Friday, May 02, 2008

There Goes Another Property Right

There is much talk these days of government intervention into the mortgage market. In some quarters, legislators are trying to "freeze" mortgage contracts and other such manoeuvers.

This is a direct attack on a fundamental American right and a renoucement of one of the only legitimate purposes of government: The legal enforcement of contracts.

A contract is an agreement between at least two parties regarding disposition of property of some kind, whether it be land, labor, work of art, faithfulness and material support (most marriage contracts), or whatever.

The notion of property rights is the human attempt at legal standardization of the basic rights nature has given us, which legalized standardization permits us to maximize mutual respect, equality of opportunity, and individual liberty.

The importance of the respect of property rights--including those protected by contract--is one of the fundamental and least appreciated elements of the American experiment.

More importantly, if we do not respect these property rights, we impinge not only upon those rights, but also upon the basic rights nature gave us. If we persist in this impingement we eventually destroy the equality of opportunity and liberty we so crave.

Unfortunately, property rights have taken some beating over the years, as Amity Shlaes points out in this great review of a book called The Dirty Dozen by Robert A. Levy and William Mellor, accusing Supreme Court justices of contributing to the erosion of property rights in the United States.

dirtydozen
[Thanks to Amazon.com for the image.]

Levy and Mellor list the Supreme Court's twelve most egregious cases, ending with the Kelo case where Mrs. Kelo was obliged to sell her home to a developer in spite of her wishes, a complete misinterpretation of one of the clauses of our Constitution.

This point is so important that it can stand alone; but I must add this:

The destruction of property rights is indeed a fundamental hurdle to the preservation of the American experiment as the Founding Fathers intended it. However, I'm upset that no modern thinker goes beyond the surface erosion of respect for property rights to search for other root causes.

What permitted the public acceptance of this erosion? It is the injustices perpertrated through (1) mismanagement of the monetary units of the world, and (2) less-than-optimum land taxation policy.

These two government errors together caused the dire circumstances of the farmers and landlords alike, of both the department store owners and city governments alike, et al., that in turn gave rise to the public empathy for those who were suffering. The land and property seizures are the direct result of the unintended consequences of (1) inflation and (2) counterproductive land taxation; and it is these injustices that set the stage for further government meddling and even more unintended consequences.

Unfortunately, a blog like this is too ephemeral a place to go into depth about this. For the fundamental argumentation, see the work of Edward C. Harwood and Henry George, who are looking wiser and wiser as my economics apprenticeship advances.

As an aside, both of these gentlemen were unique self-taught thinkers who had not acquired any academic degrees in economics. This gives cause for reflection.

Of course I do not mean to belittle the achievements of the erudite professors and doctors who have contributed much to the science's progress. Having said that, some of these learned people--Supreme Court justices and Federal Reserve and other economic advisers among them--do or should know better and are personally responsible for the very problems we suffer today.

Another aside: Amity Shlaes is the writer of the great book The Forgotten Man.

3 Comments:

Blogger Joshua Vincent said...

Don't tax property....DO tax the value given to land by society. Thats' freedom. Locke, Paine, Smith, Mill, Ricardo, George and Friedman can't all be wrong, right?

3:45 PM  
Anonymous LVTfan said...

May I humbly suggest that land is different from the kinds of property that are created by human beings, and that since we are all dependent on it, it is completely legitimate to treat that value as our common treasure, not the personal treasure of an individual, family, corporation or other claimant?

I realize this sounds odd to many people, but I suspect that if you sit with it for a bit, you might come to agree, particularly if among your basic values is the concept that all people are created equal, and that our ways of relating to each other, in order to be legitimate, must be consistent with that tenet.

The way to make that real in the world is through land value taxation. You might explore http://lvtfan.typepad.com/, http://wealthandwant.com/ and http://answertsanswers.com/ for more about these ideas.

Human rights are more important than property rights -- as important as property rights are. And our right to that which we produced is supreme. We have NO right to that which we didn't produce, and any system which twists that truth to some other end must be exposed as wrong and unjust. Our right to support ourselves is far in front of anyone's "right" to privatize value which the community as a whole has created.

7:20 PM  
Blogger Katy said...

I love your comments, both of you.

Just to be clear to other readers, I would like to clarify our use of the word "privatize."

"Privatizing" as that term is used in free-market economics means returning the actual capital resources and labor to private sector market participants so they can monetize it as they see fit. Private entities do this much more expediently and efficiently than any unspecialized government body can do it.

As the word applies to land, unfortunately, it has a slightly different meaning. It means giving, for a market price, the use of a piece of land for a stated time (sometimes in perpetuity). It does not mean giving the actual land itself.

This difference is crucial. I don't want readers to think that in our defense of land value taxation and common land "ownership" we are denying private owners (i.e. those who have acquired the right to use that piece of land) the right to use it in any way they see fit, even if it means an exclusive use.

Vocabulary must be defined with great precision, so as not to confuse. As is often the case, one word can come to have two different applications with distinctive connotations. This leads to confusion, sometimes even among otherwise eloquent and astute scientists.

9:39 AM  

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