Research:
Principles Within Property Rights
Gina Lee
College of Arts and Science, Liberty University
Abstract
The preservation of constitutional property rights runs parallel to economic development. This research paper will seek to highlight the importance of protecting property rights to aid in market efficiency. One of the most important aides to freedom is the recognition of the right to own property. If one looks deeply across nations one can find that in places such as Venezuela and China, the outcome of restricted property rights brought a decline in the overall quality and economic productivity of the country. With some countries leading in economic growth at one time and experiencing a continual decline at another time, some consequences rested in the land restrictions of a community. Countries such as India were denied the right to property by their 44th Amendment to the Indian Constitution; this resulted in movements of resistance.
The research concludes that voluntary exchange regarding property rights, and the ability to look at consequences from decision making, will encourage sound decision making when it comes to policies. Land restrictions our found to cause many complications to individual choice. Prices rise, land becomes scarce, and decisions must be made, either by the government or the community. The government tends to create more policies with abridged rhetoric to hide any costs behind restrictive land policies and individuals make the hard decision whether to leave or stay under such legislation. One finds that considering only the benefit of today is limited; When creating public policy, one must look beyond today’s policy choices and consider the consequences of the future.
Introduction
When looking at the value and constitutional right to property, it is imperative to look at history to understand why property rights have been important and how different cultures understood the benefits of private property. Many economists understand the importance of property rights and its foundation in a thriving economy. Even if a government system focused only on housing assistance, consequences can still spiral into other negative conditions in the economy; One isolated interference begets policies that have to “fix” the former issue. The restrictions on property are usually symptoms of a bigger picture. “And as the government goes farther and farther, it will finally arrive at a point where all prices, all wage rates, all interest rates, in short everything in the economic system, is determined by the government” (Mises, 2006, p. 46). Property rights must be protected for economic growth, quality of life, and the assurance of a human right.
A Journey to Egypt
Looking back centuries past, the state controlled most of the agricultural land in places such as Egypt; during the late medieval period, land in the Vile Valley and the Delta was controlled by the state. Lisa Blaydes writes in “Mamluks, Property Rights, and Economic Development: Lessons from Medieval Egypt” that the landlords were the sultanate and the military. “The military commander thus acted as landlord and as final arbiter of disputes in rural areas” (Blaydes, 2019). The military was “linked” to the state. For Egypt’s mamluks to pass down land or wealth to their children, they founded religious endowments and named a child as the future administrator. They wanted to pass down wealth; this was their transfer of wealth. “[T]he historical Egyptian experience offers insights into how relatively strong states can be gradually undermined by state actors seeking to carve out their own forms of “private” property”; On English lands during this period, land laws were evolving. There became a need for more private control (Blaydes, 2019).
Venezuela: “Squatter City”
Michael Eamonn Miller gives a detailed analysis of the fall of Venezuela in his article “Squatter City: How the housing crises threatens Venezuela’s revolution”. Hugo Chavez Frias, Former President of Venezuela, led a housing crisis that produced poverty and illegal tenants in homes in the city of Caracas. Because of the government-controlled housing, there was no incentive to care for and trade resources. There was not a sense of ownership and value within material goods. The oil boom during World War II made Venezuela a once thriving country but eventually caused foreign debt to rise. Decades later the city came to have millions of workers but fewer job opportunities (2011). The root issue is how the government delt with poverty, housing as well as violence (2011). Millers writes that “[u]nder Chavez, Venezuela has become a country governed in many ways by whim” (2011). His tyrannical governance and quest for socialist cities crushed Venezuela and its economic growth. Chavez allowed “squatters” to invade property rights. In turn, the invaders of these properties voted for the socialist president; they became his constituents and incentivized government overreach.
In Venezuela, people did not have the incentive to move from their places of residence because poverty was rampant and part of everyday life; where there is rent control and government run housing systems, there will be a shortage due to no other available places to live and no incentive to lose their low priced or “free” space, whether it was gained legally or not. Surprisingly, those who benefited from the government’s hand accepted the control. Ludwig von Mises writes in Economic Policy “[t]he government interference which they praise brings about conditions which they themselves do not like” (p. 51).
South Africa and China
There is a difference between private and public ownership when it comes to housing. The obvious is the care given to each. No matter what country one finds themselves in, the same result of government run housing can be clearly seen. David Boaz writes of the commonalties between two different regions of the world: South America and China. He writes, in his article “Private Property from Soweto to Shanghai”, that the apartheid in South Africa gives a clear form of communism. It is difficult to imagine a group of people not being able to choose where they want to live or even choose who they want to live next to. He states: “Unlike the residents of a normal town, they could not choose to live near their friends or relatives or people of similar educational or occupational background, nor, of course, did they have property rights” (1989). The government owned the property and could take it by their own choice and voluntary actions; however, when the government began to let the Sowetans purchase homes, things began to look better. The new owners began to take care of their homes instead of relying on the upkeep or lack thereof from the government.
When analyzing China, one can find a similar situation. Communists took over China in the late 40s and since then have allocated government resources to control housing. The market is pushed to the outskirts of the country; those in the rural parts are wealthier than those in the city. In the city the housing is run down and even the clothes in the government run stores are unattractive to buyers. Soon the communist government would begin to legalize private property. “Presumably the Chinese government has noticed the success of privatization and property rights in the West” (1989). After noticing Hong Kong, Taiwan, and South Korea, China began to allow the private sector to, in some places, clean up properties and living quarters and be rid of public sector squalor (1989). Communism continued but the positive effects of some private housing was evident.
In the “Economic Freedom of the World: 2020 Annual Report”, a country’s economic freedom must contain the following: personal choice, voluntary exchange, freedom to enter markets and compete, and security of the person and privately owned property” (2020). It is emphasized in this report that the protection of the right to property is foundational to economic freedom; it is foundational to a free society. “Indeed, it is the most important function of government” (2020). Within the 2018 report, Hong Kong placed first in its score; however Chinese government control regarding property rights would soon affect Hong Kong’s lead. When there are restrictions on property rights, it limits the ability of an individual to sell, trade, and build upon wealth. Government run housing affects the welfare of a community. In turn, this lowers the quality of life in such places.
India and the Land Acquisition Act
The law, regarding private property, that was enforced in India was the Land Acquisition Act in 1894. Writer Gopal Sankaranarayanan aids in the understanding of the right to property in India. In “The Fading Right to Property in India”, there are complex issues surrounding these rights. Historically, little attention was paid to property and trade. It was not until years later that a constitution to property brought some clarity and focus; however even with the Indian Constitution and the Government of India Act of 1935, the right to property was not allocated or available. Eventually it would be “sanctified” in the Indian Constitution. Within the articles the statutes protected the right to life and property. “In addition, while most of the other rights are specifically available only to citizens of India, rights of life, equal treatment and property were made available to any persons, thereby including non-citizens as well” (2011); however, soon erosion of these statutes would take place. The land reform legislation was challenged by people in other parts of the country.
The 44th Amendment would remove the right to property clause. The reason for this was an arrangement with the communist parties. The right to property fell from a position of “preeminence” to a mere legal right (2011). Since then, the Amendment caused many economic problems for the nation of India. Throughout the decades there have been a rise in movements of resistance to push back against the denial of the opportunity to legally stand against such laws. Some foreign investment ventures require land; thus, “many small landholders are deprived of their land for paltry sums of compensation” (2011).
Thomas Sowell on Land Restrictions
Severe land restrictions affect property rights and forbid any type of housing in a specific setting. Thomas Sowell discusses this issue in Applied Economics. He highlights how some of the terminology used to prevent housing in these areas fall under the guise of “open space laws” (p. 101). When these policies are enacted, the price of land near these areas leave many people not willing to build on such expensive land. In Applied Economics, Sowell speaks of California and how allocation of land is not determined by those who desire to purchase it but influenced by policies and legal restrictions (p. 102). Prices no longer serve its purposes and other entities interfere with the plans of people to keep them from their right to voluntary choices. This is not merely in California but in Massachusetts as well.
Sowell writes of pricing disparities in Massachusetts where it became the “first large community in the United States where the average price of a home exceeded a million dollars, and its land use restrictions are among the most severe anywhere” (p. 103). Moreover, in Virginia such legislation prevented thousands of homes from being built. The existing homes sustained rising prices. Homes could have been built voluntarily if property rights were protected. When decisions are restricted because of government policies, profit is restricted as well. Protecting property rights is not only serving those who desire to own property but an entire society, even those who choose to rent. “In the case of housing, property rights allow the interests of people who rent apartments to carry weight in economic competition. . .” (p. 104). As one can see the housing market and commercial properties are essential for market growth when there are no restrictions.
Aristotle and the Superiority of Voluntary Actions
The principles that stand for freedom have been part of mankind since the beginning of time; philosophers discussed the meaning and the value of voluntary actions and the importance of attaining and keeping it. Aristotle gave empirical meaning to the idea of personal rights without constraint; and was a proponent of property rights. In Nicomachean Ethics Book III, Aristotle states: “It appears, thus, that an act done under constraint is one in which the initiative or source of motion come from without, and to which the person compelled contributes nothing” (p. 54). He moves further to say choice is the result of deliberating.
We come to conclusions because we have made choices through deliberation; these deliberations and choices will ultimately become voluntary, unconstrained actions (p. 64). Moreover, people have a greater love for things they have earned themselves and are able to give generously away. A generous man is an “openhanded spender who values material goods not for their own sake but for the sake of giving” (p. 85). Man takes from what is his own property; for from his own possessions, he will be able to give to others. There is value in private property and unconstrained choice.
Biblical Principles
The concept of freedom is wrought in mankind; God has a purpose for everything that He does; this includes placing the passion for freedom in his creation; specifically in man. Writer J. Budziszewski in Written On The Heart: The Case For Natural Law extrapolates several philosophers on the idea of the purposes of God and natural law given to man. He writes: “[S]ociety unites citizens for the purpose of a secondary partnership in goodness. The purpose of human reason is to participate in the wisdom by which God made the universe, and one way human reason participates is to grasp the purpose that God has implanted in human nature itself” (1997, p. 109). Freedom and the ability to create and cultivate is instilled in human beings by God; humans are created in His image. Genesis 1:26-27 states: “Then God said, Let us make man in our image, after our likeness. And let them have dominion over the fish of the sea and over the birds of the heavens and over the livestock and over all the earth and over every creeping thing that creeps on the earth” (English Standard Version, 2008). When man is coerced or demanded to go against his conscience or is restricted from his abilities to be creative with wisdom and charity, then he is not walking in the image of God; instead, he is a mere caricature of the people that have enslaved him mentally and, at times, physically; he is not acting as himself.
God has not only given man freedom but the ability to reason; the ability to test things. Humans have this ability unlike animals. God has commanded His people to put things to the test. I Thessalonians 5:21-22 says to “. . .test everything; hold fast what is good. Abstain from every form of evil” (English Standard Version 2008). Entrepreneurs and innovators have the call to test what is good for society and provide goods that will bring value to the world. Policy makers are responsible for testing which policies are sound. The ability to discern and test is given to free agents so they can make voluntary choices that are led by God. This ability to test every spirit even helps people understand and leave tyrannical governments.
Proverbs 14:31 says, “[w]hoever oppresses a poor man insults his Maker, but he who is generous to the needy honors him” (English Standard Version, 2008). Much focus can be placed on government allocations to the poor, resulting in welfare and subsidized housing to help the “oppressed”; however, the counter argument can be made that helping the poor can be freeing the market of its restrictions so that those in need can benefit from the opportunities in a thriving market economy. Incentives can me created to gain the skills needed to come out of poverty and into a free working society.
Conclusion
In conclusion, when it comes to the economics of housing and property rights, Sowell points to a great truth: “A fundamental question is whether political goals shall be judged by how attractive they sound or by how much must be sacrificed to achieve them” (2009, p. 130). Corrupt politicians can be seen through their policy making; a government’s quest for a socialist regime is evident through violations of the very statutes that make voluntary actions possible. Freedom to own property and exchange one’s own goods is an instinct right and gift. Factual evidence and consequences that surround policy against such rights should help economists and policy makers look for what improves an entire society; for doing so, people truly achieve what is best for a better quality of life. Thus, one finds that society can improve and thrive through the freedom to own property.
References
Aristotle. (2020). Politics. (Benjamin Jowett, Ed.). Ktocyta.pl. (Original work published 350 BCE)
Blaydes, Lisa. (2019). Mamluks, Property Rights, and Economic Development: Lessons from Medieval Egypt. Sage Journals, 47(3).
Boaz, David. (1989). Private Property from Soweto to Shanghai. Foundation for Economic Education. https://fee.org/articles/private-property-from-soweto-to-shanghai/
English Standard Version. (2008). Crossway Bibles.
Miller, Michael Eamonn. (2011). Squatter City: How the housing threatens Venezuela’s revolution. The Virginia Quarterly Review, 87(2), 188-209. http://www.jstor.org/stable/44714360
Mises, Ludwig von (2006). Economic Policy. Mises Institute.
Sankaranarayanan, G. (2011). The Fading Right to Property in India. Law and Politics in Africa, Asia and Latin America, 44(2), 220–236. http://www.jstor.org/stable/43239608
Sowell, Thomas (2009). Applied Economics. Basic Books.
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