Wealth and Property: The failure of a revolution

Dear Sirs and Madams,

Driving through Summers County, West Virginia, you will notice the oddest collection of buildings along the precariously thin two lane highways that crisscross one of the poorest states in the United States. As though some child had mindlessly thrown together a place with whatever toy houses were available, large mansion like buildings stand next to small shacks, trailer homes, and collapsing wooden structures. A neglected part of the country, cut off from the wealth of the eastern seaboard by one of the oldest geological formations on the planet, West Virginia stands as a rejection of the Reagan-Thatcher model of a free and prosperous society based on a property-owning citizenry.

British Prime Minister Margaret Thatcher scathingly responded to critics who questioned the increasing rich-poor divide in Britain during her administration by accusing them of being “socialists” who wanted the “poor poorer provided the rich were less rich”. I certainly do not wish the poor poorer nor the rich less rich; however, I wish to provide an assessment of the socio-economic philosophy at the heart of the Thatcher and Reagan’s policies based on the conditions of the Appalachian communities.

Margaret Thatcher and her trans-Atlantic counterpart, President Ronald Reagan, aspired to create a property-owning democracy where people were more free and wealthy. Reagan, Thatcher, and all the cadres of this no minor revolution believed that cheaper mortgages and eliminating regulations on loans would induce higher homeownership, spending and investment. Some economists like Hernando de Soto Polar took another step further by hypothesizing that property could act as collateral for aspiring entrepreneurs and allow the impoverished to access loans. The neo-liberal revolution of the 1980s was built on the precondition of property ownership. Access to property was to liberate people from class and poverty. Freedom from rent was interpreted as the ultimate sign of self-ownership.

The problem with this simplistic notion of property yielding wealth and freedom is its one-dimensionality and naivety. Regardless of whatever brain crunching and refined equations are built upon this crude and basic philosophy, the fact remains that reality rejected this neo-liberal drive to make society more prosperous. The neo-liberal revolutionaries would have known this had they observed the socio-economic state of West Virginia.

Around 75% of the denizens of Summers Country, West Virginia, are home owners, but the area is nonetheless one of the poorest places in the United States and it is visibly impoverished. The fact of the matter is that owning property does not induce banks to provide loans. Most home owners in West Virginia do not qualify for loans because they do not have the security of a stable income. This is the same trend seen throughout the world, including Hernando de Soto’s home ground of Latin America. The brief and irresponsible lending throughout the country had led to a short term development in West Virginian service industry. However, with the economy taking a nosedive and tourism dwindling, these service sector jobs will be the first to disappear. In short, West Virginian homeowners do not live in the Reagan-Thatcher world of wealth and prosperity. In fact, West Virginians are far from being free despite many being free from rent.

One example arises from the field of psychiatry. Another relic of past projects to liberalize the society was the movement to free the populous from the psychiatric establishment. The flawed and seemingly arbitrary system of psychiatric diagnosis was replaced by a quantitative standard of normal behavior. The result was the rise of psychiatric drugs that would chemically induce normalcy in individuals. However, as Dr. Robert Spitzer, the modern architect of categorizing and diagnosing mental disorders, and many others suggest, this led to confusions between the symptoms of psychological disorders and normal human behavior. The resulting over medication of the populous yielded a negative social response. The Appalachians who received government subsidized medical care had ample access to psychiatric drugs and their subscriptions were encouraged by pharmaceutical companies which made a large profit by selling drugs to the government. The Appalachians in turn sold these drugs to complement their low income leading to violence and crime that so often accompanies illicit trades such as this.

The above explanation on psychiatrics seems out of place in a critique on a “property-owning democracy”. Yet, you must recognize by now that home-ownership alone does not create prosperity unless other conditions are met. Crime caused by mass social addiction to psychiatric drugs is but one example. The artificially crafted environment for greater homeownership is completely misguided. The problems in West Virginia does not stem from people who do not own their own homes, but those who do not have stable incomes. Likewise, problems elsewhere will not resolved magically overnight by homeownership.

Nobel laureate writer Wole Soyinka declared that there are “no such being as a dignified slaves”. In another word, those who do not have an independent means to sustain themselves cannot truly have dignity. Dignity being the conception of individual self worth stands as the basis of equal treatment, respect, and among other core virtues, liberty. There has never been any doubt to the fact that self-sustainability acts as a prerequisite to any sort of liberty. This Reagan, Thatcher, and the neo-liberals were quite dead on. However, they ignored the principle tenets of liberty that many intellectuals had reiterated and emphasized in the past. The famous philosopher of liberty, Isaiah Berlin, warned that those who promote liberty must never come to believe it to be an absolute idea, for the result of such dogmatism always results in direct or indirect coercion. The father of capitalism and classical liberalism, Adam Smith, believed that the “violent… [and] improper means [by the government] to remedy the inconveniencies of dearth” always resulted in greater problems for the rest of society. The Reagan-Thatcher revolution’s attempt to artificially induce home ownership created an imbalance that greatly damaged the socio-economic state of both Britain and the United States and arguable the rest of the world. At the end of the day basic truths on economics win out. Stable income and savings save the day.

As we seek a way out of the current economic crisis and a way forward into a new, more prosperous and freer society, the implications of the socio-economic conditions of Appalachia are far reaching. Perhaps this article was redundant and wastes time pointing out the obvious. Nonetheless, I thought I would share with you what I’ve come to reaffirm on the hills of West Virginia. We cannot expect one answer to solve our problems and we should be aware of the political venus flytraps that lure in unsuspecting citizens with its sweet promises of prosperity and wealth. It is the citizenry’s duty to work towards their own prosperity. All that the government should do is maintain roads, schools, and other services that facilitate citizens who seek wealth but never go out of its way to tilt the market in anyone’s favor. This, I believe, is the way to both wealth and liberty of nations.

Best,
Yong Kwon


p.s. For another article on stunted prosperity, read my past article on agricultural subsidies.