Well defined private property rights matter ………

Professor Maitreesh Ghatak who teach economics in LSE says in today's FE that:

• “…where property titles are ill-defined, where legal disputes takes decades to settle, where poor farmers or small businessmen face eviction threats, it is difficult to imagine how they can behave like textbook economic agents, namely, taking a long-run view, saving, investing, and climbing their ways out of poverty. Security of property rights therefore is of utmost importance. 
  
• The term property right refers to an owner’s right to use a good or asset for consumption and/or income generation (referred to as “use rights”). This can also include the right to transfer it to another party, in the form of a sale, gift or bequest (referred to as “transfer rights”). A property right also typically conveys the right to contract with other parties by renting, pledging, or mortgaging a good or asset, or by allowing other parties to use it, for example, in an employment relationship. 
  
• By property rights, economists typically refer to private property rights, a key feature of which is being able to legally exclude others from using a good or asset. This affects resource allocation by shaping the incentives of individuals to carry out productive activities involving the use of the good or asset, undertake investments that maintain or enhance its value, and also, to trade or lease it for other uses.”
  

Right to property moves right direction!

There is a news in the TOI which state that:

• “The Supreme Court on Friday issued notice to the Centre on a PIL, which said that the purpose for which right to property was relegated to a mere statutory right in the late 1970s is no longer relevant. 
  
• The PIL seeking restoration of the right to property in the third chapter of the Constitution, which enumerates the fundamental rights enjoyed by every citizen, argued that it was made a statutory right in 1978 to abolish large land holdings with zamindars and rich and their distribution among landless peasants.  
  
• Salve told a Bench comprising Chief Justice K G Balakrishnan and Justice P Sathasivam that the situation was grave and needed urgent remedial action. 
• The Bench issued notice to the Union law ministry seeking its response to the PIL, which challenged the constitutional validity of the 44th Constitutional Amendment, 1978, on the ground that it was violative of the basic structure of the Constitution. 
• The petition, filed through advocate Gopal Shankaranarayanan, stated that in the recent past acquisition of agricultural land depriving poor farmers of their only means of livelihood has given credence to the necessity for a fresh debate on making right to property as a fundamental right again. 
• Though the 1978 constitutional amendment was to permit government to acquire land for public purpose without being dragged to courts by big zamindars, the alteration of the status of the right to property never intended to harm small landholders, the petition stated”. 
  

No matter

It may be good to get this new amendment in land acquisition law but with out the private property rights it will go long way to provide basic rights to people of this country.

M R Madhavan writes in Indian Express “First, it redefines public purpose as including by a company for “any other purpose useful to the general public”, provided the company has purchased at least 70 per cent of the land required through normal market mechanisms. Second, it changes the method for computing the compensation. The price is linked to sale price in the vicinity. Importantly, the intended use of the land and the value of such land in the market must be factored into the computation. In case the acquisition is for a company, 20 to 50 per cent of the compensation must be offered as shares or debentures. The seller has the choice of accepting this offer or taking a full-cash settlement. Third, the land shall be returned to the government if it is not used for five years from the date of possession. And in case it is transferred, 80 per cent of the capital gains must be shared with the original land owners and their heirs. Fourth, the bill specifies that all persons displaced by the acquisition process — including those who did not own any land — would be rehabilitated and resettled. The process for this is detailed in a companion bill, the Rehabilitation and Resettlement Bill, 2007. Fifth, a land acquisition compensation disputes settlement authority is to be set up with civil court-like powers, which has to adjudicate all disputes within six months.  The companion bill that provides for rehabilitation and resettlement suffers from one serious constraint — the language used for many of the benefits is non-binding in nature, and this could result in several benefits being denied. The proposed changes, though welcome, need more than good intentions to be effective”….  

There cannot be a free market for land

Sauvik Chakraverti has an excellent article in Mint on “The original sinners of Singur” See other post here

Socialist Murky

What made this murky socialist Indian who wanted to see the deep darkness?

Gurcharan Das in his column in TOI said that “our socialists were impatient, and one sad day in 1978, the Janata government removed ‘property’ from the list of fundamental rights in our Constitution”.

Further he writes “Clearly, the state violated the farmers’ right to property when it forcibly acquired their land”. Now who will ask to whom?

See other posts 1 2

Poor need private property rights

As I said here, terribly there is a need for private property right not just but constitutionally.

Economist Thomas Sowell writes, “What property rights provide, in countries where these rights are readily accessible, is the ability of people to convert physical assets into financial assets, which is turn enables them to create additional wealth, whether individually or in combination with others. Property rights enable strangers to cooperate in economic ventures, some of which are beyond the means of any particular individual and must be undertaken by corporations which can mobilize the wealth of thousands or even millions of people, who cannot possible all know each other. Moreover, property rights provide incentives to monitor their own economic activities more closely than government officials can-and protects them from the over-reaching caprices or corruption of such officials. In short, property rights are an integral part of a price –coordinated economy, without which that economy cannot function as efficiently” (Applied Economics Thinking Beyond State One, p. 200-201).

 Here is an events by Delhi based Liberty Institute. I am posting the whole programme below.   

 Liberty Institute

and

International Management Institute

In partnership with

Friedrich Naumann Stiftung - für die Freiheit

Cordially invite you to

A roundtable on

Property Rights: The Sin in Singur

Panelist:

• Sanjiv Agarwal, businessman and Good Governance India
• Biswajit Bhattacharya, advocate, Supreme Court of India
• Bibek Debroy, International Management Institute
• Ashok Desai, economist and columnist
• Paranjoy Guhathakurta, journalist
• Rajiv Kumar, International Council for Research on International Economic Relations 

 Venue: Conference Room No.3, India International Centre Annexe, New Delhi

 Date: 29 September 2008 

Time: 6 p.m.

 RSVP.

Liberty Institute

C-4/8 Sahyadri, Plot-5, Sector-12

Dwarka Phase I, New Delhi 110078

Phone : 28031309

E Mail: LibertyInstitute@gmail.com

Web Sites: www.InDefenceofLiberty.org,

www.EmpoweringIndia.org

http://www.indefenceofliberty.org/story.aspx?id=1969&pubid=1761

 

Private Property Right Economic Freedom by Chandra

Whenever people, experts and policy makers even legal pundits, it is the basic rights if any man living for their livelihood. I first thought of the private property is alright for the person who owns the land. What about the masses who is not owner of any single property. This is thinking in stage one only.

Think if any one says, the same masses do not own any land or private property. Did they not live on this earth? It means obviously they are part of our society and have some sort of same private property right where they are all living with others and share the common private property right which the Government supposes to ensure by all means. Therefore, it is the basic human natural order or right to have private property and thereby allocate the resources do to their (people) business with others and create wealth to enrich better standard of life and the same for every body else’s.

Even economist Thomas Sowell has also written elsewhere about this idea. Particularly in his book on “Applied Economics Thinking beyond State one”

Many experts have written excellent pieces on this topic. There is scholarly one here by liberal economist Walter E. Williams.

Indeed it is worthy to note the below lines:

“As Thomas Sowell writes in Knowledge and Decisions, “It is precisely those things which belong to ‘the people’ which have historically been despoiled—wild creatures, the air, and waterways being notable examples. This goes to the heart of why property rights are socially important in the first place. Property rights mean self-interested monitors. No owned creatures are in danger of extinction. No owned forests are in danger of being leveled. No one kills the goose that lays the golden egg when it is his goose.”

 Aristotle said, “What is common to many is taken least care of, for all men have greater regard for what is their own than for what they possess in common with others.” What he is saying is that private property rights force people to internalize externalities, which is just a fancy way of saying that a person’s wealth is held hostage to his doing the “socially responsible” thing—wisely using the planet’s scarce resources. Private property rights induce the homeowner to take into account the effect of his current use of the property on its future value. That is why we expect a homeowner to give better care to a house than a renter. A homeowner has a greater stake in what a house is worth ten or 20 years later. An owner would more likely make sacrifices and take the kind of care that lengthens the usable life of the house. He reaps the reward from doing so, or pays the penalty for not doing so. Owners require security deposits against damage to make renters share some of their interests in the property”.

It is not surprise if any one mentions that in India we lost that private property rights from our Constitutional Fundamental Rights way back in 1978. Originally, the right to property was also included in the Fundamental Rights; however, the Forty-fourth Amendment, passed in 1978, revised the status of property rights by stating that "No person shall be deprived of his property save by authority of law."

Perhaps one can say the present SEZs land issues across the states is directly related to unavailability of private property right under fundamental right.

It is also interesting some you could read the following articles.

The right to property  by ] 

Kaushik Das

Property rights attack continues by Walter E. Williams. 

Chapter 4: Private Property Rights 

A Constitution Based On Property Rights? by Parth J. Shah

A Second Republic | There Can Be No Collective Property by Sauvik Chakraverti