Wednesday, 28 December 2016

Defining Property Rights.

Property rights are the foundation upon which we build a peaceful and prosperous society. They are thus human rights (perhaps the only ones).

Given their importance, it's somewhat surprising how little most people, especially economists, think about how they are defined and whether they are correct as they currently stand. After all, efficient resource allocation is entirely dependent upon incentives.

When I ask people how they can tell if something rightfully belongs to them, these are the answers they most often give.

1. I paid for it.
2. Legal title.
3. I discovered it.
4. I used it first.

None of the above confers moral ownership of something because, for example-

1. We can pay for stolen goods.
2. We can pay for stolen goods that society deems acceptable. Like slaves once were.
3. I can discover something of value on your property. Like a gold watch in your attic you never knew you had.
4. I can intercept something in the post you bought from Amazon and use it first.

Therefore none of 1-4 provides an ethical basis for assigning property rights. I believe the only way by which a property right can be claimed is the creation of a good or service and its provenance.

Which means the following are an infringement of property rights.

1. Taxation of factors produced by human effort.
2. Uncompensated exclusion from scarce natural resources.
3. Exclusion from the ability to use any idea.

I would therefore postulate that if property rights are fundamental, then the fact that every Country in the World is guilty of doing a,b and c, then this is the root cause of much, if not all, social and economic dysfunction.

7 comments:

ThomasBHall said...

We all know the property rights people are referring to when they talk about the foundation of civilization are absolute rights in ownership of land... ;)

Mark Wadsworth said...

Agreed. Which is why the Homeys have twisted our language and use the word "property" exclusively for "land and buildings".

Lola said...

I tried to explain this to the FCA following their 'bright idea' called the RDR. Essentially the RDR was an assault on the property rights of law abiding wealth creating citizens. It was also an assault on the sanctity of private contract - which are essential to 'property rights'.

Dinero said...

the contra points have an internal self contadiction. point 3 that in the context is a self contadiction.

DBC Reed said...

I would have thought that if you had made something, this would be your property. Some peoples go so far as to say if you had made something but did n't use it, you have lost your rights in it.

Ben Jamin' said...

@ Din

Not seeing any contradiction. Maybe something lost in the translation?

@ DBC

How would they know if you've been using it? Would they need a "Not Using It" Police Force?

Using or not using something is as equally silly as a justification for property rights. Although this is what plenty of Americans do regarding their foundation myth.

DBC Reed said...

@BJ
During the Captain Cook era the islanders noticed that the visitors in the big ships were leaving long boats lying around and presumed, since they were not in use , they could be appropriated. Much trouble ensued with the Europeans enforcing their idea of what "the law" should be in these cases.
Similarly Native Americans were quick to sell vast stretches of land
because it was literally money for nothing as far as they were concerned.
I would have thought the same primitive logic applies to the land market: if somebody has spent time and money rendering swamp land habitable of cultivable, you would have to compensate the improver for the improvements- but nothing else.