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5. Binary Intervention: Government Expenditures

4. The Myth of “Public” Ownership

We all hear a great deal about “public” ownership. Whenever the government owns property, in fact, or operates an enterprise, it is referred to as “publicly owned.” When natural resources are sold or given to private enterprise, we learn that the “public domain” has been “given away” to narrow private interests. The inference is that when the government owns anything, “we”—all members of the public—own equal shares of that property. Contrast to this broad sweep the narrow, petty interests of mere “private” ownership.

We have seen that, since a socialist economic system could not calculate economically, a die-hard socialist must be prepared to witness the disappearance of a large part of the earth's population, with only primitive subsistence remaining for the survivors. Still, a man who identifies government with public ownership might be content to spread the area of government ownership despite the loss of efficiency or social utility it entails.

The identity itself, however, is completely fallacious. Ownership is the ultimate control and direction of a resource. The owner of a property is its ultimate director, regardless of legal fictions to the contrary. In the purely free society, resources so abundant as to serve as general conditions of human welfare would remain unowned. Scarce resources, on the other hand, would be owned on the following principles: self-ownership of each person by himself; self-ownership of a person's created or transformed property; first ownership of previously unowned land by its first user or transformer. Government ownership means simply that the ruling officialdom owns the property. The top officials are the ones who direct the use of the property, and they therefore do the owning. The “public” owns no part of the property. Any citizen who doubts this may try to appropriate for his own individual use his aliquot part of “public” property and then try to argue his case in court. It may be objected that individual stockholders of corporations cannot do this either, e.g., by the rules of the company, a General Motors stockholder is not allowed to seize a car in lieu of cash dividends or in exchange for his stock. Yet stockholders do own their company, and this example precisely proves our point. For the stockholder can contract out of his company; he can sell his shares of General Motors’ stock to someone else. The subject of a government cannot contract out of that government; he cannot sell his “shares” in the post office because he has no such shares. As F.A. Harper has succinctly stated: “The corollary of the right of ownership is the right of disownership. So if I cannot sell a thing, it is evident that I do not really own it.”18

Whatever the form of government, the rulers are the true owners of the property. However, in a democracy or, in the long run under any form of government, the rulers are transitory. They can always lose an election or be overthrown by a coup d'etat. Hence, no government official regards himself as more than a transitory owner. As a result, while a private owner, secure in his property and owning its capital value, plans the use of his resource over a long period of time, the government official must milk the property as quickly as he can, since he has no security of ownership. Further, even the entrenched civil servant must do the same, for no government official can sell the capitalized value of his property, as private owners can. In short, government officials own the use of resources, but not their capital value (except in the case of the “private property” of a hereditary monarch). When only the current use can be owned, but not the resource itself, there will quickly ensue uneconomic exhaustion of the resources, since it will be to no one's benefit to conserve it over a period of time and to every owner's advantage to use it up as quickly as possible. In the same way, government officials will consume their property as rapidly as possible.

It is curious that almost all writers parrot the notion that private owners, possessing time preference, must take the “short view,” while only government officials can take the “long view” and allocate property to advance the “general welfare.” The truth is exactly the reverse. The private individual, secure in his property and in his capital resource, can take the long view, for he wants to maintain the capital value of his resource. It is the government official who must take and run, who must plunder the property while he is still in command.19

  • 18. F.A. Harper, Liberty, a Path to Its Recovery (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1949), pp. 106, 132. See also Paterson, God of the Machine, pp. 179 ff. Paterson has a stimulating discussion of the “two-dimensionality”—neglect of real conditions—in the theory of collective ownership.
  • 19. Those who object that private individuals are mortal, but that “governments are immortal,” indulge in the fallacy of “conceptual realism” at its starkest. “Government” is not a real acting entity but is a real category of action adopted by actual individuals. It is a name for a type of action, the regularization of a type of interpersonal relation, and is not itself an acting being.