• Tag Archives property rights

  • Landlords Are Struggling to Make Ends Meet as CDC Extends Eviction Ban

    Posted on by Azrael Comment

    With so many Americans out of work and unable to pay their rent, the Centers for Disease Control and Prevention instituted a nationwide eviction ban on residential rental properties.

    With the moratorium originally set to expire on January 31, newly elected President Joe Biden, on his first day in office, signed an executive order prolonging the eviction ban until at least the end of March.

    Under this eviction moratorium, tenants who fail to pay their rent or mortgage are shielded from removal, so long as they submit a formal declaration to their landlords, proving their financial hardship is COVID-related.

    Any landlord who fails to comply with the CDC’s policy can be slapped with fines up to $200,000, face criminal prosecution, and even be forced to serve time behind bars.

    No one wants to see the homeless population rise, but what of the landlords who also have bills to pay and mouths to feed? These individuals seem to be forgotten when we look at the casualties of the nationwide financial crisis.

    In Northeast Washington D.C., Archie Djabatey owns a four-unit building where he also resides. According to The Washington Post, the 35-year-old bought the building with dreams of building a legacy he could pass on to his future children—an aspiration that has since been placed on pause by the eviction moratorium.

    The eviction crisis has been a unique situation for Djabatey, because his neighbors are also his tenants. “You want to help, but it’s also a business,” he said, “That’s the way it is.”

    These moratoriums place the burden of housing solely on landlords, perpetuating the financial hardships the country is already facing.

    In February of last year, just one month before the pandemic changed nearly every aspect of our lives, Djabatey had to file an eviction suit against one of his tenants after he had failed to pay rent. Not only was the tenant delinquent, but he had also been using drugs on the property and had strangers funneling in and out of his unit at all hours, becoming a nuisance to the other residents.

    The court rightly sided with Djabatey. But the eviction process came to a screeching halt as COVID began spreading across the country. Ten months later, and the tenant in question is still living in the apartment without paying rent while violating the terms of his lease and protected against eviction. This moratorium is not only a problem to other residents, it’s also robbing the building’s owner of $1,002 a month. “It’s coming out of my pocket. I’m in a very tight situation.”

    Djabatey’s story is just one of many. Pacific Legal Foundation attorneys spoke to a landlord in Louisiana who explained that she had trouble paying her mortgage due to lost income. As a result, she could no longer afford essentials, like prescription medications, all because of the eviction moratorium.

    But Louisiana and Washington, D.C. are not the only regions with a strict eviction moratorium.

    The term “landlord” might conjure up images of slumlords taking advantage of their tenants and leaving them with dilapidated and unlivable dwellings. Yet, in Southern California, where eviction is prohibited for any tenant who is able to pay at least 25 percent of their rent or mortgage, 70 percent of rental building owners own fewer than 50 units. These small landlords are worried about how they will stay financially afloat with the eviction moratoriums being continually expanded.

    New York landlords are dealing with the same concerns, as the state recently passed what The New York Times called “the most comprehensive anti-eviction laws in the nation.”

    Many constitutional attorneys have questioned why the CDC is making policy decisions in the residential real estate market, given that the Constitution does not authorize it to do so.

    The ordinance puts a pause on any eviction proceedings already filed in court and prohibits landlords from beginning any new proceedings until at least May 1.

    In Oregon, the newly passed House Bill 4401 extends eviction bans until June 30, 2021. Several landlords have since filed suit against Governor Kate Brown, Portland, and Multnomah County in response to the new law.

    Many constitutional attorneys have questioned why the CDC is making policy decisions in the residential real estate market, given that the Constitution does not authorize it to do so. Only Congress has the power to create and pass laws.

    The Public Health Service Act does give the CDC the authority to take steps to curb the spread of the virus, but it only authorizes the agency to “provide for such inspection, fumigation, disinfection, sanitation, pest extermination, destruction of animals or articles found to be so infected or contaminated…and other measures.”

    The CDC has extended that authority by claiming that allowing landlords to evict delinquent or destructive tenants will exacerbate the spread of the virus.

    Well-intentioned as the eviction moratoriums may be, these policies often cause more unintended consequences than solving actual problems. It’s unclear how many people would actually have been evicted in 2020 without the bans. During the 2008 financial crisis, for example, despite fears of mass evictions and homelessness, eviction rates stayed relatively the same as before the crash.

    These moratoriums place the burden of housing solely on landlords, perpetuating the financial hardships the country is already facing. There are more effective and reasonable policies that would protect those truly struggling from pandemic-related hardships, while also making sure landlords aren’t losing their income.

    There are more effective and reasonable policies that would protect those truly struggling from pandemic-related hardships, while also making sure landlords aren’t losing their income.

    Many people are struggling right now, but not everyone is being asked to bear such a heavy weight on their shoulders. “No one is asking restaurants and grocery stores to give food out for free, so why are government agencies, with no authority to legislate, asking landlords to provide a service without compensation?” said PLF attorney Ethan Blevins.

    As is the case with many national crises, the government is making a power grab wherever it can feasibly justify doing so, ignoring the separation of powers guaranteed in the Constitution.

    PLF has filed suits on behalf of struggling landlords in Ohio and Louisiana, but landlords all over the country continue to suffer the consequences of the CDC’s actions.

    This Pacific Legal Foundation article was republished with permission.

    Brittany Hunter


    Brittany Hunter

    Brittany is a writer for the Pacific Legal Foundation. She is a co-host of “The Way The World Works,” a Tuttle Twins podcast for families.

    This article was originally published on FEE.org. Read the original article.


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  • A 19th Century Economist on the Simple Secret to Public Prosperity

    Posted on by Azrael Comment

    Regulation and taxation have imposed constant government assaults on Americans’ property rights, eroding their ability to make their own choices. As James Fenimore Cooper once put it, “There is getting to be so much public right, that private right is overshadowed and lost…danger exists that the ends of liberty will be forgotten.”

    Given how much private property rights have been pared away, we should return to first principles about those essential underpinnings of voluntary relationships.

    One of the very best sources is Jean Baptiste Say, the foremost French political economist in the early 1800s. An elaborator on Adam Smith’s The Wealth of Nations and a vigorous defender of economic freedom, which arises from the defense of private property rights, his Treatise on Political Economy was highly influential and widely used as a textbook.

    Say’s Treatise chapter, “Of the right of property,” remains among the wisest, though widely violated, insights into property rights available today. And it is easily accessible. In fact, the English translation of the 1819 fourth edition is available as part of Liberty Fund’s “The Best of the Online Library of Liberty” series. Especially for the bicentennial of that seminal work, it merits renewed attention.

    “The right of property…[is] the most powerful of all encouragements to the multiplication of wealth.”

    “The legal inviolability of property is obviously a mere mockery…where possession is rendered perpetually insecure, by the intricacy of legislative enactments, and the subtleties of technical nicety. Nor can property be said to exist, where it is not matter of reality as well as of right. Then, and then only, can the sources of production…attain their utmost degree of fecundity.”

    “Who will…deny, that the certainty of enjoying the fruits of one’s land, capital and labor, is the most powerful inducement to render them productive? Or who is dull enough to doubt, that no one knows so well as the proprietor how to make the best use of his property? Yet how often in practice is that inviolability of property disregarded…upon the most flimsy pretexts?”

    “The property a man has in his own industry is violated, whenever he is forbidden the free exercise of his faculties and talents, except insomuch as they would interfere with the rights of third parties.”

    “Sacred as the property in the faculties of industry is, it is constantly infringed upon…What robber or despoiler could commit a more atrocious act of invasion upon the public security?”

    “Nothing short of the necessity of defending [social] order from manifest danger can authorize these or similar violations of individual right.”

    “Taxation…must be proved indispensable to the existence of social order; every step it takes beyond these limits is an actual spoliation; for taxation, even where levied by national consent, is a violation of property.”

    “The right of property implies the free disposition of one’s own.”

    “When public authority is not itself a spoliator, it procures to the nation the greatest of all blessings, protection from spoliation by others. Without this protection of each individual by the united force of the whole community, it is impossible to conceive any considerable development of the productive powers of man, of land, and of capital.”

    “The poor man…is equally interested with the rich in upholding the inviolability of property. His personal services would not be available, without the aid of accumulations previously made and protected. Every obstruction to, or dissipation of these accumulations, is a material injury to his means of gaining a livelihood.”

    “Civilized communities pursue and punish every invasion of property as a crime …the happy effects, resulting from the right of property, are more striking in proportion as that right is well guarded by political institutions.”

    As Larry Sechrest noted, J.B. Say was “precise and yet as simple as possible, so that any literate, reasonably intelligent person can comprehend his meaning.” However, Americans have been governed by violators of those principles because “agents of public authority…can enforce error and absurdity at the point of the bayonet.” And the results have been far worse than if we had followed his understanding. As Say wrote:

    Of all the means by which a government can stimulate production, there is none so powerful as the perfect security of person and property, especially from the aggressions of arbitrary power. This security is itself a source of public prosperity


    Gary M. Galles

    Gary M. Galles is a professor of economics at Pepperdine University. His recent books include Faulty Premises, Faulty Policies (2014) and Apostle of Peace (2013). He is a member of the FEE Faculty Network.

    This article was originally published on FEE.org. Read the original article.



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  • Bitcoin, Despite All its Problems, Could Revolutionize Property Rights

    Posted on by Azrael Comment

    Weak or nonexistent property rights lead to low economic productivity. Citizens of countries that do not protect property rights must necessarily spend much energy, thought, and time in an anxious effort to secure what little production they can manage. Many innovations and business models are unfeasible without property rights because they will be destroyed (or, more often, deterred) by one or another form of theft. Even a marginal improvement in access to property rights should drive the economic equilibria of many countries in the direction of wealth creation.

    Because it is decentralized, significantly easier to transport, store, or hide, and—this is crucial to augmenting property rights—significantly more difficult to seize than any traditional asset, Bitcoin delivers a real improvement in property rights at a comparatively modest cost (risk due to price volatility + transaction fees).

    However, Bitcoin is not a better currency (at least not in its current technical implementation). In fact, it probably will never quite be able to compete with centralized solutions in terms of speed and efficiency. Bitcoin is a bank account that is hard to track and hard to seize. The hard-to-track and hard-to-seize features are where the bulk of the real current value (speculation aside) originates.

    Beyond black market applications, Bitcoin has utility and value because most of the world’s population lives in countries that do not uphold property rights.

    The average human on planet Earth lives in serious uncertainty about whether his property will be his tomorrow. (This interactive map is from Index of Economic Freedom published by the Heritage Foundation, click here to play with it)

    What Bitcoin Provides

    1. Provides a last resort store of value—and means of escaping with some assets—for people living in politically unstable or oppressive countries.
    2. Makes people more confident and more likely to be productive by providing a hedge against expropriation, hyper-inflation, theft, divorce (comical but true), and so on—meaning that people can work hard to accumulate wealth, with the confidence that they will be able to keep some portion of it, despite being the victim of some political turmoil or the target of some (in)justice.*
    3. Provides a means to streamline the pervasive and often necessary evasion of taxes, bureaucracy, and regulation in poorly governed countries.**

    *It is important not to underestimate this. Uncertainty discourages people from working hard and taking risks. First world countries owe a significant part of their productivity and wealth to the rule of law and property rights. Any shift in that direction should also increase the amount of economic activity in a country that is normally a dangerous place to be successful.

    **Having done business in China and India, I speak from personal experience when I say that nearly every businessperson and any typical middle-class citizen in these countries is guilty of regularly, or at least occasionally, breaking tax laws, bribery, and so forth, to get by.

    This is not just a third world phenomenon. At one point in my food cart manufacturing days, we worked with two Egyptian food cart partners in New York (they jointly ran several dozen food carts in Manhattan) who—in a bid to report as little income as possible to the IRS, a universal practice among small cash businesses in the city—stored tens of thousands of dollars inside a wall, only to find part of the money eaten by rats several months later (they, of course, only realized what had happened after hotly accusing each other of theft).

    Giving People a Way Out

    It is difficult for those of us living in peaceful Western democracies, and occasionally grumbling about taxes, to understand how front-and-center property rights issues can be.

    Bitcoin provides a last resort for individuals and communities contending with hyper-inflation, capital controls, corrupt courts, extortion, and expropriation of all kinds.

     

    Try selling your small business and leaving Zimbabwe.

    Or take a stroll to the ATM to try and withdraw your hard-earned savings in an attempt to spend them before the currency loses 80 percent of its value.

    It’s no surprise that by October of 2017 (note that articles above are both from 2016) Quartz reported that “Bitcoin is breaking all kinds of price records in cash-strapped Zimbabwe.”

    The Bitcoin network, despite its many imperfections, is proving itself as, at least, a moderate improvement in access to property rights and financial freedom for much of humanity.

    Property rights issues cast a shadow that spans the entire income spectrum—whether you are a middle-class entrepreneur in Zimbabwe, who is not legally allowed to leave the country with more than $1000 in cash as the political and economic situation descends into uncertainty, or the world-famous investor Prince Alwaleed.

    Ironically, shortly before being detained indefinitely and very likely expropriated by the despotic Saudi “government,” Prince Alwaleed called Bitcoin an “Enron in the making.”

    Although it’s very possible that Bitcoin’s price has run far ahead of its underlying value (and certainly many of the people bidding it up—including myself on occasion—are speculators, not users), the Prince’s bubble ended up bursting first.

    While people like Prince Alwaleed obviously have access to more traditional methods of evading capital controls and expropriation (offshore banking valued at well over $15 trillion, shell companies, and so on), it is clear that Bitcoin—and perhaps the even-less traceable cryptocurrencies like Monero, Dash, and Zcash—is at minimum a useful new gadget in the offshore banking arsenal.

    Bitcoin is even more useful for criminals (who in all likelihood made up the first critical mass of its users). But they are a rather small market compared to the enormous potential market of law-abiding and semi-law abiding citizens hedging against expropriation, unreasonably high taxes, unfair lawsuits in corrupt courts, capital controls, and so on.

    Obviously, Bitcoin is not a silver bullet—the classic $5 wrench XKCD meme says it all:

    Governments, fair or corrupt, still have plenty of very effective ways of detecting income, collecting taxes, expropriating property, and carrying on all manner of other financial/economic despotism. One cannot live on Bitcoin alone. The government can still take your house, your car, your land, and so on. However, decentralized cryptocurrencies do have the potential to shift the equilibrium noticeably in favor of the individual.

    My own parents were forced to give up all of their possessions when they left the USSR. In fact, they had to pay a fee in order to leave. Had cryptocurrency existed in the 1980s, they would have surely sold their Moscow apartment and other assets for whatever they could get in Bitcoin. In the event, I think they managed to smuggle several thousand dollars worth of gold sewed into the lining of a fur coat.

    [Side note: It was popular among people emigrating from the USSR to have gold dental work installed in a bid to carry out at least something of value… imagine what the USSR would have been like if this was possible.]

    Communist countries are a perfect storm for cryptocurrency—subsidized electricity and zero property rights. Venezuela is the best example.

    However, even China, which is hardly Communist, only allows private citizens to take $50,000/year out of the country. Unsurprisingly there is a general, and well-founded, anxiety among wealthy Chinese that the government will take away what they have earned. Chinese money has been a huge driver of Bitcoin’s price.

    Even banning Bitcoin-RMB exchanges cannot stop the outflow completely.

    Valuation

    IWhen reckoning the long term (years, not months) market cap potential of Bitcoin and other competing cryptos, it is important to consider not just its black market use cases or its competition with gold (gold has ~$7T market cap) and offshore banking ($15–30T market cap), but also the new value it may create if it proves, in the long term, to be a better mousetrap for individuals in their struggles with corrupt and ineffective governments/social structures everywhere.

    Not only does Bitcoin create value by providing a new, albeit imperfect, way to secure existing wealth, it will likely encourage the creation of new wealth by individuals living under otherwise discouraging political regimes. Even governments may trend toward better behavior as they find themselves forced to contend with Bitcoin. I can’t make any price predictions—there is still no certainty that cryptocurrencies will stand the test of time and scale—but the next decade of the cryptocurrency industry’s growth should be interesting to watch.

    Disclosure: I have been holding BTC and some other cryptos on and off since some time after India withdrew large cash notes from circulation—which got me thinking along the lines above.

    Reprinted from Medium.


    Michael Dubrovsky

    Michael Dubrovsky is a libertarian-leaning systems engineer interested in science, entrepreneurship, history, and economics. He was the co-founder of several startups—most notably MOVE Systems—and has experience establishing manufacturing operations both in China and the American Midwest. Michael is currently working on a cryptocurrency mining protocol project and planning to begin graduate studies in Materials Science. You can find more of his blog posts on Medium, where he applies meandering first principles analysis to a range of topics from woodworking to Net Neutrality.

    This article was originally published on FEE.org. Read the original article.



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