Charlie Gasparino: CNBC (and WSJ) Jackass of the Day 11/6/09 (Part 2)

Charlie’s argument about the government encouraging home ownership is trickier and it requires some consideration of American political history.

It may well be that of all the rights the Founding Fathers sought to protect from government interference, property rights were foremost in their minds. It may also well be that nowhere else in the world could you have found popular support for a revolution based on property rights. In Europe, there were unpopular governments, but in there were also vast segments of the populace who owned no property and had no reasonable prospects of ever obtaining any property. As a result, you couldn’t build an army motivated primarily by the vindication of the right to property.

In America, however, things were different. Thanks to the Indians’ susceptibility to European diseases, there were vast tracts of land there for the taking. Everyone could aspire to own a piece of the land from which he could provide for himself. From this comes Thomas Jefferson’s vision of the ideal citizen as the yeoman farmer. The common man would fight for a government that protected property rights in America because the common man could carve out his own piece of property from the wilderness.

As vast as America might have seemed to the Founding Fathers, it wasn’t unlimited. As immigrants flocked here from Europe, all the good land was eventually taken. As the frontier closed and the poor man no longer had the option of packing up and making a new start out west, it became more difficult to maintain popular support for a government whose sole goal seemed to be the property interests of the wealthy.

Things came to a head in the Great Depression as the last parcels of land that had been available to homesteaders in Oklahoma turned to dust and the citizen farmers that were expected to form the backbone of the republic found themselves on the road. Under Franklin Roosevelt, the government actively intervened in an effort to provide the equality of economic opportunity that had once been available simply by virtue of unoccupied space.

The pendulum always swings though and in 1980 Ronald Reagan was elected on a promise to return America to a simpler time when government protected an individual’s property rights and otherwise stayed out of the way. Unfortunately, land was no longer just there for the taking and another method was needed to convince the common man that he shared the wealthy man’s interest in the protection of property. It is no coincidence that the massive expansion of consumer debt started in the Reagan years.

Charlie bemoans the transformation of home ownership from “something that must be earned into something close to a civil right,” an event that he seems to locate during the Clinton administration. What he misses is that the roots of the notion go right back to our founding. You cannot elevate property rights above all else in a democracy if everyone does not have some opportunity to acquire property. The only way to maintain the illusion of the conservatives’ beloved “ownership society” is easy money that makes both the easy credit with which to buy things and the asset bubbles that create the illusion of wealth.