Posts tagged with: property rights

Blog author: lglinzak
Tuesday, April 12, 2011
By

It sounds draconian and contrary to the beliefs of many humanitarian organizations, including the United Nations which declared water as a basic human right in 2010. However, if we expect to take the correct steps forward to solve the global water crisis, then water must be treated as a commodity not a basic human right.

In his book, The Mystery of Capital, and also in an essay published in the International Monetary Fund, Hernando de Soto explains why capitalism has failed in many third world and developing countries and continues to succeed in many Western countries.

According to De Soto, by assigning property rights, people are held accountable when any sort of damage of property is committed. Such accountability is accomplished through the legal system:

The integration of all property systems under one formal property law shifted the legitimacy of the rights of owners from the political context of local communities to the impersonal context of law. Releasing owners from restrictive local arrangements and bringing them into a more integrated legal system facilitated their accountability.

By transforming people with real property interests into accountable individuals, formal property created individuals from masses. People no longer needed to rely on neighborhood relationships or make local arrangements to protect their rights to assets. They were thus freed to explore how to generate surplus value from their own assets. But there was a price to pay: once inside a formal property system, owners lost their anonymity while their individual accountability was reinforced. People who do not pay for goods or services they have consumed can be identified, charged interest penalties, fined, and embargoed, and can have their credit ratings downgraded. Authorities are able to learn about legal infractions and dishonored contracts; they can suspend services, place liens against property, and withdraw some or all of the privileges of legal property.

While De Soto’s arguments look at property mostly as land and buildings, his principles can also be applied to water. Treating water as a commodity and granting it property rights will reduce pollution and help create more sanitary sources of water. Once water becomes a commodity, the legal system will have the justification to prosecute any industry or individual that damages the water supply because it will be destruction to property. When water is a human right, and nobody owns the rights to the water, then there is nobody to prosecute because everybody owns the water and can freely do with it as he or she pleases.

Many are familiar with the economics behind the tragedy of the commons. Just as the commons were over-used, water will be depleted if we continue down the path of treating water as a basic human right.

People will over-use water until they are faced with an enormous crisis. The UN’s call for making water a basic human right does not provide any deterrent from over-use, but instead gives people the entitlement to use as much water as they desire. By charging people for the amount of water they use, people will be more conscious of their use of water and take measures to not waste it. There is no incentive to provide free water, and without assigning property rights to it, as De Soto’s argument articulates, there is no way to legally prosecute anyone or any industry that damages or pollutes water.

Samuel Gregg also articulates the problems that come from central planning and communal ownership:

Why then do people tend to favor private over communal ownership? One reason is that they are aware, as Aristotle and Aquinas witnessed long ago, that when things are owned in common, the responsibility and accountability for their use disappears, precisely because few are willing to assume responsibility for things that they do not own. Our everyday experience reminds us of the tragedy of the commons. The early advocates of socialism were well aware of these objections. Their response was to hold that all that was needed was a change of mind and heart on the part of people as well as profound structural change: a change that would not only produce a new system of ownership, but also a “new man” — the socialist man much trumpeted by the former Soviet Union.

Furthermore, in his essay, Our Stewardship Mandate, Rev. Robert Sirico explains how integrating the market supports stewardship:

Long experience has shown that the state is a bad steward. One reason this is so is because of what has been termed the “Tragedy of the Commons.” Simply put, if everyone owns something, no one person has any incentive to protect or take care of it. This has been graphically demonstrated by the appalling reports of environmental disaster in the former communist countries. Furthermore, the state has many incentives to be a poor steward. For example, the federal government owns a great deal of forestland. These forests are supervised by the U.S. Forest service, the mission of which is to cut down trees. Because it is federally funded, the Forest Service has no market incentives to keep its enterprises cost-efficient. As a result, the forest service is logging old-growth forests with a return of pennies on the dollar. Had these forests been supervised by a private company, they would never had been touched.

Likewise, experience has shown that the market is a better steward of the environment than the state. Not only does it allow for private ownership and offer better incentives, but it allows for the expression of minority opinions in regard to land and resource use. Take, for example, the Hawk Mountain Sanctuary in eastern Pennsylvania. Located along the Appalachian migration route, it provided an ideal location for hunters to shoot thousands of hawks. Conservationist Rosalie Edge decided that those birds ought to be protected, a minority opinion at the time. In 1934 she purchased the property and prevented the hunting of the birds. It is now considered one of the best bird-watching locations in the world. Had Ms. Edge lived in a regime where property was owned by the state, she would have to convince a majority of the lawmakers, bureaucrats, and competing special-interest groups that Hawk Mountain should be a preserve, so daunting a task it is unlikely it would have happened. As it was, she only had to purchase the land.

The same principles Rev. Sirico articulates in his essay can also be applied to support stewardship in the global water crisis.

 

The Wall Street Journal offers a welcomed reminder of the value of tax revolts titled, “The Spirit of 13.” Proposition 13 is a notable property tax revolt which was led by the late California citizen Howard Jarvis in 1978. There are several books about the famed revolt and many attribute the event to helping fuel the “Reagan Revolution.”

Proposition 13 passed with 65 percent voter support, and ever since has been part of the California Constitution. As a result, property taxes were slashed by 30 percent and annual increases were capped at no more than a 2 percent increase. Retirees with limited income benefited greatly from Proposition 13. Perhaps most important, taxpayers know exactly how much to budget for their property tax. The law continues to hold very popular support among Californian voters, a state where citizens are taxed heavily already.

Still there are tax and spenders who constantly decry the lack of tax revenue, and Proposition 13 always finds its way back in their crosshairs.

The speaker for the Seventeenth Acton Institute Annual Dinner is former Estonian Prime Minister, Dr. Mart Laar. One of the economic reforms Laar implemented in Estonia was a flat tax. After what was described as a brilliant economic turnaround, other countries have followed Estonia’s lead on flat tax policies and free market policies in general. Russia, Ukraine, Latvia, Lithuania, Slovakia, Romania, and Macedonia also have flat taxes for income.

The country of Bulgaria is now introducing a flat tax rate of 10 percent. This rate will be a dramatic drop from their current rate of taxing income which ranges between 20-24 percent. Bulgaria will certainly see a spike in economic growth and foreign investment.

If you value a level of fairness and simplification when it comes to income taxes you will surely appreciate a flat tax with low marginal rates. In fact, most anything would be better than the current outdated federal income tax ogre, which discourages saving, investing, and greater freedom from federal bureaucratic control.

Lawmakers in Western Europe and the United States have largely ignored the benefits of flat taxes that have benefited Eastern European nations. They would rather entrench themselves in the power the current tax code provides them. It is there they can continue to micromanage a tax-and-spend economy, along with the lives of their citizens, while continuing the politics of class warfare.

One of the most important moral components for tax law should be property rights, meaning freedom for the individual to keep more of his or her income and capital. In addition, people of faith understand the need of helping those most who need our financial, spiritual, and physical help. The freedom to develop the best use of our income and capital is increasingly becoming a historic ideal. It was John Wesley, the founder of Methodism, who said “Make all you can, save all you can, and give all you can.”

Remember also, massive and out of control federal spending is the root of much of the tax problem in this country.

I remember a few years back Steve Forbes saying on the presidential campaign trail, “Some people in Washington say we can’t afford the tax cut [that comes from a flat tax], well maybe we can no longer afford the politicians.”

Blog author: kschmiesing
Tuesday, June 20, 2006
By

It’s hard to believe that it’s been nearly a year since the Supreme Court handed down its decision in Kelo v. City of New London, which seriously damaged the institution of property rights.

The Institute for Justice marks the occasion with a series of reports that contain bad news and good. The bad news is that Kelo does appear to have had a deleterious effect, emboldening local governments to seize private property at increasing rates. The good news is that Kelo backlash has resulted in a number of legislative attempts to curb eminent domain abuse.

HT: John J. Miller at The Corner on NRO

Things are looking grim for the rule of law in Bolivia. An article in today’s Washington Post outlines the growing conflict between the minority of Bolivians who own land and the landless majority. As Monte Reel writes in “Two Views of Justice Fuel Bolivian Land Battle,” this month the Bolivian government, under the direction of the “agrarian revolution” of president Evo Morales, “began a project to shuffle ownership rights affecting 20 percent of its land area, giving most of it to the poor. And tensions are starting to boil.”

Choei Yara, a Japanese immigrant to Bolivia whose family has lived there since the end of World War II, says, “No one respects private property anymore, not even the government.” Groups of landless Bolivians are constantly threatening to forcibly take posession of private lands, and Morales’ policies have only encouraged them.

“Emboldened by the recent government announcements,” the landless “are taking over more properties on their own, without government approval,” writes Reel. The rationale is simple for those who live in poverty:

“God created the resource of land,” said Luciano Winchaca, a local campesino advocate who has helped the Landless Movement with its quest for land. “It should be divided equally for everyone, not be given to somebody because they speak better Spanish or come from a certain family. We all have the same rights. These people don’t understand the will of God.”

But how about this for God’s will? “You shall not steal” (Exodus 20:15 NIV).

To be sure there are real and dire problems of poverty in Bolivia. But the class warfare and rhetoric of socialist revolution advocated by Morales and his ideological partner Hugo Chavez, in the name of God’s will, can only exacerbate the situation and undermine the legitimate functions of government: to justly administer the rule of law and to safeguard private property.

As we can see in the case of Bolivia, when these roles are ignored and subverted by the government, anarchy ensues. Yara knows this all too well, as “now about 50 members of the group, the Landless Movement, are occupying about one-fourth of his property. They keep telling him they’ll take more soon, he said, and they promise bodily harm if he doesn’t let them have it.”

While there is a general acceptance of the role of private property for social order and economic prosperity, the challenges to private property have not ended. The eminent domain issue is one threat; another comes from environmentalist groups such as the Foundation for Deep Ecology and others who see humans as a drain on the earth and nature. Some environmentalists advocate the consolidation of land to be put under federal control and promote stringent land usage restrictions that would prevent a landowner using his property fruitfully.

Their argument is nothing new: individuals left to themselves will not be as effective as central planners in decided the best way to allocate and protect resources, etc. etc—they are merely variants of the Marxian arguments used by economic central planners.

Despite the rhetoric, common ownership of land and resources has not been an effective means of addressing problems. It failed under applied socialism, and has not led to environmental protection and stewardship as environmentalists hope. Private property ownership creates incentives for people to use land wisely and in a sustainable manner. John Stossel gives an excellent illustrations of the importance of incentives and the private ownwership including privatizing elephant ownership in Africa.

St. Thomas Aquinas addressed the question of property and human incentives in the 13th century. He argued it is lawful to own property for three reasons:

First, because every man is more careful to procure what is for himself alone than that which is common to many or to all: since each one would shirk the labor and leave to another that which concerns the community, as happens where there is a great number of servants.

Secondly, because human affairs are conducted in more orderly fashion if each man is charged with taking care of some particular thing himself, whereas there would be confusion if everyone has to look after one thing indeterminately.

Thirdly, because a more peaceful state is ensured to man if each one is contented with his own. Hence it is to observed that quarrels arise more frequently where ther is no division of the things possessed.

Notice the humanist vision—the appreciation for the individual, an understanding of human nature, a respect for the capabilities of individuals to make decisions and control their own sphere. Also notice point number three. Compare this to the unspeakable violence perpetrated by socialist government leaders on their own citizens because they were not “content” with operating in their own sphere.

It is unfortunate Marx and the socialists were not steeped in the thought of St. Thomas early on. Who knows, it could have avoided some of the pain and suffering imposed by socialist governments on their own people. But the reality of Marxism has become clear. As Pope Benedict put it in his new encyclical Deus Caritas Est

Marxism had seen world revolution and its preliminaries as the panacea for the social problem: revolution and the subsequent collectivization of the means of production, so it was claimed, would immediately change things for the better. This illusion has vanished.

The leftwing environmentalists are part of a long line of central planners. They want to the control of property in the hand of government bureaucrats and planners, i.e., themselves. But planners are always less effective than those closer to the problem, because no matter how much they know, or think they know, they’ll never has as much knowledge as those individuals on the ground close to the situation. This is the principle of subsidiarity—rooted in Aquinas’ defense of private property. Wisdom of the past as applicable today as it was then.