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APPENDIX: SOME DETAILS ABOUT ALLODIAL POLICY

A full discussion of allodial policy may be found by reading "Allodialism as Economic Policy", chapter 15 of my book A Primer on Modern Themes in Free Market Economics and "A Policy Overview of American Allodialism", chapter 4 of my book Building Regulation, Market Alternatives, and Allodial Policy. In this appendix, I simply point out some of the more important features of this policy which pertain to the urban planning and development.

No new legislation should be enacted to make real property rights allodial. Existing legislation simply should be abolished and, possibly, a constitutional declaration needs to be made that all real property is allodial. Thus, the only policy necessary is one which directs that real property be returned to its pre-legislation absolute nature (i.e., its nature before governments claimed their unique allodial rights), with no taxation or regulation. The fact that real property would not be taxed would not imply that labor or production on it could not be taxed either. All production is done on real property, but that affiliation does not convey the legal philosophical tax exemption to human action. By analogy, while a diplomat driving his diplomatic vehicle has certain exemptions from legal rules, other persons driving the vehicle would not -- the thief who stole it for instance. Human action is not dominantly colored by any legal character of the means of production it uses.

Allodialism would positively affect the way externalities are dealt with, allow broader application of the Coase theorem, extend reliance on markets, and beneficially affect nearly every human production process, since all production ultimately is a function of land. Allodification would rely on markets to resolve externality problems involving highway production and use, with perhaps the most important means of dealing with negative externalities being through restrictive covenants. Pollution would also be handled by the price system, which efficiently allocates bads as well as goods. In highway production, markets would certainly allocate land resources to their highest valued use, especially since rent seeking would be precluded. In sum, allodial policy would facilitate private communities (Foldvary 1994, pp.86-113), market-based regulatory alternatives (Holcombe 1995, pp.96-104 and Cobin 1997, pp.92-114), and greater reliance on market incentives and restrictive covenants to alleviate negative externalities. The price system would enhance resource allocation, and create opportunities for trading real property risk on the insurance and derivatives markets (Cobin 1999a, pp.20-21).

Especially in urban areas, the transition to allodialism would be costly and may take years to accomplish. Arguably, such a change would be feasible, and the long run benefits would likely exceed its costs. Indeed, over time, there would likely be fewer long-unresolved negative externalities or environmental concerns. (All social agendas would be precluded from real property and transportation infrastructure.) Under allodial policy, the market would provide a wide variety of alternatives to satisfy a wide range of consumer risk preferences (Cobin 1999b, p.21).

The profit motive and other normal market incentives, like the desire to maintain reputation, would be paramount regulatory features under allodial policy. Allodial policy would vastly extend the function of markets, with all real property regulation being replaced by market-based alternatives. Hence, individual liberty and the demand for greater individual responsibility (enforced by contracts and private communities) would become more pronounced. Correspondingly, allodial policy would permit the implementation of highway privatization without knowledge problems or public choice problems, commencing immediately with the transition. (Of course, rent seekers who possess artificial monopoly privileges or cost savings due to their craft, would be harmed by the transition and would resist the change.)

Nevertheless, allodialism might not be a panacea. As with all novel or dramatic policy alternatives, the unknown elements should be cause for concern. For instance, allodial policy might end up facilitating greater monopoly power, which might be a special concern for those outside of the public choice pale who believe that monopoly power is not by and large the result of government failure and that unhampered markets would tend to breed more of it. Others will contend that government has a monopoly on road provision now anyway so that the concern really boils down to some people believing government would be a more benevolent monopolist than would be generated in the market process. In addition, some might raise concerns about equity issues. Under direct government provision and semi-privatization schemes, voters have some indirect control over when and where roads will be built and what districts will be benefited the most and the least. For those who believe that social justice is best accomplished through proactive public policy administered by elected leaders and the regulators they appoint, allodial policy might seem frightening. But in that case, a choice must be made whether to prefer the uncertainties of the market or the public choice and knowledge problems which occur in the political process.

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