Essay on Private Property Rights The  Inefficacy of a Third Party
On page B-14 of the SF Sunday Examiner, Sunday, October 1, 1995, I read
with interest a message from Ross Perot:

     "Finally, A Political Party for Independent
Voters." Then it went on to add: "

62% of American Voters Want a New Political Party."

The current two-party system is mired in special interest and
a complex system of political trade-offs.  Sacred cows exist between and
within each party.  Usually the disenfranchised suffer when radical
political surgery is performed.  Strong interest groups, somehow or
other, tend to come through unscathed.     Under a discrete system of
voluntary voting (or zero), as exist in the U.S., a third party will
exacerbate this situation.  If we had mandatory and preferential voting,
then a third party would indeed provide a viable option.


Shopping at the super market, we do not select all fruit and no
vegetables, but instead trade-off, on the margin, according to our own
preferences.  Thus for our dinner budget of $20.00, we might walk out of
the store with a variety of food types.  We are not compelled to cast
our budget (vote) for all veggies or all fruit or all of anything.
Instead, we enter the "calculus of consent." The dollar (continuum)
voting mechanism does not disenfranchise customers from varying basket
combinations.  Under a market system, with strong transferable
[divisible/intertemporal] private property rights, a poor person can
acquire ownership in major capital goods. I can fly on a 747 or I can
buy shares in a major airline, there are many ways to skin this cat.

To make a third party truly viable, we should consider switching from a
discrete (1/0) system of voting,  to a system that more closely
replicates real (calculus of trade-offs) world choices.  A preferential
electoral system, whereby, minority interests, as reflected in their
second and third voting choices (Libertarians, Third Party types, etc.)
are reallocated as first preferences, would ensure a better reflection
of voter preferences.

This system would avoid or in part mitigate the current disenfranchising
phenomenon and hopefully make a third party truly viable.  A third
party, under our system of voluntary, first past the post, discrete
voting, will in all probability do more to enshrine special interests
and minority control, rather than expand the voice of those who feel
outside of the current two-party -Republican/Democratic system. It will
in effect generate a class of "throw-away" voters.

In this period of market reliance, and the calculus of individual
budgetary optimization, the time has come to question if a better voting
system exist for reflecting all interests.   One must ponder if a Third
Party concept is conceptually flawed from the outset, in the context of
the current voting system. Discrete voting practices represent an
unnecessary  step back from a market solution and albeit a weaker
ownership of  voter rights or ownership of the process.









Big Brother at Work (sic School)


Private Property Rights and The Dinner Table


Setting:

     The immediate post-war period at an all boys' boarding school on
the outskirts of Sydney. This school  was famous for its discipline and
football (rugby), it was the Australian, high school, equivalent of
Notre Dame in regard to the latter.

     Football players were given special privileges, and were awarded
immediate hero status.  The school was divided into divisions, along age
and academic class lines. My brother, who was of slight build, weighing
150 pounds, and of average height for sixteen, found himself in a higher
division than age and academic class would normally warrant. On top of
that, he was placed at a "football" table.

     Each division ate in a giant refectory, where tables were arranged
in rows and each table had eight boys.  The meals, not unlike a scene
out of "Escape from Alcatraz," were supervised by the "division
master."  The rectangular tables placed three boys on each side and a
boy at either end. The boys were supposed to change places at each and
every meal. This was done to ensure that the food would be distributed
equally to each boy.

     Food was brought to the tables in large platters. The boys at each
end of the table were supposed to divide the main course and dessert
equally among all eight.   Butter, jam, bread, and vegetables were
served by the four boys sitting on the ends of the table sides.  Thus,
the two boys sitting in the side centers, did not have any function and
often were less well fed.

     Theoretically, the division master was the private property
enforcer. He was there to ensure that no one was treated unfairly and
that food was allocated in equal shares.  The rotation system was a
method to reinforce this "fair" concept.  It was believed that both
systems would eventually bring about an equitable allocation of food.

     However, at this school, there existed a student system of denying
food, that went by the code phrase "...putting someone on "brusho."
Another code existed at this school, anyone found telling on another
student, could be subject to the punishment of having their head pushed
into a toilet and the toilet flushed. This latter system canceled out,
in large, the information feedback system required to let the division
master to know about infringements of the food distribution system.  The
only way the system could work was if the discipline master really
checked into meal-by-meal seating assignments. Thus, the cost of
enforcing and/or complaining about private property infringements was
raised.

The Story

     My brother found that at his table, he was not permitted to move
from the side, interior seat, and that his rations were sparse.   A
wealth transfer was thus taking place.  He was subsidizing the bulky
football players, who surely required the extra rations.  His options
were clear: (1) fight the larger ballplayers, (2) augment his rations
with extra ("extras") food from home, or (3) complain to the discipline
master. He chose option number 2.

     Option number 2 worked for awhile, but one burly lad, by the
ominous name of "Lughouse Hosby," decided it was time to  repair this
clear threat to their  "brusho system."  He took my brother's IXL jam
and passed it around the table to all of his mates. They were happy to
partake of his benevolence. Then, when it came back to Lughouse, he
"politely" asked my brother could he have some. My brother replied in
the affirmative, and liberally spread it over a surprised Lughouse's
face.

     Option number 4 had come to my brother's mind, fight each and
everyone, but individually and under school supervision (really a subset
of option 1). Without stating why, my brother requested that the
division master permit him to "box" each boy at his table. While
students never snitched, they had to honor a reasonable request to
settle an argument via the manly art of fisticuffs. This was more than
reasonable, these were stout ball players  and they were being called to
tow by a younger and smaller chap.

Possible Economic Interpretations 

     Information has value.  Lughouse and his  colleagues were unaware
of my brother's substantial boxing skills.  For seven straight nights,
and with gathering enthusiasm from the student body, brother
systematically out-boxed all seven table mates.  He then sat himself at
the head of the table and imposed "brusho" on each and everyone.  He
became known as the "brusho king" and gained considerable weight.

     What have we learned. There are non-zero enforcement costs
associated with private property rights.  Police and lawyers are all
part of this contract.   Weak private property rights lead to non market
solutions.  Lughouse and his friends, made sure that the top servings
went to each other.  Violence, usually the prerogative of states, can
erupt where private property rights are not enforced.  Had the table
mates  tried a market solution, they would have escaped the humiliation
that was inflicted on them. My brother, probably would have sold them
part or all of his portions.

      The theory of management is based in the concept of anti shirking
activity (pay managers up the marginal value of the shirking they stop),
the anti snitching rule (head in toilet), effectively negated this.  In a
non market environment, with weak private property rights, those with
power will always be tempted to allocate resources by non market
criteria.

     Profit, remember is an unexpected increase in wealth. Conversely,
obsolescence, is an unexpected decrease in wealth.  In a sense, these
ball players suffered from the latter phenomenon
All of the characters and places in this story are fictitious.










Big Thirteen University  & How to Pick a Team

     At  Big Thirteen University, I was an Econ. major. I should've
understood the economic implications of the following story.     I was
on Big Thirteen University's swim team. I was concerned about the type
of events that I was being asked to swim. I requested a challenge
swim off. Big Ten U.'s coach, later Big Country's national  coach,
agreed. Six of us lined up,  the gun went off the race started.  Coming
from behind in the last  one hundred yards, I won by six yards. Big
Thirteen University Coach (BTUC) claimed that did not even see me
finish.   He gave the win to the son of a departmental chair.  This lad
became  All Big Country.  I lost heart and emotionally quit.

The marginal benefit of awarding this event to me was offset by the
political benefit, he obviously assigned to awarding the event to a
faculty colleague.  No significant team points were involved, in that
the current world record holder for that event, was also a Big Thirteen
U swimmer.

One reason I took up swimming over football, was that I believed swim
teams, by definition, had to be objectively chosen. [At my high school,
it always seemed, for the gentlemen's sport of rugby that the
"appropriate" people were chosen on the First XV.] What a surprise!!!!
In the absence of strong private property rights, resources will be
subjectively allocated, to maximize the objective function of the
person/institution holding those rights. Had my father been a rich and
powerful alumnus, I doubt that BTU would have done this. The marginal
cost would have been higher than the expected probability of collegial
enhancement.

Later on, with an unbiased observer to prove my win (the world record
holder - who watched), BTU, told me (paraphrasing );"...even if you did
win, son of chair was more tired and would normally beat you anyhow. "

Barriers to entry, based on subjective criteria, have been costly
(opportunities forgone).  While sunk costs are irrelevant costs, the
medals hanging in many cabinets would just not be there if artificial
barriers to competition had never existed.  All we can ask is that the
starting blocks are aligned, all that wish may compete, we swim the same
distance, and the first past the post is awarded the win.   Coaches
should make this happen.  This is the concept of open and free markets
and the internalizing of a person's extranalities. Governments should
ensure this.  Maybe, BTUC just did not understand that he was negating
my rent. Actually, he did understand.

Big brother once told a cryptic joke that put this concept in
perspective.   The owner of an automobile company hired a new, but
somewhat irreverent salesman.  This new salesman (see why managers are
hire - anti shirking concept) did not get along with the manager.
However, the new and brash salesman sold triple the number of autos of
any other salesperson.  But, one day the new salesman told the manager
to "Jump in the lake."  The manager went immediately to the boss and
reported this impudence event and demanded that the salesman be fired.
The owner asked for this salesman's production report. As the owner
studied it, the irritated manager said: "Well, what are you going to do
about this guy?" The manager picked up his towel and bathing suit and
said: "I don't know about you, but I'm going to the lake."
Of course this story is fictitious; what famous college coach would
do something like this and what big school would permit it?