Government Intervention in the Housing Market and is it Ethical?

Intermediate Microeconomics

Two schools of thought encompass the intervention of government into the national economy. On the one hand there are those who believe that state intervention is not only beneficial but also essential for the creation of a stable economy. However, there too are those who contend that government intervention sub-optimises the economy and the free market should be left to its own devices. The current state of the domestic housing market helps to build a foundation for those who advocate for greater government intervention in the economy. Owning your own home is for many a life-long goal; government intervention has the ability to bring this dream to fruition for those in lower socioeconomic circumstances. A combination of taxation, subsidised mortgage rates and government incentive schemes are the most commonly used tools of intervention into the housing market that are available to interventionist national governments. Opponents of this theory believe that letting the free market regulate the housing sector is the fairest and most effective means of reducing or eliminating government intervention all together. There are, however, ethical issues intertwined with government intervention within the housing market and these issues must be weighed up against the economic and social benefits.

Without regulation many would find homeownership to be unaffordable and unattainable. Microeconomic theory states that lower rates of owner-occupied homeownership would affect the supply and demand for housing wi...

-09 -2012 1/3 1989 2001 2011 2012 25 abil abl access accomplish accord account achiev action advoc affect afford alan allow almost also altern anyon area argument around articl asset attract avail averag back becom believ benefici benefit better big breach bring brook build buyer capit case catalyst central chairman choic choos circumst clear combin common conclus condit confid consensus constitut constru construct consum contend contract corrupt cost countri creat creation credit crisi current decis decreas demand deposit desir develop devic disadvantag document domest downturn dream due duti econom economi effect elimin employ enabl encompass end enough ensur enter entir entranc equal erad erod eros essenti estat ethic exampl exist explain factor fail failur fairest famili fanni favor feder financi find first fix flaw flow flow-on forc format former fortun foundat fraction freddi free fruition futur giant given global goal govern greater greenspan gross growth guid hand happen help hennessey hennessi high higher hobbesian home homeown homeownership hous household howev hypothes imagin impact impos improv incent incom incorrect increas individu inher initi injustic institut interest intermedi intertwin interven intervent interventionist introduc invest investor issu j lack larg lead learnt left lender less lesson let liberti life life-long limit long low lower m mac mae make mandat mani market mean mechan mention merit microeconom might mind moral mortgag multitud must name nation natur need negat norm oblig obvious occupi offer one oppon opportun opposit optimis order overal own owner owner-occupi ownership payment peopl place poison polici portion poterba preserv previous price princip proof properti prospect prove provid publish purchas put rais rate real reason reduc refer region regul relat rent rentabl rental requir reserv residenti respond respons result retali retriev right say scheme school scienc sector see seek seen self servic set sever ship shrink signific similar simultan situat size smaller soar social socioeconom stabil stabl stand state state-mand stimul stock stream strong sub sub-optimis subscrib subsequ subsidis succeed suppli system tax taxat teach tend tenur term theori therefor thought time togeth tool tri truli turn two type ultim unafford unattain unemploy uneth unit upon use usual valu view way wealth weigh well within without would write