In August 1971, Richard Nixon went on television and detonated the global financial system. By severing the U.S. dollar from gold, the Nixon Shock ended Bretton Woods, ushered in fiat money, and unleashed a new era of credit, speculation, and inequality. What followed wasn’t just inflation and currency volatility—it was a fundamental rewiring of housing, wealth, and power.

In this episode of Built to Divide, Dimitrius Lynch traces how the end of the gold standard collided with housing policy, stagflation, and a rising market-first ideology. As public housing construction collapsed, Section 8 vouchers expanded, the mortgage interest deduction quietly became America’s largest housing subsidy, and real estate lobbying reshaped Washington. Jimmy Carter framed housing as a moral obligation—but crisis, inflation, and backlash undercut reform. Then came Milton Friedman, Margaret Thatcher, Ronald Reagan, and the think-tank machine, turning deregulation, tax cuts, and privatization into governing doctrine.

The result? Housing shifted from shelter to leverage. Neighborhoods hardened. Inequality accelerated. McMansions replaced porches. Master-planned enclaves rose as public responsibility retreated. And the rails were laid for subprime lending, securitization, and collapse.

This is the episode where money floats, housing fractures, and the modern economy takes its irreversible turn.

Episode Extras - Photos, videos, sources and links to additional content found during research.

Episode Credits:

Production in collaboration with Gābl Media

Written & Executive Produced by Dimitrius Lynch

Audio Engineering and Sound Design by Jeff Alvarez

Cloud of cigarette smoke hangs in the air as the Ova office hums with tension.

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Outside, in Washington and around the world, markets are twitching.

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Aware of the stacks of gold bars that fill the vaults of Port Knox, foreign central banks

are increasingly demanding redemption.

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A memo slides across the resolute desk.

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Convertibility tired.

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Phone call after phone call.

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Paris wants gold.

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London wants gold.

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The treasury pipeline is redlining.

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Nixon sinks into his chair with the weight of the financial world bearing down on him.

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For decades, the US dollar stood as the linchpin of the post-war financial order.

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Under the Bretton Woods International Monetary System,

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every major currency was pegged in relation to the dollar and that dollar pegged to gold

at $35 an ounce, redeemable on demand for foreign governments.

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The arrangement anchored trusts.

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It allowed America to issue dollars abroad, to wage war, to stimulate growth, and still

reassure the world that those dollars were backed by something real.

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But by the early 1970s,

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the system began to wobble.

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The Vietnam War was bleeding money.

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The Great Society programs demanded more than taxes could reliably supply.

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American factories were losing ground to rising powers in Europe and Japan.

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Dollars flooded out in trade deficits, military spending, and foreign aid.

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Foreign holders of dollars, once content to accumulate them, now requested conversion to

gold.

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The US gold reserves shrank.

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the pressure mounted and trust wavered.

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Inflation rose quietly at first.

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Groceries, rents, insurance.

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In public housing projects, you saw it faster.

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Peeling paint, broken pipes, roofs that leaked in winter storms.

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Tight supply and private housing made every vacancy more precious.

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Mortgage rates climbed.

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Houses that used to be within reach suddenly felt distant, aspirational.

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In that moment,

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Nixon faced a choice, defend the gold standard at all costs, accept deep cuts and high

rates, or rip off the bandage and remake the system.

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On August 15th, 1971, he went on air and delivered what became known as the Nixon Shock.

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I have directed Secretary Connolly to suspend temporarily the convertibility of the dollar

in the gold or other reserve assets except in amounts and conditions determined to be in

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the interest of monetary stability and in the best interest of the United States.

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In full cooperation with the International Monetary Fund and those who trade with us, we

will press for the necessary reforms to set up an urgently needed new international

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monetary system.

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Stability and equal treatment is in everybody's best interest.

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I am determined that the American dollar must never again be a hostage in the hands of

international speculators.

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I'm taking one further step to the dollar, to improve our balance of payments, and to

increase jobs for Americans.

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As a temporary measure, I am today imposing an additional tax of 10 percent on goods

imported into the United States.

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This is a better solution for international trade than direct controls on the amount of

imports.

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This import tax is a temporary action.

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It isn't directed against any other country.

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It's an action to make certain that American products will not be at a disadvantage

because of unfair exchange rates.

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When the unfair treatment is ended, the import tax will end as well.

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the US dollar switched from being backed by gold to a fiat system backed by the government

itself.

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Although announced as temporary, moving forward, the value of the dollar would come from

trust and confidence in the government.

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Paired with the 90-day wage and price freeze and 10 % import surcharge, the Nixon shock

jolted the international financial system.

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Now, money's value would depend more on confidence, policy,

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central banks and speculation.

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The floor was being moved beneath the system.

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Critics complained that it was a breach of faith, a repudiation of discipline, a move

towards monetization unchecked.

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It was.

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Others warned it would lead to runaway inflation, currency wars, irresponsible spending.

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It did.

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Yet defenders argued that the old tether

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had become a trap.

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Economic agents could not respond to recession or crisis if their hands were tied to gold.

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The flexible dollar would let government act, to inject, to stabilize, to steer, without

draining reserves or provoking runs.

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Also true.

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Now there has been a common anecdote shared to explain the logic behind detathering the

dollar from gold.

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It is referred to as the Capitol Hill

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Babysitting Co-op, based on a real babysitting cooperative in DC, founded in the late

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Former members Joan and Richard Sweeney first presented the co-op as an allegory for an

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economist Paul Krugman in his book

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peddling prosperity.

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Imagine 10 couples in a babysitting co-op.

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They trade tickets for childcare.

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Out of fear of not having enough tickets when needed, some began hoarding their tickets.

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Eventually no one offers to babysit.

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The system seizes, the equivalent of a recession.

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Shaming the hoarders doesn't work.

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So an alternative solution is to print more tickets, liquidity to encourage activity.

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That's Keynesian economics in a nutshell.

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When demand collapses, a sensible injection can restart the flow.

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A fiat dollar lets government play that role.

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The problem is that flexibility invites temptation.

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Cheap credit, speculative leverage, and asset inflation are all possible side effects,

especially if there are no regulations.

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As the gold anchor fell away,

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inequality found new room to widen.

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The steps to opportunity got much steeper, then turned into an escalator for those already

at the top.

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The house you owned, the home you built, they would become not just shelter but leverage,

and for some, profit.

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That August night did more than unmoor a mechanism of exchange.

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It reframed national possibility.

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A dollar untethered.

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a housing system unrestrained.

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A crisis for those on the fringe or left renting and excluded.

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I'm Demetrius Lynch and this is Built to Divide.

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The number of people who are finding themselves homeless every night is visibly increasing

in almost every city in the country and that is the outcome of a housing problem that is

92

not measured by anybody's statistics but is measured in reality in the most painful kind

of way.

93

There is a growing disrespect for government and for churches and for schools, the news

media and other institutions.

94

This is not a message of happiness or reassurance, but it is the truth and it is a

warning.

95

In our last episode, we discussed the Fair Housing Act, the establishment of HUD, Section

235 and 236's rise and fall, Robert Moses and Jane Jacobs' fight over the city's soul, and

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Nixon's pivot from building units to cutting checks.

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If you haven't listened to that episode, I encourage you to go back and listen to all the

episodes of this series in order.

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In today's episode, we'll dig deeper on Section 8 and the mortgage interest deduction,

housing scarcity, Jimmy Carter's moral housing crusade, and stagflation in the late 70s.

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Then we'll turn to the 80s, rent controls mixed legacy, Milden Friedman's intellectual

counterattack, Reagan, Thatcher, tax breaks, deregulation, and the evolving cultural

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sentiment that made it all possible.

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And we'll get into all of that after this break.

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Episode 5 Shock and awe

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Since the Great Depression, the U.S.

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has provided federal housing assistance programs.

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But by the early 1970s, the country had poured billions into housing production.

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Towers, town homes, redevelopment zones.

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Yet headlines still blared about riots, slums, foreclosures, and neighborhoods starved of

opportunity.

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The riots of the late 1960s have produced three presidential commissions.

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the Kerner, the Kaiser, and the Douglas Commissions, and each returned with the same

diagnosis.

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America had built a two-track wealth system, one white and ascending, one black and

confined.

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Bad housing wasn't the only cause, but it was always in the frame.

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Inside HUD, a quiet shift had already begun.

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George Romney, Nixon's first HUD secretary,

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raised the profile of research inside the agency, moving HUD away from purely technical

solutions, design and construction, towards social science, asking why programs failed,

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not just how many units could be built.

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In 1973, Romney was replaced by James T.

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Lynn, an attorney with a strong business background.

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Before arriving at HUD, Lynn had served as general counsel and then undersecretary

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at the Department of Commerce, the federal department responsible for promoting American

industry.

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His resume signaled his instincts, market efficiency, business discipline, and private

sector partnerships.

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He would later be appointed as director of the Office of Management and Budget.

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Then, after leaving government, go on to lead the Federal City Council, one of

Washington's most influential business-led groups.

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known for working behind the scenes to shape economic development and major policy

decisions affecting the capital.

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I hear from a lot of my friends on the other side of the aisle, so to speak, that, we

really do need a much bigger deficit.

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But it's always funny how that accommodates a business as usual growth in those 1,030

programs.

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That as long as we can rationalize or justify a big deficit, having made that decision,

now we can say to all you folks,

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Let me tell you, that gives us a chance with all of these programs to add more money to

them.

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And doesn't that make me a hero with every interest group in America?

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Linn's move from commerce to housing wasn't accidental.

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It marked a calculated shift in posture before any official policy changes were announced.

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Once in charge at HUD, he merged the agency's research, policy, and evaluation units into

a single operation, policy development and research.

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or PD &R.

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For the first time, HUD had a centralized, analytic engine designed not to bill more, but

to question its own assumptions, measure outcomes, and redefine what federal housing

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policy should be.

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That winter, Nixon delivered his pivot, calling for, new policies that would provide aid

to genuinely needy families and eliminate waste.

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He commissioned the National Housing Policy Review, a sweeping autopsy of federal, state,

and local housing programs.

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Lynn was put in charge.

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The working groups were staffed not only by civil servants, but by select private

consultants

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industry practitioners, and university economists who reframed decades of housing policy

in a new language.

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Unit costs, market forces, burden of payment.

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The previous reasoning, insufficient supply, not enough units, was pushed aside.

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In its place came a new focus, the share of earnings low-income families spent on rent.

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The studies argued that the worst housing problem

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was no longer substandard buildings, it was cost.

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Families spending 40, 50, sometimes 60 % of their income just to keep a roof over their

heads.

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Filtering, the idea that older units would naturally age or trickle down in affordability,

was floated as a quiet promise that the market could solve what policy had failed to fix.

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Through that lens, vouchers, portable subsidies,

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rather than public units made sense.

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Cheaper upfront, less political risk.

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A way to let the market work without building towers that might become the next

Pruitt-Igoe.

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However, that approach failed to address immediate housing needs, especially in the

context of an economy in rapid decline.

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Moreover, contributors to the policy review acknowledged existing issues of race and

quote,

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financing and market imperfections.

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Vouchers faced inherent issues of the time that were acknowledged but ignored.

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Despite that, in 1974, Congress passed the Housing and Community Development Act, amending

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The premise was simple.

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Families would pay roughly 30 % of their income towards rent, and the federal government

would pay the rest.

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Instead of building housing, the government would buy access to the private market.

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There were early sub-programs, new construction, substantial rehabilitation, existing

housing certificates.

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Later came moderate rehab, then the voucher program.

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Over time, they merged into what we now call Housing Choice Vouchers, with a parallel

project-based voucher stream for fixed units.

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The promise was efficient.

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Mobility, choice, flexibility.

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The reality was inherited segregation in new clothing.

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High profile housing policy leaders like Howard Hussick, senior fellow in domestic policy

studies at the American Enterprise Institute and former vice president for policy research

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at the conservative Manhattan Institute began to link crime and inner city social problems

to Section 8 housing.

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Both Democrats and Republicans have embraced an alternative called vouchers.

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Well, that hasn't worked very well either.

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40 % of those who get rental vouchers tell HUD that they live in neighborhoods of serious

distress.

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And residents of neighborhoods to which voucher recipients are moved complain that drugs

and crime come along with those vouchers' recipients.

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The administration's response has been to propose moving more voucher holders to the

suburbs.

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Well, that's wrong, Working families understand that moving to a better neighbor is

something you have to work for, not something that you're given.

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American neighborhoods can be classified on a kind of spectrum.

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ranging from poor to rich, with all points in between.

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Americans believe that we work to gain our place on what I call the housing ladder of

opportunity and to advance up its rungs.

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When the government says that we must accept new residents who haven't made their own

climb up the ladder, well, Americans become fearful and resentful.

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Researchers found no overall crime wave tied to Section 8 despite the claims.

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In fact, studies like Moving to Opportunity,

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showed modest gains in safety, mental health, and educational outcomes when families could

reach higher opportunity areas.

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But reaching those areas was the challenge.

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Landlords in high-opportunity suburbs refused vouchers.

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Zoning kept multifamily housing out of white neighborhoods.

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Brokerage networks didn't show families the places where the schools were strong.

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And while vouchers expanded,

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Public housing withered behind demolitions, minimal replacement units, and waitlists

growing to decades.

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Considering basic economics, this reduction in housing supply that the government provided

predictably drove up demand and subsequently price.

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At the same time, the Mortgage Interest Deduction, or MID, quietly solidified as the

largest housing subsidy in America.

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The Housing in the 70s report estimated that tax breaks, which largely benefited middle

and upper income households, absorbed about 80 % of U.S.

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housing subsidies.

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That was about $9.5 billion, $6 billion in mortgage deductions, and another $3.5 billion

in property tax deductions.

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But no one proposed cuts or changes to that segment of subsidies.

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Homeowners could deduct the interest portion of their mortgage payments, lowering their

effective cost of borrowing.

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In the 1970s, as rates climbed and home prices rose, the MID acted as a cushion for buyers

who qualified.

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It was framed as a middle-class benefit, a tool of upward mobility, upwardly tilted,

politically untouchable, and almost invisible in public debate.

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We call one side of housing subsidies welfare and the other incentive, but they both draw

from the same well.

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One buys needed shelter, the other buys leverage.

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One key group in protecting this structure was the National Association of Realtors, or

NAR.

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In the 1970s, NAR became the largest trade association in the United States.

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growing to over 400,000 members and a political juggernaut.

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In Washington, it lobbied hard to preserve homeowner tax benefits and fight density

mandates.

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Each legislative win of the decade revealed a strategy, protect property values, expand

credit, and shield real estate wealth from regulation.

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In the early 70s, NAR pushed for cleaner mortgage pipelines.

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blocking equity participation requirements in 1971, helping pass the Emergency Mortgage

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These steps strengthened the real estate finance system at a moment when federal housing

programs were faltering.

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But NAR's deeper impact emerged through tax policy.

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Throughout the 70s and 80s,

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It defended and expanded incentives that disproportionately benefited property owners,

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protections for sellers financing rules in 1985, and most consequentially preserving MID

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These victories cemented home ownership.

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not wages, as the engine of middle class wealth, widening the gap between those who owned

property and those who did not.

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Later in the 80s, it won reforms to protect landlords from rent control in 1984, defended

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the 1988 Fair Housing Amendments.

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Across two decades, NAR mastered Washington, redefining housing policy around the

interests of owners and investors.

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Our association consists primarily of residential brokers.

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We also represent commercial and industrial people.

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These people practice real estate all over the country, they and their sales associates.

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I guess it would be fair to say that they're a pretty conservative bunch, particularly on

fiscal matters.

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For that reason, over the years, we've taken a leading role in urging Congress and the

president, various administrations, to cut back on expenditures.

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Our concern about the federal budget deficit has been a very real and growing one over the

past several years, and it is still there.

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This is G.V.

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Mike Breneman, spokesperson for the National Association of Realtors at the Conference of

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And in addition to a housing crisis, I think it was obvious then that we were witnessing a

growing gap.

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in terms of the haves and the have-nots in this country, not just in the housing area but

in the overall economic area.

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Certainly when we speak of housing crisis, we're not talking just about ownership housing.

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Please don't feel that we're here to talk just about the sales of houses.

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Certainly that's always a concern of ours, but we're interested in rental housing too.

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I guess our President-elect Ira Griffin in our earlier meeting in May summed it up best

when he said, you know, you can't be a first-time housing buyer unless you're a renter.

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and that hits home to all of us if they're not able to be viable renters and how on earth

can they be viable first time or second time or third time homebuyers so we have a very

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selfish concern in this particular area at the same time we have other concerns involving

housing and cities some of the anti-growth measures for instance that we have seen in the

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city of washington and elsewhere spurred on by the the citizens are of great concern to us

because we think there are our rights involved of

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property owners that are being bruised rather badly.

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What this brought home to us, however, was the realization that we haven't succeeded

nearly as well on the local level in terms of getting to know local elected leaders,

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working with local elected leaders, helping to mold and create public policy, not nearly

as well as we have succeeded on the federal level, where I think, quite frankly, we've

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been rather successful over the years in influencing policy.

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And I think we've come to realize that our failure on the local level is one that simply

cannot be allowed to continue.

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With the expansion of wealth generated through ownership, some of the richest turn those

funds toward aligned economists, think tanks, media, organizations, and lobbyists to

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reinforce a cycle that bent Congress to their will once more, ultimately expanding their

wealth further through lawmaking.

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Wealth accumulated where rules were favorable and retreated where no rules protected.

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During a decade of constrained construction and subsidized ownership, the gap between home

rich and home poor widened.

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One street might have a row of sized for tax breaks.

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Across the alley, a low-income housing project struggled with broken windows and boarded

units.

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the same government that subsidized owners was withdrawing from the responsibility of

housing those without means.

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Back in the mid-1970s, cities under inflationary pressure responded with rent control

ordinances.

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In San Francisco, Los Angeles, parts of New York, and elsewhere, rent caps felt like a

necessary constraint.

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Protect tenants from runaway speculative rents, preserve mixed neighborhoods,

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allow families to stay close to jobs.

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But there were unintended consequences.

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Landlords, bound by rigid rental ceilings, deferred maintenance.

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Some pulled units off the rental market entirely.

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New multifamily housing development slowed in rent-controlled zones.

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Systems strained.

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In some cities, rent control was blamed for shrinking rental stock over decades.

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Units once protected

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became neglected.

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Still, rent control served an essential function.

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It held at least a few doors open in otherwise tightening markets.

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It preserved continuity.

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But alone, it could not offset the structural retreat of public housing or the tax

subsidies favoring ownership.

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As policy retreated, activists responded.

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In 1974,

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the National Low Income Housing Coalition formed as a national voice demanding recognition

of housing as infrastructure.

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Not charity, not speculation.

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We have three simple goals.

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We want to preserve existing federally assisted homes and housing resources.

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We want to expand the supply of low income housing and we want to establish housing

stability as the primary purpose of low income housing policy.

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And we work to achieve these goals through three basic objectives.

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The first is to change public opinion.

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We want to intervene so that we can improve the public's understanding of low-income

housing needs and solutions, how current federal policy impacts this, and what these needs

269

do to their communities.

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Our second objective is to increase the capacity of low-income housing advocates.

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We want to intervene with our members to help them be more successful.

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in educating their policymakers about the issues that we're concerned about and holding

them accountable for making good decisions.

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And our last objective is to basically cause federal policymakers to take action that

solves the shortage of housing for the lowest income Americans.

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That was Sheila Crowley, a past president and CEO of the National Low Income Housing

Coalition.

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The organization was founded by Cushing Dolbert.

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a housing policy analyst, consultant, and one of the leading experts on federal housing

policy and low-income housing in the United States.

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In 2002, as a contributor to the Millennium Housing Commission, Dolbert shared her

thoughts on affordable housing and programs available to increase home ownership.

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The fact remains that while the number of people with critical housing problems may be

overstated,

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The number of people who are finding themselves homeless every night is visibly increasing

in almost every city in the country.

280

And that is the outcome of a housing problem that is not measured by anybody's statistics,

but is measured in reality in the most painful kind of way.

281

Since its founding, the National Low Income Housing Coalition has pressed Congress, shaped

budgets, and recorded and elevated stories from neglected blocks.

282

In 1976, Habitat for Humanity found its roots in rural Georgia on a community farm founded

by a farmer and biblical scholar, Clarence Jordan.

283

It evolved into the organization founded by Millard and Linda Fuller, who developed the

concept of

284

partnership housing, but it gained prominence behind the involvement and leadership of

Jimmy Carter.

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Mr.

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President, are you doing something out of office that in the end it was impossible to

achieve in office?

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No, I think the housing programs that we had when I was in office were very good and very

much needed.

288

We have plenty of need in our country and around the world as a matter of fact for both

government and private entrepreneurs.

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and also volunteers like this.

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So all three need to work together.

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Habitat for Humanity is a worldwide organization.

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We're now in 14 nations in all, with about 50 other projects in this country.

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So we're building about one house per day for people who don't have homes.

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We require each family who move into one of our homes to work 500 hours themselves on

their house and the neighbor's house, and also be able to make the monthly payments.

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The organization out to build decent, affordable housing

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and improve homes for families of low income or disadvantaged backgrounds using volunteer

labor and zero interest loans.

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In its early years, it was piecemeal, often symbolic, but rooted in conviction.

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Housing is human dignity.

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Today, habit has grown to work in all 50 states in the US and in more than 70 countries.

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When Carter became president in 1977,

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he sought to bring that giving nature to the White House, burying policy and purpose.

302

And I join in the hope that when my time as your president has ended, people might say

this about our nation, that we had remembered the words of Micah and renewed our search

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for humility, mercy, and justice, that we had torn down the barriers that separated those

of different race.

304

and region and religion and where there had been mistrust built unity with a respect for

diversity that we had found productive work for those able to perform it that we had

305

strengthened the American family which is a basis of our society that we had ensured

respect for the law

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and equal treatment under the law for the weak and the powerful, for the rich and the

poor, and that we had enabled our people to be proud of their own government once again.

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When it came to housing, Carter expanded HUD's enforcement of fair housing, increased

funding for Section 8, and made housing equity part of his moral brand.

308

His administration saw housing not as a product, but as a right.

309

However, his presidency struggled, unable to solve the inherited stagflation and energy

crisis fast enough.

310

The political pushback and reality of challenges in the country derailed the hopes he once

had when he first took office.

311

As he wound down his term, he delivered a warning to the nation in what would be known as

the crisis of confidence speech.

312

In a nation that was proud of hard work, strong families, close-knit communities, and our

faith in God, too many of us now tend to worship self-indulgence and consumption.

313

Human identity is no longer defined by what one does.

314

But by what one owns.

315

But we've discovered that owning things and consuming things does not satisfy our longing

for meaning.

316

We've learned that piling up material goods cannot fill the emptiness of lives which have

no confidence or purpose.

317

The symptoms of this crisis of the American spirit are all around us.

318

For the first time in the history of our country, majority of our people believe that the

next five years will be worse than the past five years.

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Two-thirds of our people do not even vote.

320

The productivity of American workers is actually dropping.

321

And the willingness of Americans to save for the future has fallen below that of all other

people in the Western world.

322

As you know, there is a growing disrespect for government and for churches and for

schools, the news media and other institutions.

323

This is not a message of happiness or reassurance, but it is the truth and it is a

warning.

324

The American dream, fused with consumer desire and fueled by credit, was spinning towards

a new mythology.

325

It promised that in America, if you worked hard enough, you could rise.

326

And if you didn't rise, the fault was yours alone.

327

Pull yourself up by your bootstraps.

328

When that phrase first appeared in an 1800s physics textbook, the question was meant as a

joke.

329

Why can't a man lift himself by pulling on his bootstraps?

330

The answer was obvious.

331

It's impossible.

332

But somewhere along the way, the sarcasm became scripture.

333

By the mid 20th century, it had morphed into a moral directive.

334

Advancement is individual, effort is everything, and success is proof of character.

335

This message resonated, especially with rural America.

336

where independence and land ownership were core to identity.

337

I recently came across a social media post that summed it up well.

338

The rural experience is lateral, independent, property-focused, versus the urban vertical

experience, public systems, proximity to power.

339

If you rely on yourself and your own property, the logic follows that you want a

government that taxes less and does less.

340

But the twist likely came when this ethos was amplified by a growing conservative media

machine that served corporate interests.

341

What began as a rule of value became a national mantra.

342

The message filtered into boardrooms and Wall Street.

343

Today, we see it in the self-help industry.

344

Rise and grind, no days off, hustle hard.

345

An entire culture insisting that poverty

346

is a personal failing, not a structural one.

347

Simultaneously, there was a disconnect in perception of the economy.

348

With Black Americans serving as a bellwether for the nation's broader economic health,

ongoing Gallup polling on race relations reveals a stark disconnect between white

349

perceptions of opportunity and Black Americans' lived realities.

350

You can see a 30-plus point

351

difference in perception and experience.

352

White participants consistently reported far rosier views on racial equality, economic

fairness, and access to education, even as Black families reported significantly negative

353

reviews.

354

In addition to other issues like food insecurity, medical hardship, and structural

barriers, many white Americans simply did not believe that systemic obstacles existed.

355

And because the black community was often the public face of social programs, calls for

government intervention became easier to dismiss as waste, dependency, or special

356

pleading.

357

By the mid-1970s, economic turbulence cracked the intellectual foundation of the New Deal

and Great Society era.

358

As inflation surged and Keynesian tools faltered, a new chorus of critics rose up.

359

Among them was Milton Friedman, the Nobel Prize winning economist who argued that markets

were wiser than governments and that planners inevitably distort what they try to fix.

360

Literally thousands of people cooperated to make this pencil.

361

People who don't speak the same language, who practice different religions, who might hate

one another if they ever met.

362

When you go down to the store and buy this pencil...

363

You are in effect trading a few minutes of your time for a few seconds of the time of all

those thousands of people.

364

What brought them together and induced them to cooperate to make this pencil?

365

There was no commissar sending out offices from sending out orders from some central

office.

366

It was a magic of the price system.

367

The impersonal operation of prices that brought them together and got them to cooperate.

368

to make this pencil so that you could have it for a trifling sum.

369

That is why the operation of the free market is so essential, not only to promote

productive efficiency, but even more to foster harmony and peace among the peoples of the

370

world.

371

Friedman dismissed Keynesian as naive, championing monetarism, deregulation, and prior

markets.

372

His academic work, especially a theory of the consumption function, earned him deep

respect among economists, while his book, Capitalism and Freedom, made him a public

373

intellectual.

374

After retiring in 1977, he partnered with the Free to Choose Network, a libertarian

nonprofit corporation that produced television programs and videos, bringing his ideas to

375

television and translating

376

theory into persuasion.

377

By 1980, he was advising Ronald Reagan's presidential campaign and later served on

Reagan's Economic Policy Advisory Board.

378

His influence crossed the Atlantic as well, shaping Margaret Thatcher's economic

revolution when she became prime minister.

379

There is no doubt that the prime minister has in many ways achieved substantial success.

380

There is one statistic that I understand is not however challengeable and that is that

over her 11 years the gap between the richest 10 % and the poorest 10 % in this country

381

has widened substantially.

382

How can she say at the end of her chapter of British politics that she can justify many

people in a constituency such as mine being relatively much poorer, m

383

much less well housed and much less well provided than it was in 1979.

384

Surely she accepts that is not a record that she or any Prime Minister can be proud of.

385

Mr Speaker, all levels of income are better off than they were in 1979.

386

But what the Honourable Member is saying is that he would rather the poor were poorer,

provided the rich were less rich.

387

That way you will never create the wealth for better social services as we have.

388

And what a policy!

389

Yes, he would rather have the poor poorer, provided the rich were less rich.

390

That is a Liberal policy.

391

Yes, it came out, he didn't intend it to.

392

The second voice you heard was Margaret Thatcher, Prime Minister of the United Kingdom

393

Her conservatism centered on individual liberty, shrinking the state, breaking the power

of trade unions, and privatizing public assets.

394

Early in her tenure, recession and soaring unemployment eroded her support.

395

Until the 1982 Falklands War with Argentina and an economic rebound delivered a sweeping

396

One of her most consequential policies

397

right to buy allowed public housing tenants to purchase their homes at steep discounts.

398

It broadened ownership for some while hollowing out the public housing stock for everyone

who came after.

399

Inside this shifting political climate, conservative institutions also gained strength.

400

The Heritage Foundation, founded in 1973 by Paul Weirich, a religious conservative

political activist,

401

Edwin Fullner, a former congressional aide and foreign consultant, and Joseph Coors of the

Coors Brewing Company rose to prominence as a muscular ideological factory shaping

402

policies that aligned with market-first governance.

403

Hello, I'm Ed Fulner, president of the Heritage Foundation, a Washington-based public

policy research organization that is a think tank.

404

Think tanks are basically idea factories.

405

We're in the idea business because we believe that ideas have consequences.

406

Or as John Maynard Keynes, the economist, said, it is ideas, not vested interests, which

are dangerous for good or evil.

407

Ideas basically

408

are the raw materials of laws, which means that people here in Washington involved in the

public policy process, like the Congress, officials in the executive branch, leaders in

409

the national news media, have to depend on ideas as the raw material for everything they

do.

410

And it's those new ideas that think tanks in Washington are involved in presenting to the

public policy makers.

411

Our ideas here at Heritage are

412

usually described as conservative.

413

That is, we believe in promoting traditional American values.

414

We believe in a strong national defense.

415

And we believe in the free enterprise system and free trade.

416

We believe that basically less government is better than more government.

417

Out of the growing business activist movement of the 1970s, fueled by corporate

frustration with Richard Nixon's flirtation with liberal consensus,

418

particularly on climate, and a belief that existing think tanks were too timid, Paul

Weirich and Edwin Folner set out to build something different.

419

Not a research institute, but a political weapon.

420

With seed money from Joseph Coors and ongoing support from the Adolf Coors Foundation, the

Heritage Foundation was born.

421

Its board included senior figures from Chase Manhattan Bank, Dow Chemical, General Motors,

Exxon Mobil, Pfizer, Sears, Corporate America's top brass.

422

Heritage advanced a fusion conservatism, pro-business economics,

423

paired with the cultural priorities of the Christian right.

424

Over the decades, its influence only grew.

425

Today, the foundation helps shape conservative narratives on transgender rights, critical

race theory, Black Lives Matter, climate denial, Ukraine funding, and voter fraud.

426

And since 2023, it has led the creation of and now execution of Project 2025.

427

an effort to fundamentally restructure the executive branch.

428

But Heritage's breakthrough moment came in 1981 as Ronald Reagan entered the White House.

429

The foundation delivered Mandate for Leadership, a sprawling 20-volume, 3,000-page

blueprint containing more than 2,000 recommendations to pull the federal government

430

sharply to the right.

431

Some suggest further right than the Republican Party at the time.

432

It called for dismantling affirmative action initiatives, slashing social spending while

raising the defense budget, creating enterprise zones and inner cities, cutting personal

433

income taxes across the board, granting the president line item veto power, and

accelerating development of new strategic bombers.

434

Reagan embraced it.

435

By the end of his first year, roughly 60 % of Heritage's proposals had been enacted or

placed into motion.

436

With Reagan as its first prominent vehicle, Heritage helped steer the nation into a new

ideological era.

437

Market first, state shrinking, and increasingly willing to let inequality harden into

policy.

438

The economic ills we suffer have come upon us over several decades.

439

They will not go away in days, weeks or months, but they will go away.

440

They will go away because we as Americans have the capacity now as we've had in the past

to do whatever needs to be done to preserve this last and greatest bastion of freedom.

441

In this present crisis,

442

Government is not the solution to our problem.

443

Government is the problem.

444

Ronald Reagan's election marked a defining moment.

445

Declaring that government is the problem, he delivered the final blow to the progressive

and New Deal traditions, eras that, despite their racial exclusions, had actually expanded

446

the middle class and produced the most broadly shared prosperity in U.S.

447

history.

448

Under Reagan,

449

that framework unraveled.

450

Social spending contracted.

451

HUD's budget was cut by more than half.

452

Public housing construction dissolved.

453

Vouchers remained kept.

454

The federal role in housing shifted from builder to bystander, and the shadow of

disinvestment lengthened across low-income communities.

455

Reagan's economic philosophy, soon branded as Reaganomics,

456

centered on deregulation and deep cuts to both taxes and public welfare programs.

457

Now to understand the tax implications, it helps to recall how the U.S.

458

tax system works.

459

Since the federal income tax began in 1913, Americans have paid marginal rates.

460

Income is taxed in tiers, with higher portions taxed at higher rates.

461

So the actual tax percentage overall or average is not as high as the marginal tax would

lead you to believe.

462

To address failures of companies not paying a living wage, the top marginal rate

historically served as a guardrail against extreme inequality, reaching 91 to 92 % for the

463

highest portion or bracket of income through the 1950s and early 60s.

464

the very period when income inequality in the US was the lowest on record and many

perceived as a prosperous time in the US.

465

By the late 1970s, the top rate had fallen to the 70 % range.

466

Then came Reagan's first tax cut in 1981, which slashed the top marginal rate to 50%.

467

By the end of his second term, it dropped again to an astonishing 28.

468

While headlines celebrated tax cuts, deregulation, and a booming stock market, many

working families experienced the opposite, stagnating wages, rising living costs, and

469

shrinking social safety nets.

470

The 1980s created a new economic landscape, one where the market was celebrated, labor was

weakened, and the working class carried risk once shared across society.

471

Only about 30 % of households participated in the stock market at the time.

472

The gains of the decade were real, but they were uneven, and the working class absorbed

most of the cost.

473

The promise was trickle-down growth, that the wealthy would reinvest their savings into

jobs, innovation, and higher wages.

474

Instead, the savings often flowed into something else entirely, political influence.

475

Tax cuts didn't just enrich the top, they rebalanced power.

476

And remember, the Nixon shock untethered the dollar, inviting temptation, cheap credit,

speculative leverage,

477

and asset inflation.

478

Reagan's deregulation was the green light for those with power and assets to fully

indulge.

479

And inequality found new room to widen.

480

For some Americans, the 1980s shimmered with material aspiration, designer fashion, luxury

cars, booming stock markets, and a cultural embrace of individualism.

481

But the prosperity was uneven.

482

Census data shows that the era of shared growth ended in the late 1970s.

483

Under Reagan, income inequality surged.

484

From 1981 to 1990, the bottom 20 % of earners lost 0.1 % annually, while the top 20 %

gained 2.1 % per year.

485

The top 5 % saw even larger increases, about 3.2 % annually.

486

Meanwhile, weakened unions, suppressed wages, and cuts to public programs intensified

hardship for low-income families.

487

The social fallout was visible.

488

Homelessness climbed sharply.

489

Reports of child abuse overwhelmed agencies.

490

By the early 1990s, violent crime reached its highest recorded levels.

491

In turn, many high earners, buoyed by stock gains and lower taxes,

492

insulated themselves physically and socially, retreating into new enclaves that mirrored

the decade's mantra, wealth is virtue and inequality as personal failure.

493

Guided by this new ethos, housing evolved.

494

See, in the early 20th century, American homes were smaller, about 900 to 1200 square

feet, sturdier and in some cases, multi-generational, built to last.

495

but nothing captures the evolving world view more clearly than the front porch.

496

Once, the porch was the soft edge between private life and public life.

497

And in between refuge from heat, neighbors wandered over and stories drifted into the

street.

498

It was architecture designed for connection.

499

In the late 19th and early 20th centuries, porches flourished.

500

Industrialization made millwork cheap.

501

Catalogs offered ornate columns and railings, and families layered these details onto

modest homes.

502

Porches served as shaded rooms before air conditioning, cooled bodies on summer nights,

and even doubled as outdoor sleeping space during heat waves.

503

They protected entry doors, welcomed guests, and functioned as the original living room,

open social communal.

504

but the mid to late 20th century rewired American life.

505

Cars made it easier to leave home for entertainment.

506

Telephones replaced doorstep conversations.

507

After World War II, technology and the housing boom that introduced suburban life slowly

disconnected us, turning life toward the backyard and indoors in front of TVs.

508

Air conditioning finished the job.

509

The porch

510

once a stage for community became unnecessary, then unfashionable, then barely existent,

just a cover for rain while you fumble for your door key.

511

What disappeared wasn't just a design feature, it was a social element.

512

Modern homes turned inward, neighborhoods followed.

513

In losing the porch, we lost one of the few architectural invitations to slow down, sit

outside, and see one another.

514

What emerged from the 1980s was a new kind of suburb sprawling, inward facing, and

dominated by oversized, consumption centered houses that came to be known as McMansions.

515

These homes, often to 3,000 square feet or more, embodied the era's growing wealth divide.

516

They weren't built to strengthen community.

517

They were built to display status.

518

Everything you needed was inside, and everything outside, neighbors, public space, shared

life, mattered a little bit less.

519

Gated entrances reinforced the divide.

520

turning neighborhoods into enclaves and marking a physical boundary between affluence and

everyone else.

521

Architecturally, McMansions borrowed heavily from historical styles rooted in hierarchy.

522

French chateaus, Mediterranean villas, Georgian estates, yet stripped them of coherence.

523

As postmodern debates consumed the architectural profession, developers filled the void

with mass-produced

524

imitations of grandeur.

525

The results were often cheaply built.

526

Mismatched windows, oversized columns, synthetic ornament, and sprawling forms capped by

complicated leak-prone roofs.

527

Inside, double height rooms, echoing voids, and awkward layouts created vast

inefficiencies in energy, materials, and space.

528

These houses weren't simply large.

529

They symbolize a cultural turn.

530

away from modest, community-oriented post-war homes, away from durable craftsmanship,

towards spectacle, consumption, and separation.

531

In the landscape of rising inequality, the McMansion became the built expression of

excess.

532

As federal housing policy shifted towards vouchers, deregulation, and shrinking public

investment, the private market moved in the opposite direction, towards scale,

533

control and privatize visions of community.

534

few symbols captured the turn more clearly than the Irvine Company under Donald Brin.

535

Brin, the son of Hollywood-adjacent parents, movie producer Milton Brin, and civic leader

Marion Newbert, had style, discipline, and ambition.

536

He studied business and economics at the University of Washington, served as a Marine

Corps officer, and briefly chased his Olympic dreams in skiing.

537

In 1958,

538

he borrowed $10,000, roughly $111,000 today, to build his first house in Newport Beach and

flipped it for a profit.

539

That spark became the Bren Company, which grew from suburban homes to commercial

development, and eventually to co-founding the Mission Viejo Company, where Bren helped

540

shape one of Orange County's early master plan cities.

541

By the mid-1970s,

542

Brin had built a reputation as a builder with sophistication.

543

Exactly the image Taubman Company marketing executive Robert Schaup believed would appeal

to power players Adolf Alfred Taubman or Al and Herbert Allen Sr.

544

of Allen & Co.

545

for a new deal they were eyeing.

546

After the Tax Reform Act of 1969,

547

which ensured high-income earners pay some taxes despite deductions and exemptions, the

548

Llewelyn Bixby, was forced to end its cattle business and sell.

549

Schout made the call.

550

I found our guy.

551

Who?

552

Donald Bren.

553

Why?

554

Because Al, you and I look like a couple of gangsters from Detroit.

555

This guy looks like he came from Hollywood.

556

Taubman told Shout to offer Bren 35 % of the deal.

557

Shout pulled Bren aside and reportedly said, quote, shake my hand.

558

I'm going to make you one of the richest people on the planet, end quote.

559

He was true to his word.

560

The Irvine company held 185 square miles of land.

561

Prior to the deal with Brin's group, 1,500 acres was sold to the soon to be University of

562

By 1983, Brin became chairman.

563

In 1996, he bought out every partner and became sole owner.

564

With that control,

565

fringe-shaped Orange County in his own image.

566

The company has been a private company for all these years.

567

There was one point that we took a segment or a group of the company, the apartment group,

public for five years.

568

That was an interesting opportunity.

569

But I am convinced that community development, large scale community development has to be

done in a

570

in a private environment, meaning that there are no quarterly dividends required.

571

The cash is reinvested.

572

The cash is reinvested into the planning, into the infrastructure, into the asset

portfolio of office, retail, industrial, and apartment properties.

573

The Irvine Company

574

now holding more than 120 million square feet of real estate, including hotels, marinas,

office buildings, apartment complexes, major shopping centers, and a 97 % stake in New

575

York's MetLife building, one of the most valuable buildings in New York City, crafted some

of the most meticulously planned, tightly governed, and highly amenitized communities in

576

America.

577

Gated entries, private roads, manicured parks, architectural guidelines, and powerful

homeowner associations created a curated suburban ideal.

578

As the Los Angeles Times put it, quote, Orange County looks like Orange County because of

the influence of Donald Brin, end quote.

579

Master planning promised safety, beauty, and order, but it was also fundamentally

homogenous and exclusionary.

580

In an era when public housing construction collapsed and rents rose, the Irvine Company's

growth represented a different kind of map making, luxury on one side of the gate,

581

shrinking opportunity on the other.

582

By the mid 1980s, the consequences had become systemic.

583

Neighborhoods once protected by red lines, by local covenants, by zoning, hardened

further.

584

Apartment complexes aged, maintenance deferred, rents climbed, public housing stock

shrank, vouchers stretched thin, and as the middle class held onto homes, they watched the

585

gap to the majority who rented widen.

586

We entered a world where owning meant more than shelter.

587

It meant

588

Tax shelter, political voice, accumulation.

589

Decades of exclusion built up a longing, a ravenous desire for a chance at ownership.

590

That would lay the rails for what came next.

591

Subprime mortgages, predatory lending, securitization, and in the end, collapse.

592

A crisis that would bankrupt families, destabilize banks, hollow out cities,

593

and further enrich asset owners.

594

The next chapter would be written in foreclosures, toxic bundles, wealth losses, and

institutional acquisitions.

595

We'll track how Clinton and Bush thought they could democratize ownership, how

institutions like Blackstone turned foreclosures into portfolios, and how gentrification,

596

new urbanism, and zoning wars

597

shaped the new maps of inclusion and exclusion.

598

The Babysitters Club of American Finance printed more tickets.

599

Then someone realized you could bundle the tickets, sell them, bet on them, and build a

fortune on the belief that the night out never ends.

600

Next time on Built to Divide.

601

And today, all across the country, I say to millions of young working couples who are just

starting out, by the time your children are ready to start the first grade, we want you to

602

be able to own your own home.

603

Thanks for listening.

604

Built to Divide is presented by Lines, my architecture and creative studio.

605

This podcast is produced in collaboration with Gable Media.

606

If you enjoyed the show, please tell a friend and rate and review it on Apple podcasts and

Spotify.

607

It really helps others find it.

608

And if you're looking for similar content, Built to Divide is part of the Gable Media

network where you can find even more like this.

609

Visit gablemedia.com.

610

That's G-A-B-L media.com.

611

And before I go, if you want to see additional photos, video clips, and content that went

into this episode, you can visit me at lines.studio slash podcasts.

612

Talk soon.

613

Speaking of making things, I understand that you've turned one part of this floor into a

furniture shop, is that right?

614

That's true.

615

It used to be the kitchen years and years ago.

616

Then it was a broadcast room under Franklin Roosevelt.

617

President Truman used it to show movies.

618

Now we have an upholstery shop here where we do all our furniture restoring and

upholstering.

619

You do all of the reupholstering of these old pieces in here?

620

We do mostly.

621

It's much quicker and more practical.

622

So exciting to see things grow every day.

623

And then also in this room, we have three ladies on loan to us from the National Park

Service who cura, who catalog every single item in the White House so we'll be sure

624

nothing is lost track of again.

625

All donors will be given credit in the booklet that everyone can...