Cato's Letters, communal property, consumer debt, debt, debt encumbrance, dignity, employment, freedom, Herman E. Daly, household debt, indebtedness, indentured servitude, independence, John taylor of caroline, liberty, liens, Marxism, mortgages, personal responsibility, privacy, private property, property, salary labor, savings, self-reliance, state ownership, Thomas Gordon, Thomas Jefferson, wage labor, Wilhelm Ropke
“(T)he United States waged a long war upon the ground, that governments are instituted to secure, and not to bestow, the freedom of property.” – John Taylor, Construction Construed and Constitutions Vindicated, (1820), Sec. 1.
“To live securely happily and independently is the end and effect of liberty… All men are animated by the passion of acquiring and defending property, because property is the best support of that independency, so passionately desired by all men… as happiness is the effect of independency, and independency the effect of property; so certain property is the effect of liberty alone, and can only be secured by the laws of liberty; laws which are made by consent, and cannot be repealed without it.” – Thomas Gordon, Cato’s Letters, No 68, (1721).
“Private property is the bulwark protecting the individual against exploitation by others,” Herman E. Daly wrote in Beyond Growth. “A property owner has an independent livelihood and need not accept whatever conditions of employment are offered.”
Indeed, Daly taps into the very essence of private property with these sentiments. If there is one single element of Marxism that presses the hardest against the individual’s freedoms, it is the question of property. While it is true that in a perfect world – wherein everyone’s sincerity of altruism would be above question – a society based on communal property may indeed be a workable framework.
But this is not a perfect world, and as sure as the sun rises in the east, there will always be those individuals who would eye the control of communal property as a means to power. In fact, we find in history that state control of property defines every major establishment of communism in the world. And while contemporary Marxists will contend the communism of the USSR and China does not represent “real” Marxism, it is fair to level these criticisms against Marxism until such time its followers show us a society in possession of a complete sincerity of altruism.
It is for this reason, and others, that the tenant of private property continues to hold in free societies, at least for the foreseeable future. But there is another insidious threat to private property, one that Daly did not recognize in his statement above (but does so elsewhere in his works), and that threat is indebtedness.
The Big Lie
Today, “free” societies everywhere are populated with a large number of home and property owners, but only a small percentage outright own this property lien free. Almost all of it has been purchased with the help of a mortgage. And within this reality rests The Big Lie, that is, we live on the illusion that we are “homeowners.” Yet, unless we hold title to our property lien free, it is very difficult to align this illusion with reality. And so, to tap Daly’s passage again, encumbered homeowners are forced to “accept whatever conditions of employment are offered.”
When we traveled past the 15-year mortgage in our financial history, we crossed an invisible line that not only allowed home prices to rise precipitously, but created an unacknowledged class of indentured servants. Yes, it is difficult to imagine anyone purchasing a home or property on a cash-only basis, but the 15- or 7.5-year mortgage served a useful purpose. Once a person graduates from a post-secondary education and wants a home (~20-25 years of age), that individual will usually have to pursue wage labor of one variety or other.  But consider the realities of our economy today: It is becoming increasingly difficult to remain in the employ of others past the age of 40. Thus, the age of 40 becomes a credible age by which one should outright own his or her home, or property.
Once property is secured lien free, then we are no longer forced to accept whatever employment conditions are offered. We can seek new employment opportunities elsewhere, taking longer periods of time to do so. By the age of 40, many adults have secured a deep line of experience in their field of endeavor, and can strike out on their own. Or the middle-age adult can pursue an entirely new line of interest, one that aligns closer to his or her passions, rather than needs for a paycheck.
But such is not the case today. Either a young adult has to work a lengthy period of time to simply secure a down payment – and only then can obtain a 30 year mortgage – or purchase a home or property with little or no down payment, thus increasing interest rates and being forced to pay mortgage insurance until such time one’s equity reaches 20 percent of the property’s value. In either case, assuming the homeowner remains in the home (a very large assumption considering the mobility of labor today), this means she or he will reach 55 years of age, or older, before securing the property lien free.
During these 30 years, the homeowner is forced to accept whatever employment can be secured, in an indignity-filled effort to retain the home or property. Worse, by this age, it is very difficult for adults to consider pursuing completely new endeavors, as they have suffered the stress of selling their future labors in the quest to secure long-term debt. As a society, we now lose a vibrancy that our economy could have enjoyed with a continual flow of middle-age entrepreneurs bringing their new-found sense of passion to a start up, or other endeavors that may multiply the creation of new jobs for younger adults.
Instead, we find ourselves in a moribund economy. And while there are many variables creating this negative outcome, certainly the 20- and 30-year mortgage has contributed much to this moribundity.
Freedom of Property
A sound freedom of property, one of the main themes for which John Taylor argues in Construction Construed and Constitutions Vindicated, prevents governments from subsisting off the labors and sacrifice of others. In his view, not only homesteads and the material accumulations of a lifetime were part of the property equation, but taxes as well: The government did not labor for the wages necessary to pay the taxes, citizens did. Governments merely acted as trustees of the national, state and local treasuries. 
In light of this, Taylor understood all too well the slippery slope of property, and the dangers resting under its thin, shiny surface:
A love of wealth, fostered by honest industry, is an ally both of moral rectitude, and national happiness, because it can only be gratified by increasing the fund for national subsistence, comfort, strength and prosperity; but a love of wealth, fostered by partial laws for enriching corporations and individuals, is allied to immorality and oppression, because it is gratified at the expense of industry and diminishes its ability to work out national blessings. 
Wealth can be accumulated in a free society, but excessive wealth – and its attendant pernicious powers – cannot arise without fraud or force; the competition within truly free markets would act as counterbalances to such excesses.
John Locke gave property a breadth that few allowed prior to his writings on it. Locke spoke to “Life, liberty and estate (property),” while Jefferson enlarged this by changing “property” to “pursuit of happiness.” While he left no written reasoning behind the switch, in view of his other writings one may rightly surmise Jefferson framed the pursuit of happiness as entailing material property (estate), but not exclusively so. There are a broad range of options under “the pursuit of happiness.”
Thoreau, for example, reified Jefferson’s choice of words with his experiences at Walden Pond. Thoreau’s minimalistic living was his means to happiness, satisfaction and contentment.
Nevertheless, property as estate enshrines the notion of privacy, independence, self-reliance, freedom, personal responsibility and dignity. Ownership assumes the rights of the individual to hold property. In fact, Wilhelm Röpke goes so far as to suggest
…we should do everything we can to strengthen the counterweights in fields other than labor dependence, the most important of these counterweights being private property (The Humane Economy, 1957, Chp. 5).
Through ownership – property and savings – mixed with a person’s skills (human capital) and labor does one find the freedom to live one’s life. America’s founders framed property not only as capital capable of being leveraged for productivity, but as a source of independence.
Economic Growth by Debt, Not Incomes
However, ownership and Röpke’s “counterweights” work only if the underlying assumptions rest on the majority of citizens securing property free of state welfare, wage/salary labor, or debt (the latter was an issue Röpke did not consider). In the end, this triumvirate of contemporary existence devolves into dependency, and this is troubling for the continued survival of a viable democratic republic. In fact, Röpke asked if
…genuine democracy and a free market economy are, in the long run, compatible with a state of affairs in which the crushing majority of the population consists of dependent wage and salary earners (The Humane Economy, Chp. 5).
While we are well aware of the rhetoric surrounding welfare, what few have addressed is our reliance on wage/salary labor, which represents 92.5% of us in America, or debt, which represents most of us. Wage labor creates dependencies, and develops deeper complications when debt accumulates to secure property via future wage labor.
How can property instill “independence” and “self-reliance” when that same property is carried by debt?
And when that debt overburdens the owner that loses his or her home and other property, this creates tensions within the individual, within families/personal relationships and within communities, placing undue pressures on wage-laborers to commit ever more intensely and fearfully to an employer.
So how does this accomplish property’s promises of “freedom” and “dignity”?
When a society’s citizenry lacks true ownership – that is, ownership without debt encumbrances – then property becomes a pawn in a larger game of control.
In a democratic republic providing authentic liberty for its people, household incomes must be able to aim for and achieve debt-free property in a reasonable period of time. When employers remove jobs with sustainable incomes, and little or no influx of jobs with similar incomes replacing this removal, then the economy becomes a hollow lead sphere: While the shell of the sphere appears to expand (due to debt, not income, growth), it becomes incapable of supporting the weight of its shell and collapses.
An Economy Supporting Independence
This is a critical issue in our society. As a people, we can no longer rely on corporations for job growth, as they resource labor globally. We can no longer depend on the Federal government, as its ever-increasing debt load will eventually restrict future meaningful responses to our woes. In the end, sustainable incomes and ownership of property with minimal or no debt encumbrances must emerge from a locally based economy wherein the truly independent proprietor is foundational.
This is not a free-trade versus protectionism proposition, as both the global and the local can coexist. Substantive free trade, by which I refer to the trade of goods – and not as the ruse of taking underhanded advantage of the lowest-cost labor markets – can create LOcal production for gloBAL markets, a.k.a., lobal economies. A local economy should be framed as a way forward in replenishing middle-class household incomes while reducing wage labor and debt-encumbered property.
Do not underestimate the difficulty in achieving this goal, which is a necessity for a functioning democratic republic but from which we are a long, painful distance.
However, this should not serve as a discouragement to pursue the rebuilding of local economies for, as F.A. Hayek framed it in his foreword to the 1956 American paperback edition of The Road to Serfdom:
(I)n the present state of opinion there is some danger that our impatience for quick results may lead us to choose instruments which, though perhaps more efficient for achieving the particular ends, are not compatible with the preservation of a free society.
Simply put, the economic alternatives will not be easy, but they are critical and necessary for preserving our cherished social and political liberties.
Debt, the Real Terrorism
The American elite are prone to invent boogeymen to distract the attention of American citizens from the real threats to their lives and liberties. Marxism, despite what the fear mongers in D.C. led us to believe in the mid- to late-20th century, never truly represented a threat internal to the United States. There were never any core American cultural tenants in U.S. history that would have allowed the concept of communal property to emerge in a critical mass large enough to shift the majority.
Nor, in contemporary times, does Islam present an internal threat to the United States. As the First Amendment of the U.S. Constitution clearly states:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof….
The real threat to Americans, their lives, their families and friends, their property and their liberties, was and remains indebtedness. So firmly has debt woven its tentacles within American society, that we are well beyond calling it a threat.
In fact, debt has all but defeated the citizens of the United States.
And Americans live in fear of foreign terrorists?
“The Tyranny of Debt” originally appeared as the section “Private Property” in TSr Institute’s white paper, The American Republic and its Relevancy to the 21st Century. A copy of this paper can be downloaded for free from TSr Institute’s Google drive.
 There are, of course, opportunity costs at play here. A recent graduate could pursue the establishment of a business first, and afterwards purchase a home. This certainly occurs, but is rare. Recent graduates usually lack the experience in a given field to successfully offer a product or service. And this doesn’t consider the person’s maturity, another critical factor. Added to the mix are the incredibly high odds against success, even in the best of economic times. Thus, the discussion remains focused on the typical evolution of an individual’s finances and paths to freedom from wage labor and debt, not the outliers and exceptions. Nevertheless, this discussion of ownership shouldn’t be considered as ignoring the ownership of capital for commercial purposes, with its own set of pitfalls in terms of indebtedness.
 Article 1, Sec. 8 of the U.S. Constitution states,
“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.”
This clause sounds broad and vague, capable of justifying any expenditure. However, consider the use of the words “common” and “general,” inserted in contrast to “individual” and “specific.” As John Taylor explains it in Construction Construed and Constitutions Vindicated, these words are used
“…for the purpose of more explicitly excluding Congress, in the appropriation of the money raised to be applied to the benefit of the United States, from indulging a sovereign legislative patronage in favor of local, private or individual interests” (Sec. 6).
Thus, every Federal expenditure of narrow interest, such as earmarks or bank bailouts, should be considered unconstitutional.
The latter consideration, bank bailouts, may be argued as an expenditure for the general good of the economy, but this does not negate the fact that large, private banks and their shareholders benefited from taxpayer assistance, while lesser banks were allowed to fail. Would an economic depression have ensued? Perhaps, but in such a scenario the general and heated discontent of the American populace would have accomplished far better ends at inserting a government driven on serving its dictates as a trustee of the people, rather than empowering corporate moral hazard. An outcry in demanding substantive regulatory reform may have also helped in pushing for the necessary coercive powers in preventing such ill-managed risk from endangering the American economy in the future.
At the present moment, the economy has enjoyed a quiet interlude, and the demands for meaningful regulatory reform from the people have softened. Assuaging the woes of a society by any expedient deemed necessary by government, however, is not how a society moves forward and rectifies its troubling attributes. Governmental paternalism merely leads to a citizenry that, by imperceptible degrees, becomes more complacent about its fortunes, until it reaches a place where a mean, hard-scrabble existence of feudalism takes the place of the good life, without so much as a whimpered appeal to heaven.
 See The Chasm Between the Economy and Finance for a contemporary context. This white paper is free of charge from TSr Institute’s Google Drive.
 However, radicalized Islamic and Christian creeds – e.g., Wahhabism and American Christian Dominionism, are other considerations altogether. In light of the First Amendment, Christian Dominionism – or attempting to establish any other form of theocracy – in the United States is treason.