Re: Historical comparisons
- From: "William Mook" <william.mook@xxxxxxxxxxxxxxxxx>
- Date: 1 Mar 2006 18:17:36 -0800
royls@xxxxxxxxx wrote:
On 27 Feb 2006 16:10:42 -0800, "William Mook"
<william.mook@xxxxxxxxxxxxxxxxx> wrote:
royls@xxxxxxxxx wrote:
On 26 Feb 2006 11:51:25 -0800, "William Mook"
<william.mook@xxxxxxxxxxxxxxxxx> wrote:
royls@xxxxxxxxx wrote:
On 26 Feb 2006 00:24:32 -0800, "William Mook"
<william.mook@xxxxxxxxxxxxxxxxx> wrote:
We would also do well to allow the ownership of space based assets and
resources by people and business.
Private ownership of privately created capital equipment is a very
good policy. But private ownership of natural resources is a very bad
policy that produces increasing inequality and injustice, and eventual
economic and societal stagnation and collapse.
I disagree.
Well, sure. But you're just flat wrong.
That's easy to say. Harder to prove. I not the singular lack of any
countervaling evidence to support your views.
The evidence of history is pretty clear.
Yes, against you.
Increasingly concentrated
private ownership of natural resources (land) destroyed ancient Egypt,
Ancient Egypt is not a modern industrial state. sheez.
Rome, India twice, China at least three times,
Not in modern times certainly.
France,
Are you referring to the time before the French revolution? Sheez.
That's relevant NOT
Russia, etc.,
Are you referring to before the bolshevek revolution or after? By what
stretch of the imagination do you believe Russian Royalty or Russian
Communism has any bearing on private market based ownership of capital?
etc.
Whereas, I pointed out
(and you elited from your reponse) two practical and successful
alternatives (i.e. offshore oil leasing and cell phone channel leases)
But William, I elided those because they support _my_ position, not
yours, and consequently required no response from me. The resources
in those two cases are _not_ privately owned, but leased _from_ the
public owner on a temporary basis by private users.
A lease gives you temporary access to something for a specified period
of time for a specified purpose. Renting an apartment for example, or
renting farmland. So, leases for oil production allow you to explore
for and produce oil in specified lands.
But the investors are also given Working Interest in the production of
an oil in addition to access to the land. This Working Interest
belongs exclusively to those putting the money at risk - they own that
interest, otherwise they wouldn't be able to sell it.
The lease gives them access to government owned lands for a period of
time to do specified things. The government's royalty interests are
comparable to a tax. These are low, and fees are lower still and
working interests high to induce people to spend money looking for oil
and spend money to develop oil reserves.
WIthout private ownership of natural resources there is no
incentive to develop those resources.
Flat false.
What should follow this statement in any honest discussion should be
relevant and accessible references proving the statement.
And where are such references for the preceding positive claim? Blank
out.
I didn't think obvious facts needed any background, you objected to my
statement, it was up to you to show your reasoning. However, here's an
interesting study from Standford which has some interesting
comparisons;
http://www-econ.stanford.edu/faculty/workp/swp97047.pdf
According to the data generated by these researchers Private Enterpise
is most efficient at generating wealth, followed by TVE - township and
village level enterprise, with large SOE - State Owned Enterprise
coming in dead last.
If the State already owns a pre-existing resource renting it to the
private sector can pay divdends for both the government and the
renters. But, to generalize from this case to say that ownership
causes problems needs more support. Hand waving and talking very
generally about the French or Russian Royalty's excessive concentration
of ownership won't cut it. lol.
I note an
abject lack of such evidence, therefore I must conclude your opinions
are ideologically driven.
Garbage.
Nonsense. You provided not one whit of information - even when you
seem to provide information the information is inadequate. Saying that
ancient egypt suffered from excessive concentration of private
ownership - without drawing clear and definite relationships to today's
property rights is garbage.
It is your own positive claim (Look up about 15 lines. Yep.
There it is.) that lacks any evidence.
As I said, I didn't think any were needed. But, clearly when property
rights are well defined rate of capital formation are far higher than
when they are not and the efficiency of capital created is higher too.
http://www.cato.org/pubs/pas/pa482.pdf
Somehow, in what you are no doubt pleased to call your "mind," an
"honest" discussion is one where all your claims are accepted
No, an honest discussion provides academic references supporting ones
views WHEN ASKED. You asked for my rationale, I provided two - one
showing that private enterprise is superior to state enterprise, the
other showing the positive correlation between property rights and
capital formation.
You on the other hand make unsubstantiated claims and when challenged
call any response garbage, without providing any but the most fuzzy of
statements bringing in ancient egypt and other unrelated subjects!
unquestioningly, without any evidence, but if anyone disputes those
claims, all the burden of proof lands on them.
lol. I asked you for proof. Instead of providing any convincing proof
you point at me for not providing proof either and make wild claims
like this one, while in addition making ad homenim attacks of me. You
asked me for proof here - without providing any of your own, I have
responded to your request. You have not responded to mine. Now what
are you going to do?
vThe incentive to develop natural resources is maximized
when those who wish to prevent others from using them must pay the
market rent of those resources to the community for the privilege of
doing so.
This assumes the cost of developing those resources is zero.
It assumes no such thing. Where is the evidence for such a bizarre
claim? Blank out.
Because of the structure of real honest to God leases take that into
account. Rents for grazing lands for example, charge straight rents to
livestock owners. No further investment is needed to 'develop' the
benefits of the grazing land. Leases for oil field development allows
for a working interest in production (which is a form of ownership of
private property) to induce the investor to invest in looking for and
producing oil on the property they have leased.
If you don't want to accept the obvious, perhaps you'll be convinced by
public discussion from one government agency that is trying to increase
the utilization of its resource?
In the case of tar sands, the cost of production is barely less than
the value of the oil made from the tar sands. So, in this case, the
government who owns the tar sands provide for, in some cases, 100%
Working Interest, with zero royalty interest. That is they give the
oil the investor produces away with zero taxation. Their discussion of
their rationale is enlightening, and fully supports my original
statement;
http://www.energy.gov.ab.ca/docs/oilsands/pdfs/PUB_netsan.pdf
So, we have a range of options then. Government grazing land, which
requires zero input from the renter to be of value, merely collects
rents - which is what you were talking about originally. Oil leases,
provide for large working interests, tending toward 100% working
interest in some cases which means the government is giving producers
the asset they extract from the government land to own and sell.
Such is
typically not the case. And, is absolutely not the case for
development of off-world resources!
It could not matter less that it is not the case.
Please explain your reasoning? Here,let me explain mine. It will take
the development of a space travel infrastructure that spans the solar
system to make use of resources from across the solar system. This
space faring infrastructure will likely be very costly and risky to
develop and costly to operate. Thus, some form of ownership will be
required to induce risk takers to invest the resources needed to build
up this infrastructure.
This is very clear and well supported by the evidence I cited. Now,
what are you saying exactly? And why do you say it?
The relationship I
identified for you does not in any way depend on the cost of
development being zero.
Please re-explain what you are saying and the rationale for what you
are saying? Rather than have me speculate on what I thought you said.
Your claim is just flat wrong,
I have fully explained by statements and given you academic references
that back them up 100% - that is, investors must have property rights
over natural resources in order to invest the money time and talent
needed to develop those resources and bring them to market. Without
the possibility of ownership interest in a resource, there is no
incentive to develop a resource. Therefore some sort of ownership
interest is required. This is typically called a WORKING INTEREST in
the resource if the resource is derived from government owned lands.
Otherwise, a company merely buys or leases (with working interest)
mineral rights from existing non-government owners.
and you have
offered zero, repeat, _zero_ evidence to support it.
Well, you hadn't asked me for any until now, and I provided it when you
asked.
I note that you have provided zero rationale for your beliefs - and
don't seem to be working to provide any, yet are very quick to make
attacks.
Private ownership of natural resources reduces the
incentive to develop them, as the owner can simply hold them out of
use for a speculative gain,
Again, assuming that the cost of developing those resources, and the
market for those resources is zero - yes.
Nope.
And you say that because????
Flat wrong.
Hmm.. my rationale is clear and clearly supported by modern practice
of assigning larger working interests in properties that have higher
costs of production associated with them.
No such assumption is made, or required.
Well, since its not clear what you are saying, except that private
property is bad, its hard to have me respond usefully to any comments
directed at what you've said.
But this is clearly not
applicable to the cases I cited, but you elited - and to the case we're
discussing i.e. the development of off-world resources.
I elided them because they are examples of successful _public_
ownership of natural resources -- i.e., examples that _you_ provided,
which prove _your_ claims to be flat false.
But WHY were they successful? They were successful because they
provided investors with a WORKING INTEREST in the product. This
working interest equates to OWNERSHIP OF THE RESOURCE. Duh!
rather than take the risk of making an
investment to develop them.
Ha! You make my point.
Uh, no, actually, you made mine.
Your point is no longer clear then. Mine is. Ownership of property is
the driving force behind the development of property. I have provided
several references both related to private development of public lands,
and to ownership diretly.
If there is any cost or risk associated in
developing a resource, then there must be profit sufficient to pay for
this risk.
And your evidence that such profit is only possible if ownership of
the resource is given away to private interests...?
A working interest must cover the costs and risks involved in
developing a resource - yes. The greater the return on investment, the
greater the rate of capital formation.
I say this because the evidence of the marketplace overwhelmingly
supports it.
Thought not.
Well, you are jumping the gun here sir. You are responding to
something you've said, before I've had a chance to say anything. You
presume I wouldn't respond usefully to your request for references -
whereas I did.
One does not make money by NOT developing a resource in an
environment where the resource MIGHT NOT BE AVAILABLE.
One most certainly does, by idly owning it while its value increases
as a result of others' actions.
Sure. But, only in certain instances.
For example, if the cost of development is zero and the tax rates are
zero to very low, sure.
For example, I could own beach front property on Malibu beach. That
property historically goes up in value about 25% per year. I can
acquire the property at a price and then hold on to it. If I can pay
the taxes on it, I can hold on to it for a long while. If I can get an
interest only mortgage against it at 4% per year say, I even can take
out the value increase - providing I can make the mortgage payment. I
may also be persuaded to sit on it by the difficulty of getting any
housing plans approved by the CCC (and this is partly due to legitimate
third party effects and very real concerns of the consequences of
OVERDEVELOPMENT - so they encourage passive investors in this case!)
Yeah, that's a scenario where private ownership can make a buck by
sitting on a piece of property. But there's a heckofa lot of things
that have to be in place for that to make sense.
So what? You know companies don't benefit especially from the
secondary market in stock. But the secondary market in stock trading
provides huge benefits to the public. Same with the trading of real
property and mineral rights.
My difficulty with your unsubstantiated logic is saying that because a
passive investor can buy a piece of real estate on Malibu beach and
sell it for a profit a few years later without doing a damn thing to
it, therefore private property promotes the idling of resources.
I'm not arguing that 10,000 lots are sitting idle in NYC, or that I'm
not making a buck waiting for the prices to rise on property in Malibu.
Okay, I grant you that. But I don't grant you your sweeping logic
that draws from these special situations a link to ancient Egypt and
the French revolution - to make some generalized statement against the
ownership of private property in the modern world.
The evidence of the marketplace clearly shows that private property
promotes efficient use of assets and capital. It also shows that in
the case of publicly owned lands and resources, leasing property with
working interest in the products - which is a form of transfer of
ownership - is the most efficient way to get people to invest in
developing those publicly owned lands and resources.
Your underlying
assumption is that the market sees the resource and values it fairly.
Well, if you are going to posit some measure of value other (and more
objective) than market value, let's see it.
You misunderstand. I lot on Malibu beach has a value in itself without
any development cost. An oil lease is a question mark, especially if
surveys have yet to be done to establish the possible existence of oil
on the site. Then, additional money must be invested to explore for
oil, and once detected, more money still to develop that oil and bring
it to market. A rental scheme without any ownership interest would
easily work for Malibu beach. A rental scheme for the development of
oil requires a working interest in the product for the investor to take
the risk and make the investments needed to produce the oil and bring
it to market.
In that case, as in the case of public grazing lands, then rents make
sense as you suggest.
Likewise with _your_ examples of oil and spectrum leases.
But you make the mistake of believing that just because they're called
leases, there is no ownership interest. The reality is that up to 100%
working interest in the product extracted from a property can be
transferred to the investors who do the work of extracting that product
- this interest is ownership of the property.
But in the case we're discussing - giving the
private markets incentive to develop off-world resources AND THE
TECHNOLOGY TO MAKE THOSE RESOURCES AVAILABLE TO THE MARKETS
(technologies that don't yet exist in commercial form!!!!) you're
approach is tantamount to saying we'll never make the investment.
Evidence?
You've asked it once above, and I provided the references you asked
for.
Thought not.
YOu responded before I had a chance to. Don't prejudge, its not very
smart.
In fact, it is _your_ approach that is tantamount to
saying that no one but a private owner of a resource can ever create
the technology needed to develop it.
No one will invest the resources time and talent needed to develop a
resource without some prospet of obtaining benefit. That benefit
generally comes down to having some sort of ownership stake in the
resource. For example, if an investor is granted 75% working interest
in an oil well, and a lease to produce all the oil that well has access
to, then that investor can quite properly be said to own 75% of that
property. In fact, investors can take evidence of that ownership to
the bank and borrow against it to pay for expansion of their
businesses.
This is amply proved by the 11,000 vacant
lots in NYC.
A vacant lot in NYC meets your criterion. That I agree with. However,
a resource buried under the surface of Mars is quite a different
animal. This is clearly obvious to any mammal with anything more than
a spinal column functioning!!!!
Economically, they are the same: natural resources.
Evidence?
AND you totally omit the fact that NYC has tortuous interference in
development of lands within the city - DUE TO OVER-REGULATION OF
DEVELOPMENT.
I agree NYC has stifled development through rent control and
prohibitions of many kinds. But they do that precisely _because_ they
recover so little of the land's economic rent.
They do that as in the case of Malibu because there are legitimate
third party effects related to overdevelopment of the resource.
Would they make land
unusable if releasing it for use it would bring in greatly increased
revenue?
All they need do is reform property taxes in NYC and you'd see a change
in the way things are done.
What we haven't been good at
is limiting the growth and breadth of government actvitity once its
begun.
OTC, we have become quite good at that,
Tell that to the millions of Cambodians who suffered under Pol Pot.
OK, you were referring to a wider "we" than I assumed. I agree that
the great majority of the world's people are not good at that. But
people in many OECD countries seem to have become reasonably good at
it.
Evidence?
as the long-term stability of
the fraction of GDP recovered by taxation in the USA proves.
The US is a shining exception to statism run rampant - with notable
exceptions like NYC and LA. The rest of the world still suffers from
excessive government.
True. Either that or weak and insufficient government, as in
Afghanistan, Iraq, Somalia, much of West Africa, and a few other
spots.
Yes, government should establish the conditions for a productive
population to freely organize - one of these conditions is the broad
ownership of private property - which means universal property rights.
You make the decision you think benefits you, but those who
set up the system benefit instead.
We can't expect anything to work well or logically until we get a
handle on this shortcoming and fix it. Until then, we should do what
works best, even it doesn't comport with what we think should work
best.
Um, you elited the most important part - the fact the Ken Arrow (who
received a Nobel Prize for his ground breaking work) - showed that it
was LOGICALLY IMPOSSIBLE for systems that use scalar numbers (counting)
to make rational collective decisions.
No, he only showed that individual rationality did not guarantee
collective rationality.
This is different how? Arrow showed that collective rationality was
impossible to achieve by any system of numbers by showing that human
values were non-transitive. Transitivity is a property of scalars and
allows the unique ordering of scalars. Human values cannot be uniquely
ordered, therefore, when preference loops occur, and they always will
in sufficiently complex decisions, those preference loops can be
navigated by an informed minority to control the outcome of the voting
by controlling the order of voting or decision making in the case of
markets - and that minority by dint of their control of a minor detail
(the order of voting) can control the outcome even though others did
the voting. This is why its called a paradox. You vote your mind, but
the people who control when things get voted on and against what else
they get voted on - those people control the outcome. Its a general
and universal failure of our systems of voting and our market systems.
That's why polling and spin has become so important to our electoral
process, and its why things happen the way they do in the closing room
at your car dealership. The people who set up the voting and the people
who ask the questions control your decision even though you are making
it.
This means that until we
advance to a point where we do have a rational sytem of collective
decision making - we should use systems that have been proven to work.
Agreed.
Systems like licensing regions offshore for developing new sources of
energy, or licensing channels and areas to develop new methods of
communications.
Right. Licensing private users of publicly owned resources. As I
said.
But the licenses I cited provide for a working interest which is
tantamount to ownership - without which there would be no incentive to
develop the resource.
Now, there are powerful and legitimate third party effects in the
development of space faring infrastructure. Flight weight reactors use
weapons grade nuclear materials. Missile technology can be used to
construct ICBMs. Moving asteroids through space can smash the US Space
Command if misdirected. Clearly we don't want people roaming around in
spaceships and throwing asteroids around without taking these less
savory possibilities into account. So, a system of leasing for
celestial bodies is likely called for. However, in order to get anyone
excited about this possibility, we must incolude a WORKING INTEREST in
the leases - which is a form of ownership.
No. The problem is that the system you think will work best will not
work,
You have not made your case! You have taken a statement about public
versus private ownership and misapplied it to a situation quite
different than the one it was intended to cover.
I am just stating facts of economics and history.
Leaving out the fact that working interest is needed to develop
resources that require significant investment of capital time and
talent.
while the system I think will work best will, but a system like
your system is the one currently in use. Because your system doesn't
work, you try to convince yourself that mine won't, either.
This statement is not true. Offshore drilling is creating new sources
of oil.
No, it isn't. It is merely accessing a pre-existing source.
Yes, and ownership in the source is given to those who take the money,
time and trouble to look for that source and drill that source and
carry the results to market.
Commercial cell phones are a reality - because licenses work.
Licensing private users of a publicly owned resource does indeed work.
Right. As I said, and as you have repeatedly denied.
But there is a property right associated with the use of that spectrum,
and where those rights are ignored, huge costs are incurred;
http://www.cadep.ufm.edu/telecom/lecturas/JerryEllig.pdf
Public charging of rents work too, but under the circumstances where
the resource is immediately valueable to those paying the rents.
If the resource is not valuable, there is no market rent to pay.
Non sequitor. No relation to what I was saying. A resource like coal
can be quite valuable, but it costs something to find it, dig it out of
the ground and transport it to market. If the working interest does
not cover these costs, no private investor will take the trouble to
make the investment. A resource like beach frontage 20 minutes from
Hollywood, with all the infrastructure of a great metropolis near it,
is immediately valuable without any development.
.
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