At the end of my last column, I outlined two important arguments about the social contract between companies and people.  Based on an ownership-driven model,  Milton Friedman states that a company “cannot act effectively as a moral agent for all of its shareholders,” and that assets “diverted to social causes undermine market efficiency.”  It is relevant to consider whether these statements hold true in housing policy.  Our nation has been operating, as a matter of public policy, on the assumption that maximal private ownership of individual homes leads to the greatest consumer demand, and hence economic growth. The past three years have demonstrated the dire consequences of this unsustainable, one-track approach.

Bombarded by comparisons between the tech bubble of the 90’s and the housing bubble of the past decade, one quickly realizes that our national consciousness has unwittingly drawn a parallel between shareholders and homeowners.  As a result, the social responsibility expected of corporations has been extended to our domestic sphere.  Suppose we rephrase the first shareholder-model argument in terms of housing: “The housing market cannot act effectively as a moral agent for all of its homeowners.”  Under the purported ideal of universal homeownership, however, the shareholder ceases to be a protected class and instead becomes a proxy for the public. In this light, such an argument would imply that housing cannot be directed toward any common good apart from individual standards of living.

If this truly represented our attitude (though I do not believe it does), it would be easy to understand our aversion to social housing.  Consider the premise that multi-family dwellings and subsidized housing intrinsically represent the exercise of moral agency.  This is commonly, and not entirely unfairly, reviled in public discourse with phrases such as “social engineering.”

Furthermore, there exists a significant moral hazard for architects and planners who believe that good design alone can somehow improve and reform fallen men.  This error, aptly termed “salvation by bricks,” stipulates the progressive rule of an enlightened, professional bureaucracy.  In practice, only God’s grace can redeem mankind, and a society that designs free will right out of the picture denies that grace.  Yet that is precisely what has been attempted in past housing projects, from carefully planned income brackets to the blunt reality of austere corridors.

Nevertheless, public policy is not a corporation.  It has moral agency, despite what the secularists preach, and there is a place for it in this issue.  As a nation, we have been infatuated since the Second World War with promoting the private ownership of detached, single-family dwellings.  It would be one thing if this preference were expressed merely as a matter of taste, or cultural norms.  But at the level of public policy, it has resulted in distorted economic incentives for sprawling, green-field subdivisions.  Here we glimpse the second ownership principle entering: people who had no business buying homes, and the lenders who had no business lending to them not only brought catastrophic losses to the housing market, but also jeopardized the entire financial system.

They did so because government intervention for the social cause of private homeownership undermined market efficiency.  Freddie Mac and Fannie Mae backed trillions in mortgages of dubious quality, and mortgage tax deductions incentivized ever higher home prices.  We cannot place this all at the feet of government, however.  Because builders and developers are operating in an environment that favors short-term buyers in a single dwelling unit, the profit motive has incentivized them to increase the size of homes while building as cheaply as possible.  The vinyl siding and thin bricks will be faded and crumbling by the notional end of the 30-year mortgage term, but by then the original owner will be living in a different house, the builder  retired to Florida, and the community  left with a derelict property and sagging tax base.

I am neither libertarian nor statist.  The foundation for a sensible and lasting housing policy is natural rights informed by natural law.  Unfortunately, in our political discourse these are clichés, so I must describe what they mean to me in this context.

There are multiple, sometimes conflicting, rights in effect here.  The “inalienable” right to property would seem to favor individual ownership.  But now consider the right to freedom of movement: whether you are tied down to an underwater mortgage, or own the house free and clear but are unable to find a willing buyer, the exercise of the right to property restricts the free exercise of the right to freedom of movement.  Rights alone are not enough to adjudicate the economic, let alone moral, distribution of housing.

Thus natural law indicates that we must work in reverse, from the moral to the economic.  We must devise a policy and culture of housing that first aims to support and promote a common good, from which can then flow the economic and aesthetic blessings that improve our communities and foster our domestic lives.  The search for such an approach will be the subject of my next article.

Matthew Balkey is a fifth-year architecture student.  This XVI th installment of the Column is dedicated to Pope Benedict. When not busy saving the world with visionary wonk-speak, Matthew can be reached at