The recent equity investor land grab is threatening America's way of life.
Early last month, the media began to push a curious idea: that American homeownership is a thing of the past, and that we should be happy about our new life of renting. Bloomberg picked up on a report from Apartment List indicating that, in 2020, 18% of millennial renters said they planned to rent forever, up for the third consecutive year. Moreover, among those who plan to buy a home, 63% have no money saved for a down payment. “The share of millennials living with their parents is also significantly higher than in previous generations,” Olivia Rockeman and Catarina Saraiva add.
The recent media push against homeownership is even more insidious when you consider the context...
Two weeks later, Bloomberg Opinion featured Karl W. Smith in a piece titled “America Should Become a Nation of Renters.” “Rising real-estate prices are stoking fears that homeownership, long considered a core component of the American dream, is slipping out of reach for low- and moderate-income Americans. That may be so—but a nation of renters is not something to fear. In fact, it’s the opposite,” Smith writes. “This process is painful, but it’s not all bad. Slowly but surely, most Americans’ single biggest asset—their home—is becoming more liquid.”
This isn't the first time this idea has been floated around. In 2018, Richard Florida, author of The New Urban Crisis (2017), argued that "The rise of renting in the U.S. isn’t just about high housing prices, or preferences for city living, but about the flexibility to compete in today’s economy." In 2019, Jenny Schuetz argued against what she called the “policy bias towards homeownership.” What these commentators are advocating is quite radical: American liberty is—and has always—been tied fundamentally to small, independent freeholds like homes and businesses. The recent media push against homeownership is even more insidious when you consider the context of what's effectively a land grab by private equity firms that are threatening the human liberty at the core of our national founding.
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Suburban houses.[/caption]
An April 2021 article in the Wall Street Journal alerted Americans that major investment firms, including BlackRock, are buying up single-family homes at above-market prices. The Journal describes how “Limited housing supply, low rates, a global reach for yield, and what we’re calling the institutionalization of real-estate investors has set the stage for another speculative investor-driven home price bubble.”
American liberty is tied to maintaining these small freeholds: our own businesses and our own homes. It always was.
The report was picked up by Fox News’s Tucker Carlson, who devoted an alarming segment to the topic. Land and homes are being purchased at 20% to 50% above the asking price, using money that investment capital controls from the Federal Reserve. What this means is that the firm can buy homes using money that was created out of thin air by central bankers, rather than having to commit family wealth to the purchase. Families simply cannot compete with the bottomless funds that the Fed provides.
Along with pandemic trends that have devastated small businesses in favor of mega-corporations, these moves have grave consequences for America’s future. A man who owns his own business owns his means of production and is subject to no boss’ politics (and no H.R. department’s threats) should he express disapproved of opinions. She who owns her own home pays herself with every mortgage payment, building equity and wealth for herself and her family. In a time when massive government spending is promoting inflation, a home is still a sound investment because it will be sold someday in future dollars: even if the dollar is worth less, the home at least will be worth more of them.
American liberty is tied to maintaining these small freeholds: our own businesses and our own homes. It always was. What follows is the story of James Jackson (1757-1806), hero of the Revolution, duelist, Senator, Governor, and a man who stood up against an early corporate land grab. A disciple of Thomas Jefferson, James Jackson knew that allowing all the land in Georgia to be bought up by corporate land speculators would leave the people unfree. The liberties he had fought for in the Revolutionary War were under threat, and not only by British tyrants. If the people of Georgia were not free practically, their hard-won political freedom would amount to nothing.
Jackson thus set himself to undoing the corrupt corporate land grab of his day and succeeded. He left Georgia a land of small farmers and land-holders (what Jefferson liked to call Yeoman farmers). Contemporary Americans watching equity investors buying up land and homes with Federal money can learn from Jackson both how important it is to own their own homes as individuals, and how crucial it is for America as a whole to prioritize widespread economic freeholds like private homes and small businesses.
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James Jackson.[/caption]
THE FIGHT FOR POLITICAL FREEDOM
James Jackson was studying law in Savannah when the Revolution came. He joined the 1st Georgia Brigade and fought in the unsuccessful defense of the city against British expeditionary forces. Though forced to retreat, Jackson’s men linked up with other Continental forces and fought on. At the Battle of Cowpens, Jackson participated in the ruse that broke Tarleton’s Legion. The British cavalry, with their skull-and-crossbone caps, were drawn into over-extending their charge into concealed lines of rock-hard American militia. The battle resulted in the only double-envelopment of the war and the near-destruction of the whole British legion. Only its cavalry survived with enough strength to continue operations.
In 1795, the government of Georgia passed a law called the Yazoo Act, which sold 60% of the land in present-day Alabama and Mississippi to four land-speculating corporations.
By 1781, Lieutenant Colonel Jackson was commanding a legion of his own in the Georgia militia. His service, including at the liberation of Savannah, eventually earned him the rank of Major General. After the war, he was elected Governor of Georgia. He turned the position down. Instead, he became a member of the United States Senate, as Federal service in the early Republic was considered a much more minor role. That is why he was away when the corrupt Yazoo land deal occurred.
The Yazoo land fraud was named after the Yazoo River, which was west of the territory controlled by Georgia at that time. In 1795, the government of Georgia passed a law called the Yazoo Act, which sold 60% of the land in present-day Alabama and Mississippi to four land-speculating corporations. Naturally, the process was corrupt, featuring bribery to major politicians and newspaper editors alike.
Jackson resigned his Senate seat in order to come back to Georgia and fight the corrupt sale. He had a tough road ahead of him: he was setting himself against the entire political establishment of the state, which knew that what it had done was wrong, and was determined not to be held accountable for it. Jackson took a disciplined approach, using county-level grand juries and friendly newspapers to expose the corruption of the ruling political class. As a consequence, he was able to build a political movement against the corrupt sale of Georgian land. He won office first to the State Senate, where he wrote the law revoking the Yazoo fraud. Then he won the Governorship, which he used to execute the law.
As I heard the story told as a history student at Georgia State University, Jackson ordered all the copies of the Yazoo Act to be gathered up on the statehouse lawn. There, an old man with a prism focused the light of the sun on the copies of the law until they caught fire and burned to ashes. Jackson’s allies put out the story (honestly enough) that the fires of heaven had consumed all the copies of the law.
Having disposed of the fraud, though, Jackson and his allies had to decide what to do with all the land. How could they see that the land was used to create a nation of independent farmers, free-holders along the lines of Jefferson’s and Jackson’s political model? The solution they came up with was to take the land and distribute it by lottery. The land was divided into small parcels that a family could work. These were offered to whoever won the lottery for that particular parcel at a small, affordable price. These lotteries were repeated several times in Georgia’s early history and attained a profound effect. According to the University of Georgia’s Jim Gigantino, “[T]he system… dramatically changed Georgia so that aristocrats no longer held political and economic domination over the state as they had before the Revolution. On average, Georgia planters held less land than their contemporaries in other southern states, reflecting the power shift from large landholding aristocrats to yeoman farmers.”
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Suburban houses.[/caption]
THE CRUCIAL NATURE OF PRACTICAL FREEDOM
Small farmers were the early Republic’s version of small business owners and homeowners. That had an independence that was practical as well as political. Politically, these small, independent farmers were free to speak their minds, organize, and vote. Practically, though, these freedoms could easily be curtailed by the need to make a living. In those days, rich landowners could influence a whole village by refusing to do business with anyone who spoke a contrary word about their preferred politics, even arranging a mob to destroy written forms of their arguments.
We must have agreement on the idea that small-scale ownership is fundamental to American society.
Today, we have a similar problem. People expressing views out of order with woke corporations may find themselves out of a job. They may, in fact, find themselves unemployable. Similarly, as homes become owned not by individuals but by investment corporations, many of whom have similar “woke” ideologies, one might be evicted for wrong opinions. You can imagine a dystopia when wholly-owned neighborhoods could enforce speech codes ‘for everyone’s comfort and safety,’ just as corporations and governments already drive out unpopular opinions by firing those who hold them.
Just like Jackson, those opposing investment corporations’ control of American homes face a powerful alignment of forces. These corporations control more wealth than most nations. Corrupt politicians of both American parties are eager to do their bidding in return for access to a small part of that wealth. A disciplined political strategy will be necessary to undo what has been done, both regarding small businesses and family homeownership.
Nevertheless, we, like Jackson, have the tools to do it. First, we must have agreement on the idea that small-scale ownership is fundamental to American society. If we can persuade Americans of that, political races can be won on the argument at the Congressional, state, and local levels. And at all of these levels, eminent domain rules can be used to buy back homes for resale at fair market values as determined by a jury of citizens. The distorted market created by corporations with endless Fed funds is fundamentally unfair to citizens. A market fit for ordinary citizens with their ordinary savings is a fair market for housing. The purpose of such a fair market is the same as the purpose of America: to create an environment in which we can be free men, free women, and the free owners of our own homes.
Laissez-faire economics is ultimately insufficient to maintain a free society. The people have to ensure that they remain practically as well as politically free.
There will be pushback to such a plan, of course. There was for Jackson, too. Over the course of his moves to free Georgia’s land from speculators, Jackson fought four duels related to the Yazoo fraud. (In those days dueling was not only legal but necessary to maintain one’s honor as a political figure.) Jackson fought and won all four duels at great risk to his life in order to win his cause. Even after that, lawyers from the speculating corporations kept the matter tied up all the way to the Supreme Court.
In the end, Jackson won. Though the Court required Congress to pay the speculators a token amount to settle the case, the land returned to the people of Georgia. Likewise, we can expect aggressive legal defenses from firms that have almost no limits to their budgets for such things. Yet, the people control the juries who decide the question of what constitutes a fair market value. The jury box is one of our most powerful tools. Only citizens, not corporations, can fill a jury seat.
There is a last warning in the story of James Jackson. The yeoman system in Georgia did not last forever. Economics must be a field of permanent engagement. In Jackson’s case, the emerging slave plantation system—which could have been avoided in Georgia, as Georgia originally banned slavery—proved so lucrative that it incentivized the purchase of many of these freeholds. Our commitment to keeping America a society of free-holders of small businesses and their own households must be a permanent struggle. It must become a continual ideological commitment. Laissez-faire economics is ultimately insufficient to maintain a free society. The people have to ensure that they remain practically as well as politically free.
