DURING A MANY-YEARS-AGO HEATED EXCHANGE, a congressman told me that each American owned public property. As an example, he insisted that I was part-owner of the Washington Monument. I insisted it was none of mine.
We insisted back and forth until he asked me for the why of my position. My answer was a question, “Can I sell my part?” My test of whether I own something is whether I can sell it. Indeed, the working definition of private property is the rights held by the owner to keep, acquire and dispose of property.
Private property serves a vital social function often ignored or trivialized. You don’t have to be a keen observer to notice that privately owned property tends to receive better care than communally owned property. I’ve often said that I don’t care that much about future generations. After all, what has a kid who’s going to be born in 2050 done for me? If he hasn’t done anything for me, how then am I obliged to do anything for him? Where’s the quid pro quo?
My actual conduct belies that sentiment. I own a nice home that is well cared for. Trees have been planted, rooms added, and many other improvements have been made that will outlast me and be available for that kid born in 2050. Part of the reason I made sacrifices in current consumption to improve my house is that the longer it provides housing services, the more I get when the house is sold.
Would there be the same set of caring and improvement incentives if the government owned my house, or if there were a 75 percent transfer tax when I sell? Obviously, anything that reduces my property rights in the house weakens my incentives to do the socially responsible thing: use carefully and conserve scarce resources. If the house is cared for, the market rewards me with a high selling price. If it’s not, the market punishes me with a low selling price. Private property rights, coupled with a free market, forces me to behave as if I actually did care about that 2050 kid.
That’s one of the blessings of the free market: People serve their fellow man without coercion or caring. For example, I think it’s a wonderful thing that Texas cattle ranchers and Idaho potato farmers take the time and effort to ensure that New Yorkers have beef and potatoes. Do you think they do it because they care about New Yorkers? They may hate New Yorkers, but they make sure there’s beef and potatoes on New York supermarket shelves.
Think about the millions of goods and services that others produce for us, whether it’s cars, clothing, food, entertainment or shelter, and think about their motives. You’ll conclude that most good things get done as a result of self-interest, profit motive, private property rights and exchange opportunities. Think about the things that we are dissatisfied with, such as public schools, post office, police services and vehicle registration. There’s an absence of profit motive and private property rights.
The free market and private property rights do not produce a Utopia; we’ll have to wait for Heaven for that. But here on Earth, private property rights and free markets beat any other social arrangement in serving mankind’s needs.