US Private Property Rights Eroding

In the late 1930s, my wife Marlene’s parents bought a 2 acre lot on Highway 21 in Mehlville, an exurb in South St. Louis County.  They built a home on one end of the property and a small strip-mall on the other end. It had a barber shop, shoe repair, farm implement sharpening and gasoline station. My father-in-law was the barber in the daytime and did the shoe repair and implement work at night. He hired two neighbor boys to pump gas. My mother-in-law filled in as needed. He walked to work every day  The property bordered a wheat field.

Zoning in the US in the exurbs in the 1930s allowed property owners to have agricultural, housing and light commercial retail on their property.  It was also common for retail owners to live over their stores on commercial streets in cities within St. Louis County. Across the US, family businesses like restaurants were operated by family members who owned the property and lived on the property. They were able to deliver “value”, because these businesses didn’t have to pay rent and once the mortgages were paid off, they had lower operating costs.

The cost of commercial property today is inflated and the space rental costs retail businesses pay is too high for many of them to operate.  Consequently, we see fewer high quality retail and restaurants being operated by families. Franchise chains dominate the marketplace, but drops in demand result in store closures. Business owners are plagued with high city taxes, fees, inspections and regulations.

The family business organism has been infected with cash-grabbing parasites that include city governments, county governments, commercial property landlords, property developers, bankers, insurance companies, and regulatory compliance services.

The stealthy tightening of zoning rules concocted by big business is at the heart of the decline of family businesses.  If you want to eliminate the competition, you just make rules to make it too expensive and squeeze them out.  The start-up cost for a small retail business is around $200,000, unless you own the land and are allowed to use it.

When I opened my private consulting practice in 1993, I put my office in the basement to avoid unnecessary office rental costs. I was able to work day and night and deducted the use of my basement from my taxes. My start-up cost was $5000 for a PC, printer and office equipment. I held out another $10,000 as a cash-flow hedge, but didn’t end up needing it. I did most of my work in my office and drove to customer sites for meetings and applicant interviews.

The same “squeeze out” is being used to decrease home ownership and increase apartment rentals.  It’s the same crowd is at work trying to make home ownership tough for families with lower incomes and sloppy spending habits.

Norb Leahy, Dunwoody GA Tea Party Leader