The Rise of the Homevoters: How the Growth Machine Was Subverted by OPEC and Earth Day

Presented at the Kreisman Initiative conference “Bringing It All Back Home: Evidence and Innovation in Housing Law & Policy,” University of Chicago, June 2016

Dartmouth College Economics Department working paper, November 2016

26 Pages Posted: 4 Nov 2016  

William A. Fischel

Dartmouth College - Department of Economics

Date Written: November 3, 2016

Abstract

In the 1970s, unprecedented peacetime inflation, touched off by the oil cartel OPEC, combined with longstanding federal tax privileges to transform owner-occupied homes into growth stocks. The inability to insure their homes’ newfound value converted homeowners into “homevoters,” whose local political behavior focused on preventing development that might devalue their homes. Homevoters seized on the nascent national environmental movement, epitomized by Earth Day, and modified its agenda to serve local demands, thereby eroding the power of the prodevelopment coalition called the “growth machine.” The post-1970 shift in the American economy from industrial employment to knowledge-based services rewarded college graduates and regions that specialized in software and finance. Residents of suburbs in the larger urban areas of the Northeast and West Coast used existing zoning and new environmental leverage to protect the growth rate of their home values. The regional spread of these regulations has slowed the growth of the economy and perpetuated regional income inequalities. I argue that the most promising way to modify this trend is to reduce federal tax subsidies to homeownership.

Keywords: Homevoters, Growth Machine, Zoning, Land Use Regulation, Housing Prices, Ngrams

JEL Classification: R20, R21, R14, R52, K11

Suggested Citation

Fischel, William A., The Rise of the Homevoters: How the Growth Machine Was Subverted by OPEC and Earth Day (November 3, 2016). Presented at the Kreisman Initiative conference “Bringing It All Back Home: Evidence and Innovation in Housing Law & Policy,” University of Chicago, June 2016. Available at SSRN: https://ssrn.com/abstract=2864109

William A. Fischel (Contact Author)

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States
603-646-2940 (Phone)
603-646-2122 (Fax)

HOME PAGE: http://www.dartmouth.edu/~wfischel/

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