2024 Platform MASTERMIND: Eric Daniels: The Hidden History Of Private Property In The United States

Eric Daniels: In 2005, the Supreme Court handed down a monumental decision - a monumental decision that directly implicated your business. They handed down the famous, or perhaps I should say infamous, Kelo versus New London decision, right? And in that decision, the Supreme Court ruled that the government could take the property, in this case, Susette Kelo's Little Pink House, and those of other members of the New London community and transfer ownership of that property for “public use.” 

Tim Chermak: This is the Platform Marketing Show where we interview the most creative and ambitious real estate agents in the country, dissect their local marketing strategy, and get the behind-the-scenes scoop on how they're generating listing leads and warm referrals. We'll dive into the specifics of what marketing campaigns are working for them, how much they're spending on those campaigns, and figure out how they have perfected what we call the Platform Marketing Strategy.

This is your host, Tim Chermak. I'm the founder and CEO of Platform. I love marketing and I talk too much. So let's dive in  

Eric Daniels: As Tim said, he took a class from me and he was, in fact, you guys know Tim, he was the one asking all the questions, getting deeper into the topic. And when he told me about the conference, when he first explained what this was, I thought to myself, “This is gonna be a little bit different. They're all going to feel like they're going back to school,” and that's not always a good feeling for a lot of people. 

But what I aim to do today is a little bit different. It's a little bit different for me. I speak at conferences, I do presentations from time to time to wider audiences, but to a specific audience with a specific professional outlook, it's a little bit different for me as well. I normally have students. I have a little bit of the context of where they are. I get to tell them what to read in anticipation of coming to class, although I suspect all of you are a lot more polite. If I start running over on time, you're not gonna pack up and leave like my students do sometimes.

So it's a little bit of a different experience, and it's a little bit different, as I said, different context. But the idea that I want to put out there, and Tim can tell you whether he agrees with this or not, but I think the reason that he invited me to speak in part was to radicalize all of you. 

Okay? And what I mean by that, to radicalize all of you is to convince you that what you do every day in your occupation - putting people together with property - is one of the most vital functions of a free society that you can imagine. There's a problem though - it's broken. It's not just broken. I would say that it's been killed. The institution and private property rights that gave us the civilization that we live in today has been murdered.

And so we're going to do a little bit of like a murder podcast. Anybody listen to murder podcasts? Some of you? Yeah, you may be don't want to admit it but it's basically a “whodunit.” Why is it that despite the fact, as Tim correctly noted, The United States has an unprecedented level of protection for property rights? It has an unprecedented history of facilitating individuals, making their way in the world, becoming successful, flourishing, and making their own way through private property that it nevertheless is under attack and in many ways is vitally threatened.

And so what I want to do by radicalizing you is convince you all of how important your jobs are and also put a little bit of edge into it so that you have a different understanding of what's so important about property rights. Because the foundation that we have in this country is absolutely vital. It sets us apart, as Tim said, and there's all kinds of ways that we can see this today. 

But by the way, any lawyer? I mean, I know some of you probably practice real estate law. You probably got your law degree along the way to facilitate your careers. But are there any actual lawyers in the room? Don't be shy. Oh, wow. Really, none? Oh, awesome! Okay, so. Oh, yeah. Okay. Yeah. See? I'm embarrassed to admit it. Yeah. So my burden today to convince you, as you know, probably if you watch crime drama, there's a number of elements of the crime. We have to establish means, motive, and opportunity, but we also first have to convince, I have to convince you that there's a body, right? 

Here we stand, you guys buy and sell and facilitate the buying and selling of property every day. People use property. What am I talking about “property rights has been killed”? I mean in some ways, yes, in some ways, no. But let me just illustrate for you what I mean when I say that property rights have been under assault and ultimately have been killed.

Does anybody remember back to 2005? I know this is 20 years ago, coming up on 20 years, but who remembers 2005? Could you place yourself? Okay. Yeah. Well, I mean, I saw how many people remember playing Oregon Trail. You better remember 2005.

So how many people were in the business in 2005? Okay, so quite a few of you. In 2005, the Supreme Court handed down a monumental decision - a monumental decision that directly implicated your business. They handed down the famous, or perhaps I should say, infamous Kelo versus New London decision, right? And in that decision, the Supreme Court ruled that the government could take the property, in this case, Susette Kelo's Little Pink House, and those of other members of the New London community, and transfer ownership of that property for “public use,” because as Justice Stevens noted in the opinion, “economic development was such a traditional and long accepted function of government.”

If a municipality or state determined, in other words, that a carefully considered planning process had been executed, that taking land from one owner and giving it to another,  would increased tax revenue, would increase job growth, revitalization of distressed urban areas, etcetera, the court would allow it because, Stevens noted, “there are diverse and always evolving needs of society.”

So imagine that one of your clients has just bought a house, starts decorating, improving, customizing, only to find out that the local government decides, “Well, we need more tax revenue and you're not paying enough tax so we're going to take your land and we're going to give it to the Pfizer company so that they can build a nice headquarters and employee park,” which of course, in the case of New London, they never did, despite the case. 

So in 2005, the court made what seemed like a frontal assault on the ability of private landowners, private homeowners, to keep their property. But this was not all. Many people, I mean, if you remember 2005, you remember there was dramatic reaction against this. There was uproar about this. Was it really possible that the government could take land. Not to build a military base, not to build a road - which may be bad enough in and of itself if you're a homeowner that doesn't want to sell. You only have to go back to the 1950s with the development of the interstate projects to know that often the land that was seized through eminent domain was done so in ways that were disfavorable to the property owners where those roads were built - but for another private business. How could this be possible that the government could do this? What would make that right? 

The problem is that this is not the only way that property rights come under assault. To convince you that this is in fact a body and not just Mike Tyson taking a couple of extra punches. I didn't stay up. I understand it would have put me to sleep anyway, but yeah. The reports this morning were not great, but let me just give you an example of the kinds of things that property owners face, some of you may even have been personally affected by this. Because the Supreme Court allows municipalities to enact zoning laws, property owners may be restricted and regulated in the kinds of businesses that they can operate in their properties. 

They may be regulated in the types of transfer of property that they may engage in based upon the purported use of the new owners. Because the court considers affordable housing to be a “necessary of life.” Thus, they've permitted municipalities to enact rent control laws. They've tried to even float the idea at the national level, if you heard about that in the last campaign. If an owner of a building wishes to, for example, add new amenities, city, and state legislation can stop him from doing so if his neighbors decide to declare his building a historic one. 

Federal environmental regulations can stop landowners, prevent them from doing anything to their property for fear that it might imperil an endangered species or change a coastline. Property owners are restricted from being able to modify or change their property if an archaeological commission suspects that there may be human remains of significant interest on their property. 

If you own a building and run a business within a building, a landlord who might hire a janitorial staff will not only be told to make sure that employment discrimination doesn't happen, but that wages are adequate according to local regulations as well as federal regulations, how much you can pay them, what kind of safety regulations are implicated all the way down to the level of what kind of cleaning supplies that janitorial staff can use. 

If a building owner decides to operate his business in a publicly traded corporation, no, choose those S Corps like we talked about yesterday, right? If you choose a publicly traded corporation, you have mandatory disclosures, you have all kinds of regulations overseeing how you run your business. You have to adhere to prescribed formulas that the federal government lays out for stipulating how your profits can be used to endorse political candidates.

If the building is big enough and has a courtyard or a public area large enough, you may actually be prevented from telling people that they can't occupy your property to promote their own political candidates, right? This is the degree to which property is cramped in, regulated, and literally in some cases taken.

If local law enforcement, this one really gets under my skin, if local law enforcement agents determine that your property has been suspected of having been involved in a crime, they can seize that property. And through a preponderance of evidence, rather than through beyond a reasonable doubt, they can hold that property and not have to give it back to you. 

Then you say, “Well, of course, this is so that agents stopping people, driving across the interstates can seize $10,000 in the trunk because it's suspected of being drug money.”  But it can also happen to people's houses. One couple found this out when their son was alleged to have sold $40 in marijuana. The house was seized as a crime scene. Vehicles are seized. Boats are seized. All kinds of personal property is subject to civil asset forfeiture as if piracy was happening all across the United States. 

Finally, when property owners die, whoa, the government really wants to get his hands on it then, believe me, you have limited rights as to how you transfer your property to your heirs. So private property is lying there on the ground dead from a thousand cuts.  

But I want to take you back. I've shown you the body. I want to introduce you to the person. Like any good lawyer, like my Perry Mason moment, I'm going to introduce you to the victim. I'm going to introduce you to what we used to have and what we still have to a large degree, although obviously under assault. 

Rewind back to the founding of the United States. The moment when that huddled group of colonists on the fringe of the Atlantic World decided that the British authorities had done too much. Over a decade, between the 1760s and the 1770s, American colonists started to feel the burden of regulation. They started to feel the burden of a taxation state that was created by the British Empire in order to pay off its war debts. During the war of what was sometimes called the French and Indian War, the Seven Years War, the British had accumulated enormous debts, partly in service of protecting the American frontier, and so they saw fit to tax the American colonists in ways that they had been unaccustomed to. 

And by taxing those American colonists at rates that we would all cut off our left arm - I mean, unless you're left-handed - cut off our left arm to pay rates that the American colonists were paying, they decided that they were going to revolt, that they were going to say no, and that they were going to found their own governments on different principles. What they had discovered in that decade was that they had very different understandings of what it meant to have a right. 

At the beginning of the 1760s, if you were an American colonist, and you wrote a pamphlet or you argued in court, as did James Otis on the “Rights of the British subjects of North America,” you asserted that we had the rights of Englishmen, the traditional rights that went back to the Magna Carta through the glorious revolution. That Englishmen, unlike all other subjects of Europe, were the monarchies laid down the law.  Englishmen had certain rights against government. But the British and the English imperial authorities started to suggest to the colonists that they were wrong about that. That they did have rights, but that those rights could be adjusted, taken, and given as needed by the imperial authorities.

The Americans decided, “No, no, no. These rights, they're not just because maybe we're Englishmen, maybe they're broader than that. Maybe there's something about people themselves that has this thing that we call individual rights - rights against government.”

And so they started to assert those rights. The right to representation, if you're being taxed, you have representation. The right to limited government. The rights to an authority that could say “no” to power. That there was this concept that became enshrined in the American revolution of liberty. The right to order one's affairs according to one's own judgment. And this right became paramount for the American founding generation.

And they attempted as best they could to embody that in the founding documents that guide the way that the United States was created, starting with the State Constitutions that were created in the wake of 1776 and the beginning of the war, just on the eve of the Declaration of Independence. 

John Adams stood up in the Continental Congress and realized fighting had been going on for almost a year. Troops were in the field. They had essentially stopped governing. British imperial authorities in many colonies had fled to military ships in the harbor. There was no constituted government. And John Adams wrote a pamphlet called “Thoughts on Government”, short little pamphlet where he explained it might be a good idea if we founded our own governments. 

We're kind of living in a state of quasi-anarchy here. There's literally war going on. We have this group of people who are meeting, this Continental Congress, so to speak, that is kind of deciding how we're going to fight this? But we need actual governments. And so he suggests a process whereby this is going to happen. And the states follow suit in the wake of the Declaration of Independence, and they found new governments. And they do this in a way that was unprecedented in history. 

Many people noted at the time, Hamilton, in the first of the Federalist Papers that were written a decade later in defense of the Constitution noted that this was the first time in human history that governments had been made by conscious, deliberate decision. 

Governments before that went back as the English called it “into the mists of history.”  Some conqueror came along, some group of people occupied a space. Governments came about through conquest, through power. The Americans, though, decided, they deliberated, they considered, and more than that, they articulated an idea that the government of the United States and of the subsequent states underneath it were not governments because of the accidents of geography, the accidents of demography. They were governments meant to embody a particular ideal, the ideal of the protection of individual rights. And they did so in an ingenious way that had not been conceptualized to that point. They did so by limiting government in an unprecedented way at four levels.

People had attempted to live in limit governments prior to this. We can go back to the ancient Greek confederations, the Roman state, dozens of different governments throughout history had attempted in some way or another to limit government to give freedom to the subjects. But the Americans did so in an absolutely transformative way.

The first and the easiest, and throughout history sometimes the most common way of limiting government, is simply to say that government processes have to be orderly, regular, and according to a written down process, right? You can't have arbitrary government, I mean, you can, it's called Dictatorship or Autocracy, right? You can have a government where just a strong man says, “This is the way it's going to be. Everyone follow my command. I'll change my mind tomorrow. Be that as it may.” 

But government to be limited first and foremost has to have a regularity. It has to be predictable. It has to have, what scholars like to call “The Rule of Law,” that it's knowable, predictable, written down. That's only one phase, though. They have that in the English colonies. 

The second phase, is that people participate in their own government. That government, as is famously said is “of the people, by the people, and for the people.” Lincoln later bringing that back up in the Civil War years to remind Americans of that. What this means, essentially, is that people participate in the rule and are ruled there in turn. 

In Adams’ pamphlet in 1776, one of the things that he said was most important about free governments was that the people make up the body of those who determine the laws, and that they themselves are subject to those laws frequently going back into the body of the people, not staying in - sorry, I can't say that today without laughing - not staying in the legislatures for many, many, many years, right? As seems to be the case today. So that's the second level, that there's a kind of popular participation.

The third level is that those same people determined that government should only be about certain things, that the power of government is limited. That it cannot govern everything that we do. It is not in that way, totalitarian, it does not encompass all things. It doesn't tell us what to believe, what to think, how to live - all those other areas have been left out. It's limited. 

But the fourth way that the Americans devised to limit government, and I think the most important way, was by acknowledging that there was not just human-created law, not just positive law given by legislatures, or law given by constitutions, but rather there was some natural or some higher law - a law that existed outside the bounds of government  that constrained what was right and what was wrong about the use of government power in regard to those it applied to. That it was in some cases always everywhere and for all time wrong for government to do a particular thing. That it was not subject to majority vote, that it was not subject to the whims of the rulers, the elites, the professionals, however you want to call them. Instead, there was an abiding moral truth that said that an individual has a right to be free to direct his own life or her own life according to his or her own judgment. And that's what's embodied in those documents. 

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