American Nightmare: How Government Undermines the Dream of Homeownership.

• Author: Thornton, Mark
• Position: Book review

* American Nightmare: How Government Undermines the Dream of Homeownership

By Randal O'Toole

Washington, D.C.: Cato Institute, 2012.

Pp. 327. $25.95 paperback.

I recommend Randal O'Toole's American Nightmare for both academic and general-interest readers, especially anyone who wants to learn more about the contemporary real estate market. It is very informative and insightful about a topic that represents most peoples' largest expenditures and largest investments, our homes. It is both a wonderful history of housing and an informative analysis of the most recent housing bubble and crisis.

The only major problem I have with the book is the author's attempt to make state and local growth-management policies the cause of the housing bubble. This mistake would be a fatal flaw in any book, but to give the author due credit, I must recognize that his effort is more scientific, analytical, and rigorous than most explanations of the bubble given by mainstream economists, such as Nobel Laureate Paul Krugman and Federal Reserve chairman Ben Bernanke.

O'Toole begins with much-needed objectivity in regard to the "American Dream" of home ownership. Both Bill Clinton and George W. Bush, in their terms as president, heavily promoted the idea of homeownership as a social cure-all, and in the process they helped to push more bubble resources into home production. We now realize that renting and leasing can be more efficient for younger Americans and can make for a more mobile labor force.

I also learned from the book that Thomas Jefferson changed his mind from agrarianism to a balanced approach toward agriculture, manufacturing, and commerce. O'Toole shows that much of America's success in attracting immigrants can be attributed to the elimination of feudal laws in regard to land property, such as entail (one cannot sell inherited land) and primogeniture (the oldest male heir inherits all land property). O'Toole mentions "allodial title," ownership of all fair rights to one's property, free of taxation--a type of property well fitted to a libertarian society.

The quality and conciseness of O'Toole's history are exemplified in chapters on the urban, suburban, New Deal, and postwar "dreams." He uses charts and statistics but also relies on general history and social, cultural, legal, and legislative history to tell lively and informative stories. At the most basic level, he shows how entrepreneurs came up with new solutions to the housing problems that arose...