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The Sanctity of Private Property, Part 2

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The last thing which Americans of today wish to face is that they have abandoned the principles of private property on which the United States was founded. In last August’s Freedom Daily, I pointed to two examples of where the American people have permitted their public officials to assume absolute and total control over private property: income taxation and licensing of occupations. Let us examine two additional examples to assist us in destroying the myth of the sanctity of private property in 20th-century America: international trade and the oil business.

One of the favorite pastimes of Americans is to look down their noses at the socialist systems which are now crumbling all over the world. Americans honestly believe that the American system of “free enterprise” has prevailed in the battle of “capitalism” vs. socialism; and they believe that the world should now simply copy the “private property” system of the American people.

But what is it about the socialist countries which Americans find so objectionable? After all, the socialist nations embody much of that which Americans would never consider abandoning in the U.S.: subsidized housing and medical care for the poor, the prohibition of private citizens from gaining significantly high amounts of wealth, free schooling for an children, and subsidized food for everyone.

But one of the most significant characteristics of the socialist systems is government control over a citizen’s ability to sell goods and services to people in other parts of the world. In other words, the essence of the socialist societies in regard to international trade is that the government reigns supreme over the individual and his property; that is, all property in the nation, even when legal title is nominally held in the name of private citizens, is either owned or controlled by the political authorities.

One of the best examples of this lies ninety miles away from American shores. In Cuba, a nation guided by the principles of free public housing, free medical care, free public schooling, and subsidized food for the populace, people are not permitted to sell goods and services to others around the world without the permission of their government officials. The government takes the position that all property ultimately belongs to “the people” and, therefore, subject to political control.

Americans rightfully object to the Cuban way of life. But they have a terrible time recognizing that these same principles are found in 20th-century America. Like his Cuban counterpart, no American is free to sell, without the permission of his public officials, what supposedly belongs to him to people around the world. If an American, for example, decides to sell a quantity of wheat or penicillin to the Cuban people, he is prohibited from doing so by his own politicians and bureaucrats. In fact, if an American even travels to Cuba without permission of his public officials, he is incarcerated and fined. This was exemplified last year when an American fisherman was actually sent to jail by American authorities for organizing a fishing trip to Cuba.

Now, the American government officials justify this prohibition on the basis that the Cuban ruler, Fidel Castro, is a bad communist (as compared to the apparently “good” communists of Red China with whom Americans are permitted to trade). But the problem lies not with the American government’s determination of who are good communists and who are bad ones. The problem lies with the American people permitting their politicians and bureaucrats to assume and exercise the same power over their lives and property as that found in such nations as Cuba and China.

And despite the fact that the American government maintains ultimate control over the buying and selling decisions of the American people, Americans continue to believe that when American government officials have this control, it is a private property system; and that only when Cuban, Chinese, or Soviet government officials have it, is it considered a socialist system.

What would be a true private property system? One in which the individual is free to buy and sell goods and services anywhere in the world without the interference of his public officials. And it would be a way of life in which people were trading not because the politicians and bureaucrats permitted them too do so but rather because they have the absolute right to sell whatever belongs to them to anyone anywhere in the world.

A second example of this myth of private property in America: oil and gas. Despite their commitment to “free enterprise” and “private property,” the American people believe that whenever a person owns what other Americans need, the politicians and bureaucrats must take control over it and redistribute it to the needy.

The best illustration of this tendency toward the socialist principle of public ownership or control over the means of production concerns oil and gas. Whenever the owner of oil or gas decides to sell his product at a higher price than that which American consumers decide is “reasonable,” the politicians and bureaucrats, as a result of political pressure from the American people, threaten not only to prohibit him, through price controls, from doing so, but also to take away, through a windfall profits tax, whatever “unjust” profits the producer has made. In other words, while proclaiming the superiority of the American “free enterprise” system over socialist systems in which governments maintain extensive controls over prices and profits, the American people approve of these same socialist principles in their own nation. But, of course, they do so under the rubric of the American “private property” system rather than under the American “socialist” system.

One of the ironies is that during depressed economic conditions, when some oil companies go broke or bankrupt, the American people take the attitude of, “That’s their problem. They chose to go into the oil business, and they can’t cry when it fails to pan out.” But when conditions change, and demand for the product suddenly increases, Americans take the same attitude as their counterparts in China, the Soviet Union, and Cuba: “It’s not fair for others to have more when I have less. I need the oil and gas. He’s gouging me. I am ‘forced’ to pay these high prices. Take his product and his income away from him and give it to me.”

And another irony is that when price controls are instituted, the problems which arise from those controls are never blamed on the controls themselves. Instead, just as in other socialist countries, the problems are always blamed on others, usually “the evil, greedy, profit-seeking, bourgeois swine of a capitalist pig.

The best example of this was the price controls imposed on the oil industry by the American government in the 1970s. What was the result of those controls? The same result found in the Soviet Union, China, and Cuba when price controls are imposed there: shortages and long lines. But did the American people blame them on the political controls themselves? Of course not. Thai would have been considered unpatriotic. So, the shortages and long lines were blamed on American oil-producers. And how do Americans explain the fact that no shortages and long lines have developed as a result of the recent Middle East crisis? They are unable to do so because they have no idea that only political control over prices, and not private owners and producers of oil and gas, create shortages and long lines.

The major disaster of price controls and windfall profits taxes, of course, is the abandonment of the sanctity of private property. But the secondary disaster is that the economic situation always becomes worse as a result of the political intervention. People do not realize that prices are simply the market’s method of providing signals in the same way that a thermometer uses temperature to provide signals. High prices are simply the market’s way of telling people to produce more and consume less. But rather than permit the signals to guide the actions of producers and consumers, the American people pressure their rulers to break the thermometer. Rather than cope with the bad news which the messenger has brought, people instead choose to kill him. And the inevitable result is just like that found in socialist countries everywhere: shortages, long lines, and general market chaos.

When will private property truly be sanctified not only in the U.S. but in other nations as well? Only when the time comes when people stop believing that they have a right to take away what belongs to someone else. There are fewer more destructive forces than the belief that it is acceptable to covet and steal that which belongs to another as long as it is done through the political process. Whether it involves a person’s income, his occupational pursuits, his goods and services, or his trading decisions, the succumbing to the urge to take from those who have more will always result in the impoverishment or destruction of the people of a nation regardless of whether they are Romans, British, Soviet, Chinese, Cubans, and, yes, even Americans. As our American ancestors understood so well, only those nations which have a political system which protects free economic activity are those nations in which the citizenry are blessed with peace, prosperity, and harmony.

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    Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.