Quotation of the Day…

by Don Boudreaux on May 1, 2014

in Growth, Property Rights, Seen and Unseen, Standard of Living

… is from page 17 of 2002 Nobel laureate Vernon Smith‘s important 2008 book, Rationality in Economics (original emphasis):

Property rights mean that (1) if I plant corn, I have the right to harvest the yield of that corn, and therefore the right to prevent passersby from harvesting it; and (2) if I save some of the income from the sale of that harvest and invest in more land, then I have the right to plant and harvest from the additional land.  To be “propertied” is to have the right to accumulate.  To accumulate is not to consume all that my labor and previous savings investment has produced.  This allows all my accumulation to remain at work in society at large and for all others to benefit from my capital investment.  This is the basis for all endogenously sustainable (that is, devoid of perpetual external transfers) net wealth accumulation in society.  There can be no other basis.  If there is any abridgment of an individual’s rights to so harvest and accumulate, then there is a direct abridgment of the rights of all others to share in these external benefits and achieve a corresponding improvement in their welfare – benefits unintended by the investor-saver who seeks only his own security.

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