Woke Capitalism Comes For Your House

A capitalist society without morality is no better than a communist society.

This is a transcript from my radio show. You can listen here every weekday from noon to three.

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Do you remember the famous line from Jurassic Park? “You were so busy wondering if you could do it, no one ever asked if you should do it.” The line rings true for this story.

I'm a capitalist. Capitalism is a superior system to communism. Capitalism has elevated more people out of poverty than communism. There has always been, until very recently, one thing undergirding capitalism: morality.

For a very long time, capitalists asked if they should do something, not just if they could do something. In the early 1900s or late 1800s, many of the robber barons were deeply religious men who believed that they were providing wealth and helping their country by lifting people out of poverty by providing jobs. They accumulated a ton of wealth, but they used it very charitably. They got a very bad rap and some of them did become monopolists. When a monopolist becomes anti-competitive, it breaks down the system and the free market can't actually work.

Now we have new problems and new moral hazards. As traditional morality fades and corporations go woke, they virtue signal themselves doing the right things for the woke and then prey on everyone else, particularly the middle-class. Capitalism that is not grounded in any sort of morality is doomed.

The Chicken Sandwich War

Look at Burger King. They want to come out with a chicken sandwich that's for sale on Sunday and give money to gay rights activists to persecute Christians. Yes, the gay rights group that Burger King wants to fund through sales of the chicken sandwich is a group that is well-known for harassing Christians around the country. Now Burger King is taking shots at Chick-fil-A.

There's a lot of moralism in corporate America these days. From Major League Baseball moving games out of Atlanta because of the election law to corporations taking stands on religious freedom laws, moralizing is becoming the norm. There's a lot of woke morality that isn't really grounded morality.

Common Good Conservatism

I have a growing number of friends on the right who are embracing something they're calling Common Good Conservatism. Essentially this means we should be using government as the left does. It's very alluring. The argument is essentially the left is already doing these things, why can't we do them and fight back as well? The left is already forcing businesses through the mob to take action against conservatives. Why can't conservatives use the mob or the government to force progressives to do other things?

For example, the left is already forcing the baker to bake the cake. So why can't we force the business to not request proof of vaccines? There are a lot of conservatives out there who say, "How is this any different from the left forcing the Christian baker to bake the cake for the gay wedding. We don't want the left doing that to the Christian baker. So why are we doing this?" The response from the common good conservatives is, "They're already doing it. The baker already has to bake the cake." Jack Phillips, the baker in Colorado is being sued for the fifth time. So why can't we use the government to level the playing field?

Many of these people are essentially saying we should be harnessing government and leveraging it to enact conservative policy. We should embrace big-government conservatism. We should force their corporations to enact our agenda just like the left does. Forget about limited government. Forget about restraint of government. Let's do to them what they do to us. We'll use government against them as they use government against us. Sounds alluring, doesn't it?

There are two major flaws with Common Good Conservatism. The first is there are more of them than there are of us. I don't know if you know this, but the Republicans have not won the popular vote in a presidential election since 2004. Bush versus Kerry was the last time Republicans won the popular vote even as they've been able to win with the electoral college in 2016. In 2000, George W. Bush lost the popular vote. There's only been one election since 1988 where Republicans won the popular vote. There are more of them than there are of us. If you use government to oppose morality, at some point, there are more of them than there are of us. How do you convince them to join our side? I don't think you do that by throwing fists in their face. You've got to change hearts. You've got to change minds if you want to change the culture.

The second problem is who's going to determine the common good? I assure you it's not going to be you and me. It's not going to be the high school grad who didn't go to college or the guy who didn't go to the Ivy League. It's going to be Adolphus Josephus the 25th who went to Harvard but drank Budweiser at a Federalist Society meeting, said, "F the left" and put on a Make America Great Again hat and he gave a big donation to Donald Trump from his private jet on the way to the Maldives. That dude on his third wife is going to be the one who decides what the common good is. The morality of Harvard, Yale, and Princeton will continue to govern because that's where the conservative elite come from as well.

That conservatism really doesn't look a lot like real conservatism nor is it the common good. It simply has a veneer that looks like the common man. Ultimately, we need some level of morality. That comes, I think, from churches. It comes from us seeking the welfare of the cities in which we live as the Bible says, as opposed to imposing our will on everyone through Washington, D.C.

Who Is Buying All The Houses?

We need some level of that morality in our capitalism because of a new phenomenon that you likely are not aware of. The Wall Street Journal began covering this in 2017 and it's a problem. This is one of those places where the right probably will find some common ground with the left. From the Wall Street Journal - Meet Your New Landlord: Wall Street

When real-estate agent Don Nugent listed a three-bedroom, two-bath house here on Jo Ann Drive, offers came immediately, including a $208,000 one from a couple with a young child looking for their first home.

A competing bid was too attractive to pass up. American Homes 4 Rent, a public company that had been scooping up homes in the neighborhood, offered the same amount—but all cash, no inspection required.

Twelve hours after the house went on the market in April, the Agoura Hills, Calif.-based real-estate investment trust signed a contract. About a month later, it put the house back on the market, this time for rent, for $1,575 a month.

A new breed of homeowners has arrived in this middle-class suburb of Nashville and in many other communities around the country: big investment firms in the business of offering single-family homes for rent. Their appearance has shaken up sales and rental markets and, in some neighborhoods, sparked rent increases.

That was from 2017. Here now from 2020 also from the Wall Street Journal - America's largest landlord adds $1 billion for its home hunt.

Real-estate investors have a mountain of money looking for a home. Lately a lot of it is ending up in suburban single-family houses.

Invitation Homes Inc., the country’s largest rental-home owner, on Wednesday disclosed a joint venture with Boston property investor Rockpoint Group LLC that will result in more than $1 billion for the landlord’s ongoing house hunt.

Invitation, which owns about 80,000 houses, has been buying at a clip of roughly $200 million a quarter since a pause at the onset of the coronavirus lockdown. It sold $448 million of new shares in June to fuel its expansion, and the agreement with Rockpoint will add enough cash to buy about 3,500 more homes, said Dallas Tanner, Invitation’s chief executive.

It is the latest example of cash flowing from large money managers to single-family-rental companies. Financiers created the companies a decade ago to buy foreclosed homes by the thousand following the financial crisis.

The pandemic has sent Americans rushing to the suburbs in search of a lawn, room for home offices and distance from neighbors. Landlords including Invitation and American Homes 4 Rent have reported record occupancy and rising rents despite widespread job loss and economic upheaval, which have clouded the future of more-traditional investment properties such as office towers, shopping malls and hotels.

Now, here’s one from April of this year again, from the Wall Street Journal - If You Sell a House These Days, the Buyer Might Be a Pension Fund

A bidding war broke out this winter at a new subdivision north of Houston. But the prize this time was the entire subdivision, not just a single suburban house, illustrating the rise of big investors as a potent new force in the U.S. housing market.

D.R. Horton built 124 houses in Conroe, Texas, rented them out and then put the whole community, Amber Pines at Fosters Ridge, on the block. A Who’s Who of investors and home-rental firms flocked to the December sale. The winning $32 million bid came from an online property-investing platform, Fundrise LLC, which manages more than $1 billion on behalf of about 150,000 individuals.

The country’s most prolific home builder booked roughly twice what it typically makes selling houses to the middle class—an encouraging debut in the business of selling entire neighborhoods to investors.

“We certainly wouldn’t expect every single-family community we sell to sell at a 50% gross margin,” the builder’s finance chief, Bill Wheat, said at a recent investor conference.

From individuals with smartphones and a few thousand dollars to pensions and private-equity firms with billions, yield-chasing investors are snapping up single-family houses to rent out or flip. They are competing for houses with ordinary Americans, 

Here's the problem, corporate America and particularly private equity America has decided that Americans no longer want the American dream. American middle-class homeowners no longer need homes to buy. So instead, they're buying up every available property on the market and then forcing you to rent because the home is too expensive for you to buy, the land is too expensive for you to build, and lumber prices have gone up so much, you're forced into a rental market even though you want to be a homeowner. These corporations were so focused on if they could do it, they haven't asked if they should do it and they're driving up home prices. They're gentrifying neighborhoods against the neighbors' will. They're driving up property prices and they're forcing you to pay more and more. If you want to own land or buy a house, you are forced to move further and further away from even the suburbs out into rural America.

This is all going to come crashing down. At some point, people are going to decide they are sick of renting and want to buy. They're going to be priced out of markets and people are going to leave. They're going to move further out into rural areas. They're going to buy houses there where these corporations aren't and the property prices are going to crash. You're going to have whole empty suburban corridors with collapsing homes because corporate America never asked if they should do this. They never asked if they should wipe out the American dream. Congress will likely act on this and I’m in favor of it. Private equity companies are putting rental markets into pension funds.

These pension funds run by private entities for the government now demanding that you yourself rent your house instead of buying your house. It takes away the dream of homeownership and an available pool of equity from American consumers. This forces them to be renters for life and drives up rental prices. This is not sustainable long term. I can see it coming. After the collapse, the major hedge funds and private equity groups will go to the government for a bailout and can do it because they have access to subsidized guarantees and access to the FDIC that you, the individual home buyer do not have. They can get away with it. It's not a free market. It's not really even capitalism. It's cronyism and they're calling it capitalism.

A capitalist society without morality is no better than a communist society. Sure, more people are elevated out of poverty, but a whole lot of rich people take advantage of everyone else just like in communism. You've got to have a real free market. This isn't one. Not only that, you’ve got to have some grounding in morality and be able to question whether or not you should do something instead of can you do something. This has been going on now for a number of years and it is escalating. The government is going to step in. When they do, it's going to be a burden on all of us, unless we stop it now instead of waiting until it festers out of control.