Property Rights: Who Is the Crass Materialist Here?

There are people who reflexively sneer at any mention of property rights. It's usually people on the left. Either it's full-on socialists who think that property rights aren't even a thing, or its moderate leftists who are reflexively bracing for a "conservative" argument against raising taxes or against confiscatory regulations.

According to this mindset, we advocates of property rights are just crass materialists, even imbuing inanimate property with "rights." We're doing this at the expense of living people with actual rights, perhaps denying them an opportunity to fully enjoy those rights. By restricting the revenues of the government, we prevent the welfare state that assures (or "assures", if you're a skeptic of such assurances like I am) that everyone has the minimal material standard of living that would actually allow them to enjoy their other rights. And by hobbling the regulatory state, we're removing the only bulwark against corporate overlordship. (Labor regulations to protect the workers from their corporate masters, product safety regulations to protect consumers from unsafe products, regulations preventing misleading advertising, etc.). Arguing from a principled defense of property rights is a non-starter if you're trying to convince someone who doesn't already believe they're important. You tend to get something like an eye-roll,  and a "Here we go, another rich person wants to protect his 'property'." "Property rights" is just a phrase that rich babies use to prevent their toys from being taken away. It's a materialistic ideology that elevates property over flesh-and-blood people.

I actually think it's property rights deniers who are the crass materialists. One of their major grievances is that some people have more stuff than other people. They are obsessed with national statistics about the income of the upper class and the supposedly flat incomes of median households (which are only flat if you overstate inflation and don't account for increasing transfers, employee benefits, changing household demographics, and decreasing numbers of earners per household). This grievance persists even in a society like the U.S., where "the poor" have a much higher material standard of living than the middle class in most other nations (or for that matter the rich in most other nations). The argument that the redistributionists are just trying to ensure a minimal material standard of living is just not credible in this context. It is entirely about who has more stuff and why they should be resented for having that stuff.

More importantly, the poor need property rights to function, too. The underclasses tend to fair most poorly in societies that don't respect property rights. The economist Hernando de Soto argues in his various works that the inability to acquire title to property is a major hindrance to the world's poor. Establishing clearly who has the right to use, modify, sell, or buy an object, building, or parcel of land would remove a lot of confusion. There would be less conflict with clear rules of ownership. Property owners would also have an incentive to perform maintenance and make improvements on property that they actually own, especially if they can eventually sell it. (If you want a stark example of how lack of property rights leads to decaying infrastructure, listen to Casey Mulligan describe crumbling buildings in Cuba in this interview.)

Unclear property rights lead to unnecessary conflict. Take a simple example. Imagine a car in a world without any property rights. (How a car came to exist in that world is a mystery. Who would bother to build it knowing they couldn't sell it and recoup the production costs? Who would buy it knowing they couldn't keep it for their own use?) You approach the car and reach for the handle, thinking you're going to climb in and drive off. Someone else is approaching with the same intent. You notice each other, and each of you speeds up. This is bound to become an "I saw it first" versus "I touched it first" shouting match, which would likely escalate to a shoving contest. Or suppose we manage to solve that particular problem (of fights breaking out) because we institute an elaborate set of norms and rules for how to adjudicate the conflict. It's still a conflict, with unnecessary argumentation and shouting. Society's resources are wasted arguing over who gets what, constructing elaborate arguments, currying favor with judges, etc. A far more elegant solution is to have clear ownership rules so that not just anybody can lay claim to any property they set their eyes upon. Property rights are basically social norms that have been constructed to minimize conflict. I see property rights deniers as wanting to instigate all that conflict because they are offended by the distribution of material goods. "Let's fight it out so that we can take some of your stuff." This is crass materialism in the extreme. I want to tell them, "You're the ones who are imputing moral worthiness to material wealth, not us. You're the ones initiating a conflict where none is necessary."

I once heard a physicist describe the nature of time. He said something like, "Time is the universe's way of preventing everything from happening at once." The corollary here is that property rights are society's way of making sure everybody isn't using the same property at once. It is physically impossible for a single piece of property to satisfy all potential claims on it. The car in the example above cannot service more than a few people at any one time. A house in the same world could only comfortably fit a few people (even if we overlook non-physical discomfort of sharing a space with strangers). There must be rules governing the use of property, otherwise things get so overused or so bogged down with conflicting claims that they are basically worthless to society. There are some things that genuinely belong to the public and are more valuable if owned and managed communally. Fisheries, grazing lands, forests, etc. Even for these things, there must be clear rules for how they can be used, or they will inevitably be overused and ultimately their value destroyed. (For an excellent discussion of communal properties, I suggest Governing the Commons by Elinor Ostrom and Order Without Law by Robert Ellickson.) But even granting this point about communal property, it's a huge mistake to think that everything is in this category just because some things are.

Another argument for denying the existence of property rights goes something like this: "Historical injustices leading up to the present left property in the hands of people who aren't its rightful owner. Land was taken from displaced or exterminated people, property was confiscated by governments hostile to certain racial groups, and so on. So we can't really know who owns anything."  I think this is an incredibly silly argument. For one thing, it acknowledges that someone at some point rightfully owned property, and that it was wrong for some other party to come along at take it by force. The people who make this argument implicitly believe in property rights. (They even occasionally slip and explicitly acknowledge this belief.) More importantly, this critique of property rights doesn't provide any useful commentary about how we should adjudicate property disputes or tell us what should be distributed to whom. Yes, there are vast historical injustices whereby some powerful group pillaged, displaced, and perhaps exterminated a weaker group. Does that mean the ownership of my car is in dispute? Does that mean someone has to offer their home to anyone who needs shelter? No. The fact that there are hard cases doesn't mean that the easy cases don't exist. Most of what exists is in the "easy cases" category, and these easy cases can be handled by common-sense notions of ownership and property rights.

A related argument is the Barack Obama/Elizabeth Warren notion that "You didn't build that." If you're successful, your success depended on many inputs and required help from a lot of people. Your teachers, who built your human capital. The workers who built your establishment and staff it daily. The government roads and infrastructure that bring customers to your place of business and that generally allow you to transact. These were necessary inputs to whatever wealth you currently own. All of that is true enough, but it doesn't have any implications whatsoever for redistributing resources. If I pay someone to build a structure for me, they offer me a quote, which I can agree or decline to pay. If I pay, and they build the structure and I pay up. Deal complete, honor served. There is no residual claim. If I build a thriving, hopping business out of this structure, the builder's construction contract does not entitle him to a fraction of my revenues in perpetuity. The builder builds, the buyer pays, deal done. The same is true of almost every transaction in our society. It would be incredibly unhealthy for us to go around feeling like we had residual claims against other people's success, just because something we once did (even things we were compensated for according to an explicit contract) was a necessary input to their success. If you want to lay claim to the future profits of some company, buy stock in it. (You can't really buy stock in the future earnings of an individual person, except in some rare cases like top athletes or actors. Maybe you should be able to do this more easily? Maybe this would be a reasonable way to finance education?) It's best to start from clear rules of ownership. If people want to "sell shares" of their future earnings or buy shares of someone else's, they should do so explicitly. The Obama/Warren framing is a thinly veiled justification for grabbing more tax revenue. It doesn't tell us how much to tax, just that the amount should be "more." (Is there a way to start with the Obama/Warren formulation and arrive at the conclusion, "Therefore taxes should be lowered on top earners."? If not, I don't think it's useful for discussing tax rates.)

None of this tells us anything useful about what the optimal tax rates should be. One could be a rigid-minded "property rights extremist" in such a way that no taxation is ever justified. "It's mine, so you can't have it." But most people, even most libertarians, think that the government needs some revenue to fund its programs. (Even some anarchocapitalists, like yours truly, think that the government should remain a going concern for quite some time. If there is a necessary interim between our current massive government and future statelessness, that inevitably means some level of taxation for the foreseeable future.) These taxes might be seen as mild-but-justifiable abrogations of property rights. Or they may be seen as a necessary cost that overall improves property rights, because government police and courts discourage theft and settle disputes. I don't know what the optimal tax rate should be. But I do think it should be troubling if people start arguing that there are no moral constraints on tax collection and income redistribution because "property rights aren't even a thing." Most people are quite reasonably troubled when they hear this kind of talk. They are right to be troubled. And property rights deniers are wrong to dismiss these worries.