Mortgage Tax Deduction vs. Tuition Tax Credit

Tax code represents the DNA of a society, at least as much as do cultural norms (see the Sightline Institute's "Tax Shift" brochure for more good analysis of this). 

In many respects, the tax code creates cultural norms.  Wine was as popular a drink as beer in England until the English put a high tariff on French wine in the early 18th century.  As a consequence, England became a land of beer drinkers and port drinkers.  Beer, of course, was made in England, and although port was imported, due to the tariff based on quantity importers had an incentive to import higher priced and higher alcohol products such as port, sherry, and liquors rather than the relatively low alcohol per unit of volume wine.  Had the tariff not existed, the English might be known for their love of wine almost as much as the French were.

Thus much of the ranting about people's priorities are misguided.  To a remarkable extent, social and cultural priorities are formed by the interaction of underlying preferences with relative prices.

Combine this insight with the fact that government control reduces innovation, whereas an open market in which millions of potential entrepreneurs all have an equal opportunity to provide a given good or service produces fantastic innovations over time.

With these two insights in mind, it is interesting to consider what the U.S. would be like if, in the 1930s, we had offered a tuition tax credit that subsidized private schools while offering free public housing to all, instead of mortgage interest tax deductions combined with free public school for all.  Instead of a world of McMansions and sprawl, combined with an anti-intellectual population that hates learning, we might well have a population that hated their public housing, but which was very deeply committed to learning.  We would likely have more conspicuous erudition and less conspicuous consumption.