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Quotation of the Day…

… is from page 127 of the 1972 second edition of Henry Hazlitt’s profound – yet regrettably overlooked – 1964 book, The Foundations of Morality (footnote omitted; link added; emphases original):

The ideal moral rules are those that are most conducive to social cooperation and therefore to the realization of the greatest possible number of interests for the greatest possible number of people. The very function of morality, as [Stephen] Toulmin has put it, is “to correlate our feelings and behavior in such as way as to make the fulfilment of everyone’s aims and desires as far as possible compatible.” But just as all interests, major and minor, long-term and short-term, cannot be realized all the time (partly because some are inherently unachievable and partly because some are incompatible with others) so not everybody’s interests can be realized all the time.

DBx: Yes.

Among the foundational rules of the market order is that the law of property generally protects owners’ ‘physical’ interests in their properties but not properties’ market valuations. You may not reduce the value of my house by physically damaging it or otherwise interfering with its physical integrity, but you may reduce the value of my house by building another house down the street from mine.

One economic consequences of this legal reality is what economists call “consumer sovereignty”: In our roles as consumers we do not, by purchasing goods and services from particular sellers, thereby legally oblige ourselves to continue to purchase goods and services from those same sellers. We all have the right to use our properties, including that which we have in our labor, in whatever peaceful and honest ways we can to earn incomes – implying that we all have a right to compete amongst each other for customers (including customers for our labor) – and we have a right to spend our incomes as we wish, including, of course, changing the ways in which we spend our incomes. In our roles as producers we must adjust our property uses to the pattern of consumer spending; in our roles as consumers, we are not obliged to adjust our property uses in ways meant to maintain the market valuations of anyone’s properties.

Among the most important discoveries of economics is that the above rule of property – again, what economists call “consumer sovereignty” – over time leads to much higher market valuations of properties generally than arises when government protects some owners from suffering market-driven declines in their properties’ market valuations.