It Is Dangerous to Be Right When the Government Is Wrong - Andrew P. Napolitano [26]
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There are many other regulations that violate property rights as well; in fact almost all regulations violate property rights in some way or another. Tariffs, excise taxes, duties, and sales taxes violate the property rights of the sellers of the goods because the price for their goods is raised, making them less competitive and less profitable; as well, the buyers of these goods are forced into paying higher prices for goods, thus parting with more money than would have been the case had these regulations not been in place.
Bundle of Sticks
Not only does property ownership come with a bundle of rights, but each of these rights can be sold or transferred. The owner of a house can transfer his rights of use, possession, and exclusion to a tenant for a defined amount of time, in a lease. An owner can also grant specific uses to another individual via a licensing agreement. Thus, a private agreement, by consent, can restrict use of property. But any governmental regulation that restricts use, possession, or exclusion is an invasion of the property owner’s rights, as it makes the property less valuable. Once again the cost of the regulation that is intended for some public good is thrust upon the property owner. These costs do not require just compensation because courts have adopted a 100 percent standard. This standard states that owners are only entitled to compensation where regulations restrict complete usage of their property, or where their property is rendered completely useless.
The Story of General Widgets
If you own a widget-producing factory and the government decides one day that it is going to charge you a widget licensing fee of one hundred thousand dollars per year for the privilege of being allowed to use your land how you wanted to, this not only decreases the value of your factory, since there is a hefty cost imposed on anyone who wishes to use it, but it also is a taking of one hundred thousand dollars of your property every year.
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Then, let’s say the next year the government decides to pass legislation which requires that all widget producers hire union workers; we will call them the United Widget Workers union or the UWW. Now, to produce widgets you must give workers higher wages, bigger benefit packages, longer vacation times, shorter working hours, and better pensions for retirement. This legislation also forces you to associate with a specific union, giving the union great bargaining power in any collective bargaining agreements in the future, so much bargaining power that you are forced to guarantee that you will never use improved machinery or robots that could produce widgets faster and more efficiently than any of the current union workers because then they would be out of a job. This severely reduces the productive capacity of your factory, which also reduces the value of your business; and it also forces you to pay higher production costs, which is another taking.
To make matters worse, your main widget-producing competitor from Asia has an unregulated widget factory comprised of only robots that are producing the cheapest and highest quality widgets in the world. Now your business is relegated to bankruptcy. And this is precisely when the government will swoop in to bail out your creditors, kick you out of the management office, purchase your business and factory for pennies on the dollar, and transfer ownership of it to your union workers, the UAW. I mean the UWW.
Offer, Acceptance, Consideration . . . and Government Approval
The right to transfer property leads to the right to contract freely. All that is needed for a viable contract is for there to be