A house is something you earn

What business is it of the government whether you rent or own a home? The question arises in response to Conservative Leader Stephen Harper’s just-announced plan to increase the number of Canadian homeowners by nearly three quarters of a million within five years.

It is, of course, transparently political. The Conservative leader set this target, and reannounced a series of tax breaks (which now include a $5,000 First-Time Homebuyer’s Tax Credit, a $35,000 Home Buyers’ Plan RRSP withdrawal limit, and energy efficiency and accessibility renovation credits) on a construction site surrounded by happy employed people in hard hats and safety vests. And the handouts are tailored to aspiring suburbanites who matter in swing ridings.

Still, just because a thing is popular doesn’t mean it isn’t the right thing to do. Alas, it isn’t the right thing to do. It’s social engineering on the cheap.

By itself, his figure of 700,000 new homeowners and a home ownership rate of 72.5 per cent is an aspiration not a policy. But arbitrary objectives often conjure bad policy. If cutting taxes, simplifying regulations and leaving Canadians to create wealth led to increased home ownership, all to the good. That is miles away from flooding the market with a raft of distortionary interventions in order to hit a politically mandated target.

Harper called home ownership “one of the most unmistakable marks of economic success.” And indeed it can be, if it results from free choice in competitive markets that allocate resources efficiently. But when governments start distorting incentives, you get Potemkin prosperity, with higher-cost options becoming deceptively cheap to the actual buyer at the expense of everyone else. Favouring buyers hurts renters, who are often poorer. And it risks artificially inflating house prices — which hardly helps, if the goal is increased home ownership.

“More than anything,” Harper went on, buying a home is “a statement of optimism, a sign of commitment to your community, of faith in your country, of hope for our future.” Well yes — but as a personal decision, not a political gesture. The distinction, however obscure it may be to most politicians, matters a great deal. A society in which people earn, save, start families and proudly give them a home from the sweat of their own brows is indeed economically successful, optimistic and well-grounded. A society that gives people subsidized houses to hit made-up planning targets is not.

How does Harper know 72.5 per cent is a good number? And what makes him think getting there via state handouts is just as beneficial as getting there through individual initiative? Like the other parties, the Tories appear to have absorbed a mechanistic vision of society in which “social infrastructure” like children playing sports is as much a function of government as national defence and to be funded in the same way.

But in such a vision, there is little room for individual choice, personal responsibility or the private sector: everything becomes a jury-rigged mess of subsidies and penalties to manipulate people into acting the way the planners theorize human units would interact in a truly harmonious and smoothly functioning society.

It is not a vision Harper would have embraced in his heady, ideological, economically literate youth, when government housing targets were socialist, state subsidies undermined prosperity and initiative, and politically motivated handouts put cheap politics ahead of the public good. We commend this promising young man to his elder self.