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Quotation of the Day…

… is from page 475 of Armen Alchian’s and William R. Allen’s Universal Economics (2018; Jerry L. Jordan, ed.); this volume is an updated version of Alchian’s and Allen’s magnificent earlier textbook, University Economics:

People will punish you for wasteful use of what you own. If, in the opinion of others, you make a “wasteful” decision about your resource, its market value will fall. People express their opinion through the market values they offer for your resources.

DBx: Private property rights are private in the sense that each owner has great scope to use his or her property as he or she chooses. There’s no need for an owner to obtain the approval of others; other people have no power to veto an owner’s choices. But the ability to sell and to buy property rights, by attaching market values to each piece, creates communal input into each property owner’s choices. I can choose to let my home become run-down, but I cannot do so without suffering the disapproval of countless strangers who, because of my choice, become less willing to purchase my home. Likewise, I can choose to refurbish and beautify my home; if I do so, I enjoy the approval of countless strangers who, because of my choice, become more willing to purchase my home.

The institution of private property unites strangers. Obstructing the alienability of property rights weakens this unity. For example, government-imposed, post-natural-disaster price ceilings on bottled water prevent countless strangers from expressing their full approval of merchants’ foresight in stocking lots of bottled water. Merchants thus become less willing to stock lots of bottled water.

The institution of private property rights is, in a very important way, quite communal. And it’s deeply democratic.

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