When I began my academic career, I was fortunate to work in a department of economics in which several of my colleagues, including Yoram Barzel, Steven N. S. Cheung, and Douglass C. North, had a keen interest in property rights and their implications for economic action. I soon began to work in several related research areas, including contractual choice in agriculture, and over the years a number of my articles and important parts of my books have pertained to property rights in some fashion.
Perhaps the most important proposition in the economics of property rights is that people will not care for a resource they do not own as well as they will care for a resource they do own. It is amazing how much fashionable economic belief — for example, nearly everything ever advanced in support of socialism, as well as the bulk of what passes for environmentalist policy proposals — fails to take adequate account of this virtually axiomatic proposition.
But don’t take my word for it — or even the word of any of my illustrious former colleagues at the University of Washington. Take the word of Jesus of Nazareth.
In the tenth chapter of the Gospel According to John, Jesus is trying to make a point, but his listeners are not getting it, so he finally gives them a parable he can be sure they will understand (verses 11—13):
The good shepherd lays down his life for the sheep. The hired hand, who is not the shepherd and does not own the sheep, sees the wolf coming and leaves the sheep and runs away — and the wolf snatches them and scatters them. The hired hand runs away because a hired hand does not care for the sheep. I am the good shepherd. I know my own and my own know me.
Hired hands must be monitored closely if the owner is to prevent them from diminishing or destroying the value of the capital he has provided for them to work with. In postbellum southern agriculture, for example, plantation owners monitored sharecroppers, to whom they furnished mules, more closely than they monitored tenants who furnished their own mules. The typical plantation layout placed the wage workers in fields closest to the owner’s house, the sharecroppers a little farther away, and the fixed-rent tenants in the most outlying areas. This arrangement allowed monitoring costs to be minimized. (Anyone who wants to see a thorough survey and analysis of these contractual arrangements might wish to consult Lee J. Alston and Robert Higgs, Contractual Mix in Southern Agriculture since the Civil War: Facts, Hypotheses, and Tests, Journal of Economic History 42 [June 1982]: 327—53.)
If you don’t care for economic theory or econometrics, just read the Bible.