David R. Henderson  

Property Rights Create Harmony

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I live in Pacific Grove, California, where we just voted on a measure to change how an area was zoned so that a luxury hotel can be built. I favor property rights and so I voted in favor of allowing it. Other factors made my Yes vote even easier, like the fact that if the hotel's investors manage to get it through all the other remaining hoops, the hotel will give the city government a substantial amount of Transient Occupancy Tax revenue that will help pay the huge pensions that the city government unwisely, and illegally, granted policemen and firemen back in the early 2000s. Yes, the city government could waste it on new projects, and I'm reasonably sure they will, but they probably won't waste more than half of it.

I'm also on a Facebook site called Pagrovia, in which there's a lot of bad-willed fighting and name-calling. One of the fighters, who was on the opposite side of the ballot measure, attacked people who favored the measure as being bought off, shills for the hotel investors, etc. A couple of days ago, she lamented, I think quite sincerely, the amount of bad will that there was on the site.

Put aside the hypocrisy of being someone of bad will who laments its existence. Here's what I find interesting: what created the bad will, at least in this case, was the flimsiness of property rights. Imagine that there had been no zoning, or even very liberal zoning, so that the hotel investors had not needed voter permission. There would not have been a fight.

Consider other issues that arise in Pacific Grove. One is that to cut down a tree, even one that is threatening your house, you need government permission. And when these issues come up before the city government, there are almost always people there who want to prevent you from cutting down your tree. There is a lot of bad will. Let people make that decision--that is, respect their property rights--and there is less bad will and more harmony. Bastiat made this point very well and in many contexts.

Here's what I wrote about this in The Joy of Freedom: An Economist's Odyssey:

Not only do property rights give people a strong incentive to invest to steward their property, making themselves richer in the process, but they also resolve many problems and prevent many conflicts. We don't often realize this, because the conflicts prevented are...prevented. To see what happens when people aren't allowed to own property, visit any Indian reservation in Canada or the United States. On my vacation described above, I spoke to a man who runs a store on a Canadian reservation. I made the point that the inability of people on that reservation to own their own houses strictly limited the amount they were willing to invest in improving "their" houses. He responded that the fundamental problem was that various factions on the reservation are always at each other's throats. But this wasn't a fundamental problem; it was a derivative problem. Imagine what would happen if you had to get a coalition together every time you wanted to paint your house. You would start complaining about "factions."


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CATEGORIES: Property Rights




COMMENTS (9 to date)
Kevin Erdmann writes:

Amen, and amen.

I think Michael Munger's Euvoluntary Exchange idea is very important on this issue. Every time California creates more distance between regulated rents and market rents, or between replacement cost of a new building and the market value, they create a gap between available alternatives, which is the fundamental source of economic injustice. It's funny how an intuitive sense of this issue informs so many people's reactions to, say, poor workers accepting low wage jobs, yet so many times their proposed solutions make the matter worse.

Jon Murphy writes:

Preach!

Tom DeMeo writes:

So it's not a hotel somewhere in town.

It's adjacent to your property.

The parcel had been over a hundred acres of privately owned forest and was recently sold.

The new owner wants to do something large and industrial and not particularly pleasant to be near.

Pajser writes:

During collective decision process, people learn about wishes of other people and about world they will influence with their decision. They sometimes develop conflicts and hate, but cooperation and empathy also.

James writes:

Tom,

So what? With or without property rights, there will be outcomes that make some parties worse off. The point is that on net, property rights promote harmony, not that property rights make everyone happy all the time.

Pajser,

People who own private property can join with others and pool their assets into collective ownership when they want if they think it will make them better off. How often do you see people do so? Would you merge your yard with your neighbors?

Jaime L. Manzano writes:

Rezoning can award a property owner a windfall gain. That gain can be at the expense of neighbors, be it in terms of the quality of life, or the value of their property. Government tends to be interested in rezoning to increase property tax revenues. Implicitly, there is a collusive, even crony, relationship between government and real estate speculators. If neighbors could block a a popular undesired zoning change, or perhaps share in the profit, or maybe a reduction in their property tax triggered by the change, less hostile, even cooperative rezoning might be practicable. The concept needs development.

Pajser writes:

James - many people already live in apartments in buildings, and some parts of the buildings, including yards are collectively managed. I do. If there is an option for further collectivization, I would vote for it. I am not particularly interested in starting new, more collectivist collective or even initiating actions for further collectivization in existing sytem - because organizing part would require lots of effort.

Benjamin Cole writes:

Great post, but let's go further with it.

If you want to control what your neighbor does, then buy a first right of refusal on the neighbor's property, or buy a contract that they do not cut down trees.

Why zoning anymore? In 1926, in a split decision, the Supreme Court granted local government zoning rights, and from that much more has stemmed.

Curiously and gratuitously, one justice wrote that without zoning, cheap apartments would be "parasites" and move into single-family detached neighborhoods. The underlying case involved industrial land. A little arbitrary class warfare, this time from the top down.

The upshot of that 926 decision (at least in California) is single-family detached neighborhoods, or other less-dense neighborhoods, where a free market would have built dense high-rise condos.

The other upshot is that California is choking itself, due to expensive housing. People blame liberals, but go to Newport Beach (GOP territory) and try to build anything. On the other hand, you can build a high-rise in downtown Los Angeles.

I doubt property zoning, or for that matter, criminalization of pushcart vending, will ever become much of an issue.

Influential people own land, are voters, and they like zoning.

De-zoning will not be an issue that America's right-wing will embrace, or even regard as the topic of polite conversation.

I support the regulations, laws and tax codes that benefit me, my interest group, my party and my class, and I am against those that do not. That is my bedrock principle, and from that I will not waver.

David R Henderson writes:

@Benjamin Cole,
I support the regulations, laws and tax codes that benefit me, my interest group, my party and my class, and I am against those that do not. That is my bedrock principle, and from that I will not waver.
More’s the pity. I think we will get more positive change if people look beyond their own narrow self-interest and defend the rights, including the property rights, of others.

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