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BOHANON & CUROTT: Be thankful for our private property rights

November 25, 2017

Economic Analysis Cecil Bohanon and Nick CurottAs you celebrated Thanksgiving, we hope you took a moment to give thanks for another great American tradition: private property rights. Plymouth Plantation, home of the Pilgrims of Thanksgiving fame, was founded in 1620 on a system of communal property rights with the hope, as its Gov. William Bradford wrote in his diary, “that the taking away of property … would make them happy and flourishing.”

Big mistake. Under common ownership, everyone has the perverse incentive to rustle goods and shirk work. Economists call this the tragedy of the commons. As Bradford recalled, “the young men that were most able and fit for labor and service did repine [i.e. complain] that they should spend their time and strength to work for other mens [sic] wives and children, without any recompense.” Very little food was produced, and the Pilgrims almost starved.

So in the spring of 1623, the colonists “began to think how they might raise as much corn as they could … that they might not still thus languish in misery.” The solution? They “assigned to every family a parcel of land,” which “made all hands very industrious.” Everyone knows about the feast that followed the next harvest, but few are aware of the economic reason the Pilgrims were able to turn food insecurity into bounty.

Like the Pilgrims of the past, nations prosper to the extent they establish and protect private-property rights from government or criminal predation. The Fraser Institute reports nations ranked in the top fourth in protecting their citizens’ private-property rights had average per-capita income of $42,618 in 2015, compared to $8,014 for bottom-fourth nations. Nations that have more economic freedom, including more secure property rights, have more economic growth. Countries in the top fourth had an average yearly economic growth of 3.35 percent from 1990 to 2015, whereas those in the bottom fourth had only 1.66 percent growth.

In 1990, the United States did better than any other nation protecting private-property rights. Today, the United States ranks 24th—Switzerland does best, followed by Finland, Luxembourg and Sweden. This decline is troubling because, of all the facets of economic freedom, protection of private property is the single most significant determinant of economic growth. It’s more significant than government spending and taxes—and it’s more significant than monetary policy.

Let’s all be grateful for the heritage of strong private-property rights bequeathed to us by our forebears; and for the sake of posterity, let’s be vigilant in their defense.•

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Bohanon and Curott are professors of economics at Ball State University. Send comments to ibjedit@ibj.com.

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