Jack Ryan is the interviewee in this week’s “The Weekend Interview” for the Wall Street Journal. Hopefully you all will get to it, plus buy several copies of the new book mentioned in the interview, Bringing Adam Smith Into the American Home: A Case Against Home Ownership.
Jack and I co-authored it, and as I see it, Jack is really and truly a hero. You may remember him, as he most famously ran for U.S. Senate against Barack Obama in 2004.
After politics, Jack plowed tens of millions of his own money into REX Realty, a national real estate company that would offer 2% commissions on purchases/sales of houses, rather than the usual 6%. Yet another person trying to break the National Association of Realtors (NAR) cartel and its 6% commissions, the only price in all of capitalism to never come down over decades and decades.
Most expected Jack to lose, but as the recent headlines indicate, he may be the one who finally succeeds where everyone else has failed. Just two weeks ago, the lead editorial in the Washington Post was about the NAR and its calcified commission structure. Most of the other major newspapers (regardless of ideological slant) have published commentary that similarly questions the traditional 6 percent. Absent Jack, I think it’s safe to say this wouldn’t be happening.
A major, but unsung theme of The Wealth of Nations is the mobility of human capital. As the passages by Smith within our book make clear, Smith disdained homeownership. He saw it as consumption as opposed to investment, and worse, he made the point that ownership renders us citizens of plots of land, while stock and bond ownership make us citizens of the world.
Housing restrains Americans who, in the words of de Tocqueville, have historically been “restless amid abundance.” We argue that freedom for Americans to move as they wish through the 50 states is the biggest U.S. prosperity story, only for housing to restrain the mobility.
We address commissions in the book, and make a case that they harm homeowners and realtors alike. The commissions exist as a huge tax on mobility, but they also arguably restrain realtor earnings for them greatly reducing the volume of annual home sales.
It’s a book I’ve long wanted to write. Hopefully readers will consider it. The interview can be found here.
