Property rights: The key to freedom, prosperity and equality

February 1, 2003

Lorne Gunter

Without property rights – full, robust and free from state interference – we will never be truly free. And while we might be the same, we will never be equal, either. Nor will be prosperous for long.

 

The right to own and enjoy property is the most basic human right.

Governments in the Western world now act as though the right to own property is all that’s important. But being free to own property doesn’t mean much if you aren’t also free to enjoy it – to use it – pretty much as you see fit.

The right to own and enjoy property is the fulcrum on which all other rights balance. And it is not merely some American ideal; it’s as Canadian as the maple leaf and hockey.

But don’t property rights apply only to the rich? If we build our political system around property rights only the wealthy will be free, right?

Two things: First, it is your right to own property, not just your ownership of property that makes you free. Frankly, the notion that only those who already own property benefit from property rights is Marxist. Merely in order to preserve your right to own property at some point in the future, government must restrain itself in the present. The right to own property is as much about potential ownership as actual ownership.

Second, our socialist age has far too narrow an understanding of property. You likely already own far more property than you know. Property is not just land and buildings. It’s your ideas, your body, even your ability to earn a living using your ideas and your labour – all of them are your property.

However, not only is our concept of property too narrow, distorted and Marxist, so too is our understanding of freedom. If you think you can only be free if the state guarantees equality of outcome for all, then this whole speech will be lost on you.

Rather than equality of outcome, the best any state can do is work towards equality of opportunity. Life’s not fair – or at least not equal – and it never can be. Therefore it’s futile, even self-destructive for a state to attempt to achieve equality of outcome. Indeed, since equality of outcome is an entirely abnormal condition, it can only even be attempted through coercion and force. So striving for equality of outcome is by its very nature destructive of freedom.

However, if the state works toward equality of opportunity for everyone, then it makes everyone equally free. Not equally rich, or equally endowed with material goods – cars, yachts, summer homes, winter vacations – but equally free to pursue life to the maximum of their potential. Admittedly, there will never be perfect equality of opportunity, but striving for it is preferable to striving for equality of outcome.

“But I can’t be free unless I have the same amount of “stuff” as rich people, otherwise luck or what family you were born into or connections or fancy education will give rich people an unfair advance over me.” If that’s your attitude, then you are guilty of class envy; you are not possessed of some more-enlightened, morally superior understanding of equality.

Government cannot make life fair or equal. At best, it can remove the most egregious impediments others impose on your ability to achieve your full potential. It might also ensure it imposes no egregious impediments of its own on your freedoms, but that’s probably too much to ask.

But when you insist government prove how equal everyone is by taking income and goods from richer people and giving them to you, it is clear the government has not made the richer person freer. But it hasn’t made you freer, either, no matter how much new “stuff” you’ve been given.

Freedom is non-transferable.

You cannot lighten your yoke by making someone else’s yoke heavier. You cannot appropriate a portion of someone else’s freedom for yourself. Each of us has been endowed by nature with an equal measure of freedom, thus another’s freedom is neither ours to take or give.

If the state plays Robin Hood, robbing from the rich to give to the poor (or increasingly to the middle class), it certainly hasn’t made the rich freer. They cannot even be said to be freer in a general sense because somehow society as a whole has been made freer by being made “fairer.” There is no such thing as collective freedom. Individuals have freedom; groups have only power – if my group has more numbers or more influence than your group, we can force you and yours to do as we wish. That’s not freedom, it’s politics.

During his brief absence from elected office in the mid-1990s, I had occasion to interview Joe Clark during a book tour. Before asking him questions about his book, I said, “Mr. Clark, tell me something, please. You were the constitutional affairs minister during the drafting of the Charlottetown accord. In the preamble to the accord, you and the other authors sought to enshrine both individual and group rights. It’s often argued the two are mutually exclusive; a constitution may protect one or the other, but not both. So I’ve always wanted to know, how did you and the others propose to reconcile the two?”

Clark replied, “Hmm, no one’s ever wondered about that before.”

A senior cabinet minister – a former prime minister – plus 10 premiers met off and on for nearly a year to debate what shape our nation should take for decades into the future. Each of them was backed up by some of the brightest bureaucratic and academic minds in the country and the provinces, and yet not one of them understood the intellectual dichotomy they were fabricating.

Anyway, you cannot be made freer by making someone else less rich, you can only be made richer. He, however, can be made both poorer and less free by your actions.

But just how Canadian are property rights?

Very.

In 1999, the Manitoba Court of Appeal ruled that Prairie farmers could be compelled to sell their grain to the Canadian Wheat Board. Even though it was their grain, the fruit of their labour, the product of their investment and risk, it was not their property once harvested, because, according to the court, “The right to ‘enjoyment of property’ is not a constitutionally protected, fundamental part of Canadian society.”

How utterly ridiculous and wrong. The court’s ruling was – as was Mr. Clark’s answer – an example of how far the misunderstanding of property rights extends into the Canadian establishment. Even senior jurists don’t understand it.

Canada’s constitutional history did not begin with patriation and the Charter of Rights and Freedoms in 1982. It didn’t even begin with the BNA Act of 1867. It extends back nearly 800 years to the Magna Carta, in which the right to own private property was already considered an “ancient” right.

Why then was the right to own property not explicitly enumerated in the BNA Act (now the Constitution Act, 1982)? Certainly not because it was all along the dream of the Fathers of Confederation to establish a kinder, gentler, collectivist nation in the northern half of North America.

The general reason was naivety.

There is no inherent suspicion of government in the Canadian constitution, as there is in the United States constitution. Indeed, our nation is founded on the principle of POGG – peace, order and good government. The U.S. constitution seeks instead to preserve life, liberty and the pursuit of happiness. But the origins of that difference are easy to understand: The Americans fought a war of independence from government; our Fathers were the heirs of government – British constitutional and parliamentary democracy. Thankfully, since George III, that democratic tradition had evolved a further century further. The monarch had lost most of his last remaining absolute powers; something near universal suffrage for men, regardless of their class had been achieved; and responsible government was entering its early maturity.

The Fathers of Confederation believed though, erroneously, that government was self-limiting because government was the purview of gentlemen and one gentlemen would never presume to intrude on another gentlemen’s property, money, family or private pleasures

The specific reason for the omission of property protection is more complicated.

It’s not as though the Victorians placed no value on the preservation of private property. Queen Victoria herself, the last truly Imperial British monarch, declined to enter any private home, even the cottage of her humblest subject, unless the owner invited her in. She understood his home was his castle.

And property is mentioned half a dozen times in the BNA Act. It’s just isn’t concentrated in a single clause that assures Canadians the right to own and enjoy it. Why?

For one thing, the Fathers all understood the unwritten constitutional heritage which Canadians were inheriting, namely the English constitution, which, while never formally codified was nonetheless powerful. As I’ll explain in a minute, the English constitution held that the right to private property as one of three absolute rights. The Fathers knew this. The judges and politicians of the day knew it; the scholars and philosophers, too. It was obvious to anyone who cared to look, why write it down?

Sir John A. Macdonald also wanted an enumerated right to property left out because – if you can believe this – he thought its omission would better preserve the right. The BNA Act already gave the provinces exclusive jurisdiction over the laws and regulations governing property. Macdonald feared a single property-rights clause would leave the provinces with too much power to grant and take property rights. Better to weave the right throughout the document so Ottawa might still play a role. The federal government, he reasoned, would be a superior guarantor of property rights.

Besides the Senate was originally designed as a propertarian institution. To be appointed, one had to possess a considerable amount of private property. Macdonald and the other Fathers thought that such a body of wealthy landholders would never permit property rights to be trammelled. Of course, the Senate never performed that function. It quickly became a repository for party bagmen who did what their appointers told them, whether or not it impinged on their own property rights

Yet even if the Fathers of Confederation understood basic English constitutional rights and Common Law better than their modern day counterparts – better certainly than the Manitoba Court of Appeal – they were naïve about the benevolence of government, or how government would mutate into the modern monstrosity it has become.

But the authors of the Charter of Rights and Freedoms had no such excuse. Why didn’t they insert a property rights clause in 1981? After all, Pierre Trudeau claimed from the time he retired until the day he died that his goal for the Charter was the preservation of individual liberties against the encroachment of the state.

Well, of course, the Charter was never really intended as a citizens’ shield against the abuses of absolute power. It was only ever about empowering the state, about making it the gatekeeper for politically correct rights, about granting it the authority to reengineer society, to coerce the so-called majority to act as the state wishes in the name of progress for favoured minorities.

In this “great” document, the Charter, which its authors and fans still insist is the great guardian of the individual against the tyranny of the state, property rights were left out – even though they are the fundamental human right – because provincial governments in Saskatchewan, Quebec, Prince Edward Island and elsewhere feared such a clause would limit their ability to nationalize businesses and expropriate land. D’uh.

In an interview for Volume 11 of the book series Alberta in the 20th Century, former Alberta premier Peter Lougheed said only Manitoba was keen on property rights. That province’s premier, Sterling Lyon, proposed their inclusion in the Charter. But, fearing the loss their power, other provinces balked and, in Lougheed’s words, “this was a very short, 10-minute bargaining session.” Property rights were on and off the table in under a dozen minutes.

Despite the insignificance placed on property by modern Canadian decision-makers, Canadians actually do have a strong tradition of legal protection for private property. William Blackstone, an 18th Century legal scholar, wrote “Commentaries on the Laws of England,” which remains the nearest thing Britain has to a constitution. In it, Blackstone enumerates three absolute rights that are each subjects by nature: Personal security, including protection against arbitrary search and seizure, and against cruel and unusual punishment, and including the absolute right to self-defence. He argued that a free Englishman had the right to kill anyone found on his property uninvited after dark, even an agent of the King, since it was impossible to know reliably the intent of such an intruder and because one could end up dead if he delayed long enough to ascertain whether the trespasser meant him harm.

Blackstone also claimed personal liberty as an absolute right – which incorporates freedom of movement, action, speech and thought – and the right to own and enjoy private property.

To protect these three absolute rights, Blackstone argued that English law had developed five auxiliary rights: a parliament that was free to set its own agenda, to decide for itself when it sat and rose, and which controlled spending and taxes; limits on the prerogatives of the King, due process of law, the right to petition the King or the courts for redress from grievances one has suffered, and the right to bear arms, for protection from one’s own government as much as from foreign armies.

Yes the right to keep and bear arms is a Canadian tradition, too. But that’s a talk for another day.

Blackstone did admit the absolute rights – personal security, personal liberty and private property – were subject to regulation by King and parliament through due process of law. But he quickly added such limits would have to be imposed very rarely and as lightly as possible, or the rights they limited would become meaningless. It would be wrong, Blackstone explained, to expropriate land in the name of the common good, say for a road, since the ultimate common good was “the protection of every individual’s private rights.”

But the title of this speech is Property Rights: The Key to Freedom, Prosperity AND Equality. We, done freedom. But how do property rights make western nations richer and their citizens more equal?

I have come across no better description of how property rights make the West rich than Hernando de Soto’s The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. De Soto, a Peruvian economist, sent teams of researchers to a host of countries to determine why industrial nations are wealthy and Third World nations are not. He and his associates concluded the differences are the result not of racism. They are not some hangover from colonialism. Nor the result of greed or of the First World using its superior technology and knowledge to take advantage of the Third. The differences arise from the lack of secure property rights in underdeveloped nations.

Where it is next-to-impossible to secure title to one’s home, business, ideas or investments, it will be difficult to secure mortgages, working capital and shareholders

To understand just how ingrained property rights are in the West, think of a home-shopping channel and one of those beautiful lapis lazuli horses with a clock in its belly that it has so often tempted you with. One night you can resist no longer. You call, tell the operator who is standing by of your wish to buy the item, she takes your credit card number, uses her computer to get authorization and – presto – that exquisite timepiece is yours.

The shopping channel has offered it, you have accepted their offer by agreeing to their price, and you have given consideration through your credit card payment. In a matter of seconds, with no more effort than it takes to order a pizza, you have executed a binding contract that instantly gives you an ownership interest in a clock your children and grandchildren can appreciate for generations to come. Even if the shopping channel goes under before your fine clock can be shipped, your credit card receipt proves it’s yours. You can sue for its delivery and no court – with the possible exception of the Manitoba Court of Appeal – would refuse to recognize that that clock is your property.

Remember, this rather complex property transfer occurred in a matter of seconds.

Now consider that in Lima, registering the title to a home involves 207 separate steps, which is a snap compared to opening a business legally. A team of de Soto’s researchers “spent six hours a day at it and finally registered the business – 289 days later.” The cost for registering this one-worker garment-making shop was more than $1,200 US, the equivalent of 31-months pay for that lone worker. It’s small wonder that most Peruvian entrepreneurs choose to operate their businesses illegally when doing it properly takes 10 months and consumers nearly three years wages that could be paid to a worker whose labours would generate income for the entrepreneurs.

In the Philippines, registering a home can take 25 years and require 53 visits to public and private agencies. In Egypt, at least 10% of homes are illegal because getting a permit to build one legally can now take up to 14 years.

De Soto, surprisingly, found that Haitians, the poorest residents in the Western hemisphere, had assets and savings the equivalent of 50 years of foreign aid, they just had no way of using those assets and savings as collateral to build up the capital needed to make them wealthy. According to de Soto “They hold their assets in defective forms” as “dead capital.”

Far from property rights not being “a fundamental part of Canadian society,” they are in fact so integral, so accepted, so culturally engrained, we don’t give their importance a second thought, which is why we are at risk of losing the very rights that make us free and prosperous.

But how do they make us equal?

I want to give two examples rather briefly – segregation and smoking.

Racial bigotry is ugly. But I maintain that far from ending segregation faster, government action actually kept African-Americans in the U.S. South down longer. Property rights, properly understood and applied, would have ended segregation sooner.

It must be remembered that blacks were kept from eating at lunch counters and riding in the fronts of buses by local and state laws – by government actions – not only by the prejudices of individual citizens. When Washington moved to force desegregation, it sent federal marshals and the National Guard against public institutions and state governments – public schools in Arkansas, public universities in Alabama and public transit in Mississippi – not against individuals.

It is reasonable to assume that in the absence of laws forbidding the equal seating of blacks, some entrepreneurs would have had integrated lunch counters years earlier. Admittedly, it would have first been those entrepreneurs nearest black neighbourhoods and shanty towns. Those on the fringes of such ghettos, where there was some spill-over business from African-Americans and where fewer whites would have been troubled by integration, would have followed. Finally, those in mostly white districts would have switched, at a much slower pace.

By protecting the right of individual restaurateurs to use their own property as they saw fit, southern governments would have created a system wherein individuals were free to decide with whom they wished to do business and to associate, or not. Segregation wouldn’t have been total or swift, but it would have been free and consensual.

It’s true there would be some segregated businesses to this day under a property rights system, and as such modern liberals could never tolerate it – they are completely totalitarian in their quest for universal tolerance. But there is no compelling intellectual reason why we should be made by government to permit men in our clubs, or whites in our restaurants or women on our own, private golf courses.

The public square is very different. Where public institutions are involved there is no compelling intellectual reason to tolerate segregation. The state must show no favour based on immutable human characteristics.

It is also true that segregation was held in place by more than local and state laws. It was also preserved by social coercion and intimidation, most often by the Ku Klux Klan and similarly clandestine organizations. Let’s face it, a lot of Southern whites were horrible bigots.

But again, if governments had understood their proper role, they would have defended property rights against such coercive bigotry. One of the most critical functions of government in a free society is to preserve the right to property and contract. If thugs, murderers, and vandals were destroying property and intimidating property owners, then the state should have interceded on behalf of property rights and the right of property owners to serve whomever they pleased.

It’s the same role the state should play today vis-à-vis gay rights, feminism, hate crimes, and so on.

And vis-à-vis so-called public smoking.

As I said earlier, we have far too narrow an understanding of property these days. But we also have far too narrow an understanding of what constitutes “private,” too, as can seen in the dispute over smoking in “public” and secondhand smoke

A restaurant is not a public place. Nor for that matter is a movie theatre or a shopping mall. No privately owned place becomes public just because the public is invited in, since the decision to enter ultimately remains a private one. Also, the ownership remains private, the legal responsibility for injury or loss there remains private, and so on.

If you want to enter a private business in which smoking is permitted, the choice is yours. You have the freedom to enter or not. You do not have, however, the right to demand that the government dictate conditions inside be made to your liking just, so there are no adverse consequences to your entry decision.

The same is true of workers. They may choose to work, or not, at smoky establishments, but they have no inalienable right to work at any place they please, and thus no “right” to demand their place of work be smoke-free so they are not exposed to the allegedly harmful effects of secondhand smoke.

Too often we think we cannot be free unless someone else, through the state, is compelled to shield us from the consequences of our choices and actions. Sorry, that’s not freedom, it’s a sort of licentious dependency – dependence on someone else to take the fall, pay the price or bear the burden, so we may do as we please.

Property rights can be boiled down to a simple lesson from our youth – don’t touch other people’s stuff. And that includes not only their homes and cars, but their incomes, their ideas, their families, businesses, schools, ranches, etc.

Without property rights – full, robust and free from state interference – we will never be truly free. And while we might be the same, we will never be equal, either. Nor will be prosperous for long.


Lorne Gunter
Columnist, Edmonton Journal
Editorial Board Member, National Post
tele: (780) 916-0719
fax: (780) 481-4735
e-mail:lgunter@shaw.ca
132 Quesnell Cres NW
Edmonton AB T5R 5P2

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