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Roth: ESG advocates are killing the American dream

Op-ed

Investors and lenders have no moral issue with helping corporations compete with you for a home

Luke Sharrett/Bloomberg via Getty Images

You may have heard about the WEF and other global elites pushing an investing concept called “ESG." ESG, which stands for environmental, social, and corporate governance and also is referred to in concept with terms like “stakeholder capitalism,” includes various non-financial criteria for investing. ESG is also based on some elites’ decisions around morality and “what is good for society” (that always ends well, doesn’t it?).

ESG has morphed to include an increasing number of corporations embracing these somewhat vague standards. This includes lenders and investors who allocate capital, which helps drive growth and innovation in the economy. Instead of investing based on traditional market dynamics (like supply and demand) and whether the company is well run (which, by default, takes into consideration whether a corporation is doing “good”), the elites and their investing and lending cronies are directing the economy in ways that they see fit.

This has had real cost and supply ramifications in terms of energy production and commodities, which are affecting your wallet in a real way today and are certain to do so in the future.

This morality and virtue-signaling also impact individuals in the allocation of capital to compete with you for home ownership, the physical embodiment of the American dream and one of several routes the average American can pursue to generate wealth.

While many financial institutions have strictly held back financing traditional energy, on the home ownership side, it is just the opposite. They are providing ample capital for well-funded, large corporations to come into residential housing markets to purchase homes in competition with individual homeowners. How exactly does that rank on the “social” aspect of the ESG scale?

In a recent "60 Minutes" piece on the subject, the CEO of one such company, Tricon Residential, a publicly traded Toronto-based company, said that his firm owns about 30,000 homes in the U.S. today and has turned them into rental properties. The piece also mentioned that “Invitation Homes owns more than 80,000 rental houses, American Homes 4 Rent close to 60,000.” It also discussed how some of the biggest names in finance have backed the purchasing of single-family homes to the tune of hundreds of millions of dollars.

Daryl Fairweather, the chief economist for RedFin, estimated that the undersupply in homes in the U.S. today was around 4 million houses and growing. A Realtor.com study puts that number at 5.24 million. This is impacting potential home buyers, including the very large cohort of Millennials who are now in the prime age range for home ownership, but finding they can’t afford one.

A chart on historical U.S. home building from Statista shows while there was overbuilding in residential homes during 2000-2009, the fallout from that and the Great Recession financial crisis led to historic underbuilding over the past decade, accounting in large part for that gap.

With such short supply, corporate buyers that are flush with capital and can waive a whole host of requirements, including inspections or viewing the home at all, and that can even make all-cash offers make formidable competitors to the average new home buyers.

This is putting home ownership outside the reach of millions and millions of Americans. As the Gary Berman, Tricon’s CEO said to "60 minutes," instead, “You can rent the American dream.”

That sounds an awful lot like the “you will own nothing and be happy,” part of the WEF playbook (without the happiness part, of course).

Which brings us back to where we started. If you are in the social good business, part of that isn’t stacking the deck against potential home buyers who want to own and live in their own home.

Financial institutions need to stop lecturing about social good and put their money where their mouths are. Let the market be what it is, but if you are going to take the moral high ground, perhaps begin by ceasing to interfere with the American dream.

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