Armstrong Economics Blog/France Re-Posted May 23, 2023 by Martin Armstrong

QUESTION: I am writing to you today to seek your expert advice on a much-discussed topic in France: the Lagleize Law. As you probably know, this law, if passed, could radically change the way property ownership is structured in France.

The Lagleize law proposes to separate the ownership of the building from the land on which it is built. This means that a buyer could become the owner of his home without owning the land on which the property is built. In exchange for occupying the land, the owner of the building would pay rent to a freehold land agency (FLO).

I am particularly interested in the potential impact of this law on the French property market. Do you think that the Lagleize law could lead to a decrease in property prices, as some suggest? Or do you think it could have other effects, such as creating new investment opportunities or solving some of the problems in the current property market?

In addition, I would also like to know your views on how this law compares with similar legislation in other countries. For example, the UK has a long tradition of “leasehold” where land and buildings are often held separately. Do you think that the Lagleize law could have similar effects to those observed in the UK or in other countries with similar legislation?

I would be very grateful if you could share your thoughts on these issues. Your expertise would be invaluable in informing my understanding of this law and its potential implications.
I thank you in advance for your time and look forward to reading your response.
Yours sincerely

ANSWER: Europe is a Marxist paradise. The left has dominated Europe and when you just look at our Real Estate Index for each country, there is just no comparison. Of course, the left will always interpret the way to stop inflation they cause is to always confiscate property.

The entire “Commune” project began in France. They convinced Marx that Communism is the answer to stop the business cycle. We can see how that devastated human society in Russia, Eastern Europe, and China. Nevertheless, this Lagleize Law is in line with this same thinking but they are trying to do it just for landownership. As Socrates has written: “Keep in mind that given the dramatic decline of 70% from the last high established during 2015, that if we continue to move in the same direction after one target, then the move will not subside until the next target in time is reached. We have elected 2 Bearish Reversals from the last high thus far to date.”

We have not elected any Yearly Bearish Reversals in US property. It is highly questionable that the government could even try that since the 5th Amendment states plainly in what is known as the Takings Clause:

“nor shall private property be taken for public use, without just compensation.”

Whenever we analyze the law, we MUST look at the historical reason for its creation. The genesis of the Takings Clause can be found in Section 38 of the Magna Charta, which declared that land would not be taken without some form of due process.  King John (1166–1216), who signed that document, almost immediately denounced this undertaking to his barons.  However, that promise eventually made its way into the coronation oaths taken by kings, and, in England, it became a protection against the confiscation of lands without some form of a hearing.

I had to study international law in order to even be in a position to advise clients on global investment. On this subject, I found Sir Edward Coke (1552-1634), who was the Lord Chief Justice of England, really defined the English Common Law. He wrote the “Petition of Right,” which established specific rights, of alleged ancient provenance, against the powers of the King to prevent tyranny.  He eventually compiled everything in the law and prepared a full-volume series called the “Institutes of the Laws of England,” which set out his views on the role of the common law in protecting ancient rights against royal power.

Sir William Blackstone (1723-1780) wrote a four-volume series entitled the “Commentaries on the Laws of England,” which was used as a foundation for legal education in England. However, the founding of the United States relied upon his Commentaries to establish the American foundation of law. I would refer to his Commentaries to seek an understanding of the intent behind the Constitutional provisions as do US Supreme Court Justices from time to time.

You must understand the basic differences in law between nations before you dare step foot into that jurisdiction. The #1 mistake is to assume your legal tradition will apply in a foreign jurisdiction. For example, under common law, a wife or clergy cannot testify against a defendant. However, children can be forced to testify against a parent. Under French Civil/Canon Law, no family member can be forced to testify against another even a brother-in-law. The Canon Law recognized the sanctity of the family unit whereas the English King did not.

There is no constitutional prohibition against confiscating all the land in France and handing it to the State. In Fact, during the 1789 French Revolution, they confiscated all the land of the Catholic Church. On November 2nd, 1789, in the midst of the early enthusiasm for the Revolution and to solve the fiscal crisis of the Monarchy, the French Constituent Assembly passed a law to confiscate all Church property and to redistribute it by auction. The Assignat notes of the French Revolution were issued from 1790 – 1796.  To buy the land, you had to exchange coins for these notes.

So as you can see, history repeats. They confiscated land before, so the same idea resurfaces once again.