Apologies for falling off the writing wagon; I just wrapped up a huge project for my business. Time to get back in the writing groove!
In my substack description, I included “responses to reader challenges”. Today I’d like to respond to a challenge from Zach, who wrote this piece in the Berkeley Political Review. Zach’s piece covers two related topics: first, the issue of whether and how American farmland remains under American ownership, and second, the issue of private equity’s role in our affordable housing shortage. Zach challenged me to craft a conservative response to his piece. Since those are two separate issues, it’s going to take me two episodes to address them. We’ll start with the farmland piece.
Let me start by noting that I met Zach during my congressional campaign, and meeting young folks like him was one of the great joys of running for office. Politically, he’s pretty much exactly where I was at his age, as a writer he’s somewhat ahead of where I was at that age, and in terms of policy knowledge, he’s lightyears ahead of where I was at that age. So I highly recommend you read his piece in its entirety. Zach makes two significant policy recommendations: that Congress pass a total ban on foreign ownership of American farmland, and that Congress pass either a total ban on Wall Street/private equity ownership of housing, or a right-of-first-refusal policy via a “grace period” for individuals to bid on homes before financial entities are allowed to.
Zach articulates clearly and cogently the case for each of his recommendations. That said, I’m going to only partially agree with him on the farmland issue, and pretty strongly disagree with him on the private equity issue. In this episode, we’ll dig into the farmland issue.
Zach begins with a bit of history, correctly noting that land redistribution policies in the U.S. led to an increase in wealth for lower-class whites. I would add some color to that by pointing out that the majority of the truly choice farmland was given in vast tracts to already wealthy whites, and the majority of the marginal farmland was given in relatively small plots to poor whites. I’d also note that prior to the mechanization of agriculture, the only way to farm was by hand, and no one could have enough kids (the primary historical way of acquiring zero-cost labor) to farm thousands of acres by hand, so the only way to acquire zero-cost labor at scale was through slavery. It’s no coincidence that Britain’s banning of the slave trade in 1807 and its banning of slavery overall in 1833 line up so closely with the British agricultural revolution, which lowered the cost of agricultural production to the point where it became cheaper to pay your laborers a modest wage and then leave them responsible for their own housing, food, and healthcare, rather than pay them nothing as slaves but then be responsible for housing them, feeding them, and keeping them healthy enough to work. As soon costs dropped to that point, Britain jettisoned slavery.
That’s one reason why I disagree with the 1619 project’s analysis of white supremacy as a *driver* of slavery, rather than what I think white supremacy really is, which is a post-hoc justification designed to make it psychologically possible for white people to accept the terrible human cost of slavery as an economic strategy. That perspective doesn’t make either slavery or white supremacy any less morally repugnant, but I think it has far more explanatory value for understanding history.
But I digress- let’s get back to Zach and American farmland. Having firmly established land redistribution’s historical role in creating a broad (white) middle class, Zach then brings us to the present day, where he laments the consolidation that has taken place in our domestic agriculture market. It’s here that I start to quibble with him.
First, I’d like to point out that there are only two ways to farm: for subsistence, and for business. The minimum efficient scale for subsistence farming is quite small, though, as someone who spent summers and weekends on a farm, I will warn you that subsistence farming is very hard work. I was responsible for tending to a quarter acre or so of vegetables using techniques that today would be labeled as “organic”, but back then were really more “we’re not going to spend money on herbicides, so get your 10-year-old butt outside and weed those crops.” (Again, kids = zero-cost labor) It was simultaneously totally zen and soul-affirming, and really really hard, constant work. And you’ll never make money doing it.
Farming for business you can make money doing, but the minimum efficient scale for commodity crops is literally thousands of acres. You cannot, repeat- cannot, make a profit on commodity crops unless you have thousands of acres under cultivation. Grandma’s farm had around 300 acres under cultivation- depending on the year, corn, soybeans, or alfalfa- but she sold the cultivated land to the farmer next door around 1980 because already by then 300 acres was no longer economically viable. It is simply no longer possible to give someone 160 acres of land and have them be able to make a living working it, unless they grow some highly specialized crop like almonds, whose price is only as high as it is because there’s such a tiny range of land globally with the right conditions to grow them.
So, while I do agree with Zach that there is an anti-competitive policy problem in agriculture, it’s not on the land ownership side, it’s in things like seeds and tractors. With the amount of mechanization in agriculture, the amount of land under cultivation globally, and the presence of world market prices, it will never again be possible to have a large number of small producers of commodity crops. Thus, I think Zach’s economic case for a blanket ban on foreign ownership of agricultural land, which hinges on a hostility to the idea of industrial-scale farming, doesn’t pass muster.
But, Zach also makes a national security case for a ban, and that argument I’m far more receptive to. The national security implications of China owning any of our agricultural production are concerning, and so I think Zach’s idea merits close consideration from this perspective. That said, a complete ban is a very heavy-handed, market-distorting way to accomplish the goal. I would recommend instead a foreign-ownership per-acre tax, ideally separated into two tiers- one for countries like England, Germany, or Japan, which are trusted allies, and one for countries like China or Russia that are clearly antagonistic to our country. Given how thin the margins are in commodity agriculture, the tax would accomplish the vast majority of the prevention we’d hope for while interfering less in the ability of current landowners to cash out their land for the best possible price, if they wanted to do that.
Sadly, I don’t have a Congressional staffer to assign this idea to, to see if it would pass legal muster, but my broad point is that I’d like to explore alternative ways of achieving Zach’s goal of safeguarding our national security before I would sign up for something as heavy-handed as a blanket ban on any foreign ownership of agricultural land.
That’s my response to Zach’s farmland proposal; in the next episode we’ll dig into his private equity proposal.
Farming is a generally solved problem. In developed countries roughly 2% of the population works in farming compared to ~60% in developing countries. While access to land in was a pathway to prosperity a century ago, it simply isn't one now and we need to optimize to have the fewest possible people working in farming. So the author is solving a problem that does not exist with an unscalable solution.
However the author (Zach) seems to be using the farm example to support home ownership among America's middle class and increase home ownership. This is an interesting idea but relies too much on past history to make a point. American home ownership is at ~65% today and our attempts during the Clinton era resulted in the 2008 Great Recession. It's really unclear if additional homeownership solves the problem or just introduces a bunch of owners who cannot afford their new homes.