One Property Rights, Many Recipes?

Arnold Kling

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Karol Boudreaux and Paul Dragos Aligica write,

The legislative path is considered a rapid course to the creation of property rights...In some cases, when the economic mechanisms have been destroyed or have never existed in a functional form, the top-down legislative path is inescapable. Quite often, however, this path is subject to rent-seeking and capture by elites who use legislation to acquire and control property. Too often, legislation removes sticks from the bundle of property rights citizens hold, and this constricts trading opportunities, reduces the value of property and increases tenure insecurity.

...In many cases, particularly in Africa, customary law may provide a greater degree of tenure security than formal law. This raises the question: is the better path for securing property rights in Africa to somehow formalise customary rights and privileges (Alden Wiley, 2006)? There are no simple answers here either, as this approach is also fraught with complexity and uncertainty and not free from problems associated with rent-seeking behaviours

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CATEGORIES: Institutional Economics

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John Fast writes:

This raises the question: is the better path for securing property rights in Africa to somehow formalise customary rights and privileges (Alden Wiley, 2006)? There are no simple answers here either, as this approach is also fraught with complexity and uncertainty and not free from problems associated with rent-seeking behaviours

I dunno, it seems pretty clear to me that the answer is a resounding "Yes!" with the equally-clear caveat that the "customary rights and privileges" may be modified during formalization for three possible reasons:

1. Equal rights: for example, if "customary rights and privileges" explicitly discriminate, for example giving certain rights and privileges to members of one group (males, or members of a certain tribe) and not others (females, or members of a different tribe) then they should probably be modified. The exception might be when there are other rights and privileges which exist to compensate.

2. Compliance with the principles in Epstein's Simple Rules for a Complex World or a similar set of meta-rules.

3. Overall economic efficiency, i.e. reducing transaction costs.

As far as I can tell from reading the report, especially Chapter 6, the examples cited by the authors don't provide any reasons against formalizing "customary" (i.e. local common-law) property rights; they provide reasons against arbitrarily changing those rights by political fiat!

Posted January 5, 2008 5:16 PM

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