Getting Property Right(s)
A commonly understood concept in economics is the idea of the tragedy of the commons. Without sufficient property rights, people will be encouraged to overuse the resources around them, for fear that others will do the same. Less commonly understood is the tragedy of the anticommons, a situation where resources have multiple owners, and no one is able to use it without unanimous consent, leading to resource underuse.
Both problems have roots in ineffective rules regarding private property. The former is a result of insufficient property rights. The latter is an issue of poorly structured property rights.
In any society, people have their own ideas about what they find important, and what ends they wish to pursue. If it isn’t clear who owns what, it becomes very challenging to coordinate action. For example, Jeremy cannot use the axe to build houses that Isaac is currently using to harvest lumber. Property rights are a helpful mechanism, chiefly, because of their power to help coordinate action.
However, property rights are also nuanced. It wouldn’t be tenable for one person to own all the drinking water, with the ability to exclude everyone else. Similarly, failing to let people own the goods and services they acquire makes trade impossible. Why would one create when they can just take? When thinking about a property rights regime, it is important to determine the degree and scope of property rights.
First, property rights may need to have a point at which they can be overruled. For instance, large developments may be susceptible to the holdout problem, which can reduce social coordination. This type of activity and use of property decreases total welfare. Other times, property protections may lead to property rights protecting against competition and innovation, reducing overall productivity. Importantly, externality ordinances do not protect against property devaluation from competition.
More importantly, property rights that are too weak lead to large decreases in production, well-being, and economic activity. If one is not able to expect to claim the fruits of their labor, there is little reason to work. Oftentimes those aiming to seize property, such as through eminent domain, tend to use it as a tool to extract rents from those weaker than themselves. Finally, weak property rights result in weak credit systems, discouraging innovation.
Another aspect of property rights is their scope. Many would agree that certain volumes of music blasted from a neighbor’s loudspeaker during the wee hours of the morning prevent those trying to sleep from taking advantage of their property. Yet, many would see moratoriums on music entirely as restricting people’s property as well. Making sure that rules are set up to encourage social coordination is essential to building desirable property rights.
This gets into the idea of nuisance. When someone is doing something with their property that reduces the value of other people’s property, the person causing the reduction in value may be restricted from doing so. This gets into the idea of nuisance exceptions. If someone is doing something that prevents others from enjoying their property, they might need to prove that what they are doing is socially productive or they may be liable for damages.
Correctly understood, property rights are a valuable tool for coordinating economic and social behavior. Figuring out their strength and scope is key to building productivity.
Isadore Johnson is a campus free speech advocate, an economics and philosophy student, and regional coordinator for Students for Liberty.
Thomas Lee Hutcheson
Feb 25 2023 at 5:47pm
Not bad, but I’d like to have seen it applied to the increase in CO2 concentration in the atmosphere.
Feb 25 2023 at 7:42pm
the notion of “rights” is frequently (perhaps most commonly?) closely tied to morals in public discussions. it’s interesting for me to see this defense of property rights here which bypasses any explicit mention of morality and leverages things such as “coordination”, “efficiency”, and “well-being”.
i expect the most entrenched rights are exactly those which have a strong moral basis. for example, people today strongly oppose slavery or subjugation on a moral basis: a stance any person is unlikely to change rapidly. whereas any economic basis for/against slavery was more relevant before it was encoded into a moral.
the flexibility of economic justifications is both a blessing and a curse. i expect that for as long as any given class of property rights are argued on economic terms, they remain more flexible to changing economic conditions (e.g. the rapid expansion of IP law into the digital era), but they will necessarily have less strength (e.g. far more people will openly steal another person’s intellectual property than their property of self — more popularly referred to as “liberty”, with a morally good connotation, instead of as a property right which we understand it to be but to which most people don’t think of it as).
i am curious to hear today’s moral defense of various property rights and to imagine in consequence which ones may persist, appear, or fade as economic and social conditions evolve.
Grand Rapids Mike
Feb 26 2023 at 8:44am
One thing not specifically discussed in the article is how property right are confined or overruled by zoning laws. In a variety of ways owners of property are restricted in how the property is used by zoning laws in cities.
Feb 26 2023 at 11:37am
I’d refer to it as confined. Unless you are very old, in most places you bought the property with zoning laws attached to it. You agreed to the restrictions by by the property. You also have the ability to change them by getting 50% of your neighbors to agree with you.
Grand Rapids Mike
Feb 26 2023 at 1:33pm
Where I live, request for relief or variance specific zoning requirement is often requested for new and upgraded commercial and rental buildings. A substantial part of city council meeting are involved in reviewing such request. Also as a result of extensive tear downs of houses for bigger houses, new ordinances have passed to impose restrictions on the size of new houses.
Feb 26 2023 at 11:36pm
Well, the author discusses zoning kinda, in discussing nuisance. According to Wikipedia:
Grand Rapids Mike
Feb 27 2023 at 10:20pm
Not sure if this is pertinent to this article. Anyways property rights and zoning I think is a interesting issue that I really did not think about much until in a city council meeting the city manager walked thru all the incentives, disincentives etc local ordinances places on commercial and residential property like condo or apartments. Usually in this type of discussion on property rights it seems that it is about location of factories etc. But in reality it seems to me it is also about city council trying to micro manage all kinds of businesses and residential property. It’s public choice meets individual property rights.
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