Property Rights Foundation of America®

Presented at the
Tenth Annual National Conference on Private Property Rights
Property Rights Foundation of America, Inc.
Albany, N.Y. - October 14, 2006

Keynote Address
Property Rights—Freedom in the Balance

John Fund, Opinion Columnist, The Wall Street Journal

It is a pleasure beyond the normal pleasure that a speaker would express to you to be here. Carol is doing me a favor by having me speak to you because the entire brain trust of the property rights movement that I can tell is concentrated pretty much in this room. So this is a great place to catch up with all of you. R. J. Smith is here; Bonner Cohen, one of my great heroes; Gideon Kanner, who has forgotten more about eminent domain issues than I will ever learn, and I am in your debt, professor.

I was a little late coming in. I am sorry that I missed the morning session. I missed my first flight out of Washington today. I was going through the airport terminal, and there was a freshman Congressman looking completely befuddled and agitated, staring down at the floor muttering. I know him slightly so I came up to him and I said, what's the problem? He said, I'm sorry. I didn't mean to do it. It won't happen again. And I said, what? What? He says, look, I know I am only a freshman. I forgot. Okay? I forgot. I didn't realize. I've only been here two years. I said, tell me what happened. He says, I promise I won't do it again. I said, look, what happened? He looks at me and with this terrified look in his face, and he says, I don't know how it happened. I can't explain it, but I just accidentally spent my own money. Anyway, he has calmed down now. He promises he won't do it again.

I feel as if I am here with a group of patriots from which great things are going to come. Let me just speak about the Kelo decision, which I think you were marking at your last conference. It was very fresh in your minds. We now know the public reaction against it has been sustained and vigorous. Now we also know that the depredations of government when it comes to eminent domain are also ongoing, and they certainly have not been completely knocked back on their heels by the public reaction against Kelo. But I just wanted to share with you a couple of things that we have reacted to.

When we get members of Congress or elected officials who come into the Journal, we often ask them very simply as one of their first questions, as a philosophical matter, what do you think about Kelo? Do you think that it is a legitimate use of eminent domain power to benefit private development? Do you think there should be extensive hearings that you put up to a majority vote of the community? Or do you think there is a fundamental constitutional issue here? Often, the best template by which to judge a member of Congress is not whether they have an R or D behind their name, not whether they say they are a conservative or say they are liberal but what their philosophical impulses are towards Kelo. What do they feel in their guts about it?

That is basically the first point that I wanted to make, which is that issue I think this transcends normal politics, because we have eminent domain issues now in something like a dozen states. The Scott LaGanga gang of the Property Rights Coalition was filling me in on some of the developments. And what you see over and over again in these states, whether it is California or Nevada or others, is that the erstwhile friends of the private sector, of the right of people to earn a living and make profit often are completely absent from the field or on the other side when it comes to eminent domain.

Milton Friedman, who knows something of this subject, wrote, "It has always been true that business is not a friend of the free market." I have given a lecture from time to time under the title, "Suicidal Impulses of the Business Community." —Something like that and it is true. It is in the self-interest of the business community to get government on its side. Now, that does not speak for all businessmen and businesswomen, but for a large segment of the business community. Instead of siding with the principle that ultimately protects all business owners, the business guys are pouring money against some of the initiatives, especially the Proposition 90 in California. Now Milton Friedman also observed, and Lenin, for that matter, also understood, that businessmen will sell the hangman the rope that is used to hang them. Businesses are mostly interested in their own private advantage, and they are more than willing to manipulate government to further that advantage. That is why Ayn Rand made the distinction between true entrepreneurs and looters, the first being those businesses who rely on their skill in the marketplace, the latter are those who rely on government privileges to enrich themselves. I see this over and over again in the coverage that I have of state and local issues, whether it is the issue of whether or not to build an arena at taxpayers' expense, to benefit the owners of a football or a baseball or a hockey team that is going to sell luxury sky boxes and reap all of the profits and benefits from it, or the building of a light rail project.

By the way, there has never been a light rail project built in this country where the ridership ever met anything close to the projections. If you find one, $100 to your favorite charity. The closest we came was San Diego. There is one trolley line that basically makes its operating costs, not its capital cost, but its operating costs. That is the one that runs from downtown San Diego down to Tijuana, and you know, well, yes, there is that reason too, but there is a second reason, and that is there is a lot of business and other shopping traffic going back and forth, enormous flows of people, legitimate flows of people, and simply crossing the border and trying to get back in your car is simply a pain in your neck because the immigration officials are stopping people with shopping bags while, of course, thirty miles away they are crossing underneath culverts with precious little distraction. So that trolley line is often used by people who go shopping in Tijuana, and there is lots of traffic back and forth. Other than that, nothing.

But all of these government developments seemingly have the same coalition behind them. I call it, in reference to Ayn Rand, a coalition that in every town has the same acronym, LOOT, L-O-O-T. It stands for leaders of our town. The men and women of LOOT. And you have met them. They are very nice people. But they will not be deterred from bending government to their will.

Let's look specifically at what has happened in California. Luckily, thanks to the efforts of some people in this room, the business community has been a little hesitant to jump full throttle against Proposition 90, the eminent domain initiative, but still, whether it is Wells Fargo or Bank of America or the California Redevelopment Association or Bank of the West or various other entities, there is enough support, which clearly shows that the vast majority of the business money in this campaign is going out to fight the eminent domain initiative.

But here is the interesting thing. Interesting coalition. I have a friend, Martha Montelongo, who is an Hispanic talk show host in California. She is helping to build some of the minority support for the eminent domain initiative. What she reports and what my friends in the African-American community report is there is an awful lot of interest in property rights among people that you might not agree with on a lot of other issues, but they feel this passionately in their heart because whatever property people have, even if it is not very much, is near and dear to them. My home is my castle. And if you look at the votes in Congress, only 10 of the 43 members of the Congressional Black Caucus voted against the measure condemning Kelo. Only 10 out of the 43, remarkably low. Only two members of the Congressional Hispanic Caucus voted against it.

You have John Conyers, the chairman, the future chair monster of the House Judicial Committee, I'm sorry, future chairman of the House Judicial Committee if the Democrats take over and Maxine Waters leading the charge against eminent domain.

Maxine Waters who when she was first elected to Congress I commissioned an op ed from her. I said, we want an op ed from every perspective of the new entering freshman class of Congress from the far right to the far left and guess which category you fill? And she laughed and she said, well, I'll send you something you will remember and she did. The last words of her op ed piece were, "And we must eat the rich." Eat the rich. Well, that sort of puts it all in perspective. But she believes passionately that eminent domain is something that African-Americans and minorities of all kind have to worry about. The property of Californians may only be taken for legitimate public uses. Proposition 90, she says, restores basic fairness to the use of eminent domain and protects the downtrodden, businesses, churches, properties of all people, especially those who are often most affected by these measures, which are often people of color. And that is my point.

The NAACP, Operation PUSH, Leadership Conference on Civil Rights have all condemned Kelo as a practice that was used historically to target the poor, people of color, and the elderly. That may be special interest pleading, but you take your friends where you can find them. And these people, I think, give a whole new opportunity for you to paint the property rights coalition in a slightly more sympathetic vein for purposes of the media. And, frankly, that's where a lot of these battles are going to be fought. You don't have the money for slick advertisements. You don't have the money for slick lobbyists. You don't have the money for the very best lawyers, Professor Kanner and some others notwithstanding, to fight these members of LOOT, the leaders of our town. You have to often rely on media presenting a sympathetic, appealing face as the Institute for Justice has often been able to do with the kind of eminent domain cases they are taking. I think it is essential to this.

Let's look at what has happened. Martin Luther King III, a former president of the Southern Christian Leadership Conference—this was before Kelo—joined with the Institute for Justice against the State of Mississippi, which was trying to uproot homeowners to make room for a Nissan truck factory. I went down to Mississippi for that story. I watched him stand there and say eminent domain should only be used for true public projects, not to take from one private owner to give to another private owner. He called the State's actions "a giant stepping on a grasshopper." Ultimately public opposition to the taking mounted. The State finally announced that Nissan had somehow come up with a way to redesign its facility so that the homeowners wouldn't have to leave. You can fight city hall and Nissan and sometimes win.

But I know we are standing here in October, and I am not completely ignorant of the fact that this is an election season and some of you may not be expecting the best of results, especially in New York State, where I recently attended, I think it was just last week, I attended a fundraiser for Darth Spitzer, I'm sorry, Elliott Spitzer, and he had that lean and hungry look about him as if he were about to look for new people to devour or perhaps just sue. And, of course, Andrew Cuomo will be the attorney general, and we all know what that means. You know what AG stands for—aspiring governor. So you will have Spitzer who will be governor and you will have Cuomo standing in the wings. And, of course, nationally the situation isn't that much better. So I wanted to give you a historical perspective here.

I think we have to recognize the ebb and flow of politics. Often, it's like a sine wave. It is up and then it is down. In fact, just when the other party hits the top of their sine wave, they are about to implement policies that so discredit them that they soon bottom out. And I will give you an example using the career of Ronald Reagan.

Ronald Reagan, we forget, started out in politics as a liberal Democrat, campaigned for Harry Truman, campaigned for Hubert Humphrey, campaigned against Richard Nixon when he ran across the pink lady Helen Gahagan Douglas. Ronald Reagan was a committed New Dealer. In the 1950's he made a sincere conversion to free markets and conservatism. In 1957 he met Whitaker Chambers who, as you know, was the Time magazine writer who testified against Alger Hiss and helped put Alger Hiss in prison for having been a spy for the Soviet Union. Alger Hiss had abandoned atheism and abandoned Communism for Christianity and conservatism, but in his book, Witness, in 1957 he wrote, I fear I have joined the losing side. He met Reagan that year and Reagan asked him about that, and he said, do you really think you are joining the losing side? And Whitaker Chambers said, yes, which is why I can't understand why you have also joined it. And Reagan said, it doesn't matter. This is the right side. This is the American side. And ultimately I have confidence and belief in the American people. They will wake up. But Reagan had precious little reason to think that would happen in 1957, almost 50 years ago. In 1962 Nixon ran for governor of California, and lost in a landslide. Democrats took 2 to 1 majorities in the state legislature and in Congress in California.

Reagan went to work for Barry Goldwater after that defeat. He gave the famous speech, "A Time For Choosing." Do you remember that speech? Or you have seen it, perhaps, if you are young? It is am amazing and thrilling speech. I will never forget what he said, "We are constantly hushed like children and told that the world has become too complex for the simple solutions of the founding fathers, that there are no simple answers to our problems." And Reagan said, "I am here to tell you that's wrong. There are simple answers. They are just not easy ones."

And then he said, "We are constantly told to choose between the right and the left. I submit to you that the real divide in politics is not between the right and the left. It is between up or down. Up to the maximum degree of freedom or down to the antipathy of totalitarianism." These were great words. They electrified the country. Donations poured into Goldwater. Of course, there is only a week left in the campaign. Goldwater went down to an historic defeat. He lost 44 states.

Did that discourage Ronald Reagan? No. Within three weeks he decided to run for governor of California. He knew, and he told friends at the time whom I've interviewed, the Left has won everything, which just means they will overreach and they will make mistakes and, if they are wrong, those mistakes will lead to bad results. And sure enough they did in California. We had the Watts riots. We had the Berkeley unrest. We had the Vietnam disaster. And Reagan ran for governor of California and won by a million votes, completely reversing the results of just two years before.

In 1974 Richard Nixon, mistakes were made. Nixon had the Watergate disaster and had to resign from office in disgrace. That was the first year we saw the phenomenon of the embarrassed Republicans. The Republicans were just so disgusted with what was going on in Washington that they stayed home, and Democrats took 2 to 1 control of Congress.

What did Reagan say to that? I am going to challenge Gerald Ford, the incumbent President of my party, in a primary fight, and he did. He came within a hair's breath of taking that nomination in Kansas City. You remember the speech that he gave, after he had lost. He was invited down to briefly address the delegates, and he addressed them and quoted MacArthur that there was no substitute for victory. And at the end, I happened to be there, I was 17 years old. I was there on the floor at Kansas City as a young volunteer, and I remember everyone around me, including the Ford delegates, said, we just realized we nominated the wrong man. Well, that year Ford lost. Democrats retained their 2 to 1 majorities in Congress.

Reagan picked himself up, went back on the mashed potato circuit, the radio broadcasting circuit, and in 1980 the delegates recognized that they had nominated the wrong man. They nominated him, and he went to go on to win 44 states, defeating Jimmy Carter. But there was a price to pay once he became President. Carter had revved inflation up so much that we had 21 percent interest rates, 12 percent inflation. We had to wring all of that out of the economy by tightening the money supply under Paul Volcker. We had a recession. The recession hit its bottom the week of the 1982 mid-term elections. Unemployment over 10 percent. It is under 5 today. Republicans lost 26 House seats. It was a modified limited disaster, to use that Nixonian phrase. Reagan didn't surrender, didn't despair. Reagan didn't change course. His theme during campaign had been "Stay the Course." In 1984 he ran for re-election and he won 49 states. And if you read my book, Stealing Elections, you will discover he actually won the 50th, because of voter fraud, but that is another story. But Reagan won 49 out of 50 states.

The real turn began in 1986, the sixth year itch. Six years of a party in power, the voters often get tired. That sounds like a phenomenon I've heard a little about lately. Six year itch and mid-term election, in one night Reagan lost eight Senate seats. Control of the Senate flipped from Republican to Democrat. Eight Senate seats, a greater number than can possibly switch this election.

Then Iran Contra hit. Reagan didn't give up. He recovered from Iran Contra, apologized to the nation for his lapses, and proceeded to help elect his vice president, George H. W. Bush and convinced him to take the no new taxes pledge, "read my lips," and basically they don't say Bush won, they say Reagan won a third term in 1988. He won forty states.

But all those years of having lunch weekly with Ronald Reagan for eight years, Reagan thought that he had won Bush over to see the light, but as soon as Reagan was back in California, Bush retreated to some of his old ancestral and instinctual ways and taxes were raised. And there were other problems including a mild recession. Bush went from 54 percent of the vote in 1988 to 37 percent four years later, the greatest single drop of any presidential candidate from one election to the next in history. Reagan was still very active and mentally alert and with us at that point. I was at a reception in early 1993 in New York that Reagan attended with some members of his former staff, and he said, I feel really bad about how the last election went but now that they have control of everything, just watch them mess up. Sure enough Hillary's health care plan, you name it, everything else, the Sagebrush Rebellion was touched off again in the West, and in 1994 there was a great Republican conservative, free market revolution, a reaction against the Clinton years.

Obviously that has deteriorated to some extent since then, but you get the point. Just by watching and observing the career of Ronald Reagan, you see six cyclical ups and downs. Politics is not a straight line. We wish it were. If it weren't for the founding fathers I can assure you, during a revolutionary war, there were even more downs than ups. And that is what I want to leave you with.

Put not your emphasis on the cyclical political developments or the personalities of the moment. There is a reason The Wall Street Journal has never ever in its entire 119-year history formally endorsed a candidate for public office. Everybody knows what our preferences are. Our preferences are for free minds and free markets. We wrote in our founding editorial, "Don't call us conservative, don't call us liberal. Call us radical. We aim to get to the root of the problem." How radical are we? We are as radical as the founding fathers and Judeo-Christian doctrine. And then we said in explaining why we are not formally endorsing candidates, we said, "Ideas properly understood will almost never disappoint. Politicians properly observed very often will." And that's the message I leave with you. The ideas that you represent—property, the ability to make your own way in the world without undue interference, the ability to hand down things to your children and your grandchildren. All of those are enduring American principles of values. All of them have been rediscovered by many Americans who thought they were either secure or hadn't thought about it, since the Kelo decision. You are a part in that new American revolution.

I just want to tell you I am only an amateur historian, but I am a pretty good one. When I saw the Kelo decision and the brush fire reaction of anger that brought about, I said to myself, you know, this almost feels like the Boston Massacre in 1770, sort of the shocking incident in which the American people realized that the British soldiers were not there to protect them. They were there to control them. And that is when they shot those patriots down in the square in Boston. We all know that that anger did not dissipate, and a couple years later there was something called the Boston Tea Party. I think we had the Boston Massacre last year in the narrow 5 to 4 vote of the Supreme Court. I think with the eminent domain initiative that Scott LaGanga and others are promoting, I think we are going to see the beginnings, maybe not a full-fledged tea party, but perhaps a few pots of tea being brewed. And I think that will be the beginning of something much bigger. You are going to be a part of it and future generations will thank you for your role and for your patriotism and for your commitment. Thank you.

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