Dec 3, 2012

Communal property with equal-distribution of benefits

Story 1. Communal Property that is free for all to take

Communal vs. Private Property Rights : The Freeman : Foundation for Economic Education:

This is a story from the above about communal pastures for cattle grazing.

"In a famous 1968 essay, “The Tragedy of the Commons,” Garrett Hardin used the England commons to illustrate the problems of communal ownership. In the sixteenth century, many English villages had commons, or commonly held pastures, which were available to any villagers who wanted to graze their animals. Since the benefits of grazing an additional animal accrued fully to the individual, whereas the cost of overgrazing was an external one, the pastures were grazed extensively. Since the pastures were communal property, there was little incentive for an individual to conserve grass in the present so that it would be more abundant in the future. When everyone used the pasture extensively, there was not enough grass at the end of the grazing season to provide a good base for next year’s growth. Without private ownership, what was good for the individual was bad for the village as a whole.

In order to preserve the grass, pastures were fenced in the enclosure movement. After the enclosure movement established private property rights, overgrazing no longer occurred. Each owner had a strong incentive to protect the land."

Story 2. Communal Property that provides equal dividends to all

The usual idea of a communal property is that it is free for anyone to take as much of it as he pleases. As the above story shows, people will take as much as they can, and put in as little as they can. The crucial factor is the lack of a good distribution mechanism. A communal property can be carefully managed to provide equal dividends to everyone. The "management" procedure can even be written into the Constitution of a country. Such an example is the Alaska Permanent Fund, which is "communally" owned and distributes annual dividends to every resident in Alaska.

In such a scenario, the common owners will guard the communal property carefully. It is reported that some lawmakers tried to raid that Alaska Permanent Fund, and they got a big NO from the Alaskans.

Alaskans are fiercely protective of the dividend.

"But Alaskans are fiercely protective of the dividends they receive from the fund, and a "leave it alone" mentality is prevalent, creating a major political problem for Knowles. In a non-binding, advisory election two years ago, 83 percent of Alaskans voted "no" on a proposal authorizing the Alaska Legislature to tap into fund earnings to help balance the budget. A controversial 30-second ad aired before the election portrayed lawmakers who favored the plan as swashbuckling pirates bent on raiding the fund."

Moral of the stories.

"What is common to many is taken least care of, for all men have greater regard for what is their own than for what they possess in common with others." - Aristotle.

Property ownership can be refined. It need not be a strict dichotomy of private property versus communal property. There can be different categories. The order of care will be:

1. What is their own. (private property)

2. What they possess in common with others and which provides an equal distribution of income (equal-distribution communal property). Example: Alaska Permanent Fund. Equal-distribution does not mean that everyone must use the property equally, e.g., everyone sends 10 cows into the grazing commons. Equal-distribution means that the property is carefully managed for profit, and the profit is distributed equally to the common owners, i.e., the citizens.

3. What they possess in common with others and which is free for all (free-for-all communal property). Example: common grazing ground, free city park, national park.

4. What they possess in common with others and which is not accessible to them (communal property in name only). Example: Soviet collective farm, many sovereign wealth funds.

What people should do is to convert communal properties to the equal-distribution type. 

Ask your politicians to do this, or become a politician to do this. Many analysts say the current Brazilian President & party won the election because of a basic income system that her party implemented.

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