EKIP– Expert Club for Economics and Politics A Different Opinion
Author: David Friedman, translation of an excerpt from "The Machinery of Freedom"
The concept of property is of fundamental importance to our society, and probably to any functioning society. On an operational level, it is understandable to any child over the age of three. On an intellectual level, however, almost no one understands it.
Take, for example, the slogan "property rights versus human rights." Its rhetorical power lies in the implication that property rights are property rights, and human rights are the rights of people; people are more important than property (chairs, tables, and the like); accordingly, human rights take priority over property rights.
But property rights are not property rights; they are people's rights to property. They are a specific type of human right. The above slogan conjures up images of a black man occupying a Southern restaurant in protest. In such a situation, conflicting rights are intertwined, but all the rights claimed are property rights. The restaurant owner claims the right to control a certain piece of property—his restaurant. The black man claims the (limited) right to control a portion of the same piece of property—the right to sit at the bar as much as he wants. None of the property claims rights; the chair does not demand that the black man respect his right not to sit on it.
The only claim for property rights that I have ever encountered is the claim by some conservationists that certain objects—a redwood tree, for example—have a right not to be destroyed. If a man were to buy land on which such a tree grows and claim the right to cut down that tree, and a conservationist were to oppose this, not in an expression of his own rights but in defense of the rights of the tree, then we would indeed have a conflict between "human rights" and "property rights." But those who coined the phrase did not have such cases in mind.
One of the most effective political slogans of recent decades is simply a linguistic error that confuses property rights with property rights, which demonstrates how deep the public confusion on the issue runs. Since property is a fundamental economic institution in any society, and private property is the fundamental institution of any free society, it is worth taking some time and effort to understand what property is and why it exists.
Two facts make property necessary. The first is that people have different goals. These goals may be different because people are pursuing their own self-interest or because they are pursuing different versions of what is noble and morally best. Whether they are misers or saints, the logic is the same in every situation; it remains the same as long as each person, observing reality from his own specific point of view, comes to a somewhat different conclusion about what should be done and how it should be done.
The second fact is that there are some things that are in such a state of scarcity that they cannot be used by everyone as much as they want. We cannot all have everything we want. Therefore, in any society, there must be some method of determining who can use what and when. You and I cannot both drive the same car to our different homes at the same time.
The desire of several people to use the same resources for different purposes is the key problem that makes the institutions of property necessary. The simplest way to resolve such a conflict is through physical force. If I can beat you up, I will use the car in question. This method is very expensive, unless you enjoy fighting and have very large medical insurance. This method also makes it difficult to plan for the future; unless you are the current heavyweight champion, you have no way of knowing when you will have access to a car. The direct use of physical force is such a poor solution to the problem of resource scarcity that it is usually only used by small children and great nations.
The standard solution is that the use of each thing is determined by one person or a group of people who have organized themselves under some set of rules. These things are called property. If each thing is controlled by an individual who has the power to transfer that control to any other individual, we call that private property.
Within the institutions of property, whether private or public, a person who wants to use property that is not his must persuade the individual or group in question who controls that property to allow him to do so; he must convince the individual or group in question that their ends will be served by his use of the property in question for his own ends.
In the context of private property, this is usually achieved through trade: I offer you the use of my property (including, perhaps, myself) to achieve your goals in exchange for your permission to use your property to achieve mine. Sometimes, but less often, this is achieved by convincing you that my goals are good and therefore you should pursue them too; this is how charities and, to some extent, families function.
Thus, under the umbrella of private property, each individual uses his own resources to achieve his own goals. Cooperation occurs either when several individuals find that they can more easily achieve a common goal together than separately, or when they find that they can more easily achieve their different goals through cooperation in the form of trade, each helping the others to achieve their goals in return for the same.
Within the institution of public ownership, property is held (the use of things is controlled) by political institutions, and this property is used to achieve the goals of those political institutions. Since the function of politics is to reduce a variety of different goals to a set of "common goals" (the goals of the majority, the dictator, the party in power, or whatever individual or group controls the political institutions), public ownership imposes these "common goals" on the individual. "Ask not what your country can do for you; ask what you can do for your country." In other words, ask not how you can achieve what you think is good, but how you can achieve what the government tells you is good.
Let's take a concrete case study in which we can compare the effects of public and private ownership. The press is produced entirely through private ownership. You buy newsprint and ink, rent a printing press, and you're done. Or, for a cheaper alternative, you use a photocopier. You can print anything you want without asking permission from any government. As long as, of course, you don't need the U.S. Postal Service to deliver what you print. The government can use, and sometimes has used, its control of the mail as a means of censorship.
Radio and television are different. The airspace (and therefore radio and other frequencies) are categorized as public property. Radio and television stations can only operate if they receive permission to use that property from the Federal Communications Commission. If the FCC determines that a station is not operating in the "public interest," it has the legal right to revoke the station's license, or at least refuse to renew it. Broadcast licenses cost a lot of money; President Lyndon Johnson's personal fortune was built on a media empire whose main asset was the special relationship between the FCC and the Senate Majority Leader (Johnson).
For print media, only private ownership is needed; radio and television use public ownership. What is the result?
There is a vast variety of print media. Every point of view, whether political, religious, or aesthetic, finds expression in some magazine, newsletter, or underground newspaper. Many of these publications are deeply offensive to the views and tastes of most Americans—such as "The Realist," a crude and amusingly humorous magazine that once published a cartoon depicting "One Nation Under God" (the military pledge of allegiance to the American flag) as a sexual act between Yahweh and Uncle Sam; "The Berkeley Barb," a newspaper that is world-famous for its pornographic advertisements; and the publication "Black Panther," which superimposed a pig's head on the dead body of Robert Kennedy.
Radio and television cannot afford to offend. Anyone whose license is worth millions of dollars is very careful. No television station in the United States would run any cartoons from The Realist. No radio station would run commercials from The Barb. How could you convince the noble commissioners of the FCC that it would be in the public interest? After all, in 1931 the FCC refused to renew the license of a radio station owner because many of his live broadcasts were, in their opinion, "vulgar, perhaps even indecent. They are certainly not entertaining or invigorating. And while we have no right to censor, it is our duty to ensure that radio and television licenses guarantee a certain standard of linguistic refinement appropriate to the present time and generation."
The Barb does not need to operate in the public interest; it does not belong to the public. Radio and television do. The Barb should operate solely in the interest of the people who read it. National Review, William Buckley's magazine, has a circulation of about 100,000. It is bought by one American in every two thousand. If the other 1,999 potential readers think it is a vicious, fascist, racist, papist rag, it does not matter - it will be published anyway.
The FCC recently ruled that songs that appear to promote drug use should not be played on the radio. Is that a violation of free speech? Of course not. You can say whatever you want, as long as you don't use the public airwaves for that purpose.
When I say that this does not violate the right to free speech, I am completely serious. It is not possible for anyone to be allowed to use the airwaves for whatever they want. If the government owns the airwaves, it should decide what can and cannot be transmitted over them.
The same goes for ink and paper. Freedom of speech may be free, but the printed word is not; it requires scarce resources. It is not possible for everyone who thinks his opinion is worth something to get everyone in the country to read it. We will cut down all the trees before we can get enough paper to print a hundred million copies of the writings of everyone who would like to share their opinion; and our time on this earth will be up long before we have read all the gibberish thus reproduced.
But still, we have freedom of the press. It is not printed for free, it is printed if there is someone to pay the price. If the author is willing to pay the cost, he prints advertising leaflets and starts handing them out on the street corner. In most cases, the reader pays by paying a subscription to a magazine or by buying a book in a bookstore.
Under a regime of public property, the values and preferences of society as a whole are imposed on individuals who need to use that property to achieve their goals. Under a regime of private property, each individual can pursue his or her goals without imposing them on others, as long as he or she is willing to bear the cost. As a result, our television and radio media are uniform, while our print media are diverse.
Is it possible to change this? Yes, easily. If we make the airwaves and radio frequencies private property. Let the government organize auctions in which it sells the rights to broadcast media on a certain frequency, frequency by frequency, until complete privatization of the entire frequency band is achieved. Does this mean that the airwaves will be controlled entirely by the rich? They will be controlled by the rich no more than the print media is printed only for the rich. The market is not a battlefield where the one with the most money wins the battle and appropriates all the spoils; if it were Detroit, it would spend all its resources on creating gold Cadillacs for Howard Hughes, John Paul Getty and others in their entourage.
Where does the battlefield analogy go wrong? For starters, the market does not allocate all of its resources to the consumer with the most money. If I spend $10 on widgets and you spend $20, the result is not that you get all the widgets, but rather that you get two-thirds of them and I get one-third. Furthermore, the product purchased by one consumer is not subtracted from what is available to another—one consumer’s gain does not mean another’s loss. When I am the only consumer of widgets, only $10 worth of widgets (eight widgets at $1.25 each) are produced. When you also show up with $20, this initially increases the price of those widgets; This encourages gadget manufacturers to produce more, and soon there are enough gadgets to satisfy my demand for 8 and yours for 16. This is not so true for radio waves, which are, in a sense, a fixed and limited resource, like land. But, as with land, an increase in price actually increases supply because it makes people use the existing supply more intensively. In the case of radio waves, if the price of a particular frequency is high, it makes it profitable to use improved technology that allows for optimization of the use of the frequency waves, more careful coordination between stations in different regions to minimize interference, to use previously unused parts of the frequency spectrum, and, sooner or later, to replace some stations entirely with cable television or radio.
Another flaw in the idea of the market as a place of conflict where the rich win everything is rooted in the confusion between how much money a person has and how much he is willing to spend. If a millionaire is willing to spend only $10,000 on a car, he will get exactly as many cars and of exactly the same quality as I will get if I spend the same amount; the fact that he has a million dollars in the bank does not make the price lower or the quality of the car higher. This principle applies to radio as well. Howard Hughes could spend a billion dollars to buy up all the radio frequencies, but he would not do so unless he knew how he could then make enough money with them to justify the investment. However, there are far cheaper ways to provide private entertainment.
What does this mean for the fate of the airwaves as private property? First, the proportional nature of market "victory" means that it is virtually impossible for any rich person or group of rich people to buy up the entire spectrum and use it for some nefarious propaganda purpose. In such an endeavor, they would be bidding against people who want to buy the airwaves to broadcast what listeners want to hear and thus make money (either directly, through pay TV, or indirectly, through advertising). Advertising costs within radio and television are about $4 billion a year. Businessmen who bid for ownership of this or that broadcast frequency in order to gain a share of that money would certainly be willing, if necessary, to pay such a large sum. Suppose there is room for 100 radio stations across the entire frequency range (currently there is room for at least 50 on FM radio, and many more on AM radio). For our hypothetical Machiavellian band of millionaires to gain control of all 100 radio stations, they would have to be willing to pay 100 times more than their competitors. That would require somewhere around a trillion dollars, or almost 1,000 times the combined wealth of the wealthiest individuals in the country. But suppose they could raise $10 billion (the combined wealth of the wealthiest ten or twenty Americans) and roughly match the amount that businessmen who want to buy the stations for commercial purposes are willing to pay. Each group gets 50 radio stations. The businessmen broadcast what consumers want to hear, and all listeners benefit; The hypothetical millionaires broadcast the propaganda that THEY want listeners to hear, and so no one listens to their radio, resulting in ten or twenty of the richest Americans going bankrupt.
It seems clear that the airwaves would be bought up for commercial purposes by businessmen who wanted to broadcast what their customers wanted to hear so they could make the most money. These are largely the same kind of people who own radio stations now. Most radio stations would appeal to the tastes of the majority, as they do now. But if there were nine stations sharing 90 percent of the listeners, the tenth station could do better by broadcasting something different and thus securing the attention of the remaining 10 percent, rather than fighting for 1/10 of the vast majority. With a hundred radio stations, the one hundred and first could make money off 1 percent of the entire audience. Therefore, there would be specialized radio stations for specific tastes. There are some now. But such stations would no longer be limited by the regulatory power that the majority now enjoys through the FCC. If you were offended by what you heard being broadcast on a radio station owned by The Berkeley Barb, you would have only one way to respond: by switching the station.
The media provides a vivid example of the different effects of public and private property, but it is also an example that demonstrates only part of the shortcomings of public property. For "society" has not only the power to prevent individuals from doing what they want with their own lives, but also the incentive to exercise that power. If a property is public, I, by using part of that property, limit the part of it that can be used by you. If you do not approve of my use of that property, then from your point of view I am wasting a valuable resource that is needed for other and more important purposes - those that you approve of. Under the regime of private property, what I waste is mine. You may disapprove of my waste of my property, but it is not and never will be yours. It will only be used for some other of my purposes.
This applies not only to the waste of resources already produced, but also to the waste of my most valuable possessions, my time and energy. In a society based on private property, if I work hard, the main consequence is that I will become rich. If I choose to work only ten hours a week and live on a low income, I am the one who pays the price. Under a regime of public property, however, I, by refusing to produce as much as I could, reduce the amount of wealth available to society as a whole. Another member of that society might argue, with some justification, that my laziness is sabotaging the goals of society and that I am effectively depriving hungry children of food.
Take the hippies, for example. They benefit from private property in the same way as everyone else. Smoking pipes and colorful T-shirts are produced, underground magazines and copies of "Steal This Book" are printed entirely on the free market. Drugs are sold on the black market. No capitalist thinks that being unproductive is evil, and therefore no capital should be invested in producing things for such people; or, if someone does, then someone else will invest the capital and make a profit.
The state is the real enemy: the police arrest "vagrants"; public schools require long hair to be cut; the federal and state governments undertake large-scale programs to prevent the importation and sale of drugs. As with censorship of radio and television, this is to some extent an imposition of the values of the majority on the minority. But part of the persecution of is rooted in the concept that people who choose to be poor contribute less to the common good. Hippies don't pay much in taxes. This fact is sometimes emphasized: drug addiction is a bad thing because the addict doesn't "bear his share of the burden." If we were all drug addicts, society would collapse. Who would pay taxes? Who would fight foreign enemies?
This argument is even more crucial in a socialist country like Cuba, where a much larger part of the economy is publicly owned. Apparently, their hippie equivalents were rounded up and sent to work camps to do their part in bringing about the revolution.
George Bernard Shaw, a socialist with an unusually clear mind, puts the case very well in "The Intelligent Woman's Guide to Socialism and Capitalism."
"But Bored Willie may say that he hates to work and is willing to take less and be poor and dirty and ragged or even naked just to be able to work less. But this, as we have seen, cannot be allowed: voluntary ownership is just as socially problematic as involuntary ownership: decent nations must insist that their citizens lead decent lives, do their share of the nation's work and take their share of its income...Poverty and social irresponsibility will be forbidden luxuries.
"Compulsory community service is so obviously just that the most important duty of a government is to secure such work for all as will suffice to pay for their living and leave something on top as a profit for the country and the progress of the world. "
Take the more recent example of the "Back to the Earth" movement of "The Mother Earth News." Ideologically, it is hostile to what it sees as a wasteful, unnatural, and consumerist society. But the institutions of private property in that society serve them as they serve everyone else. The Mother Earth News and The Whole Earth Catalog are printed on paper bought on the private market and sold in private bookstores, along with other books and magazines dedicated to teaching you how to make a million dollars in real estate or live a comfortable life on a hundred thousand a year.
