Not So Wonderful Now

By Ross Douthat
Sunday, October 12, 2008

If the global economy survives the autumn and our cable-TV companies are still in business come Christmas, Americans surfing the channels for classic Yuletide movies may finally figure out exactly whom they have to blame for the housing bubble and everything that has followed. Forget the predatory lenders, Wall Street sharks and their government enablers: It all started with George Bailey.

Yes, that George Bailey -- the hero of Frank Capra's "It's a Wonderful Life," the most popular man in Bedford Falls, the man so indispensable that he earned a private visitation from a guardian angel just to show him how dreadful a world without him would have been. It's easy to forget, so potent is the supernaturally charged final act of Capra's classic, that before he was visiting looking-glass worlds where he'd never been born or scampering through the snow and shouting "Merry Christmas!" till his lungs burst, Jimmy Stewart's George Bailey was actually a pretty savvy businessman. And it's even easier to forget the precise nature of his business: putting the downscale families of Bedford Falls into homes they couldn't quite afford to buy.

This is the substance of the great war between Bailey and Lionel Barrymore's Mr. Potter, the richest, meanest man in Bedford Falls. Potter is against easy credit and the suburban dream, against the rabble moving out of his tenements and buying homes, while the Bailey Building and Loan exists to make suburbia possible.

The Bailey vision is economic and moral all at once. In a mid-movie peroration, the hero lectures Potter and a gaggle of local entrepreneurs on the virtues of democratizing homeownership: "You're all businessmen here," he presses them, sounding for all the world like a politician defending Fannie Mae and Freddie Mac against their critics in 2004 or so. "Doesn't it make them better citizens? Doesn't it make them better customers? . . . What'd you say a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait? . . . Do you know how long it takes a working man to save five thousand dollars?"

In the movie, George Bailey has God on his side, but a real-life Bailey would have had Uncle Sam. "It's a Wonderful Life" debuted in 1946, more than a decade after Franklin D. Roosevelt's National Housing Act kicked off a half-century of federal policymaking aimed at making it dramatically easier for working-class Americans to buy and keep their homes.

As a political text, Capra's movie enjoys obvious bipartisan appeal -- liberals can thrill to its attacks on Potter's corporate fat-cattery, while conservatives can retort that the film asks us to root for a rival businessman and the tight-knit community that supports him, not for a government regulator or welfare office.

Likewise, the movie's vision of working-class Americans fanning out from the slums to the suburban promised land of Bailey Park has animated government policy in Republican and Democratic eras alike -- from Roosevelt's New Deal down to George W. Bush's "ownership society."

For three generations, suburban homesteading has been underwritten by our infrastructure spending, our zoning policies, our banking regulations and our tax code. Easy credit, inexpensive mortgages, cheap gasoline, wide-open highways, the heavy hand of federal regulators on any bank that declined to lend in low-income or minority neighborhoods -- if it made homeownership cheap and suburbia accessible, Americans were for it, never mind what the critics said.

Potter-style skepticism about these trends endured, but it was safely marginalized. The Potters of the right griped that banks and government agencies were being forced to take on too much risk in the name of expanding minority homeownership -- and that besides, renting was often more economically sensible and investing your money in the stock market instead of your home delivered higher long-term returns. But their arguments fell upon deaf ears. The Potters of the left, increasingly vocal since the 1960s, argued that the whole business was unsustainable: If overpopulation or oil shocks or anomie didn't bring suburbia crashing down, then global warming would, and the only thing to do was to de-sprawl and retrench. But as suburbs gave way to exurbs, Levittowns to "sprinkler cities," Americans were too busy watching HGTV and fantasizing about "great rooms" and three-car garages to listen.

Until 2008, that is, which may be remembered as the year when the American Dream's excesses -- from gas-guzzling SUVs to subprime mortgages -- suddenly threatened to strangle the dream itself. This summer and fall, George Bailey's vision has endured a stunning one-two punch. First, months of skyrocketing gas prices (along with dire forecasts about "peak oil") made suburbia seem unsustainable, conjuring up a future in which Americans huddle together around subway stops and light-rail stations, exchanging the backyard and the garage for townhouses and apartments. And then this autumn came the mortgage-fueled financial sector meltdown, in which Potter's warnings about letting the working poor buy homes on credit seemed to find their vindication in a worldwide economic crisis.

The next decade, then, seems likely to belong to Potters from both sides of the aisle. Once the bailouts end, bankers and bureaucrats alike will grow increasingly tightfisted. Easy credit will become a privilege of wealth and mortgages vastly more difficult to get. No president in the near future -- and certainly no Republican president -- will unveil any sweeping plans to add 5.5 million more minority homeowners by reducing down-payment requirements the way Bush, eager to woo Hispanics and exurban voters, did with his minority homeownership initiative in 2002.

Meanwhile, America's infrastructure priorities will probably take a distinctly European turn -- especially under Democratic leadership -- with a greater focus on mass transit, walkable cities and "smart growth" and declining support for the kind of subdivided, car-connected sprawl that has flowed outward from our cities since the days of Bailey Park. Gas will probably get more expensive, thanks to stricter environmental regulations as well as market pressures; so will McMansions and big lawns, vaulted ceilings and master suites. More Americans may well eschew the suburbs entirely, opting for the denser, mixed-use neighborhoods that New Urbanists have been urging on us for decades -- kinder, gentler and hipper versions of the Pottersville depicted in George Bailey's nightmare vision, dotted with coffee shops and farmers' markets instead of honky-tonks and gin joints.

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