There Is No Prosperity without Private Property

by
Soham Patil
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Private property rights are crucial to economic prosperity. Without them, it becomes impossible to set up a system of free markets that allows for rational economic calculation. Despite this, property rights are under attack in today’s world by progressives seeking to build a more “just” society through equity.

When property is originally appropriated, it belongs to its owner. The owner may use, transform, sell, or even not use his property at all, based solely on his own discretion. The owner of something has the most incentive to use his property responsibly. This might occur in the form of consuming a good with moderation or using a tool in the most efficient production process. The appropriation of property is a path towards wealth. In a free market system, one can acquire property, sell property, and even lease it, allowing for goods to reach the places where they are the most desired according to the price signals. Without a system of private property and free markets, bureaucrats would be scrambling to find a system of valuation for even the most basic goods and services. The odds would be stacked against them as they cannot compare to a system that allows for voluntary transactions among people based on their individual subjective valuations. 

Unfortunately, many now see the ability of people to own property as a problem for equity. Critics of free markets contend that “property is exploitation” and allows for the hoarding of resources by the wealthy. While it is true that some people are significantly wealthier than others, there should not be a problem if all of his property were acquired through fair and voluntary means. Regrettably, this often does not put off activists who still cling to a moral high ground for the equitable society they aim to bring about. Many even claim that property rights are an after-product of colonialism.

While a moral, deontological argument ought to be what convinces someone about private property and free markets, proponents of free markets can always just point to the disastrous consequences of the erosion of property rights. A notorious example is Zimbabwe’s land reforms under the rule of Robert Mugabe. Mugabe’s regime confiscated approximately 23 million acres worth of land in an effort to redistribute farmland to the impoverished people in Zimbabwe.

The rationale for this land reform was that the commercial farms that were confiscated were mostly owned by white residents who accounted for most of the wealth in Zimbabwe. Thus, the regime found it fitting to take property away from its most productive citizens and hand it to those who had nearly no clue what to do with it. Naturally, this resulted in food production reducing drastically in Zimbabwe causing food prices to rise and plunging much of the population into food insecurity. Investors fled from Zimbabwe and the lack of trust in property rights in Zimbabwe caused by the land reforms reflected in the value of farmland losing 75 percent of its value between 2000 and 2001.

This isn’t the only instance of a politically favored group ignoring property rights to get their wishes. A more contemporary example is that of the United States where squatter’s rights currently thrive. Homeowners are unable to evict unwanted persons from their houses if a squatter contests residency in the house. In many cities across the US, law enforcement is not on the side of the property owners. Sadly, politics has triumphed over morality and economic sense in this regard as the current regime may find it politically beneficial to allow squatting in a bid to garner additional votes. This doesn’t happen without consequence though as many who lose their home refuse and warn others not to invest in areas where property rights are uncertain. Nobody wishes to lose something that rightfully belongs to them and any transgression against property rights is bound to fail in the long term due to that simple fact.

Despite all of this, states are even more eager to increase their power to extract and steal property from the residents of the land they control. South Africa’s proposed expropriation bill states that its purpose is: “To provide for the expropriation of property for a public purpose or in the public interest; to provide for certain instances where expropriation with nil compensation may be appropriate in the public interest; and to provide for matters connected therewith.”

In short, the state believes itself to be capable of determining when property is not being optimally used, and when redistribution can lead to “better outcomes.” Even if we ignore the element of theft here, expropriating property owners and granting their possessions to the politically favored rarely works well. It should not be surprising that states are incautious of ignoring property rights since states are not governed by the rules of the free market but by rules of political power. Many who are discontent with South Africa’s regime of social re-engineering and redistribution seek to leave.

In Conclusion, private property rights ought to be kept intact. A free society will always attract the more productive and hard-working compared to an unfree society. Economic prosperity is contingent on allowing for the flourishing of those who work hard to provide for the betterment of their fellow peers via the market process. By threatening the unprovoked confiscation of property, a society threatens to drive out their most capable members, which is a known recipe for disaster.