So What's a Right? [Long]

Rights.     

There is a lot of talk these days about rights, just as there was a smidgen over 200 years ago, when the founding fathers of the United States established a constitution to form a country of liberty. Politicians often stress the importance of “rights,” usually in describing how they intend to “preserve” them, but with so much talk come so many questions: what are rights? Where do they come from? Why do we need them, and where would we be without them? These queries are asked by the everyday Joe, discussed at great length by the most prestigious intellectuals in the country, and debated by the most powerful men and women in governments across the globe. In this article I strive to shed light on this important issue, and in particular I make distinction between the oft-confused concepts of “human needs” and “human rights,” to explain how they’re different, and why it matters.

The rights of everyone are two in number: the right to his person, and the right to the things he, as Enlightenment philosopher John Locke put it, “mixes his labor with.” These things are defined as his property, meaning that they can justly be used or traded away by their owner, and cannot be justly taken by other people. Rights are self-evident in the natural state of man, he being perfectly free to act independent of others, disposing of his possessions or his person as he pleases. This is important to recognize, as it means that no person is “given” his rights by other people; while some point to politicians and bureaucrats as the givers of our rights, they are, in fact, naturally inherited by everyone as a result of being able to make decisions. It is also important to note that one does not have the right to the possessions of others, or to another’s person, as nature does not grant anyone the power to control other people, or decide what those people do with the things that they possess. All rights stem from these two, basic umbrellas of what it is that people own. The United States Declaration of Independence famously declares the rights of its citizenry to be “life, liberty and the pursuit of happiness,” the first of which is a logical conclusion of owning one’s person, and the latter of which are statements regarding the freedom of anyone to act as he chooses, provided he does not interfere with the rights of others. Man is incapable of creating new rights, but he is fully capable of taking them away.

But how does one take away the rights of another anyway? If nature bestowed our rights upon us, wouldn’t that mean they are impossible to revoke? Sadly, this is not the case. Unique to the actions of men is the use of force -- a physical invasion or threat of physical invasion that involuntarily bends the will of others to one’s interests. For example, a woman has the right, the option, to keep a purse she buys and use it to carry her things, this being the use of property she has honestly obtained. However, if a mugging man threatens her with a gun and demands her purse, he changes her options to: 1. give the man the purse or 2. get shot and lose the purse. Should the woman carry a handgun, she may choose to defend herself, this being a just use of force, but if she fails to oppose her aggressor or does not have such a weapon available, she will cease to have the right that nature has granted. In any other instance that the man approaches her without threat of such physical invasion, perhaps he approaches her with money instead and offers to buy the purse, the woman will always retain her right to keep her property. This is because any voluntary offer proposed by one human being to another will leave the offered person with the option to act as though nothing happened, and have no change to their circumstance. Thus, aggression through the use of physical violence is the sole destroyer of human rights.

Most commonly, people lose their rights to governments, oftentimes without even recognizing what has happened. It is the nature of a government to act in a manner that destroys rights, because it cannot exist without the use of physical violence -- this being the only way it obtains revenue. Consider a tax, and what that is and what it means. When the U.S. government taxes people, does it collect their money through voluntary agreement? Is it asking for donations to support a cause, or offering something in return? Indeed not -- the government demands each citizen pay his taxes, and threatens locking up in cages those who refuse to do so. 

While it’s true that the government may provide services with tax revenue that may, in turn, bring benefit to the citizens who provided the funds, it remains as much a theft as the mugging man demanding the purse from the innocent woman. Even if he told her he would sell the purse and use the money to buy her a new coat, it remains a theft because he uses her property in a way that is contrary to her choosing. Even a government founded on democracy, with support from the majority of the people, will still destroy the rights of an oppressed minority if there is so much as one person who would prefer not to pay taxes in return for the benefits provided by the government, and typically it is many more than one person with such a preference. It is often said that in providing defense, the government protects rights and therefore is not destroying, but providing them. However, the distinction must be made between the rights of a people and the protection of those rights as, like many other things, nature does not provide protection to humankind. Furthermore, in order for the government to do so it must extract property from the citizenry by force, thereby violating the rights of taxpayers. While it’s also true that a citizen has the option to keep his things and leave the country, this violates the right of his person, his liberty in acting passively to remain where he moved to or was born without violating the rights of others. Because he has the right to both his person and his justly-acquired property, the government violates his rights by forcing him to choose between the two.

People are typically very fond of their rights, a truth that is self-evident and made manifest in pro-rights protests and movements across the world, and so governments will often remove the rights of a people by disguising their removal as the creation of a new kind of right -- the providing of one’s needs. Though “needs” are typically pretty hard to define, the basic understanding is that they are the resources and services that one requires in order to survive. The easiest way to see how rights and needs are fundamentally different, is while the former is provided by nature, the latter most certainly is not. Man does not live in a Garden of Eden, where food and immortality are provided by the goodness of natural law, he must act to receive his necessities, and by “the sweat of his brow” will he obtain the goods required to live. In other words, man can do nothing and retain his rights, but he must labor to attain his needs. When the government of China, for example, provides “material assistance” to the old, ill or disabled, under the guise of a right, what they are in fact doing is instating an obligation for other members of society to provide for these needs. As I said before, a government’s revenue can only be obtained through the threat of physical violence and the theft of other people, this because government by its nature does not produce wealth. The provision of this so-called “right,” therefore, is in actuality the removal of rights from taxpayers forced to provide for these material goods. Indeed, welfare or entitlement in any form, whether or not it is unjustly disguised as the provision of a right, is always destruction of the rights of innocent citizens. 

This practice is used by governments all over the Earth, by some more than others. In 1945, the United Nations established a list of “human rights” with revisions made as early as the 1990s in a document loaded with this sort of phony rights creation, including the “rights” to protection, public service, social security, “holidays with pay,” food, clothing, housing, medical care, education and “necessary social services.” As discussed previously, the implementation of these, as has been done by governments in many different countries, is the formation of entitlement, and the destruction of true rights.

The logical follow-up question then, is “so what?” What difference does it make if people keep or lose the rights nature granted them? Consequences of the abolition of rights are many in number -- the simplest being that people tend to use their rights in a way that is productive and beneficial to themselves and others. Of all the basic facts discernible plainly by the way people act, it is that human beings are self-interested creatures. As described more accurately by economist Milton Friedman, co-founder of rational choice theory: “an individual acts as if balancing costs against benefits to arrive at action that maximizes personal advantage” (Friedman 15). People have an innate desire to obtain resources above and beyond those required to survive, which, as required by natural law, can only be initially obtained through the creation of wealth, i.e. the transformation of things from their natural state into one that is more useful to man. An example of this would be when construction workers and architects take lumber and brick -- resources that are relatively useless, in and of themselves -- to create a house that a family can live in and find useful. This sort of creation happens constantly between people, and can only ever be siphoned from by government.

Furthermore, people are interested in taking property they create and trading it with others voluntarily in win-win exchanges, which benefit both themselves and those they trade with. It stands to reason then, that the honest creation and exchange of property through voluntary means betters the lives of people, and should not be discouraged or made impossible. 

Examples of these consequences to efficiency and production can be found in the current implementation of health care entitlement in the United States via the Affordable Care Act, better known as “Obamacare.” While it is true that a notable sum of previously-uninsured Americans is expected to benefit from access government healthcare (Cutler), provided the system remains functional, an analysis by Senators Tom Coburn and John Barrasso predicts a grim outcome. In particular, that “the overhaul will destroy a total of 120,000 to 700,000 jobs by 2019,” that it will “force industry leaders to curb the research and development of new medical tools,” and that it “creates a permanent disincentive against business growth” (Coburn). This occurs for a number of reasons. Firstly, as the government seizes the rightful property of taxpayers to provide for others’ healthcare, taxpayers become less willing to keep a job. After all, the workload of work remains the same, but now they’re keeping less of the money they make, thereby making government welfare options for the unemployed a more tempting substitute to holding a job. Secondly, the required increased taxation on business means that business owners are less willing, indeed less able, to initiate growth and development (Bowman). Just as there is a reduced incentive for people to stay employed, so is there a reduced incentive for people to hire, as the profit they make from their employees is significantly reduced. This leaves them with the options to either 1. pay their employees less, thereby tempting some to leave and cause the business to shrink, or 2. fire those employees who are no longer worth their revenue, thereby also reversing business growth. Should the business do neither, it will become unprofitable, and inevitably collapse to its competitors. Thirdly, mandating that employers provide healthcare services to their employees raises the cost of employing humans, causing workers whose jobs can also be accomplished by machinery to be laid off in favor of mechanical substitutes. This simultaneously raises both the rate of unemployment and the cost of doing business. From an economic perspective, the destruction of rights tends to follow the destruction of progress.

This same inefficiency is found in another form of rights violation seen today and throughout history, which is the prohibiting of sale for products deemed harmful by a given majority of people. For example, in the 1920s when the United States government upheld a prohibition of alcohol, illegal alcohol consumption became rampant, and drunkenness became more problematic than ever before. The desired effect of reducing alcohol supply was counterbalanced by a massive uprising of “speakeasies” -- illegal sellers of alcohol -- who reduced their costs by ignoring regulations and taxes. Likewise, the desired effect of reducing demand for alcohol was counterbalanced by a “forbidden fruit” effect, which increased the desire of some people to consume alcohol because it was forbidden (Miron). 

Instead, the uncertainty of the alcohol illegally sold resulted in an increase in accidental poisonings. The lack of social controls and regulations led to an increase in patterns of binge drinking, as described by psychoanalyst Norman Zimberg who wrote: “People did not take the trouble to go to a speakeasy, present the password, and pay high prices for very poor quality alcohol simply to have a beer. When people went to speakeasies, they went to get drunk” (Zimberg 470). Since alcohol was sold in secretive environments, police were never notified by bartenders or customers during aggressive disputes, thereby raising the level of violent crime. Disrespect for the law saw dramatic increase, as people are more able to justify crime when they are already criminals, and the police force was made thoroughly busy arresting former-innocents who maintained the popular habit of drinking. As reported by economist Jeffery Miron, 7,000 arrests were made between the years 1921 and 1923 on the grounds of consumption or sale of alcohol, no doubt increasing costs of the police force, and further burdening the taxpayers (Miron). 

The U.S. government’s current drug prohibitions have arguably shown many similar problems, including organized crime, mass arrest and imprisonment, drug abuse despite the law and a seemingly never-ending battle -- the “war on drugs” -- at an enormous expense. It is estimated that over 500,000 people are currently in prison for drug use, and that between $20 and $25 billion dollars per year have been spent over the last decade to fight drugs (Porter). This would likely explain a recent survey by economist Mark Thornton, which included hundreds of leading, modern economists and found that “most professional economists favored changes in public policy in the general direction of decriminalization [of drug use and sale]” (Thornton). 

Another consequence of violating rights is that, by virtually all modern ethical standards, it’s an immoral thing to do, despite the failure of many to acknowledge when their rights are revoked. In 300 B.C. philosopher Epicurus described how "natural justice is a symbol or expression of usefullness, to prevent one person from harming or being harmed by another,” and in 20 A.D. the golden rule of Christ was composed, to “do unto others as you would have them do unto you.” Since the time of these statements people have, for the most part, accepted a non-aggression moral code. Generally speaking, people believe in the immorality of theft and assault, as is taught by every major religion and the majority of philosophers since ancient Greece. The problem is that many do not realize the immorality when rights are violated, mostly because they aren’t aware of when it occurs. No one has an issue with receiving benefits from government sources, and most have no problem with letting others receive them, but where the benefits come from is typically of little concern.

Particularly in the case of welfare, where material goods are given to the needy and the poor, support is often lent on ethical grounds, with the modest belief that helping those in need is a morally right action. As explained by political scientist Gregory Shaw, people support welfare policies through “the long-standing sense of obligation to help the poor among us—whether driven by guilt, the practical need to raise up the next generation of citizens, religious conviction, a strategy to placate the poor, or simply a near-universal sense of humanitarianism” (Shaw). Social theorist Michael B. Petersen has noted that people will support welfare policies based on “perceptions of the welfare recipients’ deservingness,” with support lent when the recipients are perceived as “unlucky” (Petersen). Unfortunately, what most don’t consider is how the material goods are obtained in the first place, which is, as I’ve explained previously, by the use of force. In essence, while people believe they are charitably helping the poor by supporting government welfare, in reality they are not. Such charity could be accomplished through personal, voluntary donation, or by the founding of a charitable organization, but welfare programs are the product of innocent people being forced to give away their property. Demanding that others lend help is not the same as lending help, nor is it truly humanitarian in any sense of the word.

So what does all of this mean, and what can be done about it? Currently the United States, viewed by many as one of the scarce few relatively-free countries left on Earth, is at a crucial tipping point in its history. Prominent public figures are often swaying public opinion to destroy the rights of some people in providing needs for others, disregarding the costs that entail and the problems that result. As a fellow citizen of the United States I urge that people everywhere stand up for true rights, and that they strive where they can to see through deception in the world of politics. I urge that they reject the notion that material goods, even when they are needed, be provided to others through entitlement, and instead that they look for ways to serve charitably, advocating for voluntary means of providing for the underprivileged. It is crucial that the United States citizenry vote for policies and representatives with these concepts in mind, that our country may keep the liberty it was established to maintain.

Works Cited

1. Coburn, Tom, and John Barrasso. "Health Care Reform Will Destroy Jobs." Health Care Legislation. Ed. David M. Haugen and Susan Musser. Detroit: Greenhaven Press, 2012. At Issue. Rpt. from "Grim Diagnosis: A Check-Up on the Federal Health Law." Oct. 2010. Gale Opposing Viewpoints In Context. Web. 8 Nov. 2012.

2. Cutler, David, and Neeraj Sood. "Health Care Reform Will Create New Jobs." Health Care Legislation. Ed. David M. Haugen and Susan Musser. Detroit: Greenhaven Press, 2012. At Issue. Rpt. from "New Jobs Through Better Health Care: Health Care Reform Could Boost Employment by 250,000-400,000 a Year this Decade." Center for American Progress, 2010. Gale Opposing Viewpoints In Context. Web. 8 Nov. 2012.

3. Petersen, Michael B. "Deservingness versus Values in Public Opinion on Welfare: The Automaticity of the Deservingness Heuristic | Michael Bang Petersen – Academia.edu." Deservingness versus Values in Public Opinion on Welfare: The Automaticity of the Deservingness Heuristic | Michael Bang Petersen - Academia.edu. Department of Political Science, Aarhus University, Denmark, Jan. 2011. Web. 8 Nov. 2012.

4. Shaw, Greg M. "Changes in Public Opinion and the American Welfare State (Report)."Business Information, News, and Reports. Illinois Wesleyan University, 2009. Web. 8 Nov. 2012.

5. Thornton, Mark. "AMERICAN Economic Association." Ebscohost. AMERICAN Economic Association, 2007. Web. 8 Nov. 2012.

6. Bowman, Scott A. "Should I Stay or Should I Go? Tax Considerations in U.S. Expatriation." Ebscohost. American Bar Association, Oct. 2012. Web. Nov. 12.

7. Friedman, Milton. Essays in Positive Economics. Chicago, IL: University of Chicago, 1953. Print.

8. Miron, Jeffery A. "Alcohol Prohibition." Economic History Services. Economic History Association, 1 Feb. 2010. Web. 27 Nov. 2012.

9. Zimberg, Norman E., Nancy K. Mello, and Jack H. Mendelson. The Diagnosis and Treatment of Alcoholism. New York: McGraw-Hill, 1979. Print.

10. Porter, Eduardo. “Numbers Tell Failure in Drug War.” New York Times 4 Jul. 2012: B1. New York Times. Web. 27 Nov. 2012.

The Privatization Presentation-- An Underwhelming Response.

A mockery of the proposition to privatize.

"I think I realized why Jacob's trying to change the system."

"Why?"

"I think he's just trying to make a system where he doesn't have to do anything at all."


Numerous questions followed my blog post last week-- "Privatizing the Dorm: A Practical Application of Economic Theory" (If you haven't read it- I recommend you read that first before you proceed). At the request of many inquisitive dormmates and friends, I collected a presentation to illustrate what a fully private dorm might look like, and why it would be more efficient than a dorm with collective ownership of scarce resources.

I was thoroughly mocked.

Conversations like the one above were made commonplace, along with post-it notes labeling supposed ownership of various items throughout the dorm-- sometimes with a ridiculous price tag for its usage.

This Dormmate has claimed ownership of my bed.

Absurd price tags were often attached to the various notes, reflecting the frequent complaint that we'd have to pay for things we've already bought.

My own coupon pack-- plastered with a dormmate's label.

There were several major recurring complaints, and I did answer them- each and every one. Since some of you may have had similar considerations, I'll pose them in a Question (the complaint)/Answer (my response) format.

The PRIVATE DORM FAQ

Q: Aren't we just paying for things we already bought?

A: Certainly not-- the system merely makes better use of them. To think of it on the basis of 'what you lose' and 'what you gain', consider that where before each dormmate essentially owned "1/6th" of each source of capital, be it the stove or the sink or the dishwasher, they will now own 100% of 1/6th of the sources of capital. While you might have to pay to use property owned by a dormmate, he'll end up paying you to use yours, so it's ultimately a zero-sum game (or pretty close) that simply encourages the efficient use of resources.

Q: Wouldn't this mean that every time one wants to use the sink, toilet, oven, couch, etc, they would have to find the owner to pay them? (Assuming they, themselves, don't own it of course) Doesn't that take too much time and cause too much hassle?

A: No, the owner would not have to be located each time you wanted to use what he owns. Instead, owners of capital- be they owners of the sink, the toilet, the oven or whatever, could simply leave a sign above what they own, describing the fee for using it. For example, if I own the sink, I would leave a paper on the wall behind it reading "wash three dishes, leave a dime", then I'd have a pouch beside the paper where customers could leave their payment. This way neither one of us would have to meet each other face-to-face each and every time the other wanted use of my property. Should I worry that the pouch be stolen in such an open location, I could always ask the customer to leave the dime on my desk down the hall.

Background for the next Question: In my presentation I described one of the benefits of privatizing the two showers, which is more accurately allocating their usage to those who obtain the most benefit from them. I posed the example where two dormmates wake up at the same time and make for the showers, but only one is open. Both want to use it, but one of them will have to wait. In the current system, the showers-- being community property-- are allocated in a "first come, first served" manner, and so the two dormmates would race to enter the shower and remove their clothing. The first one in gets the shower first, even if he has his next class in 2 hours, and the other, who must wait, has his own class in just 30 minutes.
Were the showers owned privately, imagine the owner standing at the doorway-- he being the one who allows either of them to enter. Rather than let them race, the owner-- being self-interested-- will use the opportunity to make the most money he can, and so will ask each of the customers how much they are willing to pay him for the shower. The customers will bid against each other, and the one who offers the most will go first. This is a more accurate representation of who has the greatest benefit from the shower's use, because all else equal- the man with 2 hours to wait would not be willing to pay as much as he with only 30 minutes of time.

Q: Your bidding scenario includes the shower's owner standing at the doorway, but it was said earlier that the owners and the customers would not have to meet face-to-face in order to make transactions. Assuming the owner could not be there when two men race for the shower, wouldn't your supposed benefit be lost, since a sign with a price tag has no ability to pose an auction?

A: Not so, because while a sign cannot pose an auction, it can list a price that corresponds to the demand of the consumers-- the market price. If the shower's owner overhears that men are racing to his shower every morning because everyone, even those who can wait 2 hours, is willing to pay the low fee, he will raise the price in order to increase his profits. In the case of a shower, since the demand is higher in the morning than the afternoon and evening, the profit-maximizing price would be structured around the time of day. The sign might read "6-9 am: x cents, 9:01am-12pm: y cents, 12:01pm-5:59am: z cents, where x>y>z. When one dormmate is rushing to his 8:30 class, he won't have to worry about dormmates with class two hours later, since said other dormmates can and will wait until the price is lower.

Q: How would these rules be enforced? Who's to say that people won't make use of other's property as they please without paying the ascribed fee?

A: Enforcement is an issue present in both the current system and the one I propose-- since no dormmate represents the United States government, we don't have enforcers with guns and prisons to ensure that everyone is playing by the rules. There are ways around this however, some of which have already been implemented. Rule-breakers can be shamed by the community, or be made to feel guilty, which, while more effective on some than on others, does impose a cost. If that cost is greater than the modest fee, it stands to reason that people will not break the rules. Additional costs to breaking rules can be imposed if rule-breakers are isolated. Individuals within the dorm can withhold trade, assistance and friendship to those who use their property without payment, and it would make sense for them to do so. In combination these costs can be very large, and while perhaps an imperfect means of enforcing rules, it is as best we can do in *any* system, and should work fine for this one.

Q: What is to stop the man with the sink from overpricing the use of his property? After all, there is only one kitchen sink, so doesn't he have a monopoly? Wouldn't the same would be true of the man with the dishwasher and the man with the toilet?

A: In each of these cases, the answer is no-- there isn't a monopoly. While there's only one kitchen sink, there is also a bathroom sink, which *could* be used for dishwashing. While there's only one dishwasher, there is dishwashing soap and a scrub brush, which could be used in its stead. While there is only one toilet in any given room, the building contains a toilet on the basement level that can be accessed at all times of day. Each of these options is sub-par, and should the system ever come to people using the bathroom sink to wash dishes it can be assumed that inefficiency abounds, but their existence means that they would never have to be used for such reasons. For example, the man with the kitchen sink knows that if he *were* to charge ridiculous prices, his customers would move to the bathroom and he would lose profits-- therefore he won't charge ridiculous prices, and his customers won't move to the bathroom.

Q: Suppose the man with the kitchen sink and the man with the bathroom sink collaborated with one another to fix prices. Since they are each other's only competition, couldn't they severely overprice their services together? Alternatively, and along the same lines, suppose that one man were to buy the sinks in both the bathroom *and* the kitchen. Would he not have a monopoly with ownership of both competing sources of capital?

A: The scenario described in the first part of the question, and others like it, are known as "trusts", which are highly unstable and unlikely to last. To see why, let's say Gary owns the kitchen sink and Jimmy owns the one in the bathroom-- they've formed a trust by agreeing to fix their prices abnormally high. When Gary leaves for class in the morning one day, Jimmy realizes-- just before he leaves-- that by quickly modifying his price sheet and charging a much lower fee, he could undercut Gary's business and steal all the customers for the entire day. When Gary returns to the dorm room later that night, his money pouch is empty and there's a party in the bathroom. Gary then cuts his prices to match the norm, and the trust is broken. Since Gary and Jimmy both know that at any time the other might break the trust, it's in their respective best interests to do it first, and so the trust will be broken relatively quickly, if not the following day. Furthermore, Jimmy might decide to change his price sheet and lower prices while Gary is gone, and then quickly change them back before Gary arrives home in order to maintain the "trust" while stealing customers. As soon as word gets out and Gary overhears Jimmy's trickery (he's likely already suspicious due to a newfound loss in revenue), he'll break off the trust and things will go back to normal.

This follows a commonly-known aspect of game theory called "The Prisoner's Dilemma", where even though two people, in this case the two members of the trust, are *both better off* if they made one decision (simultaneously accepting and keeping the trust), they will both fail to make that decision out of fear that they will be 'backstabbed', and obtain the worst of all outcomes.

The second part of the question is easier said than done, as is well known by players of the board game "Monopoly." If you own Park Place (the bathroom sink) and another player owns Boardwalk (the sink in the kitchen), when that other player asks you for Park Place, do you charge him the listed price you bought it for of $350? The answer is-- only if you like losing the game of Monopoly. And while it's true that in the board game people *do* obtain Monopolies at some point, it tends only to happen in a "wild west" format, where people claim properties by getting lucky and simply "landing" on them-- a concept that's impossible in a dorm room scenario. When each source of capital is auctioned off from the get-go, dorm mates are sure to be unwilling to let anyone obtain a monopoly in any given market, and that's the way things are likely to stay. Should one person somehow acquire a massive sum of money from some outside source (like landing on "Go"), and use it to buy out his market, I think he'll quickly find that he wants to sell it back-- for a couple reasons:
1. There will always be other forms of substitution
Even if someone owns the kitchen sink *and* the bathroom sink, the building is littered with dorm rooms, and customers can always go next door to wash their dishes in the sink of a neighbor, offering a little monetary compensation or a friendly favor. This means that even though the dorm's supposed "monopolist" can charge a little extra to prevent such a journey, he couldn't raise prices through the roof by threatening entirely your ability to wash a dish.
2. Management costs would be high
Management costs would rise for two reasons.
First of all, in order to maximize the benefit from a source of capital, a fair bit of work is involved. Demand for various goods may fluctuate with the time of day, the type of weather, the occasion, the proximity of a holiday or whatever else, and making sure you price things right takes some level of time or resources-- which would increase as you manage a larger share of the market.
To explain the second reason, first know that owners of capital can often increase their revenue through innovation. For example, the owner of the bathroom sink may come up with the bright idea to install a grate in the sink's pipeline-- not too much trouble to access from underneath-- thereby granting customers the ease of simply tossing their fee down the drain. This innovation makes customers more likely to pay when they use the bathroom sink, and the man with the kitchen sink may "free-ride" off this idea since, while he didn't think of it on his own, it still applies to his business. In this way, management costs are raised for industrialists in a market when the number of people who are busily thinking of ways to make revenue in said market are cut down.

Since the cost of obtaining this monopoly in the first place was so incredibly high, and likewise the price one is willing to pay to break the monopoly is great, the sink-monopolist would find his monopoly unprofitable, and choose to sell one of the sinks back to another dormmate. This ends the monopoly and reverts prices to their normal state.

Q: If a fully private dorm is such a great idea, why doesn't it exist?

A: People like tradition. Much as they might cry for a change in their life's quality, they are less likely want change in the specifics of a system they've lived in since they were born. To find the origin of the typical "household economy" we were all raised in-- where between the children and their parents people use resources as a community-- is not a difficult matter. Until people reach an age where they are rational, a private economy is dysfunctional. When children are so young that by pouring a liquid from one glass to another you convince them there's an increase in liquid (see below), 'extortion' becomes the name of the game, and the children end up losing everything.

However, by the time children reach the age of about 8 or 9 they gain the ability to discern what actions are in their best interest, and become rational creatures. Once this is the case a private economy works smoothly, and is the more efficient way to organize than a household economy.

Another reason is that children tend not to work in the home, thereby becoming charity cases that depend fully on the wealth of their parents. It creates a different sort of relationship between parent and child that is unfavorable to a private economy, because the concept of ownership is flawed when everything is *really* owned by the parents, who can confiscate the material possessions of their children at any time.

Neither of these issues exist in a college dorm room as its members are both rational and on equal footing. Sadly, with the idea of the 'household economy' still lingering in their mind, they are slow to change.


Alas, when all was said and done and the meeting had adjourned, my level of support was left in shambles. Only after the mockery had begun and the people at large had reaffirmed their belief in community ownership did a precious few confront me with serious interest-- agreeing with what I had to say, or at least willing to give it a try.

One can only hope that the numbers will grow.

Why Free Stuff is Bad

People have strange mentalities. Some are harmless, some are good, and some are severely detrimental to efficiency within an economy. They vary from culture to culture, but there's a popular one in the United States that I'll analyze in this post, and that's the 'first-come, first-served' system.

There's a distinct difference between ordering a product from amazon and buying it from a crowded retail store-- one has shipping costs, the other has a line. Why is that?

Imagine an amazon where rather than pay for shipping, products would wait in a queue. A quick supply and demand graph gives us some insight. Figure 1 is an estimate for the Kindle Fire:

Fig. 1

The important point is the red triangular area displayed. This area represents the number of kindle fires the public will demand, and is based off the price at which they are sold.

A Demand curve is essentially a representation of the population and how much they value-- in this case-- the kindle fire. At a price of $168, consumers who value the product at equal to or more than $168 will purchase it, while those who value it at less than $168 will not. Notice how that area changes in Figure 2, where shipping costs are removed, thereby reducing the overall price.

Fig. 2

Where 6.5 million Kindle fires were demanded before, now 8 million are demanded at the price of $144. The problem is that Amazon is less willing to sell Kindle Fires if they're making less money, and will now only supply 5 million to the market.

This leaves an imbalance in supply and demand, and results in a shortage-- 3 million people who want the product will not be able to get it. To solve this crisis, people will inevitably default to 'first come, first served'-- buy a Kindle Fire as soon as possible, because once they run out, you can't get one. No matter how much the market demands, it can only purchase as much as is supplied, so where 6.5 million Kindle Fires were bought and sold in the first scenario, only 5 million are bought and sold in the second.

In the case where shipping is *free*- nice as that sounds- it causes inefficiency in the marketplace.

Let's take an example closer to home. Well, my home anyway.

A scholarly statue at the entrance of the BYU library.

The BYU library-- one of the largest in the collegiate world.

In this library, as is typical with most, the ground level features a vast array of computers at which students may sit and use any time of the day.

Free of charge.

The result? See for yourself.

On the right, a man with urgent business scours the room for an available computer-- nowhere to be found.

On ground level, all computers are in use at all times. More computers litter the basement floor, and the scene is no different. What's more, numerous students are constantly patrolling in the background, waiting patiently for a computer that takes an average of 7 minutes to become available!

With no price attached to computer usage, students have defaulted to a first come, first served system- and the demand is staggering. Those that want to use one of the 60 operating machines will lurk like predators, carefully defining their territory to prevent competitors from beating them to a spot that opens up. Each time a student decides finally to let go of his computer, three desperate people in the vicinity rush briskly to the chair, sitting as quickly as possible to prevent interference. Like savages they rely on brute strength, physical speed and territorial cunning to determine the victor in a race to free stuff.

At a first glance, this might not seem like such a bad thing. After all, we are using all the computers, right? Doesn't that mean we're being efficient?

The answer is a resounding no, for a few simple reasons.

1. Computers are often not allocated to the right people.

Some spend their time...

Fact is, some people are going to benefit more from the use of a computer than others. If Jimmy wanders in and sits down at the last available computer to browse Facebook, George is out of luck with his last-minute physics assignment when he runs into the room with but a prayer. It's obvious that with one computer remaining, it would be best served going to George, but because Jimmy strolled in a minute earlier, it goes to him instead.

...better than others.

George may then wait patiently, only to have Freddy enter the room-- another Facebook-browser. Freddy is the BYU track team superstar, specialized in the 100 meter dash. With his free time he practices the martial arts, and has the highest known rank in Brazilian Jiujitsu. George and Freddy stand nearby until Jimmy finally gets up to leave-- and Freddy's incredible speed along with a well-placed stiff arm secures his position at the instantly-retaken computer. Once again, a higher net benefit would be obtained if the seat was secured by George, but rather than allocate based on this sort of importance, the computer is allocated based on the irrelevant factor of foot-speed.

Many students, myself included, own a laptop but prefer the use of a desktop computer. I'll use my macbook and be perfectly content, but the added utility of a mouse and a nice big screen is to my liking. When it comes to the library, a comfortable padded chair is also somewhat preferred to the wooden benches that line the walls-- so even when my portable computer is readily available, I'll often take a seat at a desktop if I get lucky with timing and walk in on one unused.

An excellent blog-- that I could easily browse on my laptop.

While it's true that I'm somewhat bettered in this, it's not much difference to me-- I would happily use my macbook and take it elsewhere. If the aforementioned George rushes into the room however, it could mean the difference of half a letter grade. Yet another example of how this scarce resource is easily allocated to the wrong person.

2. People spend a longer-than-optimal amount of time at their computer.

After all, if it's free for as long as I use it, why would I get up? Oftentimes, a person may sit down to finish a dire assignment, but may find that with time to spare they might as well surf the web- check their Facebook and email. Rather than use the computers efficiently, people will linger on until their marginal benefit from the next minute of computer use is less than the virtually zero marginal cost, and for people without too much else to do, that can be a long time. Looking over shoulders indicates that much, if not most, of the time people spend on the computers is doing trivial activities out of having nothing better to do, even as people with a desperate need stand by on the sidelines.

Like I said before-- with 60 machines in the room, the average wait time during the busier hours is an astounding 7 minutes. With multiple people waiting on the computers, if you're not fast, it could easily mean 15 minutes of anxiously standing around.

3. Seat-savers.

With no cost attached to holding onto your seat, it turns out that not all the computers even *are* being used. If someone has to make a bathroom run in the middle of writing their essay, simply leaving the computer logged in with a nearby backpack signals a "saved seat" that no one is allowed to touch.

For obvious reasons, this is a disastrous waste of the computer. Furthermore, whoever leaves with a seat-saver has no incentive to carry out their business quickly and rush back so as to efficiently spend time. The computer will be waiting for them all the same.

The Solution

Pricing.

In this instance, pricing could be applied in two ways. The simplest is to attach a price/hour to use of the computers, and use the revenue gained to reducing students' tuition. This means students as a whole are paying no more for their college experience than they used to, with costs being associated to those who take most advantage of the scarce resources BYU has to offer. It would encourage students to spend their time wisely, and wrap up their assignments quickly. Facebook users would be reduced to only those who were in *daring* need of checking their Facebook (in which case, all power to them), and seat-savers would either forget the practice or make their seat saving as short as possible.

The other option, perhaps more interesting, is to have the students do the exchanging with each other. Each computer could have a tall rod above the screen that holds an index card. After sitting down at a computer, a student would simply write down a dollar value, on a card, that he or she would be willing to accept in exchange for use of the computer. Students that walk in could then scan the room for a low-enough price that they are willing to pay, and give that money to the computer's user in order to trade places. Waiting around would be futile, and no one would bother doing it, since the only time a computer would open up is when someone else is taking it for money-- this because there is value in use of the computer. As with the pricing system described above, this solves the problem of allocating computers to the wrong people, because if you value the computer less than I do, I'll pay you to get off. Dispassionate Facebook users will throw up very low prices that homework-doers will readily accept, thereby ensuring that those who value the computers most will have use of them as needed. Only in the instance that everyone else in the room at their respective computers values their usage more than you do, will you walk in deciding not to pay for the use of a computer-- and rightly so.

The main advantage I see to the second system is removing the BYU administration from the picture, which would likely reduce transaction costs. On the other hand, since everyone will be forced off their computers when the library closes, the beginning of each day would remain a first come, first serve dash to grab a seat-- only reverting to a more sensible pricing once the system gets going.

Either way, these systems are both far more efficient than that which is currently in place.

Privatizing the Dorm: A Practical Application of Economic Theory

It took 14 days for the six of us to realize that pigsties were for pigs, and that dorms probably shouldn't look like them. Space on the kitchen table was virtually always being used, which made for a miserable eating experience-- cluttered by the occasional newspaper or Cheez-it box that the owner didn't bother to pick up. When dirty dishes were so abundant that they inconvenienced use of the adjacent stove, I felt a piece of my humanity slip away and die, rotting amidst the garbage bags stacked 3-high by the counter top. What an atrocity of which my roommates and I were thoroughly guilty: the senseless waste of first-world human life in a state of utter squalor.

This was a time for action; a time for leadership.

And so we made this:

The 'Weekly Stuff' Chart- regularly featuring threats, as seen in the upper left-hand corner.

'Weekly Stuff' chart. A project spearheaded mostly by myself.

The concept is fairly simple: each week, each person will be assigned one of 6 tasks. They perform their task for the whole week, and if they don't, we shame them.

"Kitchen" meant doing the dishes and straightening everything else in the room to keep it clean.

A few of these are self-explanatory.

Eggs- 'community food' in dorm 232.

And the others-- "Bread/Eggs" and "Milk" were thrown in there with the reasoning that there would be some foods that each one of us would like to get every single week. We determined that milk, bread and eggs would be consumed by all of us on a weekly basis, so rather than have us each making our own separate runs to the store just down the road, we could have one person do it for all of us. The task of these people is simply to buy as much of the food that corresponds to their job as the community is willing to eat. This food is then labeled "community food", and can be eaten by any one of the 6 of us to our heart's content. All other foods would remain labeled with the owner's name-- not to be touched by anyone else.

Most types of food remain individually owned and labeled.

The Weekly Stuff Chart yielded some interesting results. Most notably, the amount of milk, eggs and bread consumed skyrocketed. When I served as our first milk man, the dorm got by on 3-1/2 gallons of milk just fine, but by the time Peter had gone for milk a few weeks later, we were barely getting by on 5 gallons. Our first egg-buyer brought 36 eggs to the dorm to last his shift, but it wasn't long before we had managed to consume 108 eggs in a single week. Bread was disappearing by the loaf, and the job of community food purchaser became a burden indeed.

Why did this happen?

Microeconomic theory holds that people will weigh the costs and benefits of their actions when determining what to do. It holds that people are economically rational, meaning that they will arrive at conclusions that maximize their personal advantage.

Suppose I decide to eat eggs. To determine how many eggs I will eat, I measure the marginal benefit and marginal cost of eating eggs. The marginal benefit is the benefit I gain for each additional egg I eat, and the marginal cost is the price I pay for each egg eaten.

The law of diminishing returns states that as I continue to eat eggs, they will gradually give me less benefit. After all, food tastes better when you're hungry, so it stands to reason that it will be less tasty to me as I start to fill up. Furthermore, as I eat eggs I will eventually get sick of them and desire variety, so in that sense they will also become less pleasurable.

Whatever the cost of eating eggs- it isn't going to change, per egg, as you eat more eggs.

This is represented by Figure 1-- a static marginal cost line, and a downward-sloping marginal benefit.

Fig. 1

The thing about eggs is that if I eat one, it's gone. Same goes for milk, if I drink a glass, or bread, if I eat a slice. Thus, if I'm the one buying, the marginal cost of these items is the knowledge that if I want it again, I'm paying for it myself. The more I have to pay, the higher the total cost.

It shouldn't be hard to see then how the concept of community food changes the graph-- marginal cost goes down. After all, if I eat an egg with the knowledge that somebody *else* is replacing it, it's no longer such a big deal. The cost of eating an egg is now essentially zero, a change represented by figure 2.

Fig. 2

As you can see, the quantity consumed has increased drastically, and for a relatively simple reason: if it costs me less to get the same thing, I'm going to get more of it. Note that in each case, the quantity of eggs (or milk or bread) is represented by the point at which the marginal benefit is equal to the marginal cost. This is because, rationally speaking, I'm going to keep eating eggs as long as the benefit outweighs the cost. Since the cost of eating eggs is close to zero in the case that they are community food, it stands to reason that I will continue to eat them until they cease to provide me any benefit at all (e.g. I'm totally sick of them).

Though unseen, this graph displays results that were fully realized by the members of our dorm as time went on. It then begs the question- is there a problem here? After all, what's wrong with eating more eggs and more bread if they're all being eaten?

The answer is yes, there is a problem. Because we're buying and consuming a lot of food that people don't actually want.

Even though the marginal cost *to me* is zero for eating another community egg, *somebody* had to go out and buy that egg, and the cost is imposed on them. When it's the egg man's turn to go out and buy 100 eggs for 8 dollars, only to have many of them be eaten by dorm members who barely want them at all, who end up valuing the lot at 5 dollars, he (the egg man) has performed an action that is of net loss to the dorm. It is rational for him to buy the eggs, because the rest of us have made sure to impose shame at a cost much greater than 8 dollars if he doesn't, but the end result is an irrational waste of resources.

This is a concept that no one else in the dorm fully understands, but the idea that massive community food expenditures like the ones we've been having probably aren't efficient is an idea that's resonating.

Much to the dorm's displeasure, other aspects of the Weekly Stuff chart fared badly as well.

The typical state of our sink, on a good day.

Also a good day.

Kitchen man rarely did the dishes, and the tables were exactly as messy as before. This is due to a couple problems:

1. The person who uses a dish or leaves out a mess is not the same person who has to clean it, meaning that dorm members have very little incentive to be resourceful about the messes they make.

2. There's only so much we can do as a group to inflict shame. We're not the government, so locking people up in jail or shooting them with a gun is off the table. This means on any given day that kitchen man is a little busy, if spending the time it takes for him to clean the amazing amount of mess six people can create in a kitchen costs more than the shame we can inflict, the messes will not be cleaned.

"Passable."

The refrigerator-- though technically the duty of kitchen man to straighten, was often disorganized and at oftentimes a complete mess. This brings to light another issue with community rules, which is that they are often hard to define. A "clean" refrigerator means one thing to someone who came from a house of perfectionists, and something entirely different to he who came from a house of chaos (you know who you are).

It is the nature of community jobs to be done to a bare minimum. Whatever one can get away with to avoid the consequence of shame.

"Highly questionable."

When it was suggested that perhaps Kitchen man simply had too much to do, we tried to divert work away from him and encourage a little personal responsibility through the creation of the "community standards" page (shown below). 

It details the process by which people are supposed to aid in dish washing and pick up to a certain degree. Kitchen man is still to do most of the work, but everyone should do their part with regard to their own things.

Once again, no significant improvements. It's nearly impossible to identify who ate with what dish when it's found in the sink, and so there's no way to accurately focus shame. When people ate from snack boxes and finished them off, the empty box wasn't really "theirs" anymore, because they didn't care for it, and so on the table or by the couch it would remain.

Our system is crumbling.

The Solution

Privatize, privatize, privatize.

I venture that all of our problems stem from "community." The irony stings in knowing that I made the Weekly Stuff chart and now in my lonesome advocate its abolishment, but there are many other changes that need to be made for optimum efficiency in dorm 232.

Let's start with community food, and why we don't need it.

If you'll recall, the initial reasoning behind the institution of community food was:

"We determined that milk, bread and eggs would be consumed by all of us on a weekly basis, so rather than have us each making our own separate runs to the store just down the road, we could have one person do it for all of us."

This turned out to be irrelevant for 2 reasons. Firstly, the store contains a great many products that each one of us uses on a regular basis. Everything from toothpaste to paper is a must-have, and as it turns out, each one of us makes a run about once a week anyway.

Secondly, there is a perfectly good community-less solution that has already manifested itself on multiple occasions: compensation. For one reason or another somebody needs to pick something up but they're too busy to do it, and a quick exchange between them and another guy lying around who does have time ensures a speedy delivery. "Go pick this up for me and I'll pay for your laundry" is perfectly applicable to eggs, or bread, or milk should a dire situation ever arise.

When I most recently suggested we abolish community food, a new concern arose: fridge space.

Milk gallons, the dorm mate reasoned, were both spacey and popular to buy. If each one of us bought a milk gallon every week, we could never hope to fit them all in the space we had. After all, nobody wants to buy half-gallons, since the milk to dollar ratio is significantly worse.

A legitimate complaint, to which I devised a new solution.

Rather than label milk gallons individually, we could *co-own* them. Consider a milk gallon labeled like so:

Of the remaining 2,822 grams of milk left in this gallon, the labeling indicates that I own 822 grams of it, and some Jared owns 2,000. When we purchased this gallon, I must not have needed as much milk. I would have payed him an amount of money relative to the percentage of milk I owned after the purchasing, and whichever one of us picked up the milk from the store would have received a premium from the other.

The following process is then used when I choose to drink from our gallon of milk:

1. Use as much as I want.


2. Weigh the milk gallon when I'm done using it, and make note of how many grams of milk are left.

3. Make a brief calculation to determine how much milk I drank.

4. Adjust the label to reflect how much of the milk in the gallon I now own.

This solves the problem of over-consumption in milk, since the marginal cost for me to drink milk is equal to the marginal cost of buying the milk (I'm the buyer), and also ensures that limited fridge space is conserved for everyone to leave milk there. In fact, since milk consumption would be reduced to reasonable levels, fridge space taken up by milk would be reduced.

The reasoning used here should apply equally to eggs, which can be marked individually. Bread doesn't suffer at all from this problem, for obvious reasons.

When I proposed my solution again, bread was officially removed from the Weekly Stuff chart community food list. Eggs and milk is a work in progress, with complaints on the other side regarding the inefficiency associated with having to mark up eggs and milk so intensely before and after use. It remains obvious that leaving these foods to the community poses a far greater harm, but if any readers can think of a more efficient labeling solution, I'd love to hear it. I'm considering a couple other ideas myself.

Allocating Space and Capital

In dorm 232, as is typical with dorms everywhere, all space, other than the rooms, is treated as "community space." Strangely enough, it isn't even thought of in this manner-- it's just assumed as the way things are. I attribute this to the way people are raised in American households throughout their pre-college education, but there could be other, deeper factors at play. All the same, many problems are solved when this space is owned by individual members of the dorm.

It's worth noting, firstly, that some spaces *aren't* worth distributing to individuals. The hallways, for example, are so infrequently used that they aren't really "scarce." Exactly as often as people desire to use the hallway can they use it, and between the six of us there is never a "traffic jam." Just as there is no price on air, and nobody owns it, there need be no price on hallway use, or ownership thereof.

In dorm 232, as is likely typical of other dorms, there are a dozen significant sources of capital owned by the community.

1. Couch

2. Kitchen table

3. Refrigerator

4. Stove

5. Oven

6. Microwave

7. Kitchen Sink

8. Dishwasher

9. Shower

10. Bathtub

11. Toilet

12. Bathroom Sink

All of these should be owned individually.

Note that they can be divided up in many cases-- no one person has to own the entire kitchen table, and I anticipate that no one person would. If each of us has a strong desire for some table space, and none of us has a great desire for more than a small amount, the table would be divided six ways.

Since we can assume that, in a state of community ownership, each one of us owns each item of capital to an equal degree, simply bid off each item-- the highest bidder gains ownership and pays the rest of the community an equal portion of the determined price.

For example, I could call a price of $10 for the couch. If you value it more highly then 10, you bet $11. When someone finally ends with the highest bet of $25, he pays each of us 5-- his dorm mates-- $5 dollars, and then obtains ownership of the couch.

Some items, like the table, can be divided six ways right from the start (assuming 6 random portions of table are essentially equal in value), and then if one desires more table space he can buy it off someone who desires the table space less, if such a person exists.

Keep in mind that if I own the couch, I have an incentive to allow other people to use it, for a fee, during the times I'm not using it. So resources are unlikely to go to waste.

The kitchen sink would never be loaded with dishes, because you can't leave your stuff on someone else's property. To use the sink and dishwasher you would pay a minor fee, and then return it to cabinet space that you own.

Refrigerator space would be used wisely because you wouldn't have much of it, and, if you could fit the stuff you have in less space, you could sell of the unused space to someone who wants more and make money.

This is the way in which problems are solved.