Monday, 11 August 2014

Losing land to foreign owners? [updated]

Property rights theorist Armen Alchian has a point to make to Winston Peters, David Cunliffe, Metirua Turei … to all the various xenophobes queuing up to ban sales of New Zealand land to foreigners on the basis that, when New Zealanders sell their land, New Zealand somehow loses land -- an argument bizarre on its face.

Especially because, as Armen Alchian points out, sellers in any given market don’t sell the thing, they sell rights in the thing.

In markets, you trade rights back and forth rather than goods, and that makes a big difference.

The reason being, as Irving Fisher once explained,

that property rights, unlike wealth or benefits, are not physical objects nor events, but are abstract social relations. A property right is not a thing.

In other words, when New Zealanders sell land to the highest bidder, it is the rights that are transferred, not the land. The land remains.

And for that sale, those New Zealanders get a lot of money in return. More than they thought their rights were worth, to new owners making the most of rights they valued much higher.

Can someone please explain some of that to some of the xenophobes?

UPDATE: Garner on land sale xenophobia

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