Property Rights: An Elegant Solution

Whenever two or more people get together, there is bound to be conflict (and, of course, the greater the number of people, the greater the likelihood of the occurrence).  One of the ways of heading off conflict is through the establishment of clearly-defined property rights.

Allow me to tell a story:

A few months ago, I was in New Jersey visiting my friend, her boyfriend, and their two roommates.  4 people living in a house together.  And yet, there was surprisingly little conflict between them.  That was because of the regime of property rights they established among themselves.  Some items (like the TV, furniture, Xbox, etc) were available for common use, but others (like food) were marked with initials, meaning that no one could touch that but for the owner(s).  This had the joyous consequence of heading off any potential conflicts over consumption of goods like food; no one could be accused of slacking about and consuming the goods of others (likewise, no one could feel like s/he were doing all the work and not receiving anything for it).  And what’s more, the property rights were tradeable, too.  If Roommate 1 was making a salad and ran out of mushrooms, he could ask Roommate 2 if he could use some of her’s.  She could trade (or give them away).

The end result of all this, was a peaceful house with multiple people and little conflict.  (Of course, there could be conflict arising from other things, such as the negative externality of a roommate playing their radio too loud, but that did not arise while I was there so I don’t know how they would have addressed that issue.  Knowing them as I do, I’d suspect some kind of Coasian bargaining).

Property rights, when clearly-defined and enforceable, are key to a peaceful civilization.  If we look at the places with the most violence in the world, the key factor among them is a lack of property rights, either for all or for some marginalized group.

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