After America - Mark Steyn [45]
BULLS IN A CHINA SHOP
What do we have to show for the political class’ disruption of every field of endeavor? From education to energy, health care to homeowning, the Conformicrats bungled everything they touched. You can see the impact of the regulatory state in the structural transformation of the American economy. From 1947 to the start of the downturn in 2008, manufacturing declined from 25.6 percent of the economy to 11 percent, while finance, insurance, real estate, and “professional services” grew from 13.9 percent to 33.5 percent.96 Much of that last category is about the paperwork necessary to keep whatever it is you do in compliance with the Bureau of Compliance. Of the remainder, the financial sector ballooned in support of the Age of Credit, and real estate was the one thing you could always rely on—“safe as houses,” right?
So how are those growth “industries” doing today? A headline from the New York Times:
Real Estate’s Gold Rush Seems Gone for Good97
Which is a problem. For all the novelty junkies twittering about the Internet age and virtual reality, the principal asset of most Americans remains the most basic of all: the bricks and mortar of their rude dwelling. For all the analysts proclaiming society’s transition from manufacturing to the “knowledge economy,” for the majority of Americans the surest way of building wealth at the dawn of the twenty-first century involved neither knowing nor making anything: you bought a house, and, simply by doing nothing but eating, sleeping, and watching TV in it, your net worth increased.
Not anymore. Dean Baker, of the Center for Economic and Policy Research, calculates that it will take two decades to recoup the $6 trillion of housing wealth lost between 2005 and 2010.98 Which means that in real terms it might never be recouped. In the early Seventies, the United States had about 35 million homes with three or more bedrooms, and about 25 million two-parent families with children. By 2005, the number of two-parent households with children was exactly the same, but the number of three-or-more-bedroom homes had doubled to 72 million. As the Baby Boomers began to retire, America had perhaps as much as a 40 percent over-supply of family-sized houses.99 As Mr. Baker puts it, “People shouldn’t look at a home as a way to make money because it won’t.”100
Oh. So what does that leave?
The “financial sector”? In the Atlantic Monthly, Simon Johnson pointed out that, from 1973 to 1985, it was responsible for about 16 percent of U.S. corporate profits. By the first decade of the twenty-first century, it was up to 41 percent.101 That’s higher than healthy, but the “financial sector” would never have got anywhere near that size if government didn’t annex so much of your wealth—through everything from income tax to small-business regulation—that it’s become increasingly difficult to improve your lot in life through effort—by working hard, making stuff, selling it. Instead, in order to fund a more comfortable retirement and much else, large numbers of people became “investors”— albeit not as the term was traditionally understood. Like homeowning, it was all very painless: you work for some company, and it puts some money on your behalf in some sort of account that somebody on the 12th floor pools together with all the others and gives to somebody else in New York to disperse among various parties hither and yon. You’ve no idea what you’re “investing” in, but it keeps going up, so why do you care? That’s not like a nineteenth-century chappie saying he’s starting a rubber plantation in Malaya and, with the faster shipping routes out of Singapore, it may be worth your while owning 25 percent of it. Or a guy in 1929 barking