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OpEdNews Op Eds    H3'ed 4/26/18

Capitalism Works For Capitalists

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In a civilized country, such as Japan, the view enjoyed by an owner is part of his property rights, but not in barbaric America. A Gulf view is something that can be appropriated by an outside real estate speculator who puts up a four-story McMansion in front of a resident's property. By blocking the view, the outside real estate speculator can transfer value that was in the resident's property to his speculation.

Moreover, the activities of outside real estate speculators overdevelop the area and create congestion, which uses up residents time in travel and makes an evening out a traffic ordeal. Nothing is the same. Beach communities give up and die. They are replaced with commercial enterprises.

According to economic theory, which is essentially a cover for looting and theft, free markets bring resources to their most highly valued use. This is not science. It is an ideology. It only works if there are no external costs or, if there are, the costs are compensated to those on whom they are imposed.

But free market real estate speculation does not compensate any of the costs that it imposes on others. Indeed, a case could be made that the external costs of real estate speculation in south Walton county exceed the value of the speculations constructed. The value of the communities that are destroyed are not counted as an offset to the profits of the activities that destroyed the communities.

Not only have many existing properties lost their Gulf views and been devalued, not only have people lost time from their lives in traffic congestion, not only have people's enjoyment of their properties been reduced by endless construction and party house noise, not only have people's finances been impacted by massive increases in property taxes and wind insurance, reflecting the high values of the McMansion $20,000 weekly rentals and high density, not only are people impacted by the cost of sewage fees replacing their septic tanks and by the tax burden they must shoulder for widening the two-lane highways into four lanes in order to provide some semblance of hurricane evacuation for the overdeveloped areas of south Walton county, they are also impacted by experiencing the loss of their community. It is similar to losing one's village or town to a wartime bombing attack. What you knew and was part of your life is gone.

Highway widening goes through the middle of many communities, essentially destroying them. A family that lived far back from the road now has traffic passing through the front yard.

All of these costs, and there are more, are imposed on existing peoples and communities by outside real estate speculators. The speculators do not, and never will, live in the communities that they destroy. They are only concerned with their profits, and these profits originate in the ability of the speculators to impose the costs of their projects on everyone else.

Can you imagine the Chairman of the Federal Reserve Board, the Secretary of the US Treasury, the Chairman of the Securities and Exchange Commision all testifying before Congress that markets are self-regulating? Their testimony was just prior to the collapse of unregulated financial markets requiring trillions of newly printed dollars by the Federal Reserve to "save the system." In their testimony ignorance spawned by ideology spoke through the mouths of these high public officers.

If markets are self-regulating, how is it possible for capitalists to impose their costs on third parties who do not share in the profits, but who experience enormous costs? If markets are self-regulating, how is it possible for real estate speculators to destroy entire communities?

Capitalism is a system whose costs in many instances exceed its benefits. It is often the case that capitalist profits owe their existence to the ability of capitalism to impose its costs on others. If the full costs of development in south Walton county had to be borne by the developers, much of the development would not take place.

Karl Marx said that capitalism exists by exploiting labor, by paying labor less than labor's contribution to the value of output. This is true today in the globalist corporation's use of cheaper foreign labor to produce the goods and services sold to the domestic US market. However, another source of capitalist profits is the imposition of capitalism's costs on the environment and on third parties who do not partake of the profits.

Capitalism is always profitable when its costs are paid by others.

What happens to Capitalism when there is nothing left to loot and nothing left to pollute? Being an exploitative system, capitalism is not sustainable. Unfortunately, greed drives the system to the limits of its logic. The system fails when the ruination it brings is complete.

Most real estate development has external costs, but depending on the character of the development, the costs vary in intensity. As Martin Anderson showed in his classic book, The Federal Bulldozer, urban renewal in inner cities displaced many low income ethnicities and replaced them with high income recipients. The external costs were the fate of the displaced ethnicities. When the rich purchased their high-dollar residences, the price did not include the costs to the people who lost their community.

Development in suburban countryside in which there are no established communities, if the development poses no threat to water and environmental resources and does not add noticeably to traffic congestion, has low external costs compared to block-busting established communities, as is occuring in south Walton county.

As population grows, mainly from mindlessly accepting immigrants difficult to assimilate, new homes are needed and will be built. But real estate development should be carefully regulated to ensure that its costs do not exceed its benefits.

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Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His books, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available (more...)

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