A clarification for non-US residents. The anti-trust-laws (like Sherman act of 1890)* do not forbid the founding of a trust or its management by trustees for normal purposes of the institution. They forbid large combines to form gaining an oligopoly or a shared monopoly, "be it by trust or any other means."
Now, background:
Pool said that companies like Blackrock will acquire assets by offering “insane sums of money,” i.e., paying well over the market price. Eventually, the large company or a few of the largest companies “own everything” and the common folk “own nothing.” Pool asks Murphy if he would support anti-trust laws to address such a situation.
Credits to Tom Mullen for the résumé. Btw, as we are with crediting him, here is the link to him:
No, Anti-Trust Laws Are Not the Answer to Blackrock Buying Up Residential Homes
Tuesday, October 12, 2021 | Tom Mullen
https://fee.org/articles/no-anti-trust-laws-are-not-the-answer-to-blackrock-buying-up-residential-homes/
A little note of interest to me:
This article was originally published at tommullen.net.
I take it tommullen.net is the personal blog of Tom Mullen, or perhaps one of his personal blogs. This means, republishing from a personal blog is quite possible, FEE Stories are doing it.
Now, the point is, Tom Mullen objects to Murphy's answer.
With an honest monetary system, it would not be profitable for any firm, no matter how big, to buy houses at prices well above their market value. Doing so would make the firm poorer over time and those it bought the house from richer – precisely the opposite result of the big firm “owning everything” and the common folk “owning nothing.”
Actually not, since if you acquire, be it only locally, a quasi-monopoly on - in this case residential homes - you have succeeded to take the asset off the free market and onto your private one. You pay an insane sum of money, but you get it back over time, either by asking insane sums for renting your residential homes, or simply by continuing and continuing to be landlords till the excess paid to seller is regained.
Now, it is true, if Blackrock did so with only one house at a time, and the seller of the house in the example were still on the same market, Tom Mullen's objection would hold. But in reality three things skew this result:
- Say next time a house is on sale, in the same area, the seller still has more left of what Blackrock paid him, than the normal market price of that - smaller - house. If Blackrock depended only on its gains from the house and had not charged excessive rent and chased away residents, the seller would have an advantage over Blackrock and these would not be able to compete with him. In reality, Blackrock can get a bankloan and has lots more to offer for the next house as well. Hence "sellers" (like the one in the example) become more and more mere consumers, and no longer investers.
- Usually, the seller of a house for 200 000 $ is anyway already a mere consumer, and only one of the sellers.
- And when he needs to buy or rent next time, he may be giving back monetary assets to ... Blackrock.
Other argument:
Conversely, honest money appreciates over time. It is the natural tendency for prices to fall as society produces more output with the same or less inputs. That’s why prices fell over the course of the 19th century under various iterations of the gold standard. It is only monetary inflation that causes prices to rise even as society becomes more productive.
Two points:
- Blackrock started in 1988, an earlier player of same type, namely J.P. Morgan & Company started in 1895 (five years left of 19th C), and it dealt with Railroads, Treasury gold, Steel, not with buying up as small businesses as real estate. What is said of 19th C. by Mullen, depends on such actors mainly being absent.
- If and when less input is needed to produce same or more output, this also goes for less input of human labour, meaning more and more people are made superfluous for the production of essentials, and are not guaranteed to be employed in the production of inessentials. This type of growth promotes unemployment.
And finally:
Even more important, supporting the use of anti-trust laws against dominant corporations is a strategic blunder for anyone who believes in private property and free markets. Yes, they might be used to temporarily hinder large corporations whose behavior we don’t like. But getting the remnant who support freedom on board with this state intervention will forever set the precedent that even the most ardent supporters of laissez-faire recognize the need for intervention under some circumstances. ... Don’t give the central planners that win.
Two points again:
- I have no doubt that if there came around a "guild of assassins" as in Ankh-Morpork or some of the cities that Conan the Barbarian scoured, Tom Mullen too would cry out for "intervention under this circumstance;"
- and, it Anti-Trust laws are not interventions by central administrations, they are laws, passed in order to be used by courts, not by planners. Forbidding things like Blackrock investing in more and more real estate with less and less for others doesn't allow the state to actually itself plan real estate - it stops Blackrock from doing so.
Hans Georg Lundahl
Paris
St. Edward, Confessor
13.X.2021
PS. I was tired. When I wrote "three things skew this result," I planned to state that 230 000 for 200 000, while a "mad bargain" for a private and individual buyer, is peanuts for some actors, like Blackrock. They are only adding 15 %. And part of the regaining is, that kind of bargain helps to drive up the "market price" to, precisely, 230 000 $./HGL
* Original scope according to wikipedia:
- Section 1:
- Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.[11]
- Section 2:
- Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony [. . . ]
https://en.wikipedia.org/wiki/Sherman_Antitrust_Act_of_1890
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