Category Archives: Property Rights

The Case For Abolishing The FCC

Over at Slate, Jack Shaffer makes a persuasive case for eliminated the Federal Communications Commission:

Suppose Congress had established in the early 19th century a Federal Publications Commission to regulate the newspaper, magazine, and newsletter businesses. The supporters of the FPC would have argued that such regulation was necessary because paper-pulp-grade timber is a scarce resource, and this scarcity made it incumbent upon the government to determine not only who could enter the publications business but where. Hence, the FPC would issue publication licenses to the “best” applicants and deny the rest.

Whenever an aspiring publisher pointed out that timber wasn’t scarce, that huge groves of trees in Canada and the western territories made it plentiful, and that he wanted to start a new publication based on this abundance, an FPC commissioner would talk him down. He’d explain that just because somebody had discovered additional timber didn’t mean that the scarcity problem was over, it only meant that timber was relatively less scarce than before. He’d go on to say that the FPC needed to study how best to exploit this new timber before issuing new licenses.

Based on the notion of scarcity, the FPC would have evolved a power to prohibit licensees from using their paper for anything but publishing the kind of print product the FPC had authorized—no using that licensed paper to print party invitations or menus or handbills or facial tissue, the FPC would mandate.

Sounds absurd, doesn’t it ? Well, it is, but it’s a pretty close analogy to what the FCC has been doing for the past seventy years. The question is why such an absurd regulatory system is permitted to continue.

Of all the arguments that have been advanced in favor the FCC and government regulation of the electromagnetic spectrum, the on that continues to resonate is the idea that the radio spectrum is a “public good” and that access to it must be regulated by an entity such as the FCC to prevent the so-called “tragedy of the commons” that would result from allowing unregulated access.

As Shaffer points out, though, this argument doesn’t make sense given the ways in which technology has changed the ways in which we use the spectrum:

Almost everywhere you look, spectrum does more work (or is capable of doing more work) than ever before. For instance, digital TV compresses more programming in less spectrum than its analog cousin. As the processing chips behind digital broadcasting grow more powerful, spectrum efficiency will rise. Ever-more efficient fiber-optic cables have poached long-distance telephone traffic from microwave towers, and this has freed up spectrum in the microwave spectrum for new use by cell phone companies.

Other examples of spectrum efficiency: Low-power broadcasts of all sorts allow the reuse of spectrum, as everyone who uses a Wi-Fi router at work or home or listens to a low-power FM radio station knows. New technologies that share spectrum without interfering with existing licensed users exist (see this short piece about Northpoint Technology). In this bit of advocacy, an industry group gee-whizzes about the spectrum efficiencies promised by cognitive radios, smart antennas, ultrawide-band devices, mesh networks, WiMax, software-defined radios, and other real-world technology. The spectrum-bounty possibilities are so colossal that some members of the “media reform” movement even subscribe to them. The Prometheus Radio Project, best known for promoting low-power FM radio, accepts one estimate that spectrum capacity may increase 100,000-fold in coming years.

If the spectrum cow can give that much milk, why do we need regulators to ration the airwaves as parsimoniously as they do?

The answer, of course, is that we don’t. Instead of regulating the spectrum based on ideas from the 1930s that no longer hold any water, we should allow broadcasters to have private property rights in the radio frequencies that they use. Rather than leaving it up to bureaucrats in Washington, let contracts and legal precedent determine issues like boundary lines and what happens when one parties’ use of their piece of the spectrum interferes with another parties’ right to use their spectrum, which is exactly what Shaffer proposes:

Technology alone can’t bring the spectrum feast to entrepreneurs and consumers. More capitalism—not less—charts the path to abundance. Hazlett and others, going back to economist Ronald H. Coase in 1959, have advocated the establishment of spectrum property rights and would leave it to the market to reallocate the airwaves to the highest bidders. Such a price system would tend to encourage the further expansion of spectrum capacity.

Owners would be allowed to repurpose the spectrum they owned—using, say, AM radio frequencies to carry pictures—as long as they didn’t interfere with the spectrum of others. Companies in control of spectrum would even be free to subdivide their frequencies and rent it out to customers by the minute for the broadcast and reception of data.

Sounds good to me.

H/T: The Volokh Conspiracy

Life In The Post-Kelo World

Today’s Wall Street Journal notes the impact that the Kelo decision has had on eminent domain law in the state of Washington:

The city of Burien, Wash., recently decided that a piece of property owned by the seven Strobel sisters that had long housed a popular diner-style restaurant was not upscale enough for the city’s ambitious “Town Square” development, which will feature condos, shops, restaurants and offices. Rather than condemn the property for a private developer and risk a lawsuit, Burien came up with a plan–it would put a road through the property, and the city manager told his staff to “make damn sure” it did. When a subsequent survey revealed that the road would not affect the building itself, but only sideswipe a small corner of the property, the staff developed yet another site plan that put the road directly through the building. A trial court concluded that the city’s actions might be “oppressive” and “an abuse of power”–but allowed the condemnation anyway. The Washington Court of Appeals affirmed, and the Washington Supreme Court refused to hear the case.

Welcome to the post-Kelo world. The U.S. Supreme Court’s 2005 decision made clear that the federal courts would not stop local governments across the country from condemning private property for economic development. While the court noted that states were free to provide greater protections for homes and small businesses if they chose, Washington state stands as evidence that a strong state constitution means little if the courts do not enforce it and local governments disregard it.

In the immediate aftermath of Kelo, states passed laws purporting to limit local government’s power of eminent domain, and political leaders pledged that they would not use that power to take property for private use. The article points out, though, that reality has proven to be far different:

Regardless of strong constitutional protections for private property, governments and courts now view eminent domain as an area where few if any restrictions exist. And not just in Washington. In probably the most appalling example, the U.S. Court of Appeals for the Second Circuit let stand a condemnation in which a developer in the Port Chester, N.Y., demanded that Bart Didden give him either $800,000 or a 50% share in Mr. Didden’s property, which was slated to be a CVS pharmacy–or the developer would have the village condemn it. Mr. Didden refused; the next day, the village condemned his property to hand it over to the developer to construct a Walgreens. Tomorrow, the U.S. Supreme Court will consider whether to take the case.

Meanwhile, state and federal courts are turning redevelopment areas into Constitution-free zones, where the government can do what it wants with few or no restrictions. It doesn’t have to be this way. Courts could force the government to comply with the state and federal constitutions. Local governments could limit their takings only to legitimate public uses. But until all three branches of government begin taking their constitutional obligations seriously, property owners across the country face the continued threat of eminent-domain abuse, regardless of what the state or federal constitution says.

In other words, the battle against the property takers continues.

Public Rights vs. Private Contracts Redux

Nearly a year ago, I wrote this article about a resident of a Virginia community regulated by a Homeowners Association upset over the fact the rules of his HOA prohibited him from posting a political sign on property regulated by the community.

This week, via Atlas Blogged, comes news of a case currently before the New Jersey Supreme Court that reaches precisely this issue.

TRENTON, N.J. (AP) – New Jersey’s Supreme Court on Thursday began considering whether people give up some rights, such as posting a political sign in their yard, when they move into a housing development that bans such a practice.The case being argued before the high court involves residents of the Twin Rivers housing development in East Windsor who objected to some of the regulations set by their homeowners association.

A ruling in the case could affect the more than 1 million New Jersey residents, or nearly 40 percent of all private homeowners, who live in planned communities and are under homeowners association rules. Some 57 million Americans live in such planned communities.

Lawyers for the residents said the New Jersey Supreme Court was the highest court in the U.S. to ever hear arguments challenging the authority of homeowners associations.

The Twin Rivers residents who sued object to restrictions on the display of political signs, being charged high fees to use the association’s community room, and the refusal by the association to allow dissenters’ views in the community newspaper.

The essence of the Plaintiff’s case, and what I think is their primary logical flaw can be summed up in one sentence:

The plaintiffs contend the association should be treated like any other government entity, because it can to issue fines and place liens against homes.

This, of course, is utter nonsense. Many completely private organizations, including, as pointed out in a comment to the post at Atlas Blogged, college fraternities, impose fines on people. In most states, a contractor who performs work on your home and doesn’t get paid can place a lien on the property. This doesn’t make them government entities.

As I pointed out last year:

The Constitution [does] protect an individual’s right to freedom of speech, but [it] only protects it against the action of the state. There is no such thing as a right to free speech that applies to private entities. If you are on my property, I have the right to stop you from engaging in speech that would otherwise be protected if you were on your property and I were a police officer. And this is where POA’s come in.

POA’s are entirely a creation of contract. Groups of homeowners come together and form an organization that will accomplish certain goals. Typically, this includes maintaining some standard rules of esthetics for the community, contracting for trash removal, and maintaining property that is owned by the POA members in common rather than by any one person.

You don’t have to like the rules of a particular Homeowner’s Association, but then, you don’t have to live there either.

Who Makes Up “The Government”?

The refrain is common. “The government should provide X!” or “Why won’t the government do Y?”

There is an implicit assumption here, upon which the entire idea is predicated, which is and always has been flat wrong. That assumption is the idea that government is populated with selfless altruists, who happen to be philosopher-kings, able to discern correctly what should be done and execute it flawlessly. As we all know, nothing is further from the truth.

Over my Christmas vacation, I happened to be sitting with my wife and her grandparents. Her grandfather is retired now, but used to be in construction back in the days when the town was growing, and did quite a lot of building throughout the area. He was telling us of the backroom deals going on with the town currently, the graft and corruption, and the way that the rich and well-connected get projects rushed through the planning commission while everyone else languishes. Corporations push friendly politicians into power to ensure they get their projects through. When one politician’s pet projects look to be in jeopardy, they level charges against the politician standing in the way of being “on the take”. In this little local town, politics is driven by money, charges of corruption and shady dealings abound, and very few people have faith that they’re being treated fairly.

It must be a town controlled by heartless bastards, right? Here’s the kicker, though. I know some of these people. Quite a few of them are acquaintances of my wife’s parents. I’ve met them at parties. Several of them were invited to my wedding. I live 2000 miles away, so I don’t exactly interact with them on a “professional” level, but these aren’t monsters. They’re very nice people. They just know that government may give them the ability or keep them from the ability to do what they want, and thus they want to control government to get the benefits of government. And even more importantly, they’re no different from local politicians in any other town.

And as we’ve seen from our elected officials in Washington, they’re no different from most national politicians. They reward their friends (the people who help them get elected) and punish their enemies (the people who support their opposition in an election). It’s not personal, it’s just business. There’s a lot of money to be made controlling the levers of government, and thus it attracts the sort of people who are willing to use government to enrich themselves (or their friends). It’s only rarely that we have stories like that of William “Cold Cash” Jefferson, but none who watch government can realistically claim that slightly less egregious (and often completely legal) affairs don’t go on every day.

So when someone tells you about all that wonderful things they expect “the government” to take care of, ask who will really be the ones behind it? I’m no fan of Social Security, but I see “the government’s” designs of privatization to be a cure with problems worse than the disease itself. Why? Because I know that government’s solution will enrich the friends of the current administration, punish the enemies, and create unintended consequences where the rest of us get screwed. And that’s government in a nutshell. When people ask me why I don’t want the government to do anything for me, it’s not that I don’t think an ideal government could do it. It’s that I know that our government, and all governments, can never be ideal, because they’re led by people who pursue their own interests, not mine.

Another Stupid Law

The New York Times reports today on a Greenwich, Connecticut family-run coffee stand owner being kicked out of its spot thanks to a law that favors the blind:

[A]fter eight years serving the hedge fund traders, chief executives and other New York-bound professionals who stream through the station in the Old Greenwich neighborhood each morning, Mr. Maher was notified this month that he, his wife, Mary, and their 82-year-old helper, John Edward Kennedy, had lost the coffee concession and must leave by Jan. 12.

Greenwich town officials said they had little choice but to displace the Mahers in favor of a blind entrepreneur, a third-generation Greenwich man named Adam Fairbanks, who will take over the concession. They cited little-known but longstanding federal and state laws that give preference to the blind when it comes to operating concessions on government property.

“I don’t happen to think it’s a very good law,” said James Lash, a Republican who is Greenwich’s first selectman. “But it is the law.”

There is, of course, more to the story. If the Maher’s had a long-term contract, this probably would not have happened. In reality, Greenwich officials consistently refused requests for such a contract after they took over the stand in 2001, hence giving themselves the legal right to do this.

Mr. Lash, the selectman, said such arrangements are preferable because they allow the town to replace vendors who are uncooperative or who invite complaints. As Mr. Maher described the deal: “As long as you do a good job and keep everyone happy you can stay here.”

Unless, apparently, a blind man wants your business.

That doesn’t mean people are happy about it, though:

Some customers said they would treat the new vendor warily. “I’m not looking forward to giving him any of my business,” said Stephen Mesker, a regular. “Preference is one thing when you award a contract” for the first time, Mr. Mesker said, but taking it from an existing operator is “like telling someone who owns a house: ‘Guess what? We have someone better for it.’ ”

Yeah, they had that problem just down the road in New London awhile ago.

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