A report recently issued by the Swedish Research Institute of Trade confirmed America’s continuing unrivaled wealth.
The group’s analysts reported the average Swede receives less income than the average African-American in the U.S. Because Sweden is in the middle of the European income distribution, this means the average European’s annual income is similar to, or even less than, the annual income of the average African-American in the U.S.
Of course, conventional wisdom holds that the distribution of income in the U.S. is so unequal that our low-income households are less well off than those in “more enlightened” economies. That view does not stand. The Swedish Research Institute found U.S. low-income households receive more income than low-income Swedish households.
Property rights prevail
Why does the United States consistently report the highest per-capita income of any nation with more people than Rhode Island? There are a number of reasons, but a contributing factor is the strong (though not strong enough) protection of property rights.
A principal role of property rights is the creation of greater wealth: not because property rights make owners richer; but because they make everybody—especially those in the lowest income classifications—richer.
Property rights are much stronger in the United States than in most other developed countries, and that contributes mightily to our affluence. According to Peruvian economist Hernando De Soto, author of The Mystery of Capital, the lack of clear property rights explains why so many post-communist and newly democratic nations have been unable to replicate the economic success of western nations and Japan.
In America, the greater wealth available to middle-income and low-income people is, to a large degree, facilitated by home ownership. Nearly one-half of the net worth of middle-income Americans is in home equity. This equity is capital that can be marshaled to finance educations, new businesses, and home improvement. Homeowners are considerably more affluent than renters, with an average net worth 30 times as great.
The public policy message is clear. Since home ownership creates wealth and improves both real and relative economic positions, home ownership should be encouraged and expanded.
Discouraging home ownership
Regrettably, many (if not most) of America’s urban planners are encouraging just the opposite: policies that would reduce home ownership and gut the equity many already have in their homes.
In its Growing Smart Legislative Guidebook, the American Planning Association (APA) proposes something called “amortization of non-conforming uses.” Translated into everyday language, the term means your house could be virtually confiscated for no reason other than that it does not conform to the vision of urban planners as contained in local, state, or even federal land use plans.
This is not merely some non-threatening policy report for filing and forgetting. Growing Smart is being widely distributed to government agencies nationwide as part of an effort to “update” land use planning and zoning in the United States. As part of former Vice President Al Gore’s “Livability Agenda,” the Growing Smart guide has achieved near-official status as a result of millions of dollars in financial support from the United States Department of Housing and Urban Development (HUD).
A new way to take private property
The confiscation clause would work like this: Local government officials, following the Growing Smart recommendations, would revise their community’s land use and zoning regulations, adopting APA’s confiscation policy as part of the new code. In the process, those officials would decide a particular neighborhood should be zoned for multi-family dwellings. In keeping with APA’s confiscation policy, they would require that non-conforming structures— such as detached, single-family homes—be brought into conformance with the plan (be made multi-family) by a certain date.
That date might be 20 years into the future, or 10, or five, or even fewer. When the deadline comes, the home owner would no longer be able to use the house as a single-family dwelling. She would have no choice but to sell the land for multi-family redevelopment, redevelop the property herself, or simply abandon it.
There are serious problems with APA’s confiscation agenda. For one, it clearly violates the Takings Clause of the Fifth Amendment to the U.S. Constitution, which states: “nor shall private property be taken for public use without just compensation.”
For HUD to be involved in funding this assault on fundamental Constitutional rights is akin to the Department of Justice financing development of local ordinances to limit free speech.
And, while the confiscation agenda appears to be the most threatening element of Growing Smart, there are other causes for concern, such as recommendations that would destroy local democracy by taking local land use decisions to the regional or even state level.
For at least seven decades, expansion of home ownership has been a principal objective of U.S. economic policy. For even longer, the U.S. has sought to expand the economic pie and increase the standard of living of those at the bottom of the income scale. This is no time to turn back.
Wendell Cox is a senior fellow of The Heartland Institute; a consultant to public and private public policy, planning and transportation organizations; and a visiting professor at a French national university.
For more information
Hernando De Soto’s The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else is available through Amazon.com at http://www.amazon.com/exec/obidos/ASIN/0465016146/theheartlandinst.
The American Planning Association’s Growing Smart Legislative Guidebook is available on the Internet at http://www.planning.org/newsreleases/2002/ftp021301.htm.