I recently had lunch with a good friend who is a commercial real-estate broker. After exchanging pleasantries we entered into an extended discussion of the role of government in the control of what my friend describes as “dirt”. Real-estate is after all basically “dirt”.
He was concerned that one developer can devalue the dirt of another developer.
He used the example of a “dirt” owner constructing a five-story building near the waterfront, something we have a lot of in Florida. Along comes another developer and he or she builds in front of the first developer an eighteen-story building, thereby blocking the water view of the first developer. The land value of the first developer declines because of this. My friend found this outrageous and wanted government to step in to protect the first builder against the second.
I said, rather forcefully to my friend, that this is an example of the free market working. Dirt rises and falls in value due to many factors, including the one my friend described. My solution was the first builder should tear down his five-story building and build a new thirty-story building, thereby regaining his view of the water and increasing the value of his dirt. My friend would have none of it. He wanted government to step in and prevent the second builder from building. He favored central government planning over market forces to determine the value of water front “dirt”.
Here in lies the problem.
In his book The Ruling Class: How They Corrupted America and What We Can Do about It, Professor Aneglo M. Codevilla states, “[The bi-partisan Ruling Class] proceeds from the premise of human inequality and leads to even greater inequality . . .[O]ur Ruling Class is making itself the arbiter of wealth and poverty. While economic value of anything depends on sellers and buyers agreeing on the value as civil equals in the absence of force, modern government is about nothing if not about tampering with civil equality.”
What my friend embraces is government as the final arbiter of the price of “dirt”.
Once government controls the price of dirt, it controls everything. According to Professor Codevilla, “[M]odern government makes valuable some things that are not, and devalues others that are.”
“Whatever else government may be, it is inherently a factory of privilege and inequality. Thus, if you are not among the favored guests at the table where officials make detailed lists of who is to receive what at whose expense, you are on the menu,” notes Professor Codevilla. This is the definition of “crony capitalism”. The bi-partisan Ruling Class teaches that prosperity is to be bought with the coin of political support. John Kenneth Galbraith characterized America’s economy as “private wealth amidst public squalor.”
I believe in the Catholic principle of “subsidiarity”. In the secular world, the principle of subsidiarity means that local government should do only those things that individuals cannot do for themselves, state government should do only those things that local government cannot do, and the federal government should do only those things that the individual states cannot do.
The title of this column is a quote from The Spirit of the Laws by Charles de Montesquieu who also wrote, “Peace is a natural effect of trade.” Beware of government eating dirt!