at a rate 1,200 times that of the average worker, a rate which outstrips the ballooning income inequality throughout the rest of the American economy. It wasn’t like that back in the Good Old Days, back when America was Great. But of course they haven’t addressed those questions. Instead they’ve claimed they’ll have to raise prices, which will drive away customers, which will cause them to drop workers and turn to automation where possible. Is it honest, dignified work then to cheat your employees, to cut corners on your customers, to chisel on your taxes, all so that you can present an attractive financial statement to your shareholders and stuff your own already overflowing pockets with more money?
― Ed.
