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| | == Definition == | | == Definition == |
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| − | “Private property” refers to a set of legal rights, held by a person (or persons), relating to a particular thing, which together are recognized as “ownership” of that thing. Although the exact scope of that set of rights can vary depending upon the nature of the thing owned, and from legal system to legal system, certain of those rights represent the core of what is generally understood as “ownership.” Chief amongst these is the right to exclude others from the use or enjoyment of the thing owned. “Alienability,” or the right to sell (or refuse to sell) is also a core property right. To the typical person, the right to use and enjoy a thing is the most valuable aspect of property rights, but the scope of this aspect of property rights varies greatly from legal system to legal system, and even over time, with changes within a given system. | + | Property ownership refers to a set of legal rights, held by a person (or persons), relating to a particular thing, which together are recognized as possession of that thing. Although the exact scope of that set of rights can vary depending upon the nature of the thing owned, and from legal system to legal system, certain of those rights represent the core of what is generally understood as “ownership.” Chief amongst these is the right to exclude others from the use or enjoyment of the thing owned. “Alienability,” or the right to sell (or refuse to sell) is also a core property right. To the typical person, the right to use and enjoy a thing is the most valuable aspect of property rights, but the scope of this aspect of property rights varies greatly from legal system to legal system, and even over time, with changes within a given system. |
| − | Private property has traditionally been divided into two main types of property: personal property, and real property. Real property refers to real estate, while personal property refers to all other types of material property. In addition, the law recognizes certain kinds of analogous rights to immaterial assets that are sometimes considered property rights, as well. For example, patents, trademarks, trade secrets, and copyrights are often referred to as “intellectual property,” because they provide the right to exclude others and the right to sell (but, except for trademark, do not necessarily convey an affirmative right for the owner to use). Furthermore, certain legal theorists have posited that certain other legal rights (particularly government entitlement programs) are "new property." In general, "new property" is not property at all; rather, this is a characterization chosen to try to rhetorically convey upon them the constitutional protection for property rights. | + | Property has traditionally been divided into two main types, private property (absolute ownership) and estate (qualified ownership), also known as personal property, and real property. Real property refers to real estate, while personal property refers to all other types of material property. In addition, the law recognizes certain kinds of analogous rights to immaterial assets that are sometimes considered property rights, as well. For example, patents, trademarks, trade secrets, and copyrights are often referred to as “intellectual property,” because they provide the right to exclude others and the right to sell (but, except for trademark, do not necessarily convey an affirmative right for the owner to use). Furthermore, certain legal theorists have posited that certain other legal rights (particularly government entitlement programs) are "new property." In general, "new property" is not property at all; rather, this is a characterization chosen to try to rhetorically convey upon them the constitutional protection for property rights. |
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| | == Ownership == | | == Ownership == |
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| | It is often assumed that all land is real estate. But estate refers to qualified ownership, and not absolute ownership. Land is one thing, an estate in land is another. Estate is an interest in property that is less than absolute title. Since absolute ownership is a right, not a privilege, no American government has the delegated power to tax private property. All constitutional delegations of taxing authority are limited to real and personal property (i.e., estate). | | It is often assumed that all land is real estate. But estate refers to qualified ownership, and not absolute ownership. Land is one thing, an estate in land is another. Estate is an interest in property that is less than absolute title. Since absolute ownership is a right, not a privilege, no American government has the delegated power to tax private property. All constitutional delegations of taxing authority are limited to real and personal property (i.e., estate). |
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| − | == Purpose ==
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| − | The recognition of private property serves several purposes, most of which relate to improvement of the standard of living of the citizens of the government that recognizes and enforces those property rights.
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| − | A. Reduction in Rent Seeking
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| − | Perhaps the single most important of these, and likely the historical reason for the development of the concept of property rights, is the reduction in “rent seeking.” Rent seeking is a term of art in economics that refers to behavior in which people expend resources (such as time) competing over scarce resources in a way that does nothing to increase the total resources available to the society. For example, if there is a finite amount of arable land available, an attempt to take land away from another person by force is generally an example of rent seeking, because the amount of arable land available doesn’t change—the only result of the struggle is to determine who enjoys the benefits from it. Likewise, most lobbying activity is an example of rent seeking, since it’s purpose is to secure for the lobbying interest group special benefits, such as advantageous tax or regulatory treatment, rather than to improve the overall effect of the tax or regulatory systems on the general welfare. (This is perhaps the classical example of rent seeking.) The general welfare is improved if the effort that would otherwise be put into such conflicts is instead, say, put into discovery of new resources, or ways to more efficiently employ existing resources, since these activities increase the total value of society’s collective assets.
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| − | B. Efficient Allocation of Scarce Resources
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| − | The alienability of private property leads to a second major contribution to the general welfare: the efficient allocation of scarce resources. Note that the reduction in rent seeking would increase the general welfare even if private property were inalienable, that is, if ownership was permanent and immutable. The alienability of private property further benefits the general welfare because it tends to cause scarce resources to be put to their most beneficial use, from society’s collective perspective.
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| − | For example, if a person discovers a rare gem stone on his property, he would generally become the legal owner (unless he’d sold the mineral rights to such gems, or there were some other relevant limitation on his ownership rights to the real property). However, it is very unlikely that he is the individual who derives the maximum enjoyment from the possession of that gem. Because property rights are alienable, he has an incentive to identify people who would derive more benefit from it, and offer to sell it to them. Assuming that he does so, the general welfare is improved, assuming that the transaction costs in doing so do not exceed the difference in the relative values placed on the gem by the finder and the buyer.
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| − | Although labor is not generally regarded as private property, a similar analysis applies to the sale of labor, because it is alienable and in the exclusive control of the seller. An individual can derive a certain benefit, according to his individual tastes and preferences, from spending it at leisure. If an employer can derive sufficient benefit from an hour of work, he can offer him sufficient inducement for him to sell that hour. If multiple employers can do so, then the one who can derive the greatest benefit has the incentive to outbid the others.
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| − | According to Coase Theorum, assuming perfect information and zero transaction costs, all scarce resources will come to be distributed in the way most beneficial to society as a whole regardless of how those initial property rights are allocated. Thus, for example, it is immaterial that the rights to the found gem were assigned essentially at random; the ability for people to bargain will cause the gem to reach its optimal owner. Note, however, that Coase Theorum does not indicate that the outcomes for the people participating are the same. Obviously, the fellow who finds the gem is going to be better off than those who didn’tit’s only from society’s collective perspective that the initial allocation is irrelevant.
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| − | It should also be noted that, in the real world, no one has perfect information, and transaction costs are never zero. Thus, while it is generally true that the assignment of private property rights tends to lead toward an efficient allocation of scarce resources, there is no reason to believe that the perfect allocation is ever achieved.
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| − | The corollary is that, in general, the economy will tend to more efficiently allocate resources if alienability is improvedthat is, if the legal system makes it easier for people to sell property among themselves. Thus, for example, taxes and regulations on sales (or profits) tend to cause a less efficient allocation of resources, because they increase transaction costs.
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| − | C. Predictability--the Potential for Investment and Development
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| − | Although technically a subset of the more general cases above, the tendency for property rights to encourage uses that are advantageous only over the longer term is sufficiently important to the general welfare that it deserves special recognition.
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| − | The paradigmatic example is capital investment. Because so much of the prosperity of the modern world derives from activities that require an investment, the general welfare is highly dependent upon people’s ability to plan for future events. If one can be reasonably confident of the right to enjoy a parcel of land, then one is more free to invest the resources to develop the land. This might be to build a good home upon it, or perhaps to build facilities for the production of goods, which can then be sold for a profit over time.
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| − | D. The Internalization of Externalities
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| − | “Externalities,” in economics, are consequences of a decision that befall someone other than the decisionmaker. They can be either positive or negative, but the presence of either tends to result in inefficient (from society’s perspective) choices for the use of an asset. Positive externalities are benefits to people external to an economic decision, and decisions that create them tend to be selected less often than would be ideal; negative externalities are costs imposed on others by an economic decision, and decisions that create them tend to be chosen more often than they would ideally be. Although externalities are legion, even in a society with robust property rights, the recognition of property rights significantly reduces the number of them.
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| − | One example that has recently become popular is the way in which private property discourages wasteful use of natural resources. For example, if a forest is unowned, in a Lockian state of nature, anyone is free to go upon it, cut the trees, and take the timber. A person who does so enjoys all of the profits from doing so, since he can use or sell the timber as he pleases, but he imposes negative externalities when he does so, because he is not enduring all of the costsnamely, the loss of the standing tree, which many people would value for its shade, beauty, it’s ability to provide nesting space for spotted owls, or whatever other reason one might value a standing tree. However, if someone owns the land, then those externalities are “internalized.” The person who owns the land now has a rational, self-interested reason to consider all of those other people’s interests (whatever he might think of them, personally), because those other people’s interests all contribute to the value of the land. Because he has the option to either use the land himself or to sell it to the highest bidder, he bears the costs for actions that reduce the value of the land, such as clear-cutting.
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| − | Note that, in this example, it is the alienability of the land, coupled with the right to use and enjoy the land, which brings about the efficiency. The right to exclude others often creates efficiency by internalizing positive externalities, by eliminating the “free rider” problem.
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| − | Consider, for example, the prospect of building a turn pike (in the 19th Century, presumably). Few people could derive sufficient benefit from the construction of a new road to justify the considerable expense, if they had to bear it all themselves. However, if a sufficient number of people have goods that need to be transported between the endpoints of the prospective road, collectively, the construction of the road might well be efficient, from society’s collective perspective. In this case, the right to exclude others internalizes what would otherwise be a positive externalitythe ability to use the new road without having to help pay for its construction and maintenance. If someone owns the land upon which the turnpike is to be built, and, therefore, has the option to forbid these other people from using the turnpike unless they pay a toll of his choosing, then it makes sense for him to built it, despite the great cost. He has a rational reason to consider how much benefit such a road would provide to others, since that will determine how high a toll he could set, and how often he could expect to collect it.
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| | == Enemies of private property == | | == Enemies of private property == |
Revision as of 21:18, November 19, 2007
Private property is a legal term specifically referring to the private ownership of land, houses, chattels, and goods. Private property, in the United States of America, is constitutionally protected by state and federal constitution (see: Fifth Amendment)
Definition
Property ownership refers to a set of legal rights, held by a person (or persons), relating to a particular thing, which together are recognized as possession of that thing. Although the exact scope of that set of rights can vary depending upon the nature of the thing owned, and from legal system to legal system, certain of those rights represent the core of what is generally understood as “ownership.” Chief amongst these is the right to exclude others from the use or enjoyment of the thing owned. “Alienability,” or the right to sell (or refuse to sell) is also a core property right. To the typical person, the right to use and enjoy a thing is the most valuable aspect of property rights, but the scope of this aspect of property rights varies greatly from legal system to legal system, and even over time, with changes within a given system.
Property has traditionally been divided into two main types, private property (absolute ownership) and estate (qualified ownership), also known as personal property, and real property. Real property refers to real estate, while personal property refers to all other types of material property. In addition, the law recognizes certain kinds of analogous rights to immaterial assets that are sometimes considered property rights, as well. For example, patents, trademarks, trade secrets, and copyrights are often referred to as “intellectual property,” because they provide the right to exclude others and the right to sell (but, except for trademark, do not necessarily convey an affirmative right for the owner to use). Furthermore, certain legal theorists have posited that certain other legal rights (particularly government entitlement programs) are "new property." In general, "new property" is not property at all; rather, this is a characterization chosen to try to rhetorically convey upon them the constitutional protection for property rights.
Ownership
Ownership can be characterized as either absolute or qualified. Absolute ownership is synonymous with sovereignty or dominion. Only upon one's private property can one pursue happiness without consent of another. Everywhere else, one needs permission (license) from the other owner, landlord or custodian, else he commits a trespass.
Common misconceptions
It is often assumed that all land is real estate. But estate refers to qualified ownership, and not absolute ownership. Land is one thing, an estate in land is another. Estate is an interest in property that is less than absolute title. Since absolute ownership is a right, not a privilege, no American government has the delegated power to tax private property. All constitutional delegations of taxing authority are limited to real and personal property (i.e., estate).
Enemies of private property
In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property.
The Communist Manifesto
Communism and its cousin Socialism, abolish absolute ownership of land, houses, tools, and chattels by private individuals. In its place, qualified ownership of all things by the Collective is instituted. Thus no one can own themselves, their labor, the fruits of that labor, nor even the children they beget.
Collectivists are more akin to pirates, stealing private property from the rightful owners, while ascribing a moral superiority to their thievery. Since moral religions denounce thievery, it's not surprising that Collectivists abhor religion.
Friends of private property
CAPITALISM - An economic system in which the means of production, distribution and exchange are privately owned and operated for private profit. Webster's Dictionary
Concatenating that with private property, we get: Capitalism is an economic system in which individuals absolutely own the means of production, distribution, and exchange.
A farmer who absolutely owns his farm is a capitalist.
A farmer who does not is a tenant.
Citation
PRIVATE PROPERTY - As protected from being taken for public uses, is such
property as belongs absolutely to an individual, and of which he has the
exclusive right of disposition. Property of a specific, fixed and tangible
nature, capable of being in possession and transmitted to another, such as
houses, lands, and chattels.
- - - Black's Law dictionary, sixth ed., p.1217
OWNERSHIP - ... Ownership of property is either absolute or qualified. The
ownership of property is absolute when a single person has the absolute dominion
over it... The ownership is qualified when it is shared with one or more
persons, when the time of enjoyment is deferred or limited, or when the use is
restricted.
- - -Black's Law dictionary, sixth ed., p. 1106
