Property acquisition in the Americas begins.

Back to the critique of Ron Paul’s libertarian principles that I began with this post. We’re onto principle number 3:

3. Justly acquired property is privately owned by individuals and voluntary groups, and this ownership cannot be arbitrarily voided by governments.

–from The Ten Principles of a Free Society

[Aside: There’s that word “voluntary” with groups (associations) again! ]

As I’ve shown in my previous critiques, Paul’s principles are half-baked by-products of social contract theory. They want to assert that rights precede government (which even social contract philosophers have to take on faith) and then do away with the government that those philosophers posited as a necessary evil for preserving those rights in society with other individuals. Really? Do away with the government, you might ask? Doesn’t Paul, like Jefferson, for example, just want to keep the government to a size that isn’t able to overwhelm the individual with its potentially arbitrary and despotic power? I would argue that the way these principles are phrased–and this one in particular is a very good example–Paul seeks to postulate a society that operates according to natural rights, with or without a government. He seems to believe that rights in themselves, if we would only just respect them, are sufficient for self-government.

Look closely at this third principle: What a strange formulation it takes! It begins with the presumption that any “justly acquired” property must be privately owned. Is there any other way to read that first clause? And is that true? Are national parks, for example, not as justly acquired as any private ranch? And what would determine the “justice” of a property acquisition, anyway, if not a government’s property regulations?

Anyone who deals with the question of property in the Americas has to confront the root problem of its acquisition from the aboriginal populations, for all property in the Americas, like it or not, is the product of those first tainted acquisitions. I know from personal experience arguing with extreme Libertarians that this subject causes great discomfort. They tend to reply to it with impatience, knowing full well what a moral quagmire it is for their sacred property rights. Some of them do have a stock answer, however, as I noted in a previous post:

[P]roprietarians consider the taking of property through war as legitimate if the other side can be said to have “inititiated force.” Thus, because the governments of England, Holland, Spain, etc., were “legitimate” ca 1492 and because their wars against the peoples who were in the Americas were allegedly waged to protect the safety of their citizens against marauding redskins, the appropriation of lands in the Americas was “just,” and all exchanges over property since then have been “just.” (Whereas taxation is “unjust”–even though taxation merely pays for the system that legitimizes private property in the first place.)

This explanation or excuse (offered by Ayn Rand, for one), of course, ignores that conquest–or, in plainer terms, royal greed–was what drove the mass expropriation, not protection of colonists. Another libertarian justification for this thievery on a mass scale stems from the notion that property is progress, that the peoples who were in the Americas were benighted and the Europeans came partly to bring this property-based enlightenment to them (whether they were ready for it or not). Of course, this merely begs the historical question (it happened because it had to happen?) and evades the ethical one entirely.

It’s unfortunate that libertarians don’t spend more time grappling with this troubling question, seeing as how central it is to their ideology. If you’re going to assert that property is inherently just, what do you do with the enormous injustice at the heart of private property in the Americas? Do you dismiss it for the time being and hope someone else’s apologetics do the trick for you? Evidently so, for most libertarians. But they should be aware of the gigantic dishonesty at the core of their most sacred belief, and it should trouble them, I think, considering how rational they suppose their beliefs to be.

Thinking about this principle of Paul’s reminded me of an article that appeared in the Nation a few weeks ago by William Greider on New York Attorney General Eric Schneiderman’s growing case against the largest banks and their role in the housing bubble that sparked the 2008 financial crisis. It’s worth quoting at length, partly because the story is important despite being under-reported (and Greider’s reporting is exemplary) and partly because it illustrates another one of my problems with the inadequacy of Paul’s (and most Libertarian) principles (my emphases):

In recent months, Schneiderman’s office has dispatched requests for records and information from seven of the biggest banks (Bank of America, JPMorgan Chase, Wells Fargo, Goldman Sachs, UBS, Royal Bank of Scotland and Deutsche Bank). One way or another, they were the leading players in the housing bubble, either by originating subprime mortgages of dubious quality or by packaging the mortgage-backed securities that turned into toxic assets for unwitting investors.

Schneiderman has further requested information from four bond insurers that backed the investment paper, a Buffalo law firm known as a mortgage mill and two private equity firms that owned processing firms in the mortgage market. Most important, however, is his request to see files from the two leading banks—Deutsche Bank and Bank of New York Mellon—that acted as trustees for the mortgage securities, certifying that all complied with property-law requirements and provided the proper documentation.

The storm of foreclosure litigation during the past year strongly suggests the opposite. Around the country, lawyers for homeowners have won scores of cases blocking banks from foreclosing on their clients. Courts have held that mortgages or securities were fatally flawed and therefore void. Banks filed false affidavits and unsupported documents, in effect defrauding the courts. When judges asked for backup evidence of ownership, lawyers went to the trustees and found that the mortgages and liens were not in the files. Bankers couldn’t prove they owned the homes they were seizing. Often they couldn’t even establish who owned the loans or whether borrowers were actually in default. Many documents were signed by untrained functionaries who didn’t bother to examine what they were signing.

Officials in Washington at first downplayed the implications, suggesting that bureaucratic sloppiness by the banks was not a reason to intervene in the foreclosure process. But the essence of this scandal goes to the heart of capitalism—the American system of property law. The most prestigious financial firms abused and distorted that system in their rush to accumulate greater profit, with less responsibility for the results.

The Congressional Oversight Panel, led by Elizabeth Warren, investigated the mess last year and warned in its report, “If documentation problems prove to be pervasive…the consequences could be severe.” The details are complicated, but the essential meaning was described by Damon Silvers, AFL-CIO associate general counsel and deputy chair of the COP. “Here’s why all this is so dangerous,” he explained. “Property law requires very precise documentation at every step in the process because the whole economy comes apart if you can’t be certain who owns what. When you buy a house, the bank insists you comply with the property-law regime, and you sign pages and pages of agreements to do so. And you can lose your home if you fail to comply. Yet in this situation the banks did not comply themselves—that’s what’s mind-boggling.”

It remains to be seen what happens here, but it seems to me that the crimes Schneiderman is investigating show up the smoke-like fragility and intricacy of property rights in the US at this moment in our history. How easily our largest banks were able to erase the lines (arbitrarily void them, one might say) between who owns what! Where is the justice in the way these pieces of property were traded? And who is going to sort out the injustices if not the government in the form of Schneiderman and his fellow AGs?

I’d be very curious to hear from libertarians for whom Paul’s principle number 3 resonates on all of these issues.