The Texas legislature is considering a bill that would ban Chinese, Iranian, North Korean, and Russian individuals and entities from owning land in the state. Republicans supporting this bill seem unaware that it would undermine our American free-enterprise system rather than protect us from those authoritarian regimes.
Senate Bill 147, introduced by Rep. state Sen. Lois Kolkhorst, would target not only government entities, but also private companies and citizens from those countries. Gov. Greg Abbott has promised to sign the legislation.
Sen. Kolkhorst claims that the past several years have seen more Texans alarmed by the increased acquisition of land by primarily Chinese interests, and that the, growing ownership of Texas land by some foreign entities is highly disturbing and raises red flags for many Texans. Unfortunately, among Texas Republicans, she appears correct.
A recent poll by the Defend Texas Liberty PAC found that 82% of registered Republicans surveyed agreed that Texas should prohibit the Chinese government or Chinese citizens from purchasing land in Texas, while only 10% disagreed. Its unfortunate that so many Texas Republicans, who often identify as conservatives and supporters of free enterprise, dont understand that this bill would undermine our economic freedoms.
Private property rights are the bedrock of any capitalist economy, and these rights include the freedom to choose to whom and on what terms owners sell their land. Sen. Kolkhorst claims that passing this law delivers some basic safeguards to ensure Texans remain in control of Texas land. But it would do no such thing. Instead, a government prohibition would take away from Texas property owners the option of selling their land to people from these countries. Replacing private decision-making, which responds to market forces, with government orders is what the authoritarian regimes in China, North Korea, Russia, and Iran do. Its not something freedom-loving Texans should embrace.
The bill of course would interfere with Texans freedom to engage in international trade, which improves our living standards.
No need to worry about our so-called trade deficit with China. International trade accounting puts items traded into either the capital account, which consists of assets, or the current account, which consists of goods and services, but a trade deficit counts only the flow of goods and services between countries. Yet international trade always balances in the sense that a good, a service, or an asset is traded by both sides of any exchange. People who worry about the trade deficit dont understand that assets arent counted when calculating trade deficits and surpluses, making the picture incomplete.
The U.S. trade deficit with China, which stood at $20.4 billion in late 2022, means that, on net, Americans imported $20.4 billion more in goods and services from China than the Chinese bought from the Americans, and that simultaneously Americans sold $20.4 billion of assets, which includes land, to the Chinese, on net, to finance those imports.
This Senate bill could even undermine our foreign-policy interests. Economists have long provided empirical evidence showing that greater international trade promotes peace between countries by increasing the cost of war. Other studies have shown that when more-economically free countries, like the United States, trade with less-economically free countries, like those targeted by this bill, economic freedom tends to be promoted in the less-free countries.
The Chinese, Russian, North Korean, and Iranian governments are valid national security concerns. But those concerns are best dealt with by targeting specific security threats from those governments. This bill needlessly includes innocent foreign citizens and companies and regulates Texas land sales that would have no security implications. In the process it makes Texas a little more like those authoritarian states and a little less of a beacon of freedom for less free countries to emulate.