Dr. Kirsten Lombard Explains Private Property

The following ideas are summarized from a speech given by Dr. Kirsten Lombard, Corporate Communications Specialist in the Editorial Department at a leading provider of technology services.     Continue reading this page for more discussions on property rights.

We tend to think that private property is real estate, or things we can own.  But it goes far deeper: property rights go immediately back to your person.  Just because you don’t have money, just because you don’t own land, doesn’t mean you don’t have property rights.  You are your own property.
If the government can control you, if the government can control everything that you own, then you are not free.   Either you have a right to own property, or you are property.

There are two fundamental concepts to a free and prosperous society: individualism and private property, and they go together.  Property rights not only make the person living in a shack on half acre equal to the person who lives in a chateau on 40 acres, they make this person able to become that person.
The person who lives in the shack can begin to leverage the half an acre that he has, to build  business, to do all sorts of other things, so that eventually he can own the mansion on the 40 acres.

If we don’t have property rights, we are dependent upon the government to give us whatever they see fit.  There is no guarantee you ‘re ever going to  get to the chateau on the 40 acres, and probably you won’t.  You are likely to remain the person in the shack on the half acre, and probably you won’t even own the half acre.  That will belong to the government too.

Private property rights are important because they provide a block on the government.  It is a stumbling block to their total control.  If you own things, if you are in possession of yourself, then they can’t control you and what you own.  Then they can’t control everything.  That keeps government in check.  Private property rights are really important in that respect, as well as many others.

View Dr. Lombard’s full presentation here:

Is .  .  .  Property Rights

In 2000, Hernando de Soto, president of an influential Peruvian think tank and a prominent Third World economist, sets out to solve the mystery of why some people in the world can create capital and others cannot. Outside the West, in countries as different as Russia and Peru, it is not religion, culture, or race issues that are blocking the spread of capitalism but the lack of a legal process for making *property* systems work.

 

The Mystery

 

 

 

 

As Hernando De Soto (2000) has demonstrated, *property* rights to land and dwellings in developing nations are notoriously insecure—a fact that has helped *impoverish* the citizens of those nations. More generally, well-defined and enforced *property* rights are pivotal in shaping long-run economic growth and, thus, prosperity. Recent research by Erica Field (2007) is helping us understand one mechanism by which secure property rights raise wealth and improve the human condition: When rights to property are secure, people can spend their time creating wealth rather than defending it.

 

 

 

 

 

 

 

 

Implementing major legal change so as to establish a capitalist order involves changing peoples’ beliefs, and de Soto contends this is a political rather than a legal responsibility. He believes such a change can be achieved if governments seriously focus upon the needs of their poor citizens for a legally integrated *property* system that can convert their work and savings into capital. Political action is necessary to ensure that government officials seriously accept the real disparity of living conditions among their people, adopt a social contract, and then overhaul their legal system.

Capitalism stands alone as the only feasible way to rationally organize a modern economy.  Capital is the force that raises the productivity of labor and creates the wealth of nations.  According to De Soto, the problem outside the West is that while the poor have plenty of assets (land, homes, businesses), these assets lie overwhelmingly in the extralegal, informal realm. De Soto’s on-the-ground research reveals that this is the result of an accelerated process of urbanization and population growth, coupled with the inability of legal systems to adapt to the reality of how people live. What has happened is that throughout the Third World, the costs of making assets legal (obtaining proper title to a house, registering a business, etc.), are so prohibitive both in terms of time and money, that the assets end up being what de Soto calls “dead capital.” In the West, a web of financial and legal networks enable people to use their assets to create further wealth, through such tools as mortgages, publicly traded stocks, and the like. Outside the West, most people live and work outside the kind of invisible asset management infrastructure that we take for granted, and thus are unable to use their assets for the “representational purposes” we are able to. Thus the full set of capitalist tools are not available to them and it becomes incredibly hard to realize any kind of upward mobility.

Peru’s economy grew an average of 6.4 percent a year from 2002-12 after adjusting for inflation, according to government figures, a remarkable period of sustained expansion that has made it one of the world’s star economies.

De Soto identifies the crucial role *property rights* play in elevating the poor out of poverty.  His groundbreaking book is available here at Amazon.com.

Read more about Peru’s successful rise out of poverty.

from: PERC Reports, Spring 2008, Volume 26, Issue 1
“Property, Work & Wealth”
by Daniel K. Benjamin

Fundamental to Economic Prosperity

Poverty can be caused by many factors, but property rights are fundamental to the economic prosperity, for which the peoples of all societies yearn.

Daniel Benjamin

 

 

 

Secure property rights are central to economic prosperity. It was the emergence of secure property rights that laid the foundation for the Industrial Revolution and the subsequent explosion of per capita incomes. Around the world today, it is variations in the security of property rights that play a central role in explaining differences in prosperity across nations.

 

 

 

This report covers a study of the economic organization of farming in Ghana, where land is largely controlled by political leaders, and where individual property rights are both ambiguous and negotiable.

Many factors play a role in poverty, whether it is in West Africa or elsewhere. The factors identified by the authors of this paper cannot account for all of the deprivation we see in Ghana, but the paper fits nicely into a growing literature that makes one point abundantly clear: Without secure property rights, prosperity is a pipe dream.

Read the full report here.

from: PERC Reports, Volume 27, No.2, Summer 2009.
“Property Rights and Prosperity”
by Daniel Benjamin
 

The Koontz Case in Florida

Another win for property rights!    In June, 2013, the Supreme Court ruled in favor of the Koontz family in a case based on the Takings clause of the U.S.Constitution.     The Takings Clause, the last clause of the Fifth Amendment, limits the power of eminent domain by requiring that “just compensation” be paid if private property is taken for public use.  As I understand this case Coy Koontz, Sr., applied for permits to build a home on 3.7 acres of his 15 acre plot, which was in an area of Florida designated as wetlands,

Wetlands Project

The St Johns River Management District wanted him to give up the balance of his 15 acre holding as conservation lands plus pay up to $150,000 for improvements on an unrelated plot of State-owned land.   As I read about the Koontz family fight I realized how vigilant we the people have to be and how ready to fight to protect our property rights we need to be.  Read the summary of the Koontz decision as reported on the PLF (Pacific Legal Foundation) Liberty Blog on June 25, 2013

A summary of the Koontz decision

June 25, 2013

As reported earlier, the United States Supreme Court handed property owners across the country a major victory in Koontz v. St. Johns River Water Management District.  The decision’s positive impact on individuals who seek to make use of their properties—e.g., landowners, homeowners, businesses, etc.—cannot be overstated.  Here’s a summary, in layman’s terms, of what the Court decided.  But first, some background.

In 1987, the Supreme Court decided another important property rights case (also argued by PLF attorneys):  Nollan v. California Coastal Commission.  In Nollan, the permitting agency had approved a permit to remodel a home, but only on the condition that the owner first dedicate to the State an easement that would allow the public to walk freely across his backyard.  There was absolutely no connection between the owner’s remodel project and the easement demand.  The agency simply wanted something—a valuable interest in Nollan’s land—without having to pay for it, and it used the permit process to coerce him into complying with its wish.

You should read the full article about the Koontz decision as reported on the PLF Liberty Blog,  but the conclusions stated at the end of that article are as follows:

Today’s decision by Justice Alito handed the Koontz family a victory on both points.  First, it held that there’s no constitutional difference between a permit denial (following an owner’s refusal to submit to an extortionate condition) and a permit approval containing an extortionate condition.  Extortion is extortion, and all such conditions should be reviewed under the heightened scrutiny provided for in Nollan—i.e., the government must show an “essential nexus” between the condition and the impact of the proposed use of the land. Second—and perhaps more significantly—the Court held that all demands for property in the permit context (including monetary exactions) are subject to Nollan review.  This is an important holding for the countless property owners across the country who face an ever-increasing number of monetary exactions imposed by agencies in the permit process.

After today’s decision, the Constitution requires that such exactions bear an essential nexus to the impact of the owner’s use of the land. The four liberal Justices dissented.  Curiously, even the liberals rejected the “permit approval v. permit denial” distinction that the District advanced.  They, too, agreed that it doesn’t matter how a demand for property might be couched in the permit process; if an owner is coerced into giving up property in exchange for a permit, it is subject to Nollan review.  However, the liberals disagreed with respect to the monetary exaction issue.  In their view, money is not property for purposes of Nollan; thus, monetary exactions–unlike land exactions—are not subject to scrutiny under that decision.  To open such exactions to Nollan review will, in their eyes, open the floodgates to challenges to taxes, user fees, and the like.  (Alito’s opinion effectively rebuts this exaggeration, noting, inter alia, that the holding applies in the unique land-use context). There will be more analysis of this opinion as the day goes on, so stay tuned.  In the meantime, every property owner in America has a cause to celebrate today.  No longer will agencies be able to skirt the important protections provided to them under the Constitution.

 

I pay taxes and I’ll bet you do too.    Our taxes are used, in part, to help those in the country who need a little extra assistance for basic necessities like housing and food.  The federal government would have us believe that paying a little more in taxes would go a long way towards reducing poverty in this country.    I’ve never believed that argument.   I’d like to share with you an article I read in the New American, written by Tom DeWeese, published on December 4,2012, which explained better than I ever could the REAL relationship between private property and poverty.

Private Property Ownership Is the Only Way to Eradicate Poverty

Poverty. It’s the excuse for nearly every government spending program. Help the poor. Tax the Rich. Get the One Percent. How dare they get so wealthy while everyone else suffers!

And what is the preferred way to eliminate poverty? Redistribution of wealth. It is the force behind the Occupy Wall Street movement, Agenda 21 and its Social Justice schemes, nearly every poverty program of the Federal government, and even most charitable poverty programs.       

These schemes are all the same. Take money from the producers and give it to the non-producers. Yet, as billions of dollars are taken for the “cause,” poverty steadily increases. If one truly wants to help eliminate poverty, perhaps it’s time to rethink the process. To start, ask the question — why are some nations (and individuals) wealthy and others so poor?

There are many efforts underway to focus attention on world poverty. In a world of massive government spending that is supposed to be used to help the poor, the statistics on global poverty are staggering. According to the United Nations Millennium Project, there are currently 1.2 billion people living in poverty. Fifty thousand deaths per day occur worldwide as a result of poverty. Every year more than 10 million children die of hunger and preventable diseases. More than half of the world’s population lives on less than $2 per day and 800 million people go to bed hungry every night.

To combat the situation, there are massive efforts underway, from churches and charitable organizations to local, state, federal, and international government programs designed to eradicate poverty. Billions of dollars in foreign aid have been distributed to countries around the world to help feed the poor. Poverty reduction targets have been set. International goals have been announced. Deadlines have been determined. Agreement has been reached by every national leader that poverty must be eradicated.

There are faith-based programs designed to feed the children; education programs designed to create awareness of poverty and starvation; corporate programs designed to enhance global development, which would help to create business or bring existing corporations into nations to provide jobs; and government programs designed to build hospitals, schools, and improve healthcare and education. Charitable contributions and government money, either from the local level or through foreign aid, are the main source of funds for these efforts.

Yet little progress is being achieved as, in fact, the problem continues to escalate. There is an ever-growing disparity between rich and poor. Why?

To date, nearly every effort to eradicate poverty has focused on temporary relief of the suffering rather than getting to the root of the poverty and creating real solutions to actually eradicate poverty permanently. The result of such efforts, while well intentioned, and perhaps necessary in the short run to assure the poor are at least kept alive, will not solve the problem of poverty. In fact, such programs may actually make the situation worse.

Frankly there is not much new in this type of activity. For more than 50 years governments and charities have been focused on rushing aid to the poor and starving. Yet none of these efforts address the basic reason poverty exists in the first place. The solutions which call for more and more aid simply respond to the visual effects of poverty such as starvation, ignorance, and poor health. None truly address the cause. As a result, rather than easing the situation, the number of poor people continues to grow.

Most of the current anti-poverty efforts focus on redistributing funds from wealthier nations to poorer ones, either through mandatory taxation or charitable donations. This system ignores the fact that tomorrow the poor need to be fed again. Taxpayers or the voluntary donor must dig into his own funds yet again to help. The process is repeated daily, each time the poor recipient is only temporarily helped, as the tax payer or the donor become poorer themselves. Meanwhile, as massive funds are moved in and out of governments, bureaucracies are institutionalized to run the system. More and more money goes to feed the machinery of poverty than gets into the hands of the intended poor. Such a system sustains poverty rather than eradicates it.

Meanwhile, some corrupt and totalitarian governments also learn how to divert funds into their own coffers, again, depriving the poor of their daily bread. A system of bribes and local corruption often exists, making it nearly impossible for average citizens to receive government services. Such a system forces many of the poor to live outside of society in a virtual underground economy. This actually serves to sustain poverty against the efforts of those trying to eradicate it.

In addition, some international policies essentially institutionalize poverty. Policies which prevent or severely restrict development and energy use result in the violation of the most basic human rights, denying economic opportunities and the chance for better lives, the right to rid their countries of diseases that were vanquished long ago in Europe and the United States. For example, lack of electricity means no water purification or sewage treatment, no power for offices or hospitals, and no stoves to replace pollution-belching, lung-disease-causing open fires.

Yet, as the UN, through its Millennium Project, tells us that the goal is to eradicate poverty by the year 2015, the UN and nations including the United States, promote policies that make such goals impossible, Specifically, they promote Sustainable Development, which supporters say must stop the spread of human advancement in the name of protecting the environment. According to the doctrine, the poor in third world nations need to just do without electricity, clean water or modern development, for that is sustainable! Shameful.

To enforce such policy world wide, the UN, at the Rio+20 Summit held this past summer, in the name of ending poverty sought to enforce a tax on every developed nation equal to 0.7 percent of their gross national product. To every American, that is a redistribution of wealth equal to $1,325 per year for an American family of four. The money, they say, will end poverty and protect the environment.

And to get the job done, using that money, the UN will find it necessary to create a new global council to oversee it all; new UN agencies to administer the programs, budgets, and power; and “genuine global actions.”

In 2006, when I debated the head of the UN’s Millennium Project at Cambridge University in England, I said to him over dinner before the debate, “You realize you don’t have a chance to end poverty by 2015 by using redistribution of wealth, don’t you?” He said, “Yes, I know.”

The Real Way to End Poverty

It is becoming increasingly clear that poverty will never be eradicated unless those working on the problem will allow themselves to look for a drastically new way to attack it. Simply put, rather than constantly applying band-aids to the effects of poverty, they must look for the cause and fix it.

One must first look at the world and see where wealth is created and why it is so. The greatest example of wealth creation is obviously the United States. It is the beacon of wealth and freedom for the entire world. Most people in the world envy America’s wealth and seek ways to share it, yet very few look at how the nation got its wealth, or attempt to copy its system for success.

Why did the United States become so wealthy? Was it the possession of vast natural resources? Africa has more. Was it the existence of greater industry? Japan has more. Was it the existence of a superior education system? The United States now ranks below the top ten nations in education.

The reason the United States has led the world in wealth, standard of living, and abundance is that the average resident of the United States has had the ability and the opportunity to invest and produce capital.

Why could ordinary citizens of the United States produce their own capital to create personal wealth, while most of the rest of the world failed at such an attempt? The answer is actually very simple. The United States created a very easy, immediate, complete system for recording and securing ownership of private property.

Peruvian economist Hernando de Soto explains the root of American wealth in his book, The Mystery of Capital. De Soto asks, “Why does Capitalism thrive only in the West, as if enclosed in a bell jar?”

Capital, he argues, “is the force that raises the productivity of labor and creates the wealth of nations, It is the lifeblood of the capitalist system, the foundation of progress, and the one thing that the poor countries of the world cannot seem to produce for themselves.”

Read Mr. DeWeese’s full article here