WEBVTT NOTE 19. The Curmudgeon 1 00:00:00.000 --> 00:00:04.000 PART 6. BUSINESS AND TRADE 2 00:00:04.000 --> 00:00:08.000 CHAPTER 19. THE CURMUGIN 3 00:00:08.000 --> 00:00:26.000 Imagine, if you will, the problems of the real estate developer who is trying to supplant a city block of crumbling tenements with a modern residential complex, replete with gardens, swimming pools, balconies, and other accoutrements of comfortable living. 4 00:00:26.000 --> 00:00:37.000 Many problems arise, some by governmental obstacles, zoning laws, licensing requirements, bribes for acceptance of architectural plans. 5 00:00:37.000 --> 00:00:41.000 Nowadays, these are widespread and stultifying. 6 00:00:41.000 --> 00:00:51.000 However, in some cases, an even greater problem is posed by the curmudgeon who owns and lives in the most decrepit tenement on the block. 7 00:00:51.000 --> 00:00:56.180 He is overly fond of his building and refuses to sell at any price. 8 00:00:56.180 --> 00:01:03.200 The builder offers preposterous sums of money, but the curmudgeon steadfastly refuses. 9 00:01:03.200 --> 00:01:09.000 The curmudgeon, who may be a little old lady or a bitter old man, has long been active 10 00:01:09.000 --> 00:01:14.920 defending his homestead against the inroads of highway builders, railroad magnets, mining 11 00:01:14.920 --> 00:01:19.240 companies or dam and irrigation control projects. 12 00:01:19.240 --> 00:01:25.180 Indeed, the plots of many western movies are based on this resistance. 13 00:01:25.180 --> 00:01:30.540 The curmudgeon and his spiritual soulmates served as the inspiration for the enactment 14 00:01:30.540 --> 00:01:33.380 of eminent domain legislation. 15 00:01:33.380 --> 00:01:39.700 He has been portrayed as a staunch human barrier to progress, with feet planted firmly at the 16 00:01:39.700 --> 00:01:45.500 crossroads, and his motto, a strident, defiant, no. 17 00:01:45.500 --> 00:01:51.580 Prices like this abound and are said to demonstrate the curmudgeon's interference with the progress 18 00:01:51.580 --> 00:01:54.600 and well-being of the multitude. 19 00:01:54.600 --> 00:01:57.780 This popular view, however, is mistaken. 20 00:01:57.780 --> 00:02:03.420 The curmudgeon, who is depicted as standing in the way of progress, actually represents 21 00:02:03.420 --> 00:02:10.100 one of the greatest hopes that progress ever had, the institution of property rights. 22 00:02:10.100 --> 00:02:17.460 For the abuse heaped upon him is a disguised attack on the concept of private property itself. 23 00:02:17.460 --> 00:02:23.620 Now if private property means anything, it means that owners have the right to make decisions 24 00:02:23.620 --> 00:02:28.860 with regard to the use of their property, as long as this does not interfere with other 25 00:02:28.860 --> 00:02:33.820 property owners and their rights to the use of their own property. 26 00:02:33.820 --> 00:02:39.180 In the case of eminent domain, when the state forces the property owner to give up the rights 27 00:02:39.180 --> 00:02:53.780 The two primary arguments for private property are the moral and the practical. 28 00:02:53.780 --> 00:02:59.980 According to the moral argument, each man is, first of all, the complete owner of himself 29 00:02:59.980 --> 00:03:02.660 and of the fruits of his labor. 30 00:03:02.660 --> 00:03:09.140 The principle behind his ownership of himself and his artifacts is the principle of homestead 31 00:03:09.140 --> 00:03:12.580 Homesteading, or Natural Governance. 32 00:03:12.580 --> 00:03:19.100 Each person is the natural owner of himself, because, in the nature of things, his will 33 00:03:19.100 --> 00:03:22.100 controls his actions. 34 00:03:22.100 --> 00:03:27.540 According to the principle of homesteading, each man owns his own person, and he therefore 35 00:03:27.540 --> 00:03:34.480 owns the things which he produces, those parts of nature hitherto unowned, and which, when 36 00:03:34.480 --> 00:03:39.880 and mixed with his labor are transformed into productive entities. 37 00:03:39.880 --> 00:03:46.680 The only moral ways for these entities to change ownership are voluntary trade and voluntary 38 00:03:46.680 --> 00:03:48.680 gift-giving. 39 00:03:48.680 --> 00:03:53.940 These ways are consistent with the original owner's natural homesteading rights, for they 40 00:03:53.940 --> 00:04:00.080 are methods by which ownership is given up voluntarily in accordance with the owner's 41 00:04:00.080 --> 00:04:01.600 will. 42 00:04:01.600 --> 00:04:07.640 Let us assume that the property owned by the curmudgeon was gained by this process of natural 43 00:04:07.640 --> 00:04:08.640 homesteading. 44 00:04:08.640 --> 00:04:15.360 If so, there was an original homesteader, there were voluntary sales of the land or 45 00:04:15.360 --> 00:04:20.660 the land may have been given in the form of a gift at one time or another. 46 00:04:20.660 --> 00:04:26.600 The land then passed into the control of the curmudgeon through an unbroken chain of voluntary 47 00:04:26.600 --> 00:04:31.320 events, all consistent with the principle of homesteading. 48 00:04:31.320 --> 00:04:35.640 In other words, his land title would be legitimate. 49 00:04:35.640 --> 00:04:41.840 Any attempt to wrest it from him without his consent thus violates the principle of homesteading 50 00:04:41.840 --> 00:04:44.400 and hence is immoral. 51 00:04:44.400 --> 00:04:48.480 It is an act of aggression against an innocent party. 52 00:04:48.480 --> 00:04:53.040 The question will be raised regarding land which has been stolen. 53 00:04:53.040 --> 00:04:57.720 In fact, most of the earth's surface meets this criteria. 54 00:04:57.720 --> 00:05:04.880 In such cases, if there is evidence that, one, the land has been stolen, and, two, another 55 00:05:04.880 --> 00:05:11.460 individual can be found who is the rightful owner or heir, this person's right of ownership 56 00:05:11.460 --> 00:05:13.700 must be respected. 57 00:05:13.700 --> 00:05:19.320 In all other cases, the actual owner must be considered the rightful owner. 58 00:05:19.320 --> 00:05:24.880 De facto ownership is sufficient when the owner is the original homesteader, or when 59 00:05:24.880 --> 00:05:29.160 and no other legitimate claimant can be found. 60 00:05:29.160 --> 00:05:35.880 Many recognize this when the curmudgeon resists the demands on his property by private business. 61 00:05:35.880 --> 00:05:40.780 It is clear that one private interest does not have the right to intrude upon another 62 00:05:40.780 --> 00:05:42.480 private interest. 63 00:05:42.480 --> 00:05:50.060 However, when it is the state, as represented by eminent domain laws, the case seems different. 64 00:05:50.060 --> 00:05:55.660 For the state, it is assumed, represents all the people, and the curmudgeon purportedly 65 00:05:55.660 --> 00:05:58.260 is blocking progress. 66 00:05:58.260 --> 00:06:04.180 Yet in many cases, if not all, government laws of eminent domain are used to further 67 00:06:04.180 --> 00:06:06.560 private interests. 68 00:06:06.560 --> 00:06:12.180 Many urban relocation programs, for example, are at the behest of private universities 69 00:06:12.180 --> 00:06:14.180 and hospitals. 70 00:06:14.180 --> 00:06:19.620 Much of the condemnation of private property by eminent domain laws is accomplished for 71 00:06:19.620 --> 00:06:24.120 for the special interests of lobbies and other pressure groups. 72 00:06:24.120 --> 00:06:29.100 The condemnation of the land on which Lincoln Center for the Performing Arts in New York 73 00:06:29.100 --> 00:06:32.440 City was built is a case in point. 74 00:06:32.440 --> 00:06:37.900 This tract of land was condemned to make way for high culture. 75 00:06:37.900 --> 00:06:43.960 People were forced to sell their land at prices the government was willing to pay. 76 00:06:43.960 --> 00:06:49.400 Whose culture this center serves is clear to anyone who reads the list of subscribers 77 00:06:49.400 --> 00:06:51.240 to Lincoln Center. 78 00:06:51.240 --> 00:06:55.000 It is a who's who of the ruling class. 79 00:06:55.000 --> 00:07:00.380 In considering the second set of arguments for private property rights, the practical 80 00:07:00.380 --> 00:07:05.220 arguments, there is one based on the concept of stewardship. 81 00:07:05.220 --> 00:07:11.700 Under private stewardship, it is claimed, property receives the best possible care. 82 00:07:11.700 --> 00:07:16.100 Who controls the piece of property is not important. 83 00:07:16.100 --> 00:07:22.580 What is important is that all property be privately owned, that precise delineations 84 00:07:22.580 --> 00:07:29.000 between the properties be clearly marked off, and that no forced or involuntary transfers 85 00:07:29.000 --> 00:07:31.800 of property be allowed. 86 00:07:31.800 --> 00:07:38.260 If these conditions are met, and a laissez-faire market is maintained, those who mishandle 87 00:07:38.260 --> 00:07:44.340 their property lose profits they could otherwise earn, and those who nurture their property 88 00:07:44.340 --> 00:07:46.620 can accumulate funds. 89 00:07:46.620 --> 00:07:53.040 Thus, those better able to maintain a good stewardship eventually become responsible 90 00:07:53.040 --> 00:07:59.580 for more and more, since they can afford to buy up extra property with their earnings, 91 00:07:59.580 --> 00:08:03.500 while the poor stewards will have less and less. 92 00:08:03.500 --> 00:08:09.100 The general level of stewardship, therefore, will rise, and better care will be taken of 93 00:08:09.100 --> 00:08:11.400 property in general. 94 00:08:11.400 --> 00:08:17.220 The stewardship system, by rewarding good stewards and penalizing poor ones, increases 95 00:08:17.220 --> 00:08:20.220 the average level of stewardship. 96 00:08:20.220 --> 00:08:25.780 It does so automatically, without political votes, without political purges, and without 97 00:08:25.780 --> 00:08:28.640 fuss or fanfare. 98 00:08:28.640 --> 00:08:35.080 What happens when the government steps in and props up, by means of loans and subsidies, 99 00:08:35.080 --> 00:08:39.100 failing enterprises managed by incompetence? 100 00:08:39.100 --> 00:08:45.380 The effectiveness of the stewardship system is vitiated, if not destroyed altogether. 101 00:08:45.380 --> 00:08:52.460 The failing enterprises are protected by government subsidies from the consequences of their mismanagement. 102 00:08:52.460 --> 00:08:55.460 Such government infringements take many forms. 103 00:08:55.460 --> 00:09:01.700 The granting of franchises, licenses and other types of monopoly advantages to one select 104 00:09:01.700 --> 00:09:08.260 individual or group, the granting of tariffs and quotas to protect inefficient domestic 105 00:09:08.260 --> 00:09:15.100 Caretakers against competition from more efficient foreign stewards, and the awarding of government 106 00:09:15.100 --> 00:09:20.980 contracts which pervert the original consumption wishes of the public. 107 00:09:20.980 --> 00:09:23.500 All perform the same function. 108 00:09:23.500 --> 00:09:29.740 They enable the government to interpose itself between a bad caretaker and a public which 109 00:09:29.740 --> 00:09:33.420 has chosen not to patronize him. 110 00:09:33.420 --> 00:09:37.660 What if the government interposes itself in the opposite way? 111 00:09:37.660 --> 00:09:45.500 Why if it tries to hasten the process by which good stewards acquire more and more property? 112 00:09:45.500 --> 00:09:50.980 Since the sign of good stewardship in a free market is success, why can't the government 113 00:09:50.980 --> 00:09:57.500 simply analyze the present distribution of property and wealth, ascertain who the successes 114 00:09:57.500 --> 00:10:04.800 and the failures are, and then complete the transfer of property from poor to wealthy? 115 00:10:04.800 --> 00:10:11.560 The answer is that the market system works automatically, making day-to-day adjustments 116 00:10:11.560 --> 00:10:17.120 in immediate response to the competence of the various stewards. 117 00:10:17.120 --> 00:10:22.040 Governmental attempts to hasten the process by transferring money and property from the 118 00:10:22.040 --> 00:10:30.160 poor to the rich can only be done on the basis of the past behavior of the stewards in question. 119 00:10:30.160 --> 00:10:35.700 But there is no guarantee that the future will resemble the past, that those who were 120 00:10:35.700 --> 00:10:41.840 successful entrepreneurs in the past will be successful entrepreneurs in the future. 121 00:10:41.840 --> 00:10:48.340 Similarly, there is no way of knowing who among the present poor have the innate competence 122 00:10:48.340 --> 00:10:52.500 to eventually succeed in a free market. 123 00:10:52.500 --> 00:10:57.520 Governmental programs, based as they would have to be on past accomplishments, would 124 00:10:57.520 --> 00:11:01.840 could be arbitrary and inherently contrived. 125 00:11:01.840 --> 00:11:08.240 Now the curmudgeon is a prototype of a backward, poor individual who is by all standards a 126 00:11:08.240 --> 00:11:09.720 bad manager. 127 00:11:09.720 --> 00:11:15.760 Thus he is a prime candidate for a governmental scheme whose goal is to speed up the market 128 00:11:15.760 --> 00:11:23.020 process by which good stewards acquire more property and bad stewards lose theirs. 129 00:11:23.020 --> 00:11:28.400 But this, as we have seen, is a scheme bound to fail. 130 00:11:28.400 --> 00:11:35.180 The second practical defense of private property may be called the praxeological argument. 131 00:11:35.180 --> 00:11:41.420 This view focuses on the question of who is to evaluate transactions. 132 00:11:41.420 --> 00:11:48.100 According to it, the only scientific evaluation that can be made of a voluntary trade is that 133 00:11:48.100 --> 00:11:52.860 all parties to it gain in the ex ante sense. 134 00:11:52.860 --> 00:11:59.420 That is, at the time of the trade, both parties value what they will gain more than they value 135 00:11:59.420 --> 00:12:02.480 what they will give up in exchange. 136 00:12:02.480 --> 00:12:08.820 The parties would not voluntarily make the trade unless, at that time, each valued what 137 00:12:08.820 --> 00:12:12.540 is to be received more than what is to be given up. 138 00:12:12.540 --> 00:12:18.420 Thus, a mistake in a trade will not be made in the ex ante sense. 139 00:12:18.420 --> 00:12:23.420 However, a mistake can be made in the ex post sense. 140 00:12:23.420 --> 00:12:28.420 After the trade has been completed, one can change one's evaluation. 141 00:12:28.420 --> 00:12:35.420 However, in most instances, the trade usually reflects the desires of both parties. 142 00:12:35.420 --> 00:12:41.420 How is this relevant to the situation of the curmudgeon, who is charged with blocking progress 143 00:12:41.420 --> 00:12:47.420 and thwarting the natural transfer of property from the less able to the more able? 144 00:12:47.420 --> 00:12:59.420 According to the praxeologist, the answer to the question, shouldn't he be forced to sell his property to those who can manage it more productively, is a resounding no. 145 00:12:59.420 --> 00:13:07.420 The only evaluation that can be made from a scientific perspective is of a voluntary trade. 146 00:13:07.420 --> 00:13:12.420 A voluntary trade is, in the ex ante sense, good. 147 00:13:12.420 --> 00:13:18.580 If the curmudgeon refuses to trade, no negative evaluation is possible. 148 00:13:18.580 --> 00:13:24.100 All that can be said is that the curmudgeon values his property at more than the developer 149 00:13:24.100 --> 00:13:27.340 was willing or able to pay. 150 00:13:27.340 --> 00:13:34.140 Since no interpersonal comparisons of utility or welfare have scientific foundation, there 151 00:13:34.140 --> 00:13:41.620 is no unit by which such things can be measured, let alone compared between different people. 152 00:13:41.620 --> 00:13:46.640 There is no legitimate basis on which to say that the curmudgeon's refusal to sell his 153 00:13:46.640 --> 00:13:50.340 property is harmful or causes problems. 154 00:13:50.340 --> 00:13:56.900 True, the curmudgeon's choice serves to obstruct the real estate developer's goal, but then 155 00:13:56.900 --> 00:14:02.300 the goals of the real estate developer are just as obstructive of the goals of the old 156 00:14:02.300 --> 00:14:03.300 curmudgeon. 157 00:14:03.300 --> 00:14:09.900 Clearly, the curmudgeon is under no obligation to frustrate his own desires in order to satisfy 158 00:14:09.900 --> 00:14:17.100 and others. Yet the curmudgeon is usually the object of unjustified censure and criticism 159 00:14:17.100 --> 00:14:24.620 as he continues to act with integrity and courage in the face of enormous social pressures. 160 00:14:24.620 --> 00:14:26.060 This must stop.