Knowledge And Decisions

Rights have already been noticed as rigidities (Chapter 2). They are also boundaries limiting the exercise of governmental power and carving out areas within which individual discretion is free to shape decisions. In addition to these Constitutional rights of citizens in general, there are special rights, such as the right of exclusive use of specific things (property rights) or rights arising from specific reciprocal commitments (contracts) and rights created by specific legislation (employment rights, housing rights, etc.). By “rights” here is meant legal entitlements, regardless of their moral merits. Rights in this sense are simply factual statements about the availability of state power to back up individual claims. They are simply options to use governmental force at less than its cost of production — ideally at zero cost. In reality, some cost of time and effort are required even to phone the police, and to vindicate many rights a long and costly legal battle up through the appellate courts may be necessary. Where a right worth X (in money or otherwise) would cost 2X to vindicate, then for all practical purposes such a right does not exist for the individual. Where most of the cost falls on the government, the trade-off is between the social costs involved in a particular violation of individual rights — i.e., the effect on other people of letting such violations go unpunished — compared to the costs of enforcement.

Social trade-offs are involved in the creation of rights, the defining of rights, and the assigning of rights to individuals. When a given kind of activity is dealt with by the creation of rights rather than by alternative decision-making processes, there is a loss of flexibility (incremental adjustment) and reversibility. Something that is incrementally preferable at a given point becomes categorically imposed at all points by the force at the disposal of the government. Insofar as the law of diminishing returns applies to social as well as economic processes, this means that many benefits are pushed to the point where they cease to be benefits and may even become counterproductive.

PROPERTY RIGHTS

The creation of rights involves questions not only of whether to create rights as a mode of dealing with a particular trade-off, but to whom to assign such rights as are created. Property rights involve both kinds of decisions. Many things are left unowned — wild animals or birds, fish in the sea, human beings, air and sunshine — because the enforcement of property rights is deemed either impracticable or undesirable. Ideas cannot be copyrighted for both reasons, whereas a given permutation of words can be copyrighted, both because it is feasible to determine authorship and because it is deemed more important to provide a prospective reward as an incentive for future writing than to incrementally increase the circulation of existing writings by eliminating royalty charges.

Property rights in general must be distinguished from the particular form of property rights in so-called “capitalist” countries. A socialist government also owns property. If socialism meant literally an abolition of property rights, rather than their reassignment, then any individual citizen would be free to build a house, ride a horse, or play baseball on land that the government had set aside for growing food, and life would become impossible in such a society. But, in reality, whether under capitalism or socialism, property rights are basically rights to exclude — meaning in operational terms, the availability of governmental force to eject and/or punish others for using the same property without permission. However, the right to exclude does not mean that exclusion will result. Rights to exclude are negotiable in market economies, and may be sold or rented, in whole or in part. Property rights are also divisible among decision-making units. One person or organization may own the right to farm a given field while another decision-making unit owns the right to the minerals underneath and still another owns the right to string electric wires overhead. Almost never does one property owner own every conceivable use of a given property. An owner of a mountain does not own the right to fly over the mountain, nor does he own the right to every stream that originates in his mountain, in the sense of being able to dump anything that he wishes into those streams.