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Walk Away

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In the 20th century, however, government got behind the idea that every citizen should be provided a castle of his or her own.
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Housing, a central priority for government policy for many decades, collapsed in 2008; even in 2011, millions of homes are under water. This poses many economic and ethical issues.

This elegant and fact-filled book by Mises Institute president Doug French examines the background to the case of "strategic default," or walking away from your home, and considers its implications from a variety of different perspectives. The thesis here is that there is nothing ominous or evil about this practice. It is an extension of economic rationality.

The idea that "a man's house is his castle" is attributed to American Revolutionary James Otis from 1761, and his idea was that government should never be permitted to breach its walls. It is a good thought, in context, one that sums up a dogged attachment to the right of private property.

In the 20th century, however, government got behind the idea that every citizen should be provided a castle of his or her own. This is the essence of the good life, we were told, the very core of our material aspirations. The home is the most valuable possession we could ever have. It is the best investment, even better than gold. Government would make us all owners, one way or another, even if it meant violating rights to make it happen.

Beginning in 2007 and culminating in 2008, this dream was smashed, as home values all over the country plummeted, wiping out a primary means of savings. Some homes fell by as much as 75–80 percent, instilling shock and awe all across the country. The thing that was never supposed to happen had happened. This meant more than mere asset depreciation. An article of faith had fallen, and there were many spillover effects.

The home was the foundation of our financial strategy, our love of accumulating large things, the core of our strategic outlook for our lives. Once that goes, much more goes besides. The things in the home suddenly become devalued. We look around ourselves in astonishment at how much stuff we have, and we are weighed down by the very prospect of moving. We are longing for a different way, perhaps for the first time in a century.

The collapse of the housing market — which has occurred despite every effort by the government to prevent it — coincides with the highest rate of unemployment among young people that we've seen in many generations. Economic opportunity is dwindling, at least in traditional jobs. The advance of digital technology has made it possible to do non-traditional jobs while living anywhere, and perhaps changing one's location every year or two.

Millions have walked away from their mortgages. Those who have swear that they will never again be tricked by the great housing myth that this one asset is guaranteed to go up and up forever. The new source of value is not something attached to the biggest thing we own but rather in the most fundamental unit of all: ourselves, and what we can do. This change represents a dramatic change not just for one generation but for an entire ethos that has defined what it means to be an American for about a century.

This change begins with a single realization: I'm paying more for my house than my house is worth. What precisely is the downside of walking away, of going into a "strategic default"? I lose my house. Good. That's better than losing money on my house.

But what are the economic and ethical implications of this? Americans haven't faced this dilemma in at least a century. But now they are, by the millions. They are awakening to the reality that the house is no different from any other physical possession. It has no magical properties and it embodies no high ideals. It is just sticks and bricks.

But what about the idea that our home is our castle? Doug French's thesis is that the essence of freedom is to come to understand that the real castle is to be found within.


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(based on 2 reviews)

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by Stephanie
on 1/13/2011
from Utah
A Timely Book Worth Keeping
I have to admit, prior to reading this book, I was one of those folks who thought that any ethical person simply must pay his or her mortgage -- it's simply the "right" thing to do. Mr. French made a very compelling argument to the contrary, and made me question my belief and why I assumed that belief in the first place. Is martyring onself for the benefit of a corrupt banking system the "right" thing to do? Is sabatoging one's chance at a financially secure future the "right" thing to do? Mr. French's clear, concise, logical and often humorous points will get the reader to examine his or her views from a new perspective. And I love any book that does that.

This is one of the few books I will read more than once, keeping on my shelf with bookmarks and margin notes.
by Jeffrey Tucker
on 12/2/2010
from auburn
Extremely important book
To put it simply, this book can and will improve people’s lives in a very real, non-abstract sense. Every other book the Institute has published resides solely in the world of ideas and philosophy; they teach us about economics, liberty, how things are, how things could be. They shape the very way in which we view the world in which we live. This is a vitally important undertaking if we are to ever truly gain widespread economic and personal freedom. But Walk Away builds a bridge between the philosophy that can improve the world and the actions that can improve individuals lives. This short book is essential for anyone who owns or is thinking of owning a home; it can be read in a single evening and, at a minimum, will change the way you think about strategic defaults.
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ISBN 9781610161022
eISBN 9781610163095
Publisher LvMI
Publication Date 11/23/2010
Binding PB
Page Length 93
Dimensions 6 x 9

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