Machinery of Freedom, David Friedman
A Saint once said: “Let the perfect city rise.
Here needs no long debate on subtleties,
Let us intend
That all be clothed and fed; while one remains
Hungry our quarreling but mocks his pains.
So all will labor to the good
In one phalanx of brotherhood.”
A man cried out “I know the truth, I, I,
Perfect and whole. He who denies
My vision is a madman or a fool
Or seeks some base advantage in his lies.
All peoples are a tool that fits my hand
Cutting you each and all
Into my plan.”
They were one man.
The concept of property is fundamental to our society, probably to any workable society. Operationally, it is understood by every child above the age of three. Intellectually, it is understood by almost no one.
Consider the slogan ‘property rights vs. human rights’. Its rhetorical force comes from the implication that property rights are the rights of property and human rights the rights of humans; humans are more important than property (chairs, tables, and the like); consequently, human rights take precedence over property rights.
But property rights are not the rights of property; they are the rights of humans with regard to property. They are a particular kind of human right. The slogan conjures up an image of a black ‘sitting in’ in a southern restaurant. That situation involves conflicting claims about rights, but the rights claimed are all property rights. The restaurant owner claims a right to control a piece of property—his restaurant. The black claims a (limited) right to the control of part of the same piece of property—the right to sit at a counter stool as long as he wants. None of the property claims any rights at all; the stool doesn’t pipe up with a demand that the black respect its right not to be sat upon.
The only assertion of rights of property that I have run across is the assertion by some conservationists that certain objects—a redwood tree, for instance—have an inherent right not to be destroyed. If a man bought land on which such a tree stood, asserted his right to cut the tree down, and was opposed by a conservationist acting, not on any right of his own, but in defense of the rights of the tree, we would truly have a conflict between ‘human rights’ and ‘property rights’. That was not the situation envisioned by those who coined the phrase.
That one of the most effective political slogans of recent decades is merely a verbal error, confusing rights to property with rights of property, is evidence of the degree of popular confusion on the whole subject. Since property is a central economic institution of any society, and private property is the central institution of a free society, it is worth spending some time and effort to understand what property is and why it exists.
Two facts make property institutions necessary.
The first is that different people pursue different ends. The ends may differ because people follow their narrow self-interest or because they follow differing visions of high and holy purpose. Whether they are misers or saints, the logic of the situation is the same; it remains the same as long as each person, observing reality from the distinct vantage point of his own head, reaches a somewhat different conclusion about what should be done and how to do it.
The second fact is that there exist some things which are sufficiently scarce that they cannot be used by everyone as much as each would like. We cannot all have everything we want. Therefore, in any society, there must be some way of deciding who gets to use what when. You and I cannot simultaneously drive the same car to our different homes.
The desire of several people to use the same resources for different ends is the essential problem that makes property institutions necessary. The simplest way to resolve such a conflict is physical force. If I can beat you up, I get to use the car. This method is very expensive, unless you like fighting and have plenty of medical insurance. It also makes it hard to plan for the future; unless you’re the current heavyweight champion, you never know when you will have access to a car. The direct use of physical force is so poor a solution to the problem of limited resources that it is commonly employed only by small children and great nations.
The usual solution is for the use of each thing to be decided by a person or by some group of persons organized under some set of rules. Such things are called property. If each thing is controlled by an individual who has the power to transfer that control to any other individual, we call the institution private property.
Under property institutions, private or public, a person who wishes to use property that is not his own must induce the individual or group controlling that property to let him do so; he must persuade that individual or group that its ends will be served by letting him use the property for his ends.
With private property, this is usually done by trade: I offer to use my property (including, possibly, myself) to help you achieve your ends in exchange for your using your property to help me achieve mine. Sometimes, but less often, it is done by persuading you that my ends are good and that you should therefore pursue them; this is how charities and, to some extent, families function.
In this way, under private property institutions, each individual uses his own resources to pursue his own ends. Cooperation occurs either when several individuals perceive that they more easily can achieve a common end jointly than individually or when they find that they more easily can achieve their different ends by cooperating through trade, each helping the others achieve their ends in exchange for their helping him achieve his.
Under institutions of public property, property is held (the use of things is controlled) by political institutions and that property is used to achieve the ends of those political institutions. Since the function of politics is to reduce the diversity of individual ends to a set of ‘common ends’ (the ends of the majority, the dictator, the party in power, or whatever person or group is in effective control of the political institutions), public property imposes those ‘common ends’ on the individual. ‘Ask not what your country can do for you; ask rather what you can do for your country.” Ask not, in other words, how you can pursue what you believe is good, but how you can pursue what the government tells you is good.
Consider a particular case where the effects of public and private property can be compared. The printed media (newspapers, magazines, and the like) are produced entirely with private property. Buy newsprint and ink, rent a printing press, and you are ready to go. Or, on a cheaper scale, use a Xerox machine. You can print whatever you want without asking permission from any government. Provided, of course, that you do not need the U.S. Post Office to deliver what you print. The government can use, and occasionally has used, its control over the mails as an instrument of censorship.
Broadcast media (radio and television) are another matter. The airwaves have been designated as public property. Radio and television stations can operate only if they receive permission from the Federal Communications Commission to use that property. If the FCC judges that a station does not operate ‘in the public interest’, it has a legal right to withdraw the station’s license, or at least to refuse to renew it. Broadcasting licenses are worth a great deal of money; Lyndon Johnson’s personal fortune was built on a broadcasting empire whose chief asset was the special relationship between the FCC and the majority leader of the Senate.
Printed media require only private property; broadcast media use public property. What is the result?
Printed media are enormously diverse. Any viewpoint, political, religious, or aesthetic, has its little magazine, its newsletter, its underground paper. Many of those publications are grossly offensive to the views and tastes of most Americans—for example, The Realist, an obscene and funny humor magazine that once printed a cartoon showing ‘One Nation under God’ as an act of sodomy by Jehovah on Uncle Sam; The Berkeley Barb, a newspaper that has the world’s most pornographic classified ads; and the Black Panther publication that superimposed a pig’s head on Robert Kennedy’s murdered body.
The broadcast media cannot afford to offend. Anyone with a license worth several million dollars at stake is very careful. No television station in the United States would air the cartoons from a random issue of The Realist. No radio would present readings from the classified section of the Barb. How could you persuade the honorable commissioners of the FCC that it was in the public interest? After all, as the FCC put it in 1931, after refusing to renew the license of a station owner many of whose utterances were, in their words, “vulgar, if not indeed indecent. Assuredly they are not uplifting or entertaining.” “Though we may not censor, it is our duty to see that broadcast licenses do not afford mere personal organs, and also to see that a standard of refinement fitting our day and generation is maintained.”
The Barb does not have to be in the public interest; it does not belong to the public. Radio and television do. The Barb only has to be in the interest of the people who read it. National Review, William Buckley’s magazine, has a circulation of about 100,000. It is purchased by one American out of two thousand. If the other 1,999 potential readers think it is a vicious, racist, fascist, papist rag, that’s their tough luck—it still comes out.
The FCC recently ruled that songs that seem to advocate drug use may not be broadcast. Is that an infringement of freedom of speech? Of course not. You can say anything you want, but not on the public’s airwaves.
When I say it is not an infringement of free speech, I am perfectly serious. It is not possible to let everyone use the airwaves for whatever he wants; there isn’t enough room on the radio dial. If the government owns the airwaves, it must ration them; it must decide what should and what should not be broadcast.
The same is true of ink and paper. Free speech may be free, but printed speech is not; it requires scarce resources. There is no way that everyone who thinks his opinion is worth writing can have everyone in the country read it. We would run out of trees long before we had enough paper to print a hundred million copies of everyone’s manifesto; we would run out of time long before we had finished reading the resultant garbage.
Nonetheless, we have freedom of the press. Things are not printed for free, but they are printed if someone is willing to pay the cost. If the writer is willing to pay, he prints up handbills and hands them out on the corner. More often, the reader pays by subscribing to a magazine or buying a book.
Under public property, the values of the public as a whole are imposed on the individuals who require the use of that property to accomplish their ends. Under private property, each individual can seek his own ends, provided that he is willing to bear the cost. Our broadcast media are dull; our printed media, diverse.
Could this be changed? Easily. Convert the airwaves to private property. Let the government auction off the right to broadcast at a particular frequency, frequency by frequency, until the entire broadcast band is privately owned. Would this mean control of the airwaves by the rich? No more than private property in newsprint means newspapers are printed only for the rich. The marketplace is not a battlefield, where the person with the most money wins the battle and takes the whole prize; if it were, Detroit would spend all its resources designing gold Cadillacs for Howard Hughes, Jean Paul Getty, and their ilk.
What is wrong with the battlefield analogy? To begin with, the market does not allocate all of its resources to the customer with the most money. If I am spending $10 on widgets and you are spending $20, the result is not that you get all the widgets, but rather that you get two-thirds of them and I get one-third. Nor, in general, is the amount of a given product bought by one customer subtracted from what is available to another—one person’s gain need not be another’s loss. When I was the only customer for widgets, only $10 worth of widgets (eight widgets at $1.25 apiece) was produced. When you appear with $20, the first effect is to drive up the price of widgets; this induces the widget manufacturers to produce more widgets, and soon there are enough for me to have my eight, and you have to have your sixteen. This is less true for the airwaves, which are, in one sense, a fixed and limited resource, like land. But, as with land, a higher price effectively increases the supply by causing people to use the existing quantity more intensively. In the case of airwaves, if the price of a frequency band is high, it becomes profitable to use improved equipment, to squeeze more stations into a given range of frequencies, to coordinate stations in different areas more carefully so as to minimize ‘fringe’ areas of interference, to use previously unused parts of the spectrum (UHF television, for instance), and eventually to replace some broadcast stations with cable television or radio.
Another error in the picture of the marketplace as a ‘rich man take all’ conflict is the confusion between how much money a man has and how much he is willing to spend. If a millionaire is only willing to pay $10,000 for a car, he gets exactly the same amount of car as I get if I am willing to pay the same amount; the fact that he has a million dollars sitting in the bank does not lower the price or improve the quality of the car. This principle extends to radio. Howard Hughes could have spent a billion dollars to buy up radio frequencies, but unless he was going to make money with them— enough money to justify the investment—he would not. There were, after all, many far cheaper ways for him to provide entertainment for himself.
What does this imply for the fate of the airwaves as private property? First, the proportional nature of market ‘victory’ would make it virtually impossible for any rich man or group of rich men to buy the entire broadcast spectrum and use it for some sinister propagandistic purpose. In such a project, they would be bidding against people who wanted to buy frequencies in order to broadcast what the listeners wanted to hear and thus make money (whether directly, as with pay television, or indirectly, as with advertising). Total advertising on the broadcast media amounts to about $4 billion a year. Businessmen, bidding for the ownership of broadcast bands in order to get their cut of that money, would surely be willing, if necessary, to make a once and for all payment of many billions of dollars. Suppose the radio band has room for a hundred stations (the present FM band has room for at least 50, and the AM band has room for many more). In order for our hypothetical gang of machiavellian millionaires to get control of all one hundred stations, they must be willing to pay a hundred times as much as the competition. That would be something in the neighborhood of a trillion dollars, or about a thousand times the total worth of the richest individuals in the country. Suppose, instead, that they can raise about $10 billion (the total worth of the richest ten or twenty Americans) and roughly match the amount that the businessmen who want the stations for commercial purposes are willing to pay. Each group gets 50 frequencies. The businessmen broadcast what the customers want to hear and get all the customers; the hypothetical millionaires broadcast the propaganda they want the customers to hear and get no customers, and ten or twenty of the richest men in America go bankrupt.
It seems clear that the airwaves would be bought for commercial purposes by businessmen who want to broadcast whatever their customers want to hear, in order to make as much money as possible. Very much the same sort of people who own radio stations now. Most stations would appeal to mass tastes, as they do now. But, if there are nine stations sharing 90 percent of the listeners, a tenth station may do better by broadcasting something different and thus getting all of the remaining 10 percent, instead of a one-tenth share of the great majority. With one hundred stations, the hundred and first could make money on an audience of 1 percent. There would therefore be specialty stations, appealing to special tastes. There are now. But such stations would no longer be limited by the veto power that the majority now exercises through the FCC. If you were offended by what you heard on the station owned by The Berkeley Barb, there would be only one thing to do about it: turn to a different station.
The media provide a striking example of the difference between the effects of public and private property, but it is an example that shows only part of the disadvantage of public property. For the ‘public’ not only has the power to prevent individuals from doing what they wish with their own lives, it has a positive incentive to exercise that power. If property is public, I, by using some of that property, decrease the amount available for you to use. If you disapprove of what I use it for, then, from your standpoint, I am wasting valuable resources that are needed for other and more important purposes—the ones you approve of. Under private property, what I waste belongs to me. You may, in the abstract, disapprove of my using my property wastefully, but you have no incentive to go to any trouble to stop me. Even if I do not ‘waste’ my property, you will never get your hands on it. It will merely be used for another of my purposes.
This applies not only to wasting resources already produced, but to wasting my most valuable property, my own time and energy. In a private-property society, if I work hard, the main effect is that I am richer. If I choose to work only ten hours a week and to live on a correspondingly low income, I am the one who pays the cost. Under institutions of public property, I, by refusing to produce as much as I might, decrease the total wealth available to the society. Another member of that society can claim, correctly, that my laziness sabotages society’s goals, that I am taking food from the mouths of hungry children.
Consider hippies. Our private-property institutions serve them just as they do anyone else. Waterpipes and tie-dyed shirts are produced, underground papers and copies of Steal This Book are printed, all on the open market. Drugs are provided on the black market. No capitalist takes the position that being unselfish and unproductive is evil and therefore that capital should not be invested in producing things for such people; or, if one does, someone else invests the capital and makes the profit.
It is the government that is the enemy: police arrest ‘vagrants’; public schools insist on haircuts for longhairs; state and federal governments engage in a massive program to prevent the import and sale of drugs. Like radio and television censorship, this is partly the imposition of the morals of the majority on the minority. But part of the persecution comes from the recognition that people who choose to be poor contribute less to the common ends. Hippies don’t pay much in taxes. Occasionally this point is made explicit: drug addiction is bad because the addict does not ‘carry his share of the load’. If we are all addicts, the society will collapse. Who will pay taxes? Who will fight off foreign enemies?
This argument becomes more important in a socialist state, such as Cuba, where a much larger fraction of the economy is public property. There, apparently, their equivalent of hippies were rounded up and sent off to work camps to do their share for the revolution.
George Bernard Shaw, an unusually lucid socialist, put the matter nicely in The Intelligent Woman’s Guide to Socialism and Capitalism:
But Weary Willie may say that he hates work, and is quite willing to take less, and be poor and dirty and ragged or even naked for the sake of getting off with less work. But that, as we have seen, cannot be allowed: voluntary poverty is just as mischievous socially as involuntary poverty: decent nations must insist on their citizens leading decent lives, doing their full share of the nation’s work, and taking their full share of its income. . . . Poverty and social irresponsibility will be forbidden luxuries. Compulsory social service is so unanswerably right that the very first duty of a government is to see that everybody works enough to pay her way and leave something over for the profit of the country and the improvement of the world
Consider, as a more current example, the back to the land movement, as represented by The Mother Earth News. Ideologically, it is hostile to what it views as a wasteful, unnatural, mass consumption society. Yet the private property institutions of that society serve it just as they serve anyone else. The Mother Earth News and The Whole Earth Catalog are printed on paper bought on the private market and sold in private bookstores, alongside other books and magazines dedicated to teaching you how to make a million dollars in real estate or live the good life on a hundred thousand a year.