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“There’s nothing in the middle of the road
but a yellow stripe and roadkill.”
– variation of a Texas maxim.
Seeking bipartisanship can be dangerous, as the dark humor noted above reminds readers. But let’s risk finding common ground for the next few minutes.
Affordable homes ought to be a non-partisan or bi-partisan issue. The topic of this column, properly understood, is likewise a non-partisan challenge that at least on paper enjoys bi-partisan support.
Unfortunately, words on a page are not always what they seem to be.
Washington, D.C. has untold numbers of dirty little secrets. Among them is this. People often say great things, but may or may not act upon what they say. Legislators – for example – are prone to submitting a bill, or calling for an investigation, that they know when they announce it will lead nowhere. That’s called posturing, play-acting, and other phrases that aren’t nearly as polite.
Its words followed by inaction that turns millions of potential voters off. By contrast, show the voters examples of how words and deeds line up, and good things occur.
As the article linked here explains, using existing laws could lift millions into greater personal wealth. It could create some $2 trillion dollars more GDP annually, without more federal spending, per the applied logic of economic experts. That’s accomplished if existing laws were applied to allow greater #housingchoice. #Yimby not #Nimby.
Both Democratic and Republican leaders at HUD have praised modern manufactured homes. Arguably, one of the problems that is keeping manufactured homes in check are monopolistic forces.
The points made by both then Secretary Castro and current Secretary Carson are relevant to the facts that the prior administrator for the HUD Code manufactured housing program stated in the video below. These videos can be viewed now or later, for context, but the thrust of today’s topic is what follows further below.
Let’s dive into examples, and see what we discover as a surprising points of agreement that could open up housing markets to more affordable, quality homes.
Possible Across the Left-Right Divide?
We’ve made no secret that there are statements and positions made by Senator Elizabeth Warren (MA-D) that editorially – for pragmatic reasons – we disagree with. But by contrast, today, we will feature a speech by Senator Warren that make numerous strong and valid points that we agree with and applaud her on numerous levels.
There are no two humans that agree on everything. The publishers of MHLivingNews are political independents. We agree – for example – with several practical steps taken by President of the United States (POTUS) Donald J. Trump on economic reforms taken have boosted wage growth, and are bringing investments and jobs back to the U.S. economy that were once thought lost.
But that doesn’t mean that we must understand or agree with the strategy behind every tweet from POTUS. In all things, and with all people, one should separate the wheat from the chaff. That said, we applaud many positive results that have been achieved in the president’s first two years in office.
With leaders from across the spectrum, accept the good, deftly toss aside or avoid the problematic.
Do President Trump and Senator Elizabeth Warren Agree on this Hot-Button Issue?
Go beyond the political rhetoric.
Today, we will look – through the lens of affordable manufactured homes – at an issue that on paper the 45th president, his candidate for U.S. Attorney General, William Barr, and Senator Elizabeth Warren seemingly agree upon.
Is this that risky but potentially rewarding yellow stripe down the middle of the road? You can’t pass a slow moving vehicle on a two lane highway without crossing the center line.
Together, let’s ponder an issue that other Democrats, Republicans and independents are embracing. The topic? The harmful and corrosive impact of monopolies, which were long known by the term ‘trusts.’ So laws against monopolies are known as ‘antitrust’ laws.
Let’s begin with some comments during Senate testimony by Barr, who will come up for a confirmation vote in the U.S. Senate in a matter of days.
Per CNBC, William Barr, J.D., told U.S. Senators in his confirmation hearing for attorney general that regulators need to take a deeper look at the “huge behemoths” in tech.
“The purpose of the antitrust laws, obviously, is to protect competition,” said Barr, who previously served as attorney general in the administration of President George H.W. Bush. That comment was in response to a question from Sen. Mike Lee (R-UT). Barr explained that competition is ultimately good for consumers, but he candidly said that he needs to study the topic more.
“At the same time, I’m sort of interested in stepping back and reassessing, or learning more about how the antitrust division has been functioning and what their priorities are,” Barr told senators in his testimony. “I don’t think big is necessarily bad, but I think a lot of people wonder how such huge behemoths that now exist in Silicon Valley have taken shape under the nose of the antitrust enforcers. You can win that place in the marketplace without violating the antitrust laws, but I want to find out more about that dynamic.”
While antitrust – meaning anti-monopolistic practices – is a hot topic in the tech sector, it is also a serious issue in manufactured housing. The reasons for that include, but are not limited to, those found in a report linked here.
That article spotlights what some attorneys have told MHLivingNews appears to be a prima-facia case of market-rigging practices. Those practices may thus violate antitrust and/or other laws.
Is there evidence for that?
A state attorney general’s (AG) office, in recently reviewing the information linked below, has apparently referred the matter on to the Consumer Financial Protection Bureau (CFPB). The CFPB in turn confirmed in writing for MHLivingNews that they’ve opened an investigation of the claim. They have also asked Berkshire Hathaway owned 21st Mortgage to respond to the concerns that have been raised.
That doesn’t prove guilt, but it suggests that the state AG in question felt the evidence merited a closer look.
President Trump and his campaign manager Brad Parscale have both spoken out specifically about their concerns with monopolistic practices. Like Barr, they’ve been more focused on antitrust in tech. They have not yet mentioned a specific concern about monopolistic behavior in manufactured housing.
That said, MHLivingNews is aware of multiple federal investigations – as well as research by private attorneys – into manufactured home industry related concerns. Some are mentioned in the mainstream news video, that included an interview of an ex-Clayton employee, and cites federal investigations against a firm that holds about half of manufactured housing production.
With those allegations and others in mind, let’s see what Department of Justice (DoJ) nominee Barr said.
Senator Hawley asked AG nominee Barr if he sees “similar concerns” to those the Justice Department raised against the Time Warner/AT&T merger “regarding how Silicon Valley firms could use their market power and social media or search to discriminate against rival products or services and viewpoints.” Noting his response “has no application” to the merger case involving AT&T and Time Warner, Barr answered, “yes.”
Keep in mind that the principles from tech could potentially be applied to what is occurring in manufactured housing.
Once more let’s stress that while we find several points of agreement with the following organization, there would be others we’d find problematic. So, this column should not be construed as a blanket endorsement. That said, what’s cited are points we’d agree with, and come from their website, “The Open Markets Institute uses journalism to promote greater awareness of the political and economic dangers of monopolization…”
Consider this cogent point from the same source: “Big business and wealthy donors fund lobbyists and think tanks, corrupt academic science with “sponsored” research, and underwrite popular media publications and news networks. Through all these mechanisms, moneyed interests can control the flow of information in public debates and determine which issues become part of the nation’s political agenda, and which remain on the fringe,” said the Open Markets Institute (OMI).
That OMI article says that America previously “…fought political corruption and preserved democracy by breaking up monopolies and setting market rules in ways that prevented the build-up of concentrated economic power. As Supreme Court Justice Louis Brandeis explained a century ago, at the height of the power of railroad, steel, and banking barons like J.P. Morgan, “We may have democracy, or we may have wealth concentrated in the hands of a few … but we can’t have both.””
Those are accurate and valid points.
President Woodrow Wilson had serious errors in judgment, one of them is his purportedly racist tendencies. So again, we stress using a wheat and chaff approach.
OMI noted that during Wilson’s administration there was a “…period of intensifying corporate power, Americans across the ideological spectrum responded by passing measures such as the Sherman Antitrust Act, which criminalized monopoly and was ultimately used to break up Standard Oil. In 1914, with passage of the Clayton Act, Congress and the Wilson Administration created the Federal Trade Commission and charged it with preventing even “incipient” monopolies, businesses which were just beginning to monopolize a market.”
“Where economies of scale favored large-scale organizations, as in railroads and electrical utilities, Americans deployed institutions like the Interstate Commerce Commission and myriad state utility commissions to prevent price discrimination and other abuses. And, they passed laws like the anti-chain store laws of the 1920s and ‘30s, which supported small, independent retailers. Similarly, they limited big businesses’ abuse of patent law, which fostered innovation and entrepreneurship,” said OMI in their article, “Democracy and Monopoly.”
“This anti-monopoly system had a profound effect on the American economy and, crucially, on American democracy. Though the record is often forgotten or distorted, most sectors of the economy became less concentrated and more competitive from the 1930s through the 1980s, while per capita levels of new business formation and independent business ownership were much higher than today. This meant there were more employers competing for the labor of each worker, which in turn boosted wages…” per OMI.
For those who fear the outcome of antitrust activity, when AT&T was broken up during the Reagan Administration, several good things happened in their wake. Competition for phone services flourished, cellular took off. For years, the benefits were noteworthy.
MHLivingNews would stress the point that the rigging of housing markets, through zoning and other artificial barriers, makes the U.S. – the richest nation on earth – only about 41st in global home ownership rates, per Wikipedia. In a very real sense, there are monopolistic-style forces at work, often at the local, state, but also at the national level that allows that avoidable tragedy to occur. We say tragedy, because millions are trapped in rentals and often in outdated housing that could in theory own a manufactured home for less than they pay monthly in rent. More competition, more #HousingChoice would result over time in lower rental rates.
If less was spent to own than on rent, the extra cash in American’s pockets could spur the economy through other spending, savings, or investments.
By applying existing laws, manufactured homes could over time save billions a year for taxpayer subsidized housing, while simultaneously creating a ladder of wealth-building for those who currently rent.
FEAR, a Solution to the Affordable Housing Crisis, and the Manufactured Home Dilemma
So, the proper understanding of the issue of Open Markets – taking a stronger anti-trust, anti-monopolistic public policy stance – could transform housing in American in ways that would benefit almost everyone, save, perhaps the monopolists and their allies.
With that backdrop, let’s turn now to what Senator Warren said in her 2016 speech about monopolies and what are called “#OpenMarkets.” Because if you took away the party labels, this is an issue that numbers of Democrats, Republicans and independents who study the matter could find – at least on paper – surprising agreement on.
Here are key points from the text of her speech as prepared for delivery, on the topic of open markets.
Senator Elizabeth Warren
“Reigniting Competition in the American Economy”
Keynote Remarks at New America’s Open Markets Program Event
June 29, 2016
Warren said, “before I was a Senator, I was a law professor. What he didn’t say is that I taught contracts, secured transactions, and bankruptcy – all courses related to the functioning of competitive markets. I love markets! Strong, healthy markets are the key to a strong, healthy America.”
“But today, in America, competition is dying. Consolidation and concentration are on the rise in sector after sector. Concentration threatens our markets, threatens our economy, and threatens our democracy,” she said. That’s an apt point that arguably applies to what Berkshire Hathaway owned Clayton Homes, and their affiliated lenders have done to the affordable manufactured home marketplace.
A planned, upcoming report on MHLivingNews will reflect how the allegations against Clayton, 21st Mortgage Corporation, and Vanderbilt Mortgage and Finance (VMF) are by no means just historic events, now over and done. Rather, they are purportedly part of a pattern that is ongoing.
The video posted above from a Knoxville, TN based news outlet – Clayton’s hometown metro. They reveal just some of the ongoing concerns.
Returning to Senator Warren’s talk, “The concentration problem—and particularly the idea of “too big to fail” in the financial sector—gets a lot of attention. But the problem isn’t unique to the financial sector. It’s hiding in plain sight all across the American economy.”
The newly announced Democratic presidential hopeful said in her 2016 address that, “—markets need competition now…” noting that “The first problem is that less competition means less consumer choice.12”
“The second reason the decline in competition should cause concern is that big guys can lock out smaller guys and newer guys,” said Warren.
Using an example ironically similar to points President Donald J. Trump has made, Warren said that “Google, Apple, and Amazon provide platforms that lots of other companies depend on for survival. But Google, Apple, and Amazon also, in many cases, compete with those same small companies, so that the platform can become a tool to snuff out competition.”
“The third problem created by less competition is that when competition declines, small businesses can be wiped out – and our whole economy can suffer,” this is a point that is demonstrably taking place in the manufactured housing marketplace. Again, see the report linked here for specifics.
“The fourth problem,” said Warren in 2016 “is that concentrated markets create concentrated political power. The larger and more economically powerful these companies get, the more resources they can bring to bear on lobbying government to change the rules to benefit exactly the companies that are doing the lobbying. Over time, this means a closed, self-perpetuating, rigged system – a playing field that lavishes favors on the big guys, hammers the small guys, and fuels even more concentration.”
Notice that even the phrase that Warren used – “rigged system” is the same that President Trump, or Senator Bernie Sanders (VT-I but caucuses with Democrats) used to describe the corruption in the political and economic systems in America.
“Finally,” said Warren, “concentration has contributed to the decline of what was once a strong, robust middle class in this country. As corporations get bigger, and bigger, and bigger, a handful of managers get richer, and richer, and richer. And god-bless—in America, we celebrate success. But what about everybody else? What about small business owners and community bankers – people who used to be able to hold their own with big guys but now find it harder and harder to keep up with the armies of corporate lawyers and lobbyists determined to rig the economy against them?”
“And who gets a shot at their own dream? When big business can shut out competition, entrepreneurs and small businesses are denied their shot at building something new and exciting,” she said.
“Left unchecked, concentration will destroy innovation. Left unchecked, concentration will destroy more small companies and start-ups. Left unchecked, concentration will suck the last vestiges of economic security out of the middle class. Left unchecked, concentration will pervert our democracy into one more rigged game,” the Massachusetts senator noted, adding “But the good news is that this isn’t the first time America has faced this threat. We have been here before, and we know the way out.”
The “Trust Busters”
Warren named the trust-busters – those who opposed monopolistic power – as – “…reformers like Teddy Roosevelt, William Howard Taft, and Woodrow Wilson were trust-busters, people who fought the power that monopolies wield in the economy and in politics.”
Note those names span the GOP and Democratic parties. The first two were Republicans, the third was a Democrat. Again, just as affordable housing is non-partisan, so too should antitrust activity be non-partisan or bipartisan.
Left, right, and center could all agree with Warren and others across the spectrum when she said, “The original purpose of these laws [antitrust laws] was to fight concentrated economic and political power.”
Blindfold them, erase the party labels, and one could imagine Democratic leaders, President Trump, GOP members, and numbers of independents agreeing on this point made by Warren too: “A generation later, Supreme Court Justice Louis Brandeis worried that the “concentration of economic power” was so great that “private corporations are sometimes able to dominate the state.”30 The corporate system was becoming akin to the “feudal system,” that would mean “the rule of a plutocracy.”31 Brandeis declared that without vigilance, our government would be controlled by the very rich and the very powerful.”
Warren next argues how the solution to these modern problems should begin. “We can start with a President and an Executive Branch willing to once again enforce our laws in the way Congress originally intended them to be enforced. We have the tools—right now—to reinvigorate antitrust law…”
She notes as a law professor that “First: Hold the line on anticompetitive mergers.35 The DOJ and FTC are at the front lines of the battle over mergers. These two agencies already have the authority to stop harmful mergers in their tracks. Too often, though, they don’t use that authority.”
The one-time Harvard law professor also said, “Number Two: Closely scrutinize vertical mergers. Vertical monopolies exist when one company owns multiple parts of its supply chain – manufacturing, production, distribution, and sales. Again, size creates an advantage. When there’s no competition anywhere in the chain, other businesses are locked out and die. The DOJ and FTC should approach vertical mergers with the same skepticism as horizontal mergers.”
These salient point very much apply to what Berkshire Hathaway has purportedly done in the manufactured housing marketplace. The Berkshire brands own not only factory-production centers, but also retail, finance, suppliers, and more.
The Berkshire brands wield enormous influence over the Manufactured Housing Institute (MHI), which we at times editorially and satirically have at times referred to as the Monopolistic Housing Institute. Clayton and their lenders repeatedly get their way at MHI. So too with dozens of state manufactured housing associations. Let’s hastily note that several of our sources are members of those groups, but they do so quietly, behind the scenes. Why? Because Berkshire brands have arguably tried to silence open questions or other forms of opposition to their agenda within the industry.
That’s how powerful they’ve arguably become.
Which brings to mind what OMI said, cited above: “Big business and wealthy donors fund lobbyists and think tanks, corrupt academic science with “sponsored” research, and underwrite popular media publications and news networks. Through all these mechanisms, moneyed interests can control the flow of information in public debates and determine which issues become part of the nation’s political agenda, and which remain on the fringe.” Thousands of manufactured housing professionals would sadly be able to relate to those words.
Warren’s next point was, “Number Three: Require ALL agencies to promote market competition and appoint agency heads who will do so. Too often, the DOJ and FTC are viewed as the only agencies responsible for promoting competition. Promoting competition should be taken seriously across the Executive Branch.”
Note that when Warren said the following, Barack Obama was still president. The problems and lack of proper enforcement spans Democratic and Republican administrations, since the 1980s, as Warren said.
She wrote, “In April [2016], the White House issued an Executive Order requiring all government agencies to identify ways that they can play a role in increasing competition. That is exactly the right place to start.44”
“As a people, we understood that concentrated power anywhere was a threat to liberty everywhere. It was one of the basic founding principles of our nation. And it threatens us now,” Warren stated.
“Competition in America is essential to liberty in America, but the markets that have given us so much will become corrupt and die if we do not keep the spirit of competition strong. America is a country where everyone should have a fighting chance to succeed—and that happens only when we demand it. Thank you.” The full text of her speech is linked here.
Summing Up, Next Steps
So let’s note anew in summary that this problem of monopolistic power spans decades. and has occurred during Democratic and Republican administrations. While it is useful to learn from the past, the point now is — what’s next?
- With voices across the left-right divide saying similar things, why not act swiftly on behalf of tens of millions of Americans?
- Why not do so now, starting in the field of affordable manufactured housing?
- Why not work to solve the affordable housing crisis in a proven way that would raise the boats of tens of millions of Americans?
We saved this speech of Senator Warren’s and presented it to our professional readers on MHProNews some time back precisely because it is non-partisan in nature.
Warren didn’t call in her address for new legislation that may never happen. This was a case where her call was pragmatic. It focused on an application of existing laws. That means that action could be swift.
The Trump Administration has drafted an executive order regarding some antitrust concerns. What is not yet known is who in the left-right divide in Washington will step up and actually bring the various action-steps needed that will result in meaningful changes?
Warren Buffett today is the third richest man on the planet. Taking on Berkshire Hathaway in antitrust would take political will.
Would Democratic hopefuls have the courage to do so? Would Senator Warren or other Democrats have the courage to call for sworn, under-oath Congressional testimony by Warren Buffett, Kevin Clayton, Tim Williams at 21st Mortgage Corp, some at MHI, and others that could make antitrust efforts by the Trump Administration easier and more fruitful?
Why not send the link of this article to your Congressional representative and senators. Start at this link here. Ask them, “Where do you stand on these antitrust and pro-affordable housing issues?”
Then, send their written replies to us at this link below.
We’ll monitor and hold them accountable.
The time to press these issues is now. MHLivingNews will update some reports in the days ahead on more recent moves by Berkshire Hathaway owned brands that are arguably stifling competition in the vary ways that Senator Elizbeth Warren’s quotes above described. Check back for more on that in the days ahead. “We Provide, You Decide.” © ## (News, affordable homes, lifestyle, analysis, and commentary.)
(See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them. Third-party images and content are provided under fair use guidelines.)
By L.A. “Tony” Kovach – for MHProNews.com.
Tony is the multiple award-winning managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.
http://www.linkedin.com/in/latonykovach
Related References:
The text/image boxes below are linked to other reports, which an be accessed by clicking on them.
Former Manufactured Housing Institute President, Manufactured Home Owners, Urban Institute, and You
