Posts Tagged ‘property rights’

Amid the fountains of bloviation about the demise of Western Civilization because the California Supreme Court upheld a constitutional amendment, let’s have a short civics lesson.

Civil rights are “civil” because they are granted by the civic institutions of the state.  There is a lot of pontificating – yes, @ColinKelley, this means you, though you have plenty of company – about how civil rights should never be subject to majority rule.  Sigh.  People, think.

Civil rights BY DEFINITION have to be voted on.  It is inalienable rights that cannot be voted on (among these are life, liberty, and property).  By no possible stretch of the imagination is the right to have your sexual union recognized by the state inalienable.  ALL rights granted by the state are alienable.

When you get rid of the idea of God, and stop basing your laws on moral conduct, then you reach the point where all rights are civil rights, and all power rests in the hands of the government.  Then your inalienable rights, the ones that adults care about, can be violated at will.

[Side note here: if you are black, you understand all too well how government can do this.  Slavery was a violation of civil rights, yes, but it was also a violation of inalienable rights.  The Constitution did not emancipate blacks, but it did at least have a mechanism for the assertion of inalienable rights and it was that document that made emancipation possible, once people came to their senses.  Slavery remains, however, undeniable proof that the existence of a document doesn't automatically guarantee its legal force.]

This is one reason smart people revere the Constitution, because it at least attempted to put restraints on what government could and could not do with respect to those inalienable rights.  For this purpose, governments are formed.  However, as we learn, no amount of law will prevent bad people from being bad.  No set of regulations will make selfish people less selfish.  No constitution can stop people from choosing to be treated like infants, abdicating personal responsibility, and trying to make everyone else pay for their own stupid mistakes.

This is why even smarter people don’t believe that the Constitution can save the Republic.  It’s just a  document.  Only the people can save the Republic, and right now, my read is that the people don’t care.  They don’t have enough understanding to process how the CA Supremes can vote 6-1 not to invalidate a constitutional amendment process that was as meticulously legal as anything could be.  They just want to be mad.

Well, then.  Wish granted.

Look, it’s not that they don’t mean well. The courts really are trying. But the fact is that most judges do not understand how private property rights protect consumers. They consistently err on the side of “access for consumers” to data or markets, instead of protecting the incentives for providers to create that data or market in the first place.

To what do I refer? Glad you asked. Recently, the National Association of Realtors settled an antitrust suit with the Justice Department, agreeing to allow the government to strip its property rights in the name of “protecting the consumer”. Seems that the multiple listing services the Realtors maintain were, in some markets, restricting access by unaffiliated Realtors to MLS data. The access is now to be granted to anyone, decision effective end of the summer.

Who created the data? The Realtors did. Who has the right to sell the data to whomever he pleases? No one, apparently. Is this going to result in lower commissions for Realtors? Possibly. Is this going to result in lower fees paid by buyers and sellers? Not likely.

Why? Here’s the lesson: markets and repositories of data and other goods and services are created by Party A for one reason – to make a profit. The more that profit is protected, the more reason a party has to believe that his rights to the good or service will be protected by law, the more likely he is to create value by providing additional goods and services, and the more likely others are to start competitive enterprises to get some of the pie for themselves. If, however, there is no expectation that profit can be maintained or maximized, because by government whim property rights can be voided or involuntarily transferred, then creation will lessen and eventually disappear.

An example: you decide to open a lemonade stand. You buy the lemons, squeeze them, sugar the juice, get cups and ice and a cash box, and a small stand. You set up shop, and business is brisk. There are, however, customers that cannot come to your stand because they live too far away. You look at the profit in selling to them and decide that it doesn’t make sense to service those people, because the transportation costs are too high. Along comes the government and says, no, not only do you have to service these people, you have to service them at the same price you charge everyone else. This will, the government says, lower the cost of the service for these people. Otherwise it isn’t fair.

What do you do? Well, there are three options. One, you can continue to charge the same price and just lose money (in which case you are a hobbyist or a philanthropist, but not a businessman) or two, you can go out of business, or three, you can raise your prices for everyone, so that you can make the profit you were making before. Since option one is only available to a small number of people, the vast majority of us will choose options 2 or 3, which raises the cost of the lemonade for everyone (in the case of option 2, it raises it to infinity, since the lemonade isn’t available at all at any price), exactly the opposite of what the government intended.

Government, and especially the court system, seems to view property rights as outmoded, as being unworthy of protection (except, of course, for movies and music), and even as restrictions on trade and competition. In effect, with most antitrust suits, the government is telling us that if it weren’t for these pesky property rights, our costs would be lower and competition would flourish. In actuality, the reverse is true. As the kite falls when the “restricting” string is cut, so competition and choice disappear when the government fails to protect the rights of producers to the thing they produce. The string actually supports the kite, giving it resistance against which to rise with the wind. Property rights allow producers to have confidence that their work will be valuable. It is property rights that create competition, and the stronger those rights are, the better and more robust the competition will be, and the better the choice and the cost for the consumer.

This ruling, like so many, many others, ignores basic economics and property rights. It’s bad for practically everyone.

Shocker.

P.S. For a brilliant exposition of this, see anything written by Hernando DeSoto, or try this book.