PART 6. BUSINESS AND TRADE
CHAPTER 19. THE CURMUGIN
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.
Many problems arise, some by governmental obstacles, zoning laws, licensing requirements, bribes for acceptance of architectural plans.
Nowadays, these are widespread and stultifying.
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.
He is overly fond of his building and refuses to sell at any price.
The builder offers preposterous sums of money, but the curmudgeon steadfastly refuses.
The curmudgeon, who may be a little old lady or a bitter old man, has long been active
defending his homestead against the inroads of highway builders, railroad magnets, mining
companies or dam and irrigation control projects.
Indeed, the plots of many western movies are based on this resistance.
The curmudgeon and his spiritual soulmates served as the inspiration for the enactment
of eminent domain legislation.
He has been portrayed as a staunch human barrier to progress, with feet planted firmly at the
crossroads, and his motto, a strident, defiant, no.
Prices like this abound and are said to demonstrate the curmudgeon's interference with the progress
and well-being of the multitude.
This popular view, however, is mistaken.
The curmudgeon, who is depicted as standing in the way of progress, actually represents
one of the greatest hopes that progress ever had, the institution of property rights.
For the abuse heaped upon him is a disguised attack on the concept of private property itself.
Now if private property means anything, it means that owners have the right to make decisions
with regard to the use of their property, as long as this does not interfere with other
property owners and their rights to the use of their own property.
In the case of eminent domain, when the state forces the property owner to give up the rights
The two primary arguments for private property are the moral and the practical.
According to the moral argument, each man is, first of all, the complete owner of himself
and of the fruits of his labor.
The principle behind his ownership of himself and his artifacts is the principle of homestead
Homesteading, or Natural Governance.
Each person is the natural owner of himself, because, in the nature of things, his will
controls his actions.
According to the principle of homesteading, each man owns his own person, and he therefore
owns the things which he produces, those parts of nature hitherto unowned, and which, when
and mixed with his labor are transformed into productive entities.
The only moral ways for these entities to change ownership are voluntary trade and voluntary
gift-giving.
These ways are consistent with the original owner's natural homesteading rights, for they
are methods by which ownership is given up voluntarily in accordance with the owner's
will.
Let us assume that the property owned by the curmudgeon was gained by this process of natural
homesteading.
If so, there was an original homesteader, there were voluntary sales of the land or
the land may have been given in the form of a gift at one time or another.
The land then passed into the control of the curmudgeon through an unbroken chain of voluntary
events, all consistent with the principle of homesteading.
In other words, his land title would be legitimate.
Any attempt to wrest it from him without his consent thus violates the principle of homesteading
and hence is immoral.
It is an act of aggression against an innocent party.
The question will be raised regarding land which has been stolen.
In fact, most of the earth's surface meets this criteria.
In such cases, if there is evidence that, one, the land has been stolen, and, two, another
individual can be found who is the rightful owner or heir, this person's right of ownership
must be respected.
In all other cases, the actual owner must be considered the rightful owner.
De facto ownership is sufficient when the owner is the original homesteader, or when
and no other legitimate claimant can be found.
Many recognize this when the curmudgeon resists the demands on his property by private business.
It is clear that one private interest does not have the right to intrude upon another
private interest.
However, when it is the state, as represented by eminent domain laws, the case seems different.
For the state, it is assumed, represents all the people, and the curmudgeon purportedly
is blocking progress.
Yet in many cases, if not all, government laws of eminent domain are used to further
private interests.
Many urban relocation programs, for example, are at the behest of private universities
and hospitals.
Much of the condemnation of private property by eminent domain laws is accomplished for
for the special interests of lobbies and other pressure groups.
The condemnation of the land on which Lincoln Center for the Performing Arts in New York
City was built is a case in point.
This tract of land was condemned to make way for high culture.
People were forced to sell their land at prices the government was willing to pay.
Whose culture this center serves is clear to anyone who reads the list of subscribers
to Lincoln Center.
It is a who's who of the ruling class.
In considering the second set of arguments for private property rights, the practical
arguments, there is one based on the concept of stewardship.
Under private stewardship, it is claimed, property receives the best possible care.
Who controls the piece of property is not important.
What is important is that all property be privately owned, that precise delineations
between the properties be clearly marked off, and that no forced or involuntary transfers
of property be allowed.
If these conditions are met, and a laissez-faire market is maintained, those who mishandle
their property lose profits they could otherwise earn, and those who nurture their property
can accumulate funds.
Thus, those better able to maintain a good stewardship eventually become responsible
for more and more, since they can afford to buy up extra property with their earnings,
while the poor stewards will have less and less.
The general level of stewardship, therefore, will rise, and better care will be taken of
property in general.
The stewardship system, by rewarding good stewards and penalizing poor ones, increases
the average level of stewardship.
It does so automatically, without political votes, without political purges, and without
fuss or fanfare.
What happens when the government steps in and props up, by means of loans and subsidies,
failing enterprises managed by incompetence?
The effectiveness of the stewardship system is vitiated, if not destroyed altogether.
The failing enterprises are protected by government subsidies from the consequences of their mismanagement.
Such government infringements take many forms.
The granting of franchises, licenses and other types of monopoly advantages to one select
individual or group, the granting of tariffs and quotas to protect inefficient domestic
Caretakers against competition from more efficient foreign stewards, and the awarding of government
contracts which pervert the original consumption wishes of the public.
All perform the same function.
They enable the government to interpose itself between a bad caretaker and a public which
has chosen not to patronize him.
What if the government interposes itself in the opposite way?
Why if it tries to hasten the process by which good stewards acquire more and more property?
Since the sign of good stewardship in a free market is success, why can't the government
simply analyze the present distribution of property and wealth, ascertain who the successes
and the failures are, and then complete the transfer of property from poor to wealthy?
The answer is that the market system works automatically, making day-to-day adjustments
in immediate response to the competence of the various stewards.
Governmental attempts to hasten the process by transferring money and property from the
poor to the rich can only be done on the basis of the past behavior of the stewards in question.
But there is no guarantee that the future will resemble the past, that those who were
successful entrepreneurs in the past will be successful entrepreneurs in the future.
Similarly, there is no way of knowing who among the present poor have the innate competence
to eventually succeed in a free market.
Governmental programs, based as they would have to be on past accomplishments, would
could be arbitrary and inherently contrived.
Now the curmudgeon is a prototype of a backward, poor individual who is by all standards a
bad manager.
Thus he is a prime candidate for a governmental scheme whose goal is to speed up the market
process by which good stewards acquire more property and bad stewards lose theirs.
But this, as we have seen, is a scheme bound to fail.
The second practical defense of private property may be called the praxeological argument.
This view focuses on the question of who is to evaluate transactions.
According to it, the only scientific evaluation that can be made of a voluntary trade is that
all parties to it gain in the ex ante sense.
That is, at the time of the trade, both parties value what they will gain more than they value
what they will give up in exchange.
The parties would not voluntarily make the trade unless, at that time, each valued what
is to be received more than what is to be given up.
Thus, a mistake in a trade will not be made in the ex ante sense.
However, a mistake can be made in the ex post sense.
After the trade has been completed, one can change one's evaluation.
However, in most instances, the trade usually reflects the desires of both parties.
How is this relevant to the situation of the curmudgeon, who is charged with blocking progress
and thwarting the natural transfer of property from the less able to the more able?
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.
The only evaluation that can be made from a scientific perspective is of a voluntary trade.
A voluntary trade is, in the ex ante sense, good.
If the curmudgeon refuses to trade, no negative evaluation is possible.
All that can be said is that the curmudgeon values his property at more than the developer
was willing or able to pay.
Since no interpersonal comparisons of utility or welfare have scientific foundation, there
is no unit by which such things can be measured, let alone compared between different people.
There is no legitimate basis on which to say that the curmudgeon's refusal to sell his
property is harmful or causes problems.
True, the curmudgeon's choice serves to obstruct the real estate developer's goal, but then
the goals of the real estate developer are just as obstructive of the goals of the old
curmudgeon.
Clearly, the curmudgeon is under no obligation to frustrate his own desires in order to satisfy
and others. Yet the curmudgeon is usually the object of unjustified censure and criticism
as he continues to act with integrity and courage in the face of enormous social pressures.
This must stop.