In the Absence of Private Property Rights

By Lee, Dwight R. | Freeman, July 1999 | Go to article overview

In the Absence of Private Property Rights


Lee, Dwight R., Freeman


We commonly benefit from things we neither understand nor appreciate. Obviously there are advantages in benefiting from a wide range of things without having to give them much thought. But the danger is that such neglect can often cause us great harm. Good health is an example. For most people, good health is easy to take for granted, and this often results in harmful patterns of behavior. In the case of health, however, most people know something about the risks of unhealthy behavior, and recognize the advantage of healthy habits even if they don't practice them.

Unfortunately, this is not true for maintaining a healthy economy. The productivity and cooperation essential to economic progress depend on things that are not only easily neglected, but also commonly denounced. Private property is a good example. Instead of recognizing private property as the foundation of economic cooperation and progress, people commonly see it as the source of economic problems actually caused by the lack of well-defined and enforced private-property rights.

Pollution and Private Property

Pollution is widely blamed on capitalism, with its emphasis on profits and private property. According to this view, private property rights should be restricted to prevent firms and individuals from putting their private gain ahead of the public's interest in a clean environment. But pollution is actually a problem caused by too little reliance on property rights, not too much. Pollution problems should teach us how much we benefit from private property by illustrating the inevitable breakdown in social cooperation in its absence.

Pollution problems would not exist if we could divide up the atmosphere, rivers, and oceans into separate units owned and controlled as private property. There would still be pollution, but not excessive pollution. If I wanted to discharge pollutants into the air that belonged to others, they would prevent me from doing so unless I paid them a price that covered the cost my pollution imposed on them. So I would pollute only as long as the value I realized from discharging an additional unit of pollutant was at least as great as the cost to others. Private property and the market prices that result would motivate people to take into consideration the environmental concerns of others.

Pollution problems exist because without private property in air sheds and waterways there are no market prices to make polluters mindful of the cost of their polluting activities. The result is that people pollute excessively; pollution continues even though the benefits from additional pollution are less than the costs.

Although we cannot easily imagine treating the atmosphere and waterways as private property, the lack of cooperation that underlies pollution problems would extend to all aspects of human action if private property were absent. Instead of seeing pollution problems as an indictment of private property, these problems should give us an appreciation of the wonderful advantages we realize from private property. And once the power of private property to promote cooperation is realized, one can see how pollution policy can be improved through the creative establishment of private property.

Instead of having political authorities dictate how, and how much, polluters have to reduce their discharges (as they do now), it would be far better to create a form of private property in the use of the environment for waste disposal. This private property would take the form of transferable pollution permits specifying how much their owners could legally pollute. …

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