Econ 640 Feb. 19 class on rights and property rights

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Econ 640Feb. 19 class on rights and property
rights

• Prof. Howard Baetjer

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Themes we have considered

• Spontaneous order
• Often superior to what can be accomplished by
  design
• Dispersion of knowledge
• Value of decentralizing power
• Wariness of unlimited government

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Examples of spontaneous order

• Language
• Taxis Esperanto anyone?
• Invented in 1887 by L. L. Zamenhof
• Science and technology
• Markets and economies
• Internet
• Customs, culture, entertainment
• Law
• Ecosystems
• Taxis The Biosphere project

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Why Are Markets Feared?

• " To the layman untrained in economics, the
  market economy presents a bewildering face. It
  consists of numerous individuals each intent on
  his own goals, giving no concern to the overall
  social implications of his pursuits. No central
  coordinating agency controls or even monitors the
  innumerable independent production and exchange
  decisions made by these countless individuals. It
  is no wonder that the market economy seems to be
  nothing but a jungle of clashing, discordant
  individual activities.- Israel Kirzner

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Finish up from last time
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Why are property rights important?

• Ownership is necessary in a material world
• Avoids the tragedy of the commons
• The market economy is a vast network of
  voluntary exchanges of property titles
• voluntary transactions insure win-win trades
• Property rights facilitate the spontaneous order.
• They put control where the knowledge is.

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Rothbards theory of justice in property rights

• What are the main elements?
• Why is governmental definition of property rights
  problematic?
• Why does communism in theory mean rule by a
  smaller group in practice?

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The relationship between rights and government
classical liberalism

• Built on the ideas of Sophocles, Cicero and many
  others.
• People have rights before the existence of
  government (natural rights).
• The purpose of government is to protect their
  rights.
• People are justified in dissolving governments
  that do not protect their rights.

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Thomas Jefferson in the Declaration of
Independence

• We hold these truths to be self-evident that
  all men are created equal that they are endowed
  by their Creator with certain inalienable rights
  that among these are life, liberty and the
  pursuit of happiness that to secure these
  rights, governments are instituted among men,
  deriving their just powers from the consent of
  the governed

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The relationship between rights and government
positivism

• Law established by governmental authority
• All rights are man-made
• Can be granted or taken away by man
• Rights can advance common good at the expense
  of individuals

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The U.S. Constitution The enumerated powers
doctrine

• All power is originally vested in, and
  consequently derived from, the people.- Madison
• The powers delegated by the proposed
  Constitution to the Federal Government, are few
  and defined.- James Madison
• The real source of the power of the U.S.
  Constitution is the transcendent notion that man
  has inherent and inalienable rights.

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The U.S. Constitution The enumerated powers
doctrine

• By enumerating particular exceptions to the
  grant of power to the government, it would
  disparage those rights which were not placed in
  the enumeration - Madison
• because the powers are enumerated, and it
  follows, that all that are not granted by the
  constitution are retained by the states or the
  people Madison

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The solution the ninth amendment

• The enumeration in the Constitution of certain
  rights shall not be construed to deny or
  disparage others retained by the people.

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Freedom in Firms

• (Freedom is) that condition in which the agents
  in a social system are unrestrained in their
  ability to act except by rules or principles that
  apply to the organization of a system as a
  wholeincluding those responsible for the
  rules.- Michael McMaster
• The rule of law
• Known rules
• Equally applicable to all

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Lissack and Roos on Simple Rules in Organizations

• Organizations are not the legal code expounded
  by the corporate office and memorialized in
  20-page memos Instead they are the day-to-day
  actions of the members of the network-employers
  customers, suppliers, partners...
• In an organization, you dont have to
  incentivize anybody. You have to create the
  conditions under which they can thrive.
• Underspecified guiding principles like work
  hard are useless. Overspecification, like
  ifthen makes guiding principles equally
  useless.

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Nordstroms Simple Rule For Employees

• WELCOME TO NORDSTROM
• We're glad to have you with our Company. Our
  number one goal is to provide outstanding
  customer service. Set both your personal and
  professional goals high.We have great confidence
  in your ability to achieve them.
• Nordstrom Rules
• Rule 1 Use your good judgment in all
  situations.
• There will be no additional rules.
• Please feel free to ask your department manager,
  store manager or division general manager any
  question at any time.

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Southwest Airlines

• Few rules. A core rule is follow the golden
  rule.
• One pilot applicant was rude to a Southwest gate
  agent and his interview cancelled.
• Distributes They with a red slash buttons to
  employees.
• Everyone on a Southwest flight crew, even
  captains, pitch in to get planes turned around
  quickly.
• Surrender self-importance.

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What are the implications of Rothbards view for

• Inequalities of wealth or income?
• Inheritance?
• Prohibition of recreational chemicals?
• Wages and hours laws?
• Immigration?
• Zoning, smart growth, and other land use
  policies?