Property Rights Foundation of America®

from the Sixth Annual New York State Conference on Private Property Rights
November 16, 2002, Albany, New York

Opening Address
The Noblest Triumph — Private Property, The Historical Route to Prosperity
Tom Bethell

Thank you very much, Carol, and thank you all for coming. It's a great honor to be invited and to talk about this subject, which has interested me for some time. It didn't interest me when I was at Oxford, it didn't interest me when I first came to America, but it's something that you just sort of have to piece together and figure out for yourself.

It started with me back approximately 25 years ago, in 1978, with the beginnings of what was then called the Supply Side movement, which really addressed the problem of taxation. Today in America, taxation is probably still the most serious infringement of private property rights, because your income, your salary, is your property and, one way and another, governments at various levels contrive to intercept or take away approximately forty percent of it on an average in the whole country. That is, you know, a huge amount.

What was happening in 1978, and in the late seventies, is you had a combination of inflation and the progressive tax code, which was moving people up into higher and higher tax brackets. So you had non-legislated tax increases. A very effective movement with a relatively small number of people involved managed to organize to get something done about this. And, if you remember, there was the Laffer Curve, which is a brilliant idea by Arthur Laffers, still with us working on these issues, that if you lower the tax rates, if the tax rates are high enough, you will, in fact, collect more revenue, not less revenue. This was completely booed down and was regarded as a tremendous heresy by the economics profession, even though it's central to the whole supply and demand curve stuff that they are always trying to teach you in college. If you lower the price of hamburgers, if you halve the price of hamburgers, you don't just say, well, that means we are going to halve the revenues. You will, in fact, sell a whole lot more hamburgers. So the amount of revenue that you collect may actually increase. Yet, this is not thought applicable to government finances. But, in fact, the tax rates were reduced in the Reagan Administration and the revenues increased hugely.

The general success of this idea meant that people started to look at other countries too — the Third World — and see that there, too, they had very high tax rates. There was a lot of analysis and people thinking, well, we should apply this to the whole world. I remember thinking about that, because it turned out that when you really thought about it and looked into it that in these different parts of the world like Latin America, Africa, and the Arab world there was a more serious problem.

The problem was basically the insecurity of property. In Latin America, you couldn't get title. It was extremely expensive to get title, your title to the land, and to get it registered. Only rich people could do it. In Africa, property was communal and still is mostly communally owned. In the Arab world, it was insecurely owned and it still is insecurely owned. The potentate in charge can come along and tell you to get out of your house and give it up to the government and there is no recourse. That in itself and alone is sufficient to explain why the Arab world has never enjoyed real economic development. In the Communist world there is no private property by design. Private property — Marx had declared that the theory of the Communist can be summarized by the single sentence, the abolition of private property. And that was what they had in the Soviet Union, China, and lots of other countries.

So it struck me at a certain point, I remember thinking, that there is a real book possibility here. That the problem is not just taxation but the taxation, as it were, is just a special case of property infringement and the whole question of the security of private property and the role of private property in the development of Western civilization was a subject that needed really to be looked at. You might say, well, it is obviously being done. You know, there have been books on that.

Well, I began to look at economics textbooks and books about elementary economics. I mean, I went through just hundreds of them. And what you find about private property in these books — very little. I'm tempted to say nothing. It is just not there. In the beginning of introductory courses, Econ 101, you are not taught about the role of private property. Yet, if you think about it, private property is the logical starting point of analysis, of economic analysis. It really is arguable at the foundation of economics, because what is economics? It's the study of exchange. It's really the study of, I've got two of these things, you've got two of those, let's swap, let's exchange, and economics is really the study of exchange. Now, to be able to exchange something you have to own it in the first place. It has to be yours to give away. It has to be yours to trade. So if you have some system where ownership, private ownership, is abolished and government owns it, and you have a system of, let's say, economic central planning, which they had in the Soviet Union, and you can't exchange things any more and essentially the government says, well, we will tell you when you can make an exchange and we will tell you what to do, and meanwhile you just do nothing until we tell you what to do — that is really the central planning system, the result was that almost nothing got done. This is because the problem of knowing at the central point, at the central planning headquarters, what to tell people what to do is extremely difficult to figure out in the central location in Moscow, because you don't know what orders to give. You don't know where people are. You don't know especially because they are already hiding from you, too, because you have assumed tyrannical power over their lives. I remember that towards the end of the life of the Soviet Union, some marvelous remark or description of the system emerged, which was, "We pretend to work and they pretend to pay us." That's really how it ended up.

At any rate, as I say, I looked into these economics, the Econ 101 books that are taught in college, and they literally would have nothing but maybe one paragraph about private property. I called up one or two of the authors of these books, I remember, Allen Blinder, for example, who later became vice chairman of the Federal Reserve. I tried to get Samuelson on the phone. But they all just said, "Well, we take private property for granted. So it's not really necessary." In fact, Allan Blinder said, "It's sort of like saying you have to have air. You know, you wouldn't put that in an economics textbook, I mean, that you need to have air to have economic activity. You just take it for granted."

But this explanation was made suspect by the fact that later on in all of these books they would have chapters on centrally planned economies and in these chapters they would all say that the centrally planned economies are growing faster than the private property economies, than the free market economies. They have higher economic growth. So they don't have private property at all. How come this other system was so successful? I remember looking at Samuelson's famous economics textbook, in particular, which had a famous graph which showed the curve of the U.S. economy kind of going up like that and the Soviet economy was starting from a low point but going up much more steeply and intersecting about twenty years out into the future. I think this was in Samuelson's edition in the maybe the early 'sixties, so the point at which the Soviet economy would overtake the U.S. economy, was about 1980. And then, if you looked or followed it through — they come out with new editions of these textbooks about every three years — if you look at the later editions, you will see that along the x axis, the year along the horizontal was updated every few years and the intersecting point was always just out into the future. Whatever it was, ten or twenty years out into the future, and if you listened to the remarks of people like Kruschev, who were claiming their system was going to overtake ours, they would be saying the same thing, essentially Samuelson and co. were just simply repeating the Soviet propaganda. Eventually, not until the Berlin Wall was on the verge of falling, did the new edition of Samuelson come out and this graph had finally been removed.

I remember thinking, the people who are expert, who get Nobel Prizes, literally, in economics, do not understand the fundamentals of their own subject. I begun to consider that this is true, actually, probably in lots of fields. There was an amazing article last Saturday in the New York Times about two twins who got Ph.D.'s in physics, and it is thought that the theses that they wrote — this was at two different institutions, — the theses were actually hoaxes. The really amazing thing about that story is that the physics professors themselves right now who are studying this are unable to decide whether it was a hoax or not. It is actually a disgrace to the entire profession. If you have a real hoax and the guy admits that it was a hoax, you know, the editor of the journal is disgraced and then it's sort of all over. But the rest of the field will say that, well, we knew it was a hoax, though. But in this case nobody can quite tell whether it is a hoax or not. You know, advanced physics is in a very serious state and the same is true, I think, actually, of a lot of other fields.

The whole question of private property in economic history and the writing of economic history and the history of economics writing is interesting. Adam Smith in The Wealth of Nations also has very little to say about private property. However, in the case of Adam Smith, he really did take it for granted. There were no later chapters on central planning in his books, in The Wealth of Nations. Private property was probably as secure and the legal system was as correct as it should be for the establishment of economic development in England in the 18th century as it ever would be again. Private property was said to be sacred. Adam Smith does actually say that at one point, the sacred rights of private property. It just really was not thought necessary to spell out exactly why. So it was not really properly analyzed.

Then the next person you come to who is interesting is Malthus — Thomas Robert Malthus, who wrote The Principles of Political Economy, which came out in the 1820's, I think, and then a later edition. In one of the two editions, he makes a clear-cut and very interesting distinction between what he calls politics and political economy. Politics — he said, that the security of private property is among the most important conditions that conduces to the wealth of nations. But this belongs to the realm of politics. I would be discussing, he says, other factors which affect economic development and they will come under the heading of political economy, or what we today call economics. So he made this distinction and sort of put private property off into a different field, really, the field of politics, and that is really the way it has remained ever since, unfortunately. It seems to me that it should clearly be in the realm of economics.

Another interesting person who then comes soon after this is John Stewart Mill, who wrote a book called The Principles of Political Economy in 1848. It came out within about three months of The Communist Manifesto. Marx and Mill both lived in London at the same time, although there is no evidence that they ever knew one another or ever met or that Mill certainly would not have been interested in Karl Marx's ideas. Mill wrote two chapters on property in The Principles of Political Economy and here we have an interesting thing. Mill was married to somebody called Harriet Taylor who was a big lefty, feminist lefty. I mean, she is a prototype of today's sort of left-wing feminist, really. At one point, she went to live in France shortly after The Communist Manifesto had been published, and there is strong evidence that she met with a lot of the radicals on the continent at that time and corresponded with Mill. The correspondence survived and is reprinted in a book edited by Hayek, which shows some of the just amazing things that really happened. One of them was that Harriet Taylor insisted to John Stewart Mill that he should rewrite the chapter on property, that the arguments that he had made in the first edition of the book should all be changed, and that it really wasn't true that this system, that the system of socialism without private property wasn't going to be able to work. It would work very well and so on. So he said, well, if you say so, dear. Anything you say. If you've thought about it, if you've really thought about it, then I will certainly bring my opinion in line with yours. I'm not exaggerating. He was as deferential as that. I quote this in my book. So the second edition of The Principles of Political Economy was rewritten, the chapter on property was rewritten, and this book then went on to be kind of like the equivalent of Samuelson in the 20th century. I mean it went edition after edition right up until the late 19th century and sold probably millions of copies. It was very influential. The first edition was printed in a ration of 1000 copies, and you would never have seen it until the Toronto University Press edition with all the different editions of his work reprinted in 1967, I think it was.

Then you come to the Fabian Society and Alfred Marshall, who was the professor of economics at Cambridge in the late 19th century. In 1890 he wrote a book called Principles of Economics. The political economy had changed and become now the principles of economics. It had supply and demand curves, and he was the teacher of Keynes. He was in a way quite an enthusiastic socialist, hung around with Beatrice and Sydney Webb and he said in this Principles of Economics, "The need for private property goes no deeper than human nature." I read that. I was at Hoover in 1990, exactly 100 years later, and I saw Milt Friedman coming down the hall and I said, "Did you know that Marshall said that the need for private property goes no deeper than human nature." He looked at me and he said, "I would say that goes pretty deep."

That hundred-year period, 1890 to 1990, perfectly brackets, that hundred-year period the whole period of the socialist experiment.

After Marshall, we come to the beginning of this great 100-year experiment, the great project of the intelligentsia. They could organize life without private property. And, of course, the experiment was made in the Soviet Union. Yeltsin made a strong remark in 1989. He was interviewed on the radio, ABC radio hookup. They had him and Gorbachev and various other people and you could phone in with questions. And Yeltsin was asked about socialism. He said, "Well, I would say it was a noble experiment." And he used the word experiment. I thought that was so interesting. But he said, "They should have tried it out on a smaller country." He suddenly realized that it was something that western intellectuals had really wanted, you know, to try out, and during that period — incidentally, that experiment is now over, but the new great project of the intelligentsia in Europe is the European Union which is somewhat similar in many ways although they are not trying to abolish private property. They are trying to highly regulate it, and they are trying to achieve some kind of controlled, regulated outcome. My guess is that that, too, will fail, but because they are actually allowing private property, they are not so extreme, they are not quite so ambitious in that respect, it won't collapse immediately. But if they try to expand it, which they are trying to do, get more and more countries involved, the problems, the inherent problems, I think, will in the end also prove to be too great. I mean they are not going to just simply abolish the national, you know, they've got different languages to contend with and so on. They are really trying to get it into something like the United States.

During this whole period of the Soviet Union, when the Soviet Union was a going thing, my sense was that discussion of private property as an important contributor to Western civilization and the real explanation for the tremendous economic success, especially of the United States, was essentially taboo. It was not really discussed at all. There was very little that was said about it. If you look in the encyclopedia, the Britannica, Great Books, the "Great Ideas," they have something called the "Great Ideas." It is all essentially indexed, the Great Books, and private property is not on the 102, whatever it was, great ideas, which it should have been. There were very few books on the subject. There was a tendency to believe that socialism, that Communism, was working very well. The CIA put out statistics, which essentially were being quoted by Samuelson and the other economics textbook writers, showing tremendous economic growth in the planned economies.

Most remarkable of all, I remember, the statistical abstract of the United States, which was put out by the Department of Commerce in 1989 in the year the Berlin Wall fell, had figures showing that the GNP per capita in East Germany was higher than it was in West Germany. That is the most dramatic confirmation of the fact that the statistics were just complete lies. And, you know, you just really have to wonder.

The most important reason, of course, why economic development is impossible without private property is what's called the "free rider" problem. I am sure everybody is really familiar with this, and I am sure you are familiar with it, but it's sort of the explanation, it is the reason why communes don't work. If you are in a commune and you decide to work less, you still are the beneficiary of equal shares in the product that is created by all the others who continue to work. Therefore, you have an incentive to slack off. On the other hand, if you decide that you are going to work hard, the additional goods that you create by your extra work are shared equally by everybody else in the commune. This problem, I remember, when I was writing about this, in the very building in which I was writing it, a condominium building in Washington, D.C., was what is called "master meter." They didn't have individual meters for the use of electricity in the different apartments. They had just one for the whole building. — Which means that you have an incentive not to turn off lights, to leave the air conditioning running when you go away for a few days, because it's going to be hot in your unit when you get back for a few hours. It gives you an incentive to get high-watt light bulbs and so on. It gives no incentive to save, because you exploit through every other unit in the building, any savings, and any extra consumption. You put a little bit onto everyone else's bill if you use more. So this is a powerful. If you go to a restaurant and you share the bill, you agree to divide the bill equally with a bunch of people, you have an incentive to order steak. If you order hamburger, you're just simply making it less comfortable for yourself and you're giving everybody else a slightly lower bill.

This is a very powerful analytical problem, which is not addressed at all by the socialists and people like Marx never write about this or talk about ways in which this problem could be overcome. It's just simply not on the horizon. It was not really analyzed properly. It was actually one or two people in the 1830's who wrote about it, as a matter of fact, and I can't remember their names right now, but it was sort of briefly analyzed and then forgotten about. It does not show up in the writings of the socialists and the people who were advocating socialism. They described no problems. All they really insisted upon, and some of them thought that it was happening, was that human nature, somehow or other, would have to change, and some of them actually believed, and Marshall, also, was in this category, that human nature was changing. This Marshall explicitly acknowledges here the influence of Darwin, the idea of evolution. It was assumed, not that it's in Darwin, but that somehow, because nature was in some sense evolving, human nature was evolving, human nature was somehow getting better. We were getting to be better and better people. That's what people really believed in the 19th century. Everything was progressing. Progress was really believed in. That idea now is just not really accepted very much, I think. So that is a tremendous change.

If you read John Stewart Mill and the Fabian's and the people in the 19th century, they were all quite convinced that human nature was in the process, that people were in the process, of becoming better people. Really, sort of morally more superior and morally better than they had been. It would be nice if it were true, but it was really a delusion, and it's one of the ways in which the intellectual life you feel is now at least superior to what it was then, because we no longer have that illusion. We realize there is some that you just have to create the right incentives. You can't just abolish property rights and just hope that, because we are getting to be better and better people, everyone then behaves unselfishly, and assume that somehow or other it will work. People don't really believe that any more, so we do have a more realistic view, I think.

One problem, on a note about economic development now, it seems to me that the problem now is the problem of the — it is very unfashionable to say this — but the unrestricted franchise of democracy that we live with. I think it's going to make it extremely difficult to introduce real changes because too many people just essentially don't really know what is going on and are prey to propaganda of whoever it might be, the environmentalists. Somebody, I have never been able to find out who it was, said that democracy was ruled by publicity, which is, you know, a very interesting idea. If you look at the period when real economic growth took place, when they had really the correct legal system of private property, freedom of contract, and so on, in England in the 18th and the first half of the 19th century, they had some democracy. I mean you do need some democracy because you want to have some kind of a check on the totalitarian power, but if you have totally unrestricted democracy, I think, it becomes very difficult. You become ruled by special interests, and at the moment the environmental movement for the last fifteen years or so has been the dominant special interest in these issues. I mean, it is possible to imagine that at some point in the future that property rights groups would themselves develop, build up into becoming a rival and the greater, more influential special interest, and I certainly hope that happens. But at the moment, you know, overcoming the power of the environmentalists is just a huge challenge. I mean it's just amazing to me that you have all come out here on this really not very pleasant Saturday morning, which is a very encouraging sign. But the environmentalists and environmental industry, as they should be called, I think, just have tremendous power.

I also think that taxation continues to be a major problem. For example, a point with which I got into this, taxation, regulation, environmentalism, really what we are seeing is the desire to control not just our own property but other people's property. That is really the issue. Sort of greed, really. I mean words like greed need to be used to describe the activities of the environmentalists and the people who are trying to get control of other people's property. They need to be put morally on the defensive.

Okay, that's pretty much all I have, Carol.


Questions and Answers (Excerpts)

Ms. LaGrasse: Now, because of this tremendous efficiency of Tom Bethell in giving this succinct summary of what he wanted to convey about the importance of private property, you have the time to ask questions. And so if you would like, you may raise your hand and have this opportunity. Barbara?

Barbara Patrick: I am from Ulster County. I wonder if you have any comments on the latest assessment way that this state is taking up. As best I understand it, your local assessor is told to take a particular part of your county or town and see what is happening and develop a trend. Now in my neighborhood, the town of Esopus, they took some condos along the Rondout which started high, fell down, we had 9-11, up they went again. So that's what they took...Now, assessment is to be applied as of market value. He then trended the rest of the town, never went out of the town hall, ...and ipso facto we all got hiked ten to fifteen percent. That is my main question to bring to this conference today, and I want to know if anybody thinks as I think. I think that is strictly illegal.

Mr. Bethell: Well, you know, for this kind of local issues, I'm sorry, I just do not have the information at all at my fingertips to be able to discuss this. So it would have to be a somewhat more global question. I know that, in general, assessors, this is one aspect of property rights that private property owners seem to be able to exert some influence over there. They are often able, I've noticed, to get assessors to lower assessments to reduce property taxes. For some reason, property owners, the owners of real property, have more influence in this regard, in more focused interests, than they do for income taxes. The people who just earn salaries are not able to influence to get the income tax rates down. That turns out to be extremely difficult to do.

Ms. LaGrasse: Tom Bethell, may I ask one question before I call on anyone? I was wondering if you could just spend a few minutes from your background, which is so vast and tell us something about the historic societies that have had property rights and that haven't had property rights. For instance, I've read about the original settlements in the Northeast of the United States, and that is an area of great interest.

Mr. Bethell: The initial settlements of Plymouth Colony in 1620 and Jamestown in Virginia a few years earlier did not have private property rights. When the hundred and one people came over in the Mayflower in 1620, they attempted to organize their colony with communal property. Incidentally, half of the people who came died within about the first six months of general hardship and disease and not through attacks by Indians or anything. But it is important to recognize, people think that people who came here on the Mayflower as being some kind of privileged group or something. You know, the incredible hardship of life in Cape Cod area at that time, there just was nothing there, really. And after about two years, it seems that the reason why they did it was because the investor in London who had put up the money for the whole thing wanted to be able to after a certain number of years get half of the share of the profits of the whole enterprise, and they had actually petitioned him to allow them to have their own private houses and plots. I think, they feared that if this were allowed that they would have all spent their time working on their own private plots, just as they did in the Soviet Union later, and the communal farm would not really be worked on at all. So it was not allowed. They tried to appeal to Christian principles to get people to work hard on a communal system, but they could not get it to work. They were in fact on the verge of starvation. William Bradford in his book on Plymouth Colony, which wasn't itself discovered, I think, until the 19th century, has some passages and descriptions of the changeover that took place in 1623 when they privatized the property. The exact quote is in my book. And he described how suddenly everybody set forth and started to work hard.

It's just amazing. The same thing essentially happened in Jamestown, too, although there is no such clear-cut account as we have from William Bradford. What's amazing, when you read it, is to realize that even though they were faced with starvation, they still couldn't actually get it to work. People just felt the injustice, and they used the word injustice, that was involved in going forth and working for other people's families. They specify the idea of working for other families, you know.

I was thinking about this. They have been able to make communal systems work, but they are called monasteries and convents. They only really can be made to work with celibacy, where you don't have families, you don't have children. Raising small children is itself a tremendous sacrifice, and to do that and then to have to make the additional sacrifice in going forth and working for other people who are just sitting at home and not working while they are seeing you going out and doing it, you are just not going to do it. You can make it work without children and without families.

They say that in the Kibbutz, Kibbutzim, in Israel they made it work. They never made it work at all. They had huge government subsidies coming in and were pretending that it was working. It was just a completely subsidized system that they had. You can also get that information, but it is kind of buried.

But, anyway, even though they were starving, they still couldn't get it to work.

Ms. LaGrasse: Now we do have time for Tai Aguirre's question. Thank you, Tai.

Tai Aguirre: I am Tai Aguirre of Scams and Scandals radio show. You draw an interesting picture about environmentalism. Do you see the pendulum swinging eventually with property rights?

Mr. Bethell: I do see the pendulum swinging against environmentalism. I noticed that they had a big conference in, I think it was in South Africa earlier this year, and then about ten years earlier they had one in Brazil, I believe, and there was a huge difference in the sort of tone and the extent of the coverage. I mean this time you felt, I got the feeling, that the journalists were all feeling, well, this is kind of an old subject, and we have sort of been here before, and the real sort of zeal has gone off the whole thing. Also the book by Lomborg, The Skeptical Environmentalist, published by Cambridge University Press, I think, got quite a bit of attention. The Scientific American tried to undermine it, but what a dreadful magazine that has become, by the way, The Scientific American. At any rate, they tried to undermine it, but it got really a lot of quite respectful attention. And earlier books that were tremendously good like Aaron Wildavsky's book debunking a lot of the environmental problems — I think it is called But Is It True published by Harvard — got not nearly so much attention. So my sense is that the environmental star is sort of waning.

But I still get the feeling when people are talking about the problems of economic development in the Third World, they still haven't quite got property correctly in the picture. I mean Hernando DeSoto has done a tremendous job of putting these problems on the map to some extent, but there is still quite a long way to go.

Ms. LaGrasse: Joe Rota, who is the executive director of the Adirondack Park Local Government Review Board, has a question.

Joseph Rota: Thank you, Carol.Some years ago, I attended a conference at the Albany Law School at which Carol was a speaker and they were talking about and I think I have lost the word. . . Carol, maybe you might remember it.

Ms. LaGrasse: The public trust doctrine?

Mr. Rota: The doctrine, I thought it was the monarch's doctrine, in which the professor at the conference at Albany Law School said all property belongs to the people, which has been granted by the monarch and what the monarch has granted, he can take back. This was such a shock to hear in this country by a law professor that I've never been able to get it out of my mind. I wanted to get your comment about that.

Mr. Bethell: Yeah, I know that some such doctrine was used by environmentalists in California to stop water being taken out of Owens Lake. If you ever seen that, when you fly out to the West Coast just before you get to the Sierras, there is this big circular lake from which water is taken out, was for many years taken out and from fed down through aqueducts to Los Angeles. They stopped that using various environmental pretexts about birds that would stop en route when they were going somewhere and stop on islands on this. They have some small islands on this lake, and they managed to stop it, I know, using the public trust doctrine. I did read up on that and that is the only case that I know of where it was invoked, but I don't see how, the mystery would be how they can invoke the monarch in the United States. It obviously did not involve that, but it was really all just pretext and the judge just decided to rule in favor of the birds, you know. So I am sorry I don't really know how that, I mean, I think they can just make this thing come out any way they want and it is just a matter of having a friendly judge. Isn't it? It is just completely ad hoc I think.

Ms. LaGrasse: In fact that is precisely right because in the Adirondack League Club case with the Sierra Club incursions on that lower branch of the Moose River, in certain periods of the litigation the attorney general's office and the Sierra Club's lawyers actually falsely cited cases as part of some development of the public trust doctrine. Those cases were cited out of context and incorrectly.

The Albany Law School continued with the conferences for a total of three conferences, and they haven't had any in a couple of years. But Patricia Salkin, the director, has spoken recently of the need to have a follow-up conference. So they are pushing this idea, which basically began with the concept of the public trust that is inherent in preservation of the use of waterways for navigation and the areas — this is putting it very simply — and the areas adjacent to waterways, the areas below the low water mark, and there is an effort to expand that which can be discussed at great length because they produced proceedings upon proceedings of their ambitious ways to expand it. It's very convoluted and very distorted.

Now Tom, you have your hand up. Does that mean you want to ask a question? How wonderful!

Thomas Miller: You mentioned the problems with unfettered democracy. Isn't it true that in this country what we are supposed to have is a constitutional republic whereby we have, we are democratic to the extent that the people elect representatives, but the representatives have to follow the law which is the supreme law of the land, which is the Constitution. But unfortunately they are not following that and they found a way around it with grants and subsidies, and they are supported and aided and abetted by the media, of course, but I think that's how they found their way around the constitutional controls. Until people can take notice of this and get them under control, I think we're going to have that problem continued. Do you agree?

Mr. Bethell: Absolutely. The Constitution is essentially being overthrown, really, and it's more effectively by virtue of the fact that no one makes so radical a claim. But, I mean, the things that the federal government can do are specified and set forth in the Constitution and, you know, at some point there should have been some kind of insistence that that is all that the federal government can do. And, you know, the Bill of Rights then says, oh, and, by the way, you cannot do the following. But it wasn't really necessary to add the Bill of Rights, because they were already told that there are a various limited, restricted number of things they could do in the first place. So, yeah, I completely agree. The fact that nobody, no groups, right now, as far as I know, there are no attempts being made any longer to amend the Constitution, because you can get whatever you want through democracy. Whatever the pressure group is, they can get it. They don't have to amend the Constitution anymore.

There is just one point I want to make on the water rights issue, which I do have a bit on in my book also. There is a problem of water allocation in this country, but it can be solved by property rights. There is a property rights solution to it, especially in California where water is short, and, of course, in other places farmers have the first use. They have this system where you've got the first use from the rivers and so on, that essentially you have the right to continue using that water. The solution was proposed and it was proposed by some environmentalists. The Environmental Defense Fund saw the value of property rights and that farmers should be told that they have property rights in this water because at the moment they said they have a "use it or lose it" system. If they can pour it into the ground for rice farming in the desert, you know, they can continue to be allowed to do that. But if they had real property rights, they could sell the water. That is the essential feature of property rights, that you can sell what you own. If they could then sell it to the City of Los Angeles for however many dollars per acre-foot, it would be much more valuable to them than if they were trying to farm with it. This seemed like a brilliant solution. Unfortunately, the problem is that if they were to do that, a lot of farming communities would shut down because it would no longer be economical to do farming in these areas where there was a much more economic high valued use for the water. So the general farm lobbies were able to sort of stop the farmers from getting real ownership of the water because they knew that these farming communities would essentially shut down if this were to happen. Essentially it would have produced a lot of change. You know, any system with real private property rights will see constant change taking place as the values of commodities change. But it has proved to be extremely difficult to get the private property solution to work again because the political system will come in and stop it.

Ms. LaGrasse: Well, thank you very much. The problem is it is only a one-day conference. Obviously, Tom Bethell could give us the whole conference and for not one minute would our minds fail to be stimulated. But we must move on. Will you stay?

Mr. Bethell: Absolutely. I would be interested to hear, I am not very knowledgeable about a lot of your local issues, but I will be fascinated to hear about them.

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