Replacing property as a source of wealth creation

[Geee]

Washington Examiner:

One of the interesting things about our country, the independence of which the Founders declared 235 years ago Monday, is that we have been a property holders' democracy.
This is not something the Founders originally advocated. While they protested taxation by a British Parliament in which they were not represented, they did not think that everyone had a right to vote. Like their British contemporaries, they thought that only those property holders should vote. Otherwise representatives elected by the poor majority would vote to take away the property of the rich minority.

But in the early years of the republic it became apparent that almost all white males were farmers who owned the land they farmed. As property holders, they could be trusted with the vote.

So by the early 19th century just about all the states extended the franchise to adult white males. It would be extended in time to blacks and women as well.

In this property holders' democracy, elected representatives have naturally sought to facilitate the accumulation of property, as Walter Russell Mead has pointed out in his unfailingly interesting Via Media blog on the-american-interest.com.

For a century this property took the form of the farm. Government sold land cheaply and on credit and under the Homestead Act gave it away to those who worked it for a few years.

Government set up agricultural colleges and financed agricultural research. It regulated the rates railroads could charge farmers.

In the Great Depression, when 25 percent of Americans still lived on farms, government started subsidizing producers of certain crops. Amazingly, it hasn't stopped, although only 2 percent of Americans live on farms, though one hears that agricultural programs have been on the chopping block in various budget negotiations.

In the 20th century most Americans moved to cities, and the new form of property ordinary folks accumulated was their houses. Government stepped in to subsidize that property too, in the form of low- or no-interest mortgages and tax deductions for interest payments.

For many years these policies worked pretty well. Just as government enabled people to accumulate property in the form of farms, it enabled people to accumulate property in the form of urban and then suburban houses.

Then, as with farm programs, government went too far. Fannie Mae and Freddie Mac, with support from administrations of both parties, financed loans to uncreditworthy borrowers on the theory that, hey, you didn't really need a down payment or steady income to be able to afford a house.