Private Property Rights Will Solve Many Conflicts

Everybody knows that Delhi is one of the most polluted cities in the world. The roads in Delhi are congested, too. The government tried to solve the problem by insisting that vehicles with odd and even license plate numbers ply on roads on alternate days. Everybody, including the most ardent supporters of the plan, know that this is a temporary solution to the problem. According to IndiaSpends.com, pollution levels in Delhi rose when the odd-even rule was implemented the second time in the capital city. Such problems seem irresolvable because of the lack of private property rights.

Roads in Delhi are publicly owned. It is impossible to decide how a public resource can be used without violating the rights of people. Any dispute on how roads in Delhi can be used can be settled only through competing claims of different sets of taxpayers. If some taxpayers want streets to be primarily designed for cars and if, others want streets to be primarily designed for pedestrians and cycles, it is hard to resolve the ensuing conflict. The ballot box cannot decide the most efficient course. But if streets were privately owned, owners will be able to decide how to regulate traffic, especially in peak hours. This will be a huge improvement over the status quo.

Property rights, in fact, can solve many such seemingly unrelated problems.  This is why gender equality seems higher in countries where property rights are secure. This is also why income levels are higher in countries where property rights are protected. The countries which are in the top 15 in the International Property Rights Index are rich countries, and the countries in the bottom 15 are poor countries. This is because it is impossible to separate other human rights from property rights.

In Gurgaon, for example, private companies that provide sewage tend to dump waste in public places. This is seen as a problem with a private provision of public goods. But such externalities are by no means inevitable. If land were privately owned, private providers of sewage won't dump sewage on property that they do not own. As economist Alex Tabarrok pointed out, DLF won't dump waste in property that belongs to Ansals. This is not so much about electricity and sewage being provided by private firms, but about poor law enforcement and large tracts of land being publicly owned.

Take the problem of deforestation. If forests were privately owned, owners will not cut down trees arbitrarily. This is because timber is very expensive. The owner of a private forest will take profit-loss calculations into account before cutting down trees on a large scale. But when forests are publicly owned, trees are cut down arbitrarily, even when this is against the law.

As economist Muray Rothbard once pointed out, this applies to real estate developers, too. If a building collapses soon after it is built, the developer should be expected by the law to compensate buyers. This is for damaging buyers and their property by not maintaining highly scrupulous standards. Now, as real estate developers are expected to comply with various building codes imposed by the government, they do not always pay the price when such accidents happen. If a building collapses, the developer is not always seen as guilty because he would not have been allowed to build if he had not complied with building codes and other regulations.

This is not a problem which India alone faces. American politician Marco Rubio recently said that the government owns too much land, and many eminent economists agreed with him. As Chris Edward of Cato Institute said in agreement, “Increasing federal control over America's lands is misguided for both economic and environmental reasons.” What makes India different is that the problem is much worse when the government is the primary owner of land in major cities. There are many conflicts which only the legitimate owners of land can solve. Fishing, for example, will improve if parts of oceans are privately owned, just as land is privately owned today. Fishermen will be able to make partitions using electronic fencing and ensure that bigger fishes do not eat larger fishes. Private ownership in such matters will be a revolution if and when it happens.