Response to “A fundamental truth about America”

On his “Behind The Black” blog, Robert Zimmerman discusses the fact that America has a variety of different types of rockets for launching things into space while other space-faring nations have only one or at most two types of rockets, and those rockets are pretty much “the national rocket program” of that country. The American way is more robust and adaptable. It leads to more rapid discovery of new ways of doing things. It produces a lot of benefits. You could say the American way is an ecology with lots of participants doing lots of different things, while other countries are a monoculture. Robert uses rockets as an example, but his point is that this difference in the American way applies in many areas of society. Robert identifies two factors that he believes are responsible for this difference: property rights and freedom.

I agree with a basic theme of his argument, which is that we should build a society that values, motivates, and rewards individual creativity and initiative, and great economic benefits will flow from that. But whenever I hear a libertarian making this kind of argument I cringe a little because I know that they have one particular model of society in mind that they think is the only way to value, motivate, and reward individual creativity and initiative. I think their attitude leads to a false choice. They think we can’t protect endangered species because that restricts property rights and freedom. We can’t prevent unfair business practices because that restricts property rights and freedom. We can’t have a society that values individual accomplishment but also protects individuals from being taken advantage of.

The idea that we can’t have freedom, prosperity, and fairness is a false choice. We should be working towards all of those goals. I think we can do better than the every-man-for-himself society that libertarians want.

Another problem is that libertarians overestimate the importance of the exact details of their preferred model as causal factors of the benefits. In other words, I want to say a little something about property rights. Libertarians have a very high opinion of a legal system of absolute property rights. They believe that legal ownership is the important ingredient in the recipe.

I’m sure you’ve heard the business advice that managers should try to get employees to “take ownership of their jobs.” What does this mean exactly? Does it mean that managers should give employees legal property rights in their jobs? Does it mean that the managers can no longer take those jobs away from the employees because the jobs are the empolyees’ property? No, that’s not what that phrase is trying to convey. It means that the employees should have a sense of ownership. A feeling both of empowerment, the authority to make decisions and take initiative, and responsibility, caring about the outcome and having a stake in the results whether good or bad. It is in fact this psychological sense of ownership that motivates the behaviors that produce the benefits that libertarians attribute to legal property rights.

Of course, property rights are one way to produce a sense of ownership. I’m not suggesting that we should try to trick people Dilbert-style into feeling like they have a stake when they don’t, but legal property rights are not the only way to produce a non-fraudulent sense of ownership where people believe they have control and a stake because they do. The management strategy of letting employees take ownership of their jobs is evidence of that.

Also, legal property rights don’t guarantee the creation of a psychological sense of ownership. I know it seems like a long time ago, but think way back to the Tyco and Worldcomm corporate governance scandals. The executives of those companies lined their pockets at the expense of ordinary stockholders. But the stockholders were the legal owners of the company. Why weren’t they monitoring the operations of the company and firing their irresponsible C-level employees?

The problem is that when you have a vast multitude of stockholders good corporate governance becomes a public good that is not positive sum for any individual to invest in. The check and balance of having widely distributed stockholders vote for the board of directors didn’t work any better than having widely distributed citizens vote for members of congress. None of those stockholders felt like the boss of the CEO any more than I feel like the boss of my senator and representative. Without the psychological sense of ownership they didn’t perform the behaviors that would have produced benefits despite the fact that they had legal property rights.

A legal system of absolute property rights is neither necessary nor sufficient to create the motivational benefits of the psycological condition of ownership. Legal property rights are a tool in the toolbox, but not the sine qua non.

2 thoughts on “Response to “A fundamental truth about America”

  1. Ownership of property can be a double edged sword, it can be both a reward and an obligation at the same time. How did that ownership come about, did you earn it or was it given to you, if you earned it, it is a reward that is not taken lightly, you will take care of that property, if you did not earn it, you will not feel obligated to take care of said property in which case you did not really take ownership! In the United States, we have a more fractured idea of ownership with regards to entitlements, this is a reward that is not earned(not talking about s.s. or medicare) that keeps people enslaved to a meager lifestyle that stops an individual from reaching for a better standard of living, one that has no earned ownership privlidge, thus no incentive to do better, this is not an example of American exceptionalism, but something that thwarts exceptionalism. Someone who lives on welfare and has the ability to do better will never take ownership of their situation, they will only blame the system! sorry if this is not where you were going with this post.

  2. I don’t think your comment is off topic on the post. When it comes to things like welfare, certainly giving someone a check each month no strings attached is not the best way to help people. There needs to be a goal for people to take psychological ownership of their situation. Probably a lot of people who are on some kind of government assistance long term need help with life skills. But they still need a place to live and food on the table while they are working on their life skills. I think programs to help the poor could be done better.

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