Page added on November 3, 2015
If resources were not scarce, there would be no need to economize. The existence of scarcity is true of all resources (such as time, human energy, and natural resources). However, it is not necessarily intuitive that allowing scarce resources to be owned privately is the solution to this problem.
Consequently, socialism appears attractive to many and they turn to having all resources owned collectively for the “common good.” Unfortunately, a society which spurns private property — and hands resources over to government planners instead — often learns the terrible lessons of central planning and the tragedy of the commons (i.e., commonly held resources will be plundered to extinction).
If society spurns allowing private ownership of resources, it must find some other means to prevent the tragedy of the commons and to allocate goods. Historically, the means chosen is the use of force and central planning. Throughout history, most of mankind has been divided into a hierarchical system of masters and slaves with some gradations between the two extremes. The masters (pharaohs, emperors, kings, sultans, warlords, etc.) devised complex rules-based systems for resource distribution that were decided by a small number of people and not by markets. And ultimately, these plans depended upon pure terror for enforcement. But this so-called solution to the problem of scarcity — restricting the people’s liberty through the use of force — does not work.
The gradual growth in the understanding of what we now regard as basic economics eventually ended thousands of years of subsistence existence for the masses in the West. Modern economics explained that without private ownership of resources, there was no mechanism for observing or acting on ordinal preferences in which persons prioritize desires from highest to lowest. Without a way to allocate goods according to ordinal preferences, there is no rational means to economize for the betterment of society.
In other words, without markets and prices, there is no way to know what people really want or need, so the masters never really knew what to order the slaves to produce, what technical means to use, what alternative materials to use, the quality desired, or how much to produce. Thus, the commissars of the Soviet Union ordered the production of inefficiently produced, shoddy goods. The Soviet empire collapsed, despite the fact that Russia is blessed with vast natural resources and an industrious population.
A second fatal problem with common/government ownership of resources is that few readily available, consumable resources actually exist. There are no resources on the planet that do not require at least a minimum of effort to transform into a consumable product. Even edible berries growing in the wild must be harvested, meaning that someone must transport himself to the berries’ location and pull them from the bush at just the proper time. The cost of doing so is the value one places on forfeiting his leisure. Of course, other natural resources require much more effort to convert to consumable products, passing through many stages of production.
For example, timber and minerals must be extracted, harvested, etc. and then molded into something that can be consumed. Consider a hiker lost in the wild. It matters not at all to him that great stands of timber lie within easy reach or that valuable minerals lie under foot. These natural resources require great effort over very long time periods to be converted into something consumable, as is the case with converting timber into a shelter or crude oil into gasoline. A lost hiker does not have the knowledge, time, or previously produced means to convert these basic resources into consumable products to ensure his survival. All this is far beyond anyone’s autarkic abilities.
Now let us assume that someone did harvest trees by felling them, transporting them to a lumber mill, milling them, storing them in a ventilated and dry place for many months before kiln-drying them (all processes that are required to turn trees into useable lumber), advertising their availability to contractors, keeping sales records, sending out bills, and collecting the bills, only to have a socialist call him a plunderer and confiscate his lumber for free distribution to whomever the masters deemed to be politically advantageous to their continued privileged position. No one other than the favored cronies of government would ever harvest another tree. In other words, production of usable lumber would be monopolized, and as with all cases of monopolies, prices would increase and quality would decline. Moreover, with no voluntary market at work in timber and forest land, there would be no means of knowing if these resources were being used in a way valued by those who valued them most.
At the same time, the central planners could not let just anyone harvest the trees or access the land. If the trees had no owners, great forests would be denuded in short order because there would be no social mechanism to prevent what would amount to a tragedy of the commons by order of the state.
Without the ability to profit from privately owned property, there would be no incentive to provide or withhold capital for any endeavor. Also, a system of private ownership is necessary to determine if that capital is being used in a way the consumers value. The consequences of ignoring this fact of economic science is most evident today in China’s ghost cities, where resources, both natural and human, have been expended for no observable benefit except to advance the careers of politicians who can claim to have met the requirements of the latestFive Year Plan. Timber and other resources were provided to build ghost cities, not because the owners of the resources sought to be economical with their resources, but because government edicts required that timber, concrete, gasoline, and more be used to produce what are now empty cities.
The opposite case of resource waste comes from special interest groups who capture the political apparatus of the state and prohibit exploitation of resources by private individuals. In the name of protecting Mother Gaiafrom being plundered, modern environmentalists have convinced the political class that most progress is unsustainable, dangerous to our health, or any number of other specious claims. Society is prevented from benefiting from their conversion to consumable products. The poor suffer the most from these policies as the prices of raw materials — and thus finished consumer goods — are driven up.
Private ownership insures that valuable resources will never be plundered to extinction, because their value will have been capitalized. Instead, private owners will seek to make resources as widely available as possible without endangering the long-term prospects for future harvesting of resources. The process of determining a resource’s capitalized value is impossible absent free-market capitalism with strict defenses of property rights.
Despite both the theoretical and empirical evidence to the contrary, socialists tell us the opposite; i.e., that stateownership of all resources will prevent their plunder and ensure prosperity for all. As Ludwig von Mises explained, though, socialism is not an alternative economic system of production. It is a system of consumption only, and a system of economic ignorance and economic plunder.
36 Comments on "Why We Need Private Property to Deal with Scarce Resources"
ghung on Tue, 3rd Nov 2015 1:55 pm
Seven+ billion people feeding at the resource trough makes this argument moot for the most part. Slice it, dice it, spin it through the salad shooter, when they’re gone, they’re gone, regardless of the system used to bring them to market. It’s all just a matter of who wins and who loses.
yellowcanoe on Tue, 3rd Nov 2015 2:46 pm
It is highly questionable that a private for-profit corporation would consider the long term need for a non-renewable resource. Most corporations want immediate profits and will try to exhaust an oil field or mine sooner rather than later.
jjhman on Tue, 3rd Nov 2015 2:51 pm
Wow what an insightful message. This would probably convince any distracted 3rd grader to read Ayn Rand and become a true believer.
On the other hand, if you actually could read and understand three sylable words you might think this was empty of anything useful.
claman on Tue, 3rd Nov 2015 3:24 pm
The very beginning of this article shows the authors lack of understanding of what a resource is.
1 :If resources were not scarce, there would be no need to economize. TRUE
2 :The existence of scarcity is true of all resources.
NOT TRUE
There is no scarcity of water. It’s people living in unfavorable conditions for water supply that makes water look scarce. There is plenty of water for us all, if people just lived where the water is.
There is a lot of arable land if just people lived where the soil is (india v. U.S. for ex.)
There is a lot of fertilizers available if we didn’t over use this commodity, and took care of human waste.
Almost 100% of metalls can be recycled
Wood exist in incredible amounts, but maybe not where the most people live
THE HEADLINE IS DEAD WRONG , BECAUSE THE MOST NEEDED RESOURCES ARE NOT SCARCE, THEY ARE MAYBE JUST IN THE WRONG PLACE FOR THE CONSUMER, AND THAT IS A VERY BIG DIFFERENCE.
When the arabs start building multimillion societies in the middle of a dessert, and they suddenly find them selves with out water. Can you blame that on the water or the arabs?
ghung on Tue, 3rd Nov 2015 3:57 pm
The article wasn’t hard to invalidate from the title:
Why We Need Private Property to Deal with Scarce Resources”
Who the hell is “WE” anyway? Any time I see any scheme applied to “we” without defining specifically who ‘we’ is, I smell an agenda. No manner of governance, no manner of resource exploitation, no cultural paradigm, no economic system, virtually nothing humans do as large collectives or as individuals ensures equitability or reasonable outcomes for all over time. There are always winners and losers, and it’s generally the winners who define who ‘we’ is, while providing for their own continued winning status.
Humans aren’t well adapted to operating in large groups because the ‘we’ invariably devolves to ‘us’ and ‘them’.
claman on Tue, 3rd Nov 2015 4:18 pm
Exactly ghung, It’s the “WE” that discovers an agenda.
GregT on Tue, 3rd Nov 2015 6:23 pm
“The very beginning of this article shows the authors lack of understanding of what a resource is.”
And almost everything that you have written in response to the article show your complete lack of understanding and the degree of denial that you are in claman.
Cloud9 on Tue, 3rd Nov 2015 6:40 pm
Look at Zimbabwe. A thugocracy took over and killed the concept of private property. As a result no one wanted to improve their property and make it productive because that would attract a bigger thug higher up on the food chain. Better to drive a beater than a BMW. One of the higher up thugs would take it from you. Socialism causes the producers to sit down in the dirt and give up.
makati1 on Tue, 3rd Nov 2015 7:28 pm
Private property does NOT exist. You either owe a bank, and/or annual real estate taxes on it. Fail to pay either and you will lose it. Or, the government can come and just take it.
As long as banks or governments exist, they own the land. Not you. And in America, you need a shit load of permits to use that land. Even here in the Ps, there are government regulations to follow in it’s use. For instance, the country is covered in coconut trees, but there is a law that requires a permit and fee to cut one down. You are never free.
Peak Oil Prognosticator on Tue, 3rd Nov 2015 7:48 pm
I’m very confused by this article, I should state I am neither a free marketeer or a Marxist. When a resource gets extracted and uses are found for it people want it. Depending on if the commodity is valuable people will demand MORE of it. So inevitably more people come into an area to extract oil themselves. Then areas expand throughout the state, country, continent, and now the entire world. Inevitably many of these resources are OWNED privately.
“Thus, the commissars of the Soviet Union ordered the production of inefficiently produced, shoddy goods. The Soviet empire collapsed, despite the fact that Russia is blessed with vast natural resources and an industrious population.”
Sounds like Sowell, I mean I agree to some extent but also Soviet Union by the 1930’s was more productive and prosperous than other E. European nations. The fact of the matter is that they eventually competed with the United States in the Space Race, military arms, and other goods. So clearly they had to be able to build up their productivity to a high level. And I agree this was probably due to a huge resource base and a population hungry for growth. They too ran into the same problems with oil, using too much year over year.
“If the trees had no owners, great forests would be denuded in short order because there would be no social mechanism to prevent what would amount to a tragedy of the commons by order of the state.”
As opposed to if someone owns a forest and cuts it down?
Oh, it’s from Mises, I see.
claman on Tue, 3rd Nov 2015 8:17 pm
Greg,“The very beginning of this article shows the authors lack of understanding of what a resource is.”
Now, if we have a scarce resource it would mean that there is little of it available on earth.
But resources like fresh water, wood, arable land etc. exists in abundance on planet earth. It’s just not where the most people live, so there is a transport problem.
But that doesn’t mean that there is a scarcity in those particular commodities.
The author thinks that all commodities are scarce, and that is just not right. All commodities have a freight price , and that is the problem, not necessarily the scarcity.
apneaman on Tue, 3rd Nov 2015 9:02 pm
jjhman, lol.
claman, just on the water alone you don’t seem to understand the enormous amounts of water it takes to run industrial civilization. Sources are dwindling. Industrial civ and agriculture have depended upon a consistent amount of water from glacier and snowpack melt. AGW has changed this and soon it will be no more. Already having problems up north in Canada – not just the US south and north west. Glacier melt feeds the Canadian prairie, one of the world’s great bread baskets. Also, Alberta beef has gone through the roof because of drought. Same story everywhere snowpack and glacier melt feed agriculture and industry. I live in a city that is in the middle of a rain forest and we had drought and water restrictions this year. 75% of BC’s electricity is from hydro and it will be going bye bye once the levels drop. Like the Hoover dam you can switch the turbines to low flow turbines, but they have minimum flow rates too – just a matter of time. How come you don’t do your research before commenting? Is google broken in Sweden?
claman on Tue, 3rd Nov 2015 11:22 pm
Apne: I didn’t know there was a drought in central Canada, sorry bout that. I know that it’s too hot and dry out west, with wildfires and bugs destroying your pines, but what you’re telling me comes as a surprice. I hope you get some rain and snow this winter.
Where I live we haven’t had a decent rain for a month, but that’s no problem, it only makes the well water taste better.
Truth Has A Liberal Bias on Tue, 3rd Nov 2015 11:27 pm
There’s no scarcity of fat lazy retards in Merika. Too bad they aren’t a resource. I suppose we could make them into candles.
apneaman on Tue, 3rd Nov 2015 11:40 pm
Truth, at least one demographic is doing their part to lighten the load. Hopefully they will inspire other.
“Stunning” Rise in Death Rate, Pain Levels for Middle-Aged, Less Educated Whites
http://www.nakedcapitalism.com/2015/11/stunning-rise-in-death-rate-pain-levels-for-white-middle-aged-less-educated-whites.html
claman on Tue, 3rd Nov 2015 11:47 pm
Truth . You are not very well informed about the american food supply. Almost every home grow their own couch potatoes, and they are very rich in calories, but not too much in vitamins and shit. It is by law forbidden to make them into candles (unless they are dead or somtin)
GregT on Tue, 3rd Nov 2015 11:48 pm
claman,
Alberta declares state of emergency for farmers
http://www.edmontonsun.com/2015/08/22/alberta-declares-state-of-emergency-for-farmers
GregT on Tue, 3rd Nov 2015 11:53 pm
claman,
Scarcity
The notion of scarcity is that there is never enough (of something) to satisfy all conceivable human wants, even at advanced states of human technology. Scarcity involves making a sacrifice—giving something up, or making a tradeoff—in order to obtain more of the scarce resource that is wanted.
The condition of scarcity in the real world necessitates competition for scarce resources, and competition occurs “when people strive to meet the criteria that are being used to determine who gets what.” The price system, or market prices, are one way to allocate scarce resources. “If a society coordinates economic plans on the basis of willingness to pay money, members of that society will [strive to compete] to make money” If other criteria are used, we would expect to see competition in terms of those other criteria.
https://en.wikipedia.org/wiki/Scarcity
claman on Wed, 4th Nov 2015 12:16 am
Greg, I’m really sorry to hear about this drought. I allways had the impression that Canada wasn’t too much affected by climate changes.
I knew about Alaska and the west coast, but as I said to Apne, I didn’t know the problems were this big. Hope the best for you all.
GregT on Wed, 4th Nov 2015 12:21 am
Cimate change is global claman. If it hasn’t affected you yet, it will. And it isn’t going to get better as time goes on. It is going to get exponentially worse, globally.
apneaman on Wed, 4th Nov 2015 1:12 am
claman, the hour is much later than many realize and many who know will not admit it publicly.
Drought, deluge, destruction, rebuild. Rinse and repeat until broke.
2013 Alberta floods
https://en.wikipedia.org/wiki/2013_Alberta_floods
How climate change fits into Calgary’s record flood
http://www.canadiangeographic.ca/blog/posting.asp?ID=818
deadlykillerbeaz on Wed, 4th Nov 2015 3:04 am
The only scarce resource is brains. Every skull is filled full of shit.
Davy on Wed, 4th Nov 2015 3:38 am
Not True liberal dumbass and Ape Man, if Americans are such retards and fat and lazy why is Canada doing so poorly and the US still relatively strong. I wonder who is fat and lazy and the actual dumbass’es. Which country is just an oil sands banana republic and which is a diversified economic power?
“Forget China: This Extremely “Developed” Country Just Suffered Its Biggest Money Outflow Ever”
http://www.zerohedge.com/news/2015-11-02/forget-china-extremely-developed-country-just-suffered-its-biggest-money-outflow-eve
“According to BofA’s Kamal Sharma, Canada’s basic balance – a combination of the capital and the current account: a measure of national accounts that spans everything from trade to financial-market flows – swung from a surplus of 4.2% of GDP to a deficit of 7.9% in the 12 months ending in June. That’s the fastest one-year deterioration among 10 major developed nations.”
“Citing Sharma’s data Bloomberg writes that “money is flooding out of Canada at the fastest pace in the developed world as the nation’s decade-long oil boom comes to an end and little else looks ready to take the industry’s place as an economic driver.” In fact, based on the chart below, the outflow is the fastest on record.”
“How long until not Putin but Harper’s successor is seen in the White House, begging Obama to put an end to QE so that the US shale sector, thanks to infinite junk bond refills courtesy of the Federal Reserve and “investors” allocating other people’s money, will mercifully die and prevent Canada’s economy from sliding from recession into an outright depression?”
Ralph on Wed, 4th Nov 2015 3:43 am
All resources are finite, renewable resources have a finite maximum rate of exploitation. Try to exceed that, and you damage the resource irreversibly (in human terms). One of the best systems of maximising exploitation of land sustainably is the common land management used in medieval times. Most of the land of a parish was held in common ownership, and each year each farmer was allocated a share in rotation. Everybody depended on each other to maintain and improve the land, if you damaged it your neighbours would come down hard, because it would eb their turn to farm it next year, or the one after.
rockman on Wed, 4th Nov 2015 4:03 am
“As opposed to if someone owns a forest and cuts it down?” You must not live in the south where you see mile after mile of replanted forest. Some places 4th or 5th generation. And they were typically planted by the folks who cut down the original stand of trees. I’ve never checked the validity but what I read long ago wouldn’t surprise me: there are more trees in the US today then when the Pilgrims landed. Granted not the original old growth forests but forests none the less. OTOH how many here live in a house or apartment that wouldn’t exist if some trees weren’t permanently removed?
But not true for the prairie grasslands…they have been decimated. Decimated and replaced by crops that today feed much of the world as well as most Americans.
Both the forests and crop lands exist today because the private owners of those lands had the financial incentive to do so. Of course this dynamic only works for renewable resources. Exploration companies are not going to create new oil fields. But if there’s sufficient financial incentives they’ll look for undiscovered one…as has always been the case. And in the USA that has happen onshore almost exclusively on private lands. And allowed by those private owners for the revenue it generated for them. The offshore federals water are owned by the govt but the utilization has been driven by the same factor: revenue generation. The govt, and thus all the US citizens, have received hundreds of $billions in income from that area. And one could even look at those offshore assets as privately owned by all the citizens and administered by the govt. No company or foreign govt could produce those reserves without the approval of the citizens’ administrator.
Permanently changing the landscape to accommodate the financial desires of private landowners isn’t automatically a bad thing. Often it allows life to be improved for the commons. There will always be the potential for such efforts to have a negative impact on some. Even for some private landowners. Everyone one here routinely drives down roads and highways much of which wouldn’t exist had not those private landowners been forced to give up some of their property. Eminent domain laws have angered many private landowners. But there’s not a single person reading this message that hasn’t benefited greatly from those laws.
Along that same line: consider one of the country’s greatest natural assets: Yellowstone Park. Yet 99%+ of the folks who had the pleasure of experiencing it would not have been able to if a portion of the land had not been permanently converted to roads.
Nothing in this process is perfect. In fact in some cases its truly tragic. But it is a process that has given a great deal to the commons as well as to the private ownership.
makati1 on Wed, 4th Nov 2015 7:13 am
“Private property. Private property means little at a time when SWAT teams and other government agents can invade your home, break down your doors, kill your dog, wound or kill you, damage your furnishings and terrorize your family. Likewise, if government officials can fine and arrest you for growing vegetables in your front yard, praying with friends in your living room, installing solar panels on your roof, and raising chickens in your backyard, you’re no longer the owner of your property. … SWAT team raids. Over 80,000 SWAT team raids are conducted on American homes and businesses each year. Police agencies, already empowered to crash through your door if they suspect you’re up to no good, now have radars that allow them to “see” through the walls of your home.”
http://www.theburningplatform.com/2015/11/03/the-real-issues-you-wont-hear-from-the-2016-presidential-candidates-this-election-year/#more-108578
“Private” property… LOL
rockman on Wed, 4th Nov 2015 8:13 am
mak – Except in Texas with respect to the feds of course. OTOH the Texas Rangers are another matter: you wouldn’t want Chuck Norris wanna-be in your face. LOL
apneaman on Wed, 4th Nov 2015 9:10 am
Davy says
“Not True liberal dumbass and Ape Man, if Americans are such retards and fat and lazy why is Canada doing so poorly and the US still relatively strong.”
What category of logic is this?
So what you’re saying is because Canada is having certain economic woes, the stats in the story I linked are invalid because America is supposedly “strong” and “economically diversified”?
Sounds like retard logic to me.
40% financialized and what 10-12% sick care? with millions of university educated debt slaves making mocha frappuccinos and flipping burgers while still having to live with the folks, yet depending on payday loans for unneeded junk and 7 year subprime auto loans sounds real diversified and strong. It’s a 1%er country in uber debt and you know it. Claiming otherwise is contradicting hundreds, maybe thousands of your very own comments on this site.
Davy no matter how many things you find wrong with Canada or any other country, they will never exceed the fuck ups of the US or cancel out the fact that you live in the all time empire of retards and are still nowhere near excepting it – not even close. Your barking up the wrong tree if you think I give a shit about the geographical area that has been deemed a country, by long dead British aristocracy, that I happened to be born in. Very polite and obedient spoiled rotten cunts who are overly obsessed with their next dopamine hit, showing zero concern for their kids and grandkids future. I have no sympathy for suicidal apes from any made up country with their stupid fucking flags and propaganda national myths and national anthems – the ingredients for voluntary slavery. I think they like it. You seem to love that connection based on plucking tribal heartstrings. See, education is no barrier to brainwashing and moronic patriotism. These are the rather simple tricks that have been used since time immemorial to rule sheep. After you’re done bragging up US economic and military superiority then you can switch to one of your contrary windbag comments on what everyone needs/should do for a gentle, hand holding, kumbia “degrowth” future that is the worst kind of wishful thinking. Notice how the over privileged even have a special entitled version of collapse? Bipolar view points if ever I heard them. You might be better off making up your mind – just pick one or the other. Cognitive dissonance causes a great deal of anxiety and you look like the fool switching from concerned sensitive collapsenick to predictable rabid patriot every time you’re pissed.
Davy on Wed, 4th Nov 2015 9:26 am
Geeze, Ape Man, lay off the coffee you made a stupid comment so I gave you something in return. Can’t we have fun?
dave thompson on Wed, 4th Nov 2015 11:54 am
So the USSR and Communism was the worst economic system, that was beat out, by the US and capitalism the second worst economic system.
KrellEnergySource on Wed, 4th Nov 2015 12:27 pm
Building codes with minimum R-value requirements for insulation in new construction and remodel of homes.
Mandatory low flow shower heads.
1.0 Gallon and less flush toilet requirements.
Fleet MPG requirements for automakers.
Phase out of incandescent bulbs.
These measures all have an impact on resource consumption.
Price manipulation related to scarcity lets those with money get to use as much as they want. “Freedom of Consumption” is not a fundamental right. Rationing and planning for the future is a far more rational and unifying response to true scarcity than market forces and the driving of quarterly corporate profits could ever be.
makati1 on Wed, 4th Nov 2015 7:20 pm
One low flow shower head does not negate washing the car, watering the lawn, having a swimming pool that evaporates more water then the shower uses, etc.
Having a high mpg engine does not negate unnecessary road trips to look at colored leaves or float the bass boat in the nearby lake.
Eliminating incandescent light bulbs does not replace electric leaf blowers, lawn mowers, weed wackers or the hundreds of other gadgets/I-toys used by the lazy/bored Westerners.
Waste is waste and the Us is overflowing with it along with the debt it has run up by wasting.
KrellEnergySource on Wed, 4th Nov 2015 11:10 pm
Yes, waste is waste. Did you overlook my comment about rationing being a possible response to steward irreplaceable, dwindling resources? How else would you choose to address this waste that you speak of? Again, do the rich get to consume all that they can afford are can we address some way that limits *their* consumption as well as that of the poor?
makati1 on Thu, 5th Nov 2015 1:11 am
Krell, I saw that, but real rationing will only happen AFTER the crash, when it is the only method of distribution possible. That is, IF there is a system/government around to do it. If not, it will be everyone for themselves.
A form of rationing is already beginning, by ability to buy. That will weed out the poor from the wealthy until the poor see the wealthy are not suffering. Then the pitchforks will come out. Maybe. If they still have the strength to do so. But, it will be too late.
And, yes, the rich will ALWAYS get to consume what they want until it is gone. They will NEVER be rationed. That is NOT going to change and since the rich make the laws and control the world’s economic system, they will continue to get what they want. Your suffering and death means nothing to them. That is obvious if you look around. 47 million Americans in the soup lines and a trillion dollar plus military budget to make the rich richer.
JuanP on Thu, 5th Nov 2015 7:42 am
Private properly, capitalism, democracy, human stupidity, and the American dream are going to save us from all the problems they created in the first place. I couldn’t finish the first paragraph of this shit. I couldn’t buy this crap when I was in kindergarten, so I am not going to try to believe it now. I am not senile or demented enough!
JuanP on Thu, 5th Nov 2015 8:30 am
Claman “Almost 100% of metalls can be recycled” True! And 100% of human beings can produce no more than one biological offspring and get sterilized immediately after, too! There are so many things we can do. Pity we don’t do them. By the way, humans can be recycled, too, but I think it is politically incorrect to point that out.