Think about the oldest and most familiar principles of American law, property and proportional liability, in a new and surprising way, and learn to apply economic reasoning to an especially important and interesting aspect of life.
An Infinity of Rights
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Do curso por Wesleyan University
Propriedade e Responsabilidade Civil: Uma Introdução ao Direito e a Economia
240 classificações
Wesleyan University
240 classificações
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Property
Property is where law and economics meet, but it's not a simple concept. Property is not an object or a relation between people and objects, but a set of rights, relations among people over who is to control each of the many uses to which objects can be put. Different people may control different uses of an object, that is, have different property rights over its various uses, at the same time, or control the same use of the object at different times. When new uses create disputes, the law must define new property rights and allocate them initially to resolve the dispute – someone must be deemed to have won the dispute and be given initial ownership of the new rights. But once the former disputants are allowed to trade these rights among themselves, surprising results follow.
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Richard AdelsteinProfessor
Department of Economics
Hi, everyone. Welcome back.
In this lecture, I'd like to develop what I've called earlier the new view of
property rights. The one that associates a different right
with every different use, to which a particular object might be put.
This means that there can be potentially a very large number of different property
rights associated with the same object. Which differs from the older view which
associated only a very small number of different property rights, possession,
use, and disposition with any particular object.
The new view multiplies enormously the number of property rights associated with
any given object. To illustrate this idea, I've asked you to
look at an example of a dorm room, a college dormitory room, like the one on
the picture. Let's imagine, although it isn't really
the case, that this is a picture of a dormitory on my own college campus.
I work at a school called Wesleyan University, which is located in a small
city in the center of Connecticut, called Middletown, Connecticut.
And Connecticut itself is in the Northeastern part of the United States.
On our campus, the dormitories are on the campus and so students live in rooms on
the campus in building which are, I'll use this word advisedly owned by the
university. So let's imagine that the room in the
picture is a Wesleyan University dorm. And let's imagine that it is occupied by a
young woman who we'll call Simone. So, the question before the floor is the
question at the top of the slide, whose room is it?
If we were to ask Simone, whose room it was?
She'd almost certainly give us the answer that it's her room.
But as we've seen, under the new view of property, the answer might be somewhat
more complex than that. The real question to ask, in terms of
whose room it is, is to ask what different people could actually use the room for.
So, the first question is, what can Simone do in the room?
Well obviously, she can live there, and will associate with living there a whole
range of activities which is, in principle, open ended.
She can sleep there, she can study there, she can talk with her friends there.
She can, as we can see, use her computer. There seems to be a microwave in the room.
She could use her little television. She could do all sorts of things in the
room that are associated with living with it, living in it, excuse me.
And she can invite other people into the room if she choose, and she can invite
those other people to use the room in the way that she can use the room.
So she can invite somebody else to sleep there, she could invite somebody else to
study there, she could invite somebody else to do any of the things in the room
that she's entitled to do in the room herself.
By the same token, since she has the right to invite people to come in, she also has
what the older theorist would call the right of possession which means that she
doesn't have to let anybody in that she doesn't want to let in.
That is because she controls that use of the room.
Entry into it for the purposes of studying, Et cetera.
She can invite some people in, and she can exclude other people by simply not
inviting them in and closing the door. Where did Simone get these rights?
But at our university, she got the rights and a housing contract between her and
Wesley. In the housing contract, Simone agrees to
pay a certain sum of money for the right to live in the room between September and
June of the academic year. She gets these rights as I say, by
purchasing them from the University. Our University as I speak has a president
named Mike. And so we'll personalize Wesleyan by
calling, Wesleyan Mike. And Simone, therefore, got the rights that
she has to use the room in the way that she can by buying those rights from Mike
as part of a contract. She's paid for them, he's delivered them,
and those property rights belong to her. But you'll notice in the picture, that
there are posters all over the wall. Who has the right to nail those posters to
the wall? Well, we need to check the contract.
That is, the contract that conveyed a certain set of property rights from Mike
to Simone, because that contract may well have allowed for Mike to keep or retain
some rights to use the room in particular ways.
At our university, Mike retains the right to nail a nail into the wall to hang up a
poster and he typically chooses to exercise this right negatively.
That means not that he is able to enter into Simone's room and nail a poster to
the wall himself, because he has the right to do so.
But he does, alternatively gets to exercise the right negatively by
forbidding Simone to nail a nail into the wall without Mike's permission.
How could Simone get Mike's permission to nail a nail into the wall?
Well, the easiest answer is that she would simply do it to take the poster and nail
it to the wall. But at Wesleyan, if a student nails a
poster to the wall, that student will be asked to pay a fine to compensate Wesleyan
for the cost of repairing the wall, once the student has left the room and the nail
has been pulled along with the poster. Indeed, at Wesleyan, many dormitory rooms
contain a menu of prices for certain kinds of rights that Mike retains to the room,
that students might seize against Mike's will and without his consent.
So, for example, Mike retains the right not just to nail nails into the wall, he
retains the right to use an old fashioned hot plate.
That is to cook food in a room, and he chooses to exercise the right to use a hot
plate negatively by forbidding Simone, or anyone else.
Within his power from using a, a hotplate in the room.
Could Simone use a hotplate? Could she nail posters to the wall?
Obviously she could, but if she did, she'd have to pay Mike the cost of transferring
that right from Mike to Simone. That is, that is encapsulated in this
stipulated fine. So, now we have two people who own
properties in, in Simone's room. Simone who has the right to live there and
Mike who owns the right to nail posters to the wall, a right he exercises negatively.
Except for the payment of fines which represent a transfer of that property
right for might to the person whose nailed the nails into the wall and paid for that
right by paying the fine. So, another question arises.
Suppose Simone says, well the pizza on the campus is awful.
I think I could make a lot of money if I simply opened the pizza business in my
room, and made better pizza than students can get at the other alternative pizza
places around the campus. Could she do so?
Who has the right to operate a pizza business in Simone's room?
The answer is, not Simone, and not even Mike.
But, in fact, the Middle Town Connecticut planning and zoning board has the right to
tell Simone whether she may or may not operate a pizza business from her room.
Obviously, operating a pizza business is not anything that's intrinsically wrong.
Pizza businesses operate everywhere, quite legally, and people enjoy the pizzas that
they make, and everybody is happy. But pizza businesses can't be open just
anywhere. And almost every part of the United States
has what are called zoning laws. And zoning laws tell people what kinds of
uses they can put to land, in what particular locations in a particular
jurisdiction. So a zoning law might say, all the
buildings in this particular portion of a city will be residential buildings.
Or it might say, all the buildings in another part of the city will be
commercial buildings, or all the buildings in a third part of a city will be devoted
to heavy manufacturing, and so on. It's the planning and zoning commission of
Middletown that gets to say whether Simone can operate a pizza business in her room.
And we'll personalize the planning and zoning commission by identifying it with
the government of the city of Middletown which as I speak, has a mayor named Dan.
Since the planning and zoning commission has the say-so over whether or not Simone
can operate a pizza business in her room. We say that it is the property right
holder of the property right to, to operate the pizza business in Simone's
room. Could Simone buy the right from Mayor Dan,
and thus open a pizza parlor in her room? Well, not literally.
If she actually did try to pay money to Mayor Dan, or the planning and zoning
commission, she and they would have committed a crime, the crime of bribery.
But it certainly is in the discretion of the planning and zoning commission to
allow people, Simone or someone else to run a pizza business in Simone's room.
So, the planning and zoning commission, Mayor Dan, has the right to use the
property right negatively. That is, it can forbid anyone, including
Mayor Dan himself from entering Simone's room to operate a pizza business.
But the planning and zoning commision, Mayor Dan, may decide for whatever good
reasons it might have to allow people to do so.
Since they get to say so, they're the ones who hold the property right.
Now we have three owners of different property rights in Simone's room, Simone
Mike had Mayor Dan. Consider the fourth use of Simone's room.
Who has the right to use cocaine in Simone's room?
There's a picture of some cocaine up there now, and the answer, one might think is
nobody. Using cocaine in a dormitory room indeed,
using cocaine anywhere in the state of Connecticut is a crime against the state
of Connecticut. And so we'll say the governor of
Connecticut, who is also named Dan, holds the property right to use cocaine in
Simone's room. Then what we me by, Governor Dan, is not
Governor Dan himself as a person, since if he were to try to enter Simone's room and
use cocaine, he too would be arrested and made to pay a penalty for using the
cocaine. Instead, the state of Connecticut attempts
to stop everybody. Simone, Mike, Mayor Dan, Governor Dan,
everybody from using cocaine in Simone's room.
Could Simone buy the right from Governor Dan?
Well, she could indeed. How would she do so?
In the same way that she would buy the right to nail a nail into the wall for
Mike. She could simply use the cocaine in the
room. If she did use the cocaine in the room,
she would've taken the entitlement from Dan, taken the property right from Dan to,
to use cocaine in the room which Dan had been attempting to exercise negatively by
excluding her from. Using the cocaine in the room, she would
have seized that entitlement from government gut, Governor Dan that property
right, and she would have used it to use the cocaine.
But she then, most likely, would be arrested, and made to pay a penalty set by
Governor Dan. And so analogously to the way in which
Simone could purchase the property right to nail posters in the wall, by paying the
appropriate fine to Mike. She can also appropriate the right to use
cocaine in her room from Governor Dan, simply by paying Governor Dan's price,
which would be considerably higher than Mike's price, for nailing a poster to the
wall. Finally, we might ask, who has the right
to make a nuclear weapon in Simone's room? Actually, as some students at Princeton
had discovered making a nuclear weapon is technically not all that difficult, you
can make it with easily available components along with a small amount of
weapons-grade plutonium. So let's ask, who has the right to get
that weapon's grade Plutonium to get those easily available parts and construct an
atomic bomb like the one in the picture, in Simone's room?
And the answer to this is, is that the government of the United States of America
has that right. Will personalize the government by calling
it Barack, who happens to be, as I speak, the president of the United States.
Barack has the right to test nuclear, excuse me, to make the weapons in Simone's
room and he exercises it negatively as best he can, not just in Simone's room.
But everywhere, well, not quite everywhere in the United States, because there are
two places in the United States, each of them housing a different company, one of
them in New Mexico, housings Sandia laboratories, and one of them in
Tennessee, housing the Oakridge laboratories.
Where America's nuclear weapons are made, and they're made there because Barack, the
government of the United States has allowed those two organixations to produce
nuclear weapons in the places where they exist.
And so although Barack has the authority to exercise the property right to make
nuclear weapons anywhere in the United States negatively.
He choose to exercise those rights negatively by barring people from making
nuclear weapons. Almost everywhere, except for those two
places, one in New Mexico and one in Tennessee.
So we'll ask again, could Simone buy the right from Barack?
Well yes she could, in exactly same way that she bought the right to nail posters
into the wall from Mike, and the right to use cocaine from Governor Dan.
If she were willing to pay the penalty that Barack would impose upon her for
building the nuclear weapon in her room. So, we now have five different owners of
property rights to Simone's room, each of them owning a different property right
associated with a different use of the room itself.
The first of course, is Simone herself who has the right to live there.
She can work there, she can entertain friends there, and she can exclude others
from entering the room and partaking of these activities without her consent.
Then Mike, as we've seen, can forbid posters to be hung with nails and
therefore, he owns the property right to nail the nails into the wall.
And he does forbid posters from being hung, but he does have a procedure to
enable people to purchase that property right from him if they're willing to pay
the penalty that he sets. The mayor then nails into the wall.
A third property right owner is Mayor Dan, who can allow a pizza parlor to operate
anywhere within the city limits of Middletown and also, therefore, can choose
to disallow a pizza parlor from operating anywhere in the city of Middletown.
And Mayor Dan has, as we speak made it illegal, that is, denied the right to open
a pizza parlor in any dormitory room on the Wesleyan campus.
Governor Dan goes further and forbids the use of cocaine in Simones' room, not just
by Simone, not just by Governor Dan himself, but by everybody.
But Mayor Dan might allow some pizza parlors to operate somewhere, Governor Dan
would like to see the use of cocaine forbidden everywhere in the state of
Connecticut. And finally, Iraq can allow nuclear
weapons to made if he wishes, or he can deny people the right to make nuclear
weapons where they wish to make them, and therefore he owns the property right to
make nuclear weapons. Not just in Simone's room, but anywhere in
the United States. And, there's one other way in which
property rights attach to Simone's room. And that is property rights distinguished
in time. Each of the five property rights that I've
already discussed are rights that exist right now.
Simone has the right to live in her room right now.
Mayor Dan has the right to prohibit the pizza parlor right now, and Et cetera.
But in the housing contract, Simone has only purchased what rights she has in the
dormitory room from Mike for the academic year that begins in September and ends in
June. This is the year 2012 and 13 and Simone's
housing contract would expire in June of 2013.
At that moment, all the property rights that she had in the room during the
academic year 2012 and 13 would disappear. And she would be left with no property
rights in the room at all. All of the property rights that she had,
in the room, between 2012 and 2013, now revert back to Mike.
Indeed, they never left Mike, because the only rights that he sold to Simone were
the rights that she has from September of 2012 to June of 2013.
Now, selling it would be possible for Mike in 2012 to sell the rights to live in
Simone's room to somebody other than Simone for the academic year 2013, 2014.
Simone will be gone in June of 2013. And so Mike can sell the rights that
Simone had in 2012 and 13 to somebody else to use in the year 2013 and 14, and he can
make that sale today so that, that person will have the property rights at some
period in the future. And so, every property right to every use
can also be divided, potentially infinitely, into the future.
You can have the property right to do x in the room now, or you could have the
different property right to do x in the room next year.
And different people could hold this different property right at the same time.
So, to summarize what we've seen about the dorm room is that associated with the dorm
room In the new view of property, are a potentially infinite number of property
rights, each one associated with a different use of the room, and each one
associated with a different moment in time.
And we've seen that different people may hold the same right different people may
hold rights to different uses at the same time, that was what we saw with our five
property holders. They all held rights to use the room in a
different way, but they all held those rights at the same time during the current
academic year while Simone is living in the room.
But toward the end, when we saw that Mike could sell the right to live to the room
to somebody, live in the room to somebody other than Simone for some period in the
future. We've also seen that different people may
hold rights to the same use, but those rights apply at different times.
Hence, a potentially infinite number of rights divided amongst the potentially
infinite number of uses, and spread across a potentially infinite number of periods
of time into the future.
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