Americans own less stuff. From physical property to intangibles, Americans, especially millennials, are increasingly becoming renters instead of owners, which could be troubling news. A market economy, in which private property is its bedrock, needs to ensure access to property in order to maintain public support. Creating an environment where everyone has the ability to attain property is essential in an era when growing populist movements on the left and the right threaten the free and open society on which historic economic growth depended on.
Often, when property is discussed, the first thing that comes to mind is housing. At this point, the existence of a housing crisis is well known, but most of the solutions proposed only lead to temporary gains. While the homeownership rate has been increasing since its low in 2016, it is still low, and the demographics of buyers are worrying. First-time buyers continue to decrease as the median income of buyers increases, and millennial home ownership, which was rising throughout 2017 has fallen this year.
Housing policy in areas with the highest prices have often focused on cosmetic solutions such as rent controls and housing subsidies, which fail to address fundamental housing needs. This failure has inflamed nationalist sentiments among those who see the clear explanation as “America is full,” and blame high immigration for the crisis. The relationship between the poor results of well-intentioned policy and a frustration-fueled politics should not be taken lightly. While policy-wonks are almost unanimous in their observation that the housing crisis is a supply issue and that we need to build more homes, the lack of an emotional resonance to the argument makes it hard to sell. But these serious policy solutions must be considered, not least due to the anti-establishment sentiment continued error creates.
When it comes to supporting market-based solutions, however, millennials cannot fully be blamed for not finding them appealing. They live in an increasingly digital world that lacks the feel of one governed by private property and free markets. Once one has a smartphone, which is most likely leased on contract by younger buyers without much income, one is exposed to a mostly free digital world. Social media, online search, and web browsing all exist at zero marginal cost, almost eliminating any notion that a transaction is occurring. Even when making a purchase, it is rarely one of ownership. You don’t own the books on a Kindle or the songs in your iTunes library, and young people are increasingly aware and contented with this “use, but not own” culture.
The complacency might be justified given the tremendous benefits brought about by the internet revolution, but its cultural impacts also need to be considered. Without attachment to what one owns, one becomes less ambitious and entrepreneurial, as argued by economist Tyler Cowen. Market solutions rely on these traits. Complacency, on the other hand, supports passive approaches to policy, an approach increasingly favored in Communist China. There, it is argued that the data produced online is sufficient to run algorithmically planned economies without markets, a proposition that should strike fear into our hearts given the terrifying ways in which China uses technology to oppress citizens and empower dictators.
The solutions needed to address the problem of a lack of access to property, which I believe undergirds many of the anxieties expressed by populists, needs to be market-based, yet not complacent. This is not easy, but such a project can be seen in the blockchain community’s vision of digital lives with more explicit property rights. On the policy level, the work of Glen Weyl of Microsoft Research and Eric Posner of the University of Chicago School of Law in their book Radical Markets provides an economic vision in which markets pervade more of our digital lives, and enable a more efficient use of physical property.
But these ideas need to enliven the popular imagination in order to get off the ground. To this end, the community RadicalxChange was formed at the nexus between artists, activists, academics, and entrepreneurs, to help revitalize market-based solutions to the very real problems faced by many. Young people concerned about inequality and the various populist ills befalling America should not turn towards centrally-planned solutions to their woes, but rather engage with those working to address their problems in a sympathetic light.