From independence, freedom and truth

Economy

Expropriate it!

Fernando del Pino Calvo Sotelo

May 10, 2013

A few years ago, the late Venezuelan President Hugo Chavez made one of his famous propaganda gestures in front of the TV cameras. Walking beside the mayor of Caracas and cloyingly applauded by the usual cohort of smiling followers, Chavez demanded details about the ownership of the buildings sitting on both sides of the street they were walking through. Every time, immediately after the mayor’s explanations about their private owners, Chávez gave a laconic order: “Expropriate it!” In one case even he felt obliged to justify it “…because I’ve been told that a just married Bolívar lived there”. Despite the opinions of Chavez’s well intended critics, he didn’t lead a tyranny or a dictatorship, but a democracy. Moreover, Chavez was the perfect example of the potential for degeneration of democracy, or putting it more strongly, of the natural tendency to degeneration of democracy through the cancer of populism and demagoguery, exemplifying that democracy and liberty are not necessarily the same thing. Therefore, decadences such as we witness in Venezuela or Argentina should serve as a clear warning of the risks of weakening the rule of law through populism, a threat that is always there but turns particularly dangerous in times of deep economic distress as at present.

In Spain, the increasing number of evictions caused by the crisis has drawn the attention of the media, served as the latest excuse for leisurely street activism and become the cause of shameful examples of third-world like legislations. For instance, the regional government of Andalusia (an alliance between socialists and communists) passed a law by which empty flats owned by banks would be expropriated so families could extend their stay for free for up to three years, after which the ownership would in principle be returned to the bank (after a second eviction, I suppose!). Of course, this is just a populist smokescreen to distract voters from allegedly the most important corruption case in the whole history of Spain, in which top officials belonging to that same government have been put into jail. Nevertheless, the lukewarm response from the central government to this abuse is as worrying as the law itself. To paralyze evictions or to oblige the owner of a good to put it to a certain use under the threat of expropriation implies breaching contracts and violating the right to private property. Both are extremely serious issues. Of course, we must not forget that evictions are a personal tragedy, and there are cases of extreme helplessness that any civilized society should address. But at the same time we must make an effort to avoid the usual propaganda, which is always trying to manipulate our feelings in order to provoke an on-the-spot emotional response preventing the workings of reason and common sense. Propaganda is about tragic storytelling; if children are involved so as to awaken our natural protective instinct, it’s even better; if there’s someone evil to blame, then it becomes perfect. We should bear in mind that the real story of evictions is about an adult citizen freely engaging in a loan guaranteed by the house, stopping the payments due to the lender, with the consequence of the lender lawfully claiming the right to recover at least part of it through the sale of the house. That adult citizen took that decision to profit from it (sometimes to brag about it) very often forgetting the prudence required to not live beyond one’s means.

Honoring contracts belongs to the realm of the rule of law, and without the rule of law, there is no progress and no order; and without order, liberty cannot survive. Regrettably, in Spain there is scarce and decreasing respect for the rule of law. Despised by the political class which sees it as an obstacle to its beloved arbitrary power abuse, it is also ignored by the economically and politically illiterate people, made that way thanks to the efforts of that same ruling class, which is only too happy to keep the people in the darkness of ignorance and a uniform way of thinking. Our Constitution does not help either. It waits until article 33 to talk about private property, and even then it subdues it to a vague “social utility” to be determined by politicians. Who else?! And later, in article 47, we come upon a weird concept: “All Spaniards will have the right to enjoy an adequate and dignified home”. Should we understand that this “right” means buying a house for free or below its true cost? Because no constitution would mind mentioning the right to buy anything for its market price, right? How do you achieve this, exactly? Demanding that the workers and architect, for example, work for nothing? Maybe through taxes? Who has the right to have a house for free and who has to work to pay for it, and through taxes, for other people’s houses? In the real world this whole issue seems absurd. However, the Welfare State, already perverted down to the bone, has systematically destroyed the concept of individual responsibility. Instead of focusing on the weakest and defenseless, it has created out of thin air extravagant and inexistent rights for everyone, generating puerile expectations in the citizenry, which has ended up disconnecting reward from effort, salary from work, the just prize from the previous sacrifice, and the use of a good or service from the payment of its true cost.

In 1891 Pope Leon XIII chose wise words to defend the inviolability of private property in his  encyclical Rerum Novarum: “(…) The common opinion of mankind, little affected by the few dissentients who have contended for the opposite view, has found in the careful study of nature, and in the laws of nature, the foundations of the division of property, and the practice of all ages has consecrated the principle of private ownership as being pre-eminently in conformity with human nature, and as conducing in the most unmistakable manner to the peace and tranquility of human existence”. One of the particular traits of our narrow economic culture is that private property is deemed inviolable – but only one’s own. That of the neighbor is a different story, and if the neighbor is richer, then not only do we deny the neighbor’s right to his property, but assert our “right” to claim part of it! We welcome any hindrances to banks’ evictions, but on the other hand we consider it unacceptable not to be able to throw our tenant out when he stops paying the rent for months in a row. The problem is that when we do not respect all private property, the outcome is chaos, loss of freedom and poverty, and sooner or later, my dear reader, it will be your own property that will be seized.

As I said before, extreme cases of helplessness should be addressed. That doesn’t mean the affected family should be allowed to stay in a house which they can’t afford, but should only be provided with temporary shelter. Those extreme cases are different from the average guy who during the bubble bought something which was beyond his means making other prudent folks look dumb – for a while – for not losing their minds. It’s always unfair to apply: “heads I win, tails, others lose”. For sure, banks should shoulder their responsibilities for reckless lending practices – and abuse. But either we are adults or we are not, for the good and for the bad. We cannot choose selectively when we are to be held accountable for our adult decisions and when we are not. If we do not honor contracts and do not respect private property we will turn into a banana republic. Maybe we have already become one.

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