Three years ago 20″ of snow and 5 days housebound forced me to think about how something like a blizzard could create something as useful as property. I posted this diary on a prominent liberal web site. It got a very good response, as you can see from the comments.
Today’s snow in Fairfax reminded me of this.
Snowmageddon has come and gone. In its wake it has left three feet of snow, blocked roads, downed trees, sore backs, bored children and one pressing question:
Who owns that parking space on the corner?
It’s a public street. There are no parking restrictions, no stickers, no resident only covenants. Surely anyone can legally take that space if they find it unoccupied.
But doesn’t whoever dug out the space have some claim to it? Doesn’t he now “own” it? Would you feel OK taking that space?
My neighborhood is small and we know each other at least casually, so the “owner” of that space is probably safe. We know who dug out which spaces. No one would park in someone else’s spot.
But this same sense of ownership arises in more anonymous settings. It’s common down in DC and I’ve experienced it myself when I lived in heavily urban areas. I’ve passed up perfectly good spaces on snowy streets and left “my” space in the morning with every expectation that it would be available when I got back. Even among strangers, people tended respect each other’s claims to parking spaces and to park in “their” space every night. Whether out of common decency or a fear of getting keyed, people do observe these newly created property rights.
These rights are, by no means, perfect. People may need to defend their space with plastic cones, lawn chairs or other markers. There can be disputes over spaces and interlopers do poach spaces. The rights also decay over time, as more spaces become available or when it’s unclear who cleared the original space.
The Nordic Track to Property Rights
Parking spaces aren’t the only new property right emerging in my neighborhood. New rights are also being created by a conflict between cross-country skiers and dog walkers in our park.
There’s a trail through the park which, under normal conditions, is heavily used by bicyclists, dog walkers, runners and many others. Now that it is buried in thigh deep snow, only the dog walkers are motivated enough to slog down the trail, leaving little yellow patches as they go.
But a new group of users are competing with the dog walkers. Cross-country skiers are enjoying a rare chance to practice their sport without driving 70 miles. As they glide down the trail, they carve firm, smooth tracks which they reuse, making their runs easier and faster.
The conflict comes when dog walkers use the tracks left by the skiers. It’s much easier to walk in the tracks than in the fresh snow or in the footsteps of previous walkers. But by walking along these tracks, the walkers ruin them for the skiers. They mar the tracks with rough boot prints and occasionally sink through the track, leaving pot holes.
The skiers have responded by creating a second track parallel to the first. The dog-walkers didn’t respect the skiers’ right to exclusive use of the first path. But they are respecting the skiers’ right to the second path. Except for some narrow spots, like getting around and under fallen trees, the second path is pristine. No boot prints wreck its smooth, fast surface.
I’ll Take My Nobel Prize Now
Unlike the shovelers with their parking spaces, the skiers didn’t benefit from an assumed property right. Maybe it’s because cross-country skiing lacks the utilitarian aspects of parking spaces. Maybe it’s because the easily traversed track is too tempting. Maybe the dog walkers just never thought about what they were doing to the skiers’ track. For whatever reason, the skiers couldn’t simply claim ownership of their track.
Instead, the skiers were forced to create a new public good, the first track, which the dog-walkers took over. Only after they had “donated” the track to the park were they able to create their second, privately owned track.
Political Science professor Elinor Ostrom won the Nobel Prize in Economics this year for studying exactly this phenomenon. Ostrom’s work examines how societies manage shared resources, like fisheries, pastures and irrigation systems. Traditional economic analysis says such resources will either quickly be converted into private property or suffer the tragedy of the commons. Ostrom showed that many other management systems are possible. These widely varying systems use tradition and taboo in place of formal property rights to limit access and exploitation of shared resources and thus avoid the tragedy while preserving common ownership.
Ostrom traveled the world to study these alternative systems. We marvel at the ingenious solutions developed by goat herders in Africa and farmers in Nepal. Yet here’s a great example in my own back yard. The skiers hit on one of the common solutions. They donated some of the fruits of their labor to the community as a whole, in exchange for exclusive use of the rest.
The fascinating thing about this arrangement is that the skiers and the dog walkers never even met. The compromise over use of the trail emerged spontaneously without any face-to-face interaction at all. This shows that not only can private property regimes arise among strangers, so can more complicated Ostromiam regimes. It doesn’t take generations of experimentation and tradition to solve a shared use conflict. A little common-sense and courtesy can be just as effective.
Ostrom recently spoke at George Mason University’s Mercatus Center. Too bad that was before Snowmageddon. I could have been collaborating my way to my first Nobel Prize.
After The Storm
These incipient property rights won’t last. Soon the shoveler’s claim to his little patch of street will melt along with the snow that created it and the skiers’ donation to the park will be a memory. If these snowy conditions lasted longer, could real property rights eventually become fixed? Could shovelers and skiers ever take out-right ownership of public property like roads and parks?
Hopefully, no blizzard will last long enough to find out. But Peruvian economist Hernando de Soto has studied the emergence of property rights in similar situations in the streets and shanty towns of Lima and across Latin America. His findings explain everything from the ugliest stereotypes about the Latin poor to why squatters form Home Owners Associations.
The common links between Snowmageddon and Peru are shaky property rights and an artificial scarcity of vital resources. Of course, Peru’s problems weren’t caused by a single huge storm. They are the result of decades of weak money policies, corrupt petty officials, cronyism and government theft. They are also much more serious than losing a parking space.
In Peru, much of the land is controlled either by a few very wealthy landowners or by the government. This land, for many reasons, is unused. It lies empty and undeveloped. In the meantime, the poorest people in Peru lack bare essentials like housing and markets. These problems are exacerbated by migration from the country-side to cities which increases populations in already over-crowded areas.
The poor respond to this intolerable situation with squatter invasions. They choose an unoccupied piece of land, form an invasion committee, solicit people to join the group and cultivate the political connections needed for a successful invasion. When everything is in place, they take possession of the land in a highly organized move. If the group’s aim is to build houses, they will quickly lay out plots and streets, with each plot assigned to a member of the group. If it’s to build a market, they similarly lay out the stalls, aisles and common areas. In either case, they will organize a defense committee to fight off any attempt by police or private forces to evict them.
The government’s response to these invasions is often open support. Since these mass, popular uprisings represent many voters, the party currently in power can gain much by offering their de facto approval. By allowing the people to take possession of the land, but by denying them out-right ownership, the government gains a hold over that voting bloc.
Once they have that hold, it is in the government’s interest to maintain it. It can take years, even decades for the squatters to gain de jure ownership of their homes and businesses. In many cases, they never achieve that goal.
Life Without Property
De Soto describes the perverse effects of this horrible political dance in his book The Other Path. If I’m ever popular enough forBill In Portland Maine to feature me on Cheers and Jeers, The Other Path is on my short list of books every Kossack should read. I read the original edition. It’s excellent. The new edition has been dolled up as an anti-terrorism strategy, but much of the original material remains.
The shanty towns erected by the squatters are unsanitary with poorly constructed buildings and little or no access to clean water. The people living and working in these towns are constantly at risk of losing everything. People waste huge portions of their lives and their productivity guarding their shacks and stalls from the police or squatters who enjoy better political patronage. If a new party gains power, they can be evicted and their land given to supporters of the new rulers.
De Soto shows how this uncertainty affects the lives and choices of the squatters and how it keeps them poor. People who own their houses out-right invest in concrete floors, well built 2nd stories and running water. Squatters who lack property rights are much more likely to buy fancy trucks (by Peruvian standards), radios and TVs.
The stereotype among wealthier people in North and Latin America is that the squatters are either too stupid to want a better home or too lazy to work for it. Nothing could be further from the truth. These people work incredibly hard running markets, taxis, bus lines and other businesses which account for most of the Peruvian economy. They are not stupid or lazy. They just know that any day someone could come to take their land from them and there is nothing they could do about it. So they prefer to spend their money on things they can move, if that day ever comes.
De Soto and his fellow researchers at the Instituto Libertad y Democracia have shown that the world’s poorest people have the use of over $10T in capital. The total worth of all their de facto assets far exceeds the foreign aid and development funds donated to the governments of developing countries each year. Yet, because the poorest people lack legal ownership of those assets, they remain desperately impoverished and cannot improve their condition, no matter how hard they work.
Remember that the next time someone says, “Property is theft.”