DeSoto, meet Heinlein: Part 2, buying the future
[Continued from yesterday's Part 1.]
Yesterday’s interplanetary riff about potentially sell land rights on the Moon, stimulated by a provocative Drake Bennett article in The Boston Globe, suggested that pre-selling future rights would stimulate not only investment but also exploration with a view to investment. Hernando De Soto and numerous others (including me) believe that ownership of private property and land rights is critical to spurring investment in improving that property – and hence, to improving communities. (I’ve already posted at length about Hernando
Now,
Let’s do a thought experiment for a burgeoning city in the global south, like Sao Paulo , where I recently spent nearly a week. Let’s imagine an urban homesteading law:
If you settle it, you can own it
Big caveat: Having written this little summary, I realize that it exists in the land of make-believe where governments do what they say, administrative processes are swift and impartial, records are accurate and not forged, householders always tell the truth, and amnesties never have unintended consequences or create perverse incentives. But as this is a blog post, we can dream, can’t we?
Second big caveat: I have deliberately elided the very real and legally complex issues of regularizing title over adverse possession – that’s lawyer-speak for “letting the squatter acquire ownership of the land on which he squats.” The subject is a flashpoint – giving ‘amnesty’ to squatters generates outrage among formal government and property owners, with good reason, and the eminent-domain compensation can be a major financial exposure for government. Yet time and again, starting with the American Homestead Acts, sooner or later government allows some diligent long-standing squatters to acquire title by virtue of incumbency and investment. Here’s a chunk of my earlier post:
When the government factory first steamed into action, it took the invariable first step — enforcing prohibition:
As early as 1634 in
Nevertheless, just as with our high-rise washer-dryers, when people improved their property, they found means of informally entitling it, and then buying and selling these informal titles:
Squatters began inventing their own species of extralegal property titles known as ‘tomahawk rights,’ ‘cabin rights,’ and ‘corn rights.’ Page 116.
My tomahawk, my tree!
Rights were signified (and hence functionally established) by marking a boundary in trees, building a log cabin, or raising a crop of corn. All these rights involved physical inspection, physical possession and demarcation, and capital improvement — the critical purposes for which we invented title and property law.
Significantly, these extralegal rights were bought, sold, and transferred — just like official titles. Page 117.
Markets, even informal ones, add and create value because they animate (and therefore mobilize) capital, which in turn leads to reinvestment. (A
In seeking to balance the rights of the well-capitalized passive owner with those of the enterprising possessor/ improver, courts have found a way of distinguishing what value belongs to whom:
As early as 1642, the colony of
I dream of property rights that never were, and say, whatever!
So let’s just imagine that such an Urban Homesteading Program exists. (Programs from HUD or cities bearing this name were popular in the mid-1970s, in the aftermath of the urban riots, and although they largely died out, the concept has a natural resonance.)
Would it work?
Well, would it work in space, with the Moon?
Giving extraterrestrial property rights could be a powerful force, not only for exploration, but for the efficient development of the discovered and undiscovered resources of space.
One crucial element is the possibility of substantial upside:
Celestial bodies such as the moon and the thousands of near-Earth asteroids may prove to be highly lucrative pieces of property – as sources of minerals and clean energy, venues for scientific experimentation and high-end tourism, or simply as open space for refugees from an increasingly crowded planet.
“Property rights will provide the only economic incentive that will possibly justify entrepreneurial space exploration,” says Alan Wasser, chairman of the Space Settlement Institute and the former CEO of the National Space Society. The exploration and settlement of space “benefits all mankind, but all mankind doesn’t want to put up the money.”
They’re also a budgetary asset. In one of the more remarkable examples, the Federal government has periodically auctioned bandwidth, capturing billions of dollars in revenue for selling rights to frequencies.
It may never fly, it it looks so cool
Already, space is becoming the province of the private sector: hundreds of private satellites now orbit the planet. And within a few years, private space travel has gone from concept to near-reality. Virgin Galactic’s Spaceshiptwo suborbital spacecraft is already taking reservations from aspiring space tourists, and hopes to start flights by 2010. Amazon founder
People with vast sums to spend can take wild flyers, and even if their money dissipates (it doesn’t disappear, it just circulates back into the economy), their creations remain for us to admire. Bob Bass built Biosphere Two, an expensive but intriguing white elephant. Further back in time, Pope Julius commissioned the Sistine Chapel. And then there were those pyramids …
Talk about non-recoverable capital cost!
The prototype of Las Vegas hotel billionaire Robert Bigelow’s “space hotel,” a private space station that he envisions could be rented out to everyone from wealthy vacationers to national space programs, has been in orbit since July 2006.
These successes have suggested to some space exploration proponents that private efforts, given the right incentives, might be capable of meeting far more ambitious goals, bringing new technologies, lower costs, and a swashbuckling attitude to a field traditionally dominated by public bureaucracies.
Whatever else, they will bring capital and risk tolerance – even risk infatuation! – to the enterprise.
There’s a variety of opinion as to how extensive extraterrestrial property rights should be – whether to allow, for example, the outright buying and selling of land, or whether to forbid ownership and instead rely on leases, trusts, and easements – but there’s nonetheless a growing consensus that some form of space property is inevitable and necessary.
In Homecoming, my third novel, I imagined Mars as a modern
Now You Don’t dropped into the lee of the canyon lip. The arid prairie beyond Bradbury was acned with divots and spiked with ships like upturned bullets. “Where is the landing field?” Peacoat asked.
“Ain’t one,” Atkins boisterously shouted, indicating randomly scattered rockets. “You plop anywhere you can find a space.”
Capitalism is messy; order arrives after the fact; but it is energetic and experimental, and amid all the chaos, concepts are discovered and a few are proved. Provided, of course, there are property rights:
In 2004, President Bush’s Commission on Implementation of United States Space Exploration Policy announced that a key component of the exploration of the solar system was assuring “appropriate property rights for those who seek to develop space resources and infrastructure.”
As a general matter, property rights are efficiently and peacefully enforced via governments. Yet there is no government reach to the Moon … or is there?
And while the question of property on the moon remains, for the time being, an abstract one, for space property proponents it’s far from frivolous.
Now, some say, it’s time to look up.
“Look! Up in the sky!”
We already have. More than half a century ago, Robert A. Heinlein laid out the common-law argument for ownership of the Moon via a neat vignette of maid-and-butler dialog:
“What does a man own when he buys a parcel of land? Suppose he buys the works, without splitting the rights; how far down does he own? How far up does he own?”
“Well, he owns a wedge down to the center of the Earth. That was settled in the slant-drilling and off-set oil lease cases. Theoretically, he used to own the space above the land, too, out indefinitely, but that was modified by a series of cases after the commercial airlines came in.”
“George, you didn’t read those cases right. Right of passage was established – but ownership of the space above the land remained unchanged.”
In the
If you’re going to overfly someone’s sovereign airspace, Gary Powers, don’t get shot down!
“But what of it? It’s a purely theoretical matter.”
“George – who owns the Moon?”
“
“They apply here. The Moon stays constantly over a slice of Eawrth bounded by ;attitude twenty-nine north and the same distance south; if one man owned all that belt of Earth, then he’d own the Moon too, wouldn’t he? And, by direct derivation, the various owners of that belt of land have title – good vendable title – to the Moon somehow lodged collectively in them.
“It’s fantastic!”
“George, when are you going to learn that ‘fantastic’ is a notion that doesn’t bother a lawyer?”
Pages 77-78
Heinlein’s hero thus reasons that (1) the rights exist ab initio even if latent and unclaimed, and (2) all rights not explicitly assigned to private property vest in the national government. His reasoning of rights existence and vesting therefore still looks sound sixty years after he wrote it.
Throughout history, land grants have been used to encourage people to tame the frontiers.
Whether it’s 16th-century English privateer-explorers or the Dutch East India Company, 19th-century American homesteaders or the building of the Transcontinental Railroad, privatization has a long history as a catalyst for discovery, development, and settlement.
Couldn’t have said that better myself.
We have, among numerous examples:
100 AD: Roman soldiers or farmers who, upon retirement from the legions, could set up an estate in a province they conquered or pacified.
1550: Most of the conquistadors were in pursuit not just of portable loot but also of vast ranchero grants.
1600;
“We’ve decided to call it, ‘
1700: In Colonial America, a patentee could obtain a grant of land on condition that he:
was required to cultivate an acre of land and build a small house on the property, otherwise the patent would revert to the government.
1790: The British government granted land in Australia to released convicts.
Work it and you can own it
1830: Land grants fueled the private development of the US railroad network. Listen to the language:
At first, states financed many projects, such as building roads and canals. However, the massive investment needed to build transcontinental railroads was more than private rail companies were able or willing to do. Since they were privately financed, rail companies seldom began unprofitable projects — they needed encouragement. Political maneuvering and economic necessity thus combined to help pass the first of several land grant bills. These made government gifts of public land to the railroad companies in exchange for laying track in designated areas. In 1850, for example, the Illinois Central received a land grant of several million acres. Standard procedure was to distribute land by alternate sections along the proposed railroad line, one section going to the company and the next kept by the government.
As land values increased, both the railroads and the government gained. Railroad companies then sold their newly profitable lots and used the proceeds to pay for materials and labor to continue their expansion.
1865: During the Civil War, General William Tecumseh Sherman granted freed slaves forty acres and a mule.
Human beings are selfish creatures; we improve things that we think we own and from whose ownership we think we can profit. As I wrote in an eminent domain post:
Without respect for private property, there is no wealth creation (sorry, Karl, it was no fun while it lasted),
no entrepreneurial engine, no innovation. We are primates, we mark and possess our territory. Ownership and defense of property are wired into our gene pool (”a man’s home is his castle”) and the American pioneering heritage (”forty acres and a mule“). We build respect for property into the fundamentals of our Constitution (the Fifth Amendment), and jurisprudence (citizens’ ability to sue the government). Respect for the citizen’s property is among our fundamental defenses against tyranny.
The grant of rights ought to work, both in the urban frontier, and in the interplanetary frontier.
But what might be good real estate on the Moon?
[Continued tomorrow in Part 3.]
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