Econ 640
Feb. 19 class on rights and
property rights
Prof. Howard Baetjer
Themes we have considered
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Spontaneous order
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Often superior to what can be accomplished
by design
Dispersion of knowledge
Value of decentralizing power
Wariness of unlimited government
Examples of spontaneous order
Language
Taxis:
Esperanto anyone?
Invented
Science
in 1887 by L. L. Zamenhof
and technology
Markets and economies
Internet
Customs, culture, entertainment
Law
Ecosystems
Taxis: The Biosphere project
Why Are Markets Feared?
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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
Finish up from last time
Why are property rights important?
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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
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voluntary transactions insure win-win trades
Property rights facilitate the spontaneous
order.
They put control where the knowledge is.
Rothbard’s theory of justice in
property rights
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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?
The relationship between rights and
government – classical liberalism
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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.
Thomas Jefferson in the Declaration
of Independence
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“We hold these truths to be selfevident: 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…”
The relationship between rights and
government – positivism
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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
The U.S. Constitution: The enumerated
powers doctrine
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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.
The U.S. Constitution: The enumerated
powers doctrine
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“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
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“…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
The solution – the ninth amendment
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“The enumeration in the Constitution of
certain rights shall not be construed to deny
or disparage others retained by the people.”
‘Freedom’ in Firms
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“(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 whole—including those responsible for the
rules.”- Michael McMaster
The “rule of law”
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Known rules
Equally applicable to all
Lissack and Roos on Simple Rules in
Organizations
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“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 don’t 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 “if…then…”
makes guiding principles equally useless.”
Nordstrom’s Simple Rule For Employees
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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.
Southwest Airlines
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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.
What are the implications of
Rothbard’s view for:
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Inequalities of wealth or income?
Inheritance?
Prohibition of recreational chemicals?
Wages and hours laws?
Immigration?
Zoning, “smart growth,” and other land use
policies?