How the Bubble Burst: A Critical Review of Randall O’Toole’s “Bursting Our Bubble” The U.S. economy has been in shambles for a few years now. The government is still trying hard to patch up the financial crisis and stop the bleeding. To truly understand the recession woes the people of the United States have faced, one must first understand what prompted the recession in the first place – the housing market. Houses, a notion which started as a primal instinct in human beings has convoluted to the point where shelters no longer serve as a simple roof over one’s head. The modern housing market has gained so much power that it has the strength to bring down an entire economy of a nation. It is clear now to economists and politicians that the collapse of the housing bubble is undoubtedly what spurred the financial crisis. Randal O’ Toole, however, tries to explain what exactly catalyzed the real estate bubble and its collapse in his article “Bursting Our Bubble” in the USA Today Magazine. He believes that the housing bubble only existed in areas where state governments imposed “restrictive growth management” (O’Toole). In the author’s opinion, state-level growth management provides nothing positive for the economy.
The article begins with a detailed case study of regions which administer growth management versus regions which do not. First, O’Toole mentions Florida and California (two states where the local government imposes growth limits), and how drastically they were impacted by the housing bubble. The housing prices in these two states “more than doubled and, since the peak, they have fallen by 20% to 30%.” However, in states where population growth is not restricted, such as Georgia and Texas, real estate prices “grew by only about 20% to 25%” and more importantly “they have not declined significantly.” The author here does an excellent job of providing statistics and concrete numbers to back up his claim. Right from the start, he appeals to logic in order...
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