Category Archives: Property Rights

For Discussion: Property Rights in Virtual Markets

I’m no expert on this, so I’m offering it for your consumption. How do you define property rights for a virtual store, selling virtual wedding gowns, to virtual people, in exchange for virtual money?

Veronica Brown is a hot fashion designer, making a living off the virtual lingerie and formalwear she sells inside the online fantasy world Second Life. She expects to have earned about $60,000 this year from people who buy her digital garments to outfit their animated self-images in this fast-growing virtual community.

But Brown got an unnerving reminder last month of how tenuous her livelihood is when a rogue software program that copies animated objects appeared in Second Life. Scared that their handiwork could be cloned and sold by others, Brown and her fellow shopkeepers launched a general strike and briefly closed the electronic storefronts where they peddle digital furniture, automobiles, hairdos and other virtual wares.

“It was fear, fear of your effort being stolen,” said Brown, 44, whose online alter ego, Simone Stern, trades under the name Simone! Design.

Brown has reopened her boutique but remains uncomfortably aware that the issue of whether she owns what she makes — a fundamental right underpinning nearly all businesses — is unresolved.

My knee-jerk reaction would be that these virtual markets are the “property” of the software designers who create the software, and they can define their own property rights for their users based upon their license agreement. The cost of entry and exit from a virtual marketplace is a lot different than, say, a physical one, so the idea of competing governments and property rights structures seems to me to be ideal.

As a whole I don’t know that I support government getting involved in regulating virtual property rights. But given that I’m wholly unfamiliar with these sorts of games, never having played any of them, I’m not sure that I’m qualified to offer an opinion.

What are your thoughts?

(random snark below the fold)
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A Kelo Christmas

Suzanne Kelo, the Plaintiff in the now infamous Kelo v. City of New London case has sent a Christmas Card to the people who took her house away:

Here is my house that you did take
From me to you, this spell I make
Your houses, your homes
Your family, your friends
May they live in misery
That never ends.
I curse you all
May you rot in hell
To each of you
I send this spell
For the rest of your lives
I wish you ill
I send this now
By the power of will

Heh. Good for her.

I may open an account at BB&T

I have a lot of respect for BB&T. After the Kelo decision they took a firm stance in favor of private property rights when they made it a bank policy not to lend money to any developers that used the practice of eminent domain for private development.

BB&T is taking another step in promoting capitalism:

Winston-Salem-based BB&T’s philanthropic organization, BB&T Charitable Foundation, recently made the $1 million donation to UNC-Greensboro to establish the BB&T Program in Capitalism, Markets and Morality. The program also will create the Ayn Rand Reading Room in the school’s library. The room will include fiction and nonfiction works by Rand, who was an economic freedom advocate, and other authors.

BB&T Chairman and Executive Officer John Allison IV said the grant would help to promote students’ understanding of concepts outside the technical framework of businesses. “Unfortunately, we find that many students who graduate with business degrees while understanding the ‘technology’ of business, do not have a clear grasp of the moral principles underlying free markets,” Allison said.

The gift will fund an undergraduate course on markets and morality and a separate course for graduate students. It will also provide faculty grants for curriculum development to increase students’ knowledge of capitalism and moral foundations in the economic principle.

Also included in the gift is the creation of the BB&T Distinguished Lecture Series in Capitalism, which will promote discussions on business ethics and values. Dr. Bruce Caldwell, a professor of economics at UNC-Greensboro and editor of The Collected Works of F.A. Hayek, will be among the various presenters during the lecture series.

Hat tip to the Libertarian Party blog.

A Post-Kelo Update

Ilya Somin writes at The Volokh Conspiracy about what looks to be the most important eminent domain case to reach the Federal Courts since the Kelo decision:

[T]wo Port Chester [New York] property owners joined with the Institute for Justice (the public-interest law firm that litigated the Kelo case) to ask the Supreme Court to look again at the issue of eminent domain abuse and ensure that lower courts do not read Kelo to completely eliminate judicial review. The case illustrates the dangerous results of the Kelo decision and asks what should be an easy question: Does the Constitution prevent governments from taking property through eminent domain simply because the property owners refused to pay off a private developer?

In 2003, private developer [Gregg Wasser] approached Bart Didden and Domenick Bologna with a modest proposal: they could either pay him $800,000 or give him a 50 percent interest in their proposed business, or he would cause the Village of Port Chester to take their property from them through eminent domain. Outraged, they refused. The Village condemned their property the very next day.

Bart and Domenick filed suit in federal court, arguing that the taking violated the Fifth Amendment of the U.S. Constitution, which only allows property to be taken for a “public use.” Shockingly, the trial court threw out their case, and the Second Circuit agreed. Because their property lay within a “redevelopment area,” a region the Village had designated as subject to its eminent domain power, the Constitution didn’t protect them from condemnation, even though they had alleged that they were condemned solely because they resisted the developer’s attempted extortion….

“What the developer and Village of Port Chester did is nothing short of government-backed extortion,” said Didden. “I had an agreement to develop a pharmacy, a plan fully approved by the Village, and in the eleventh hour I was told that I must either bring this developer in as a 50/50 partner or pay him $800,000 to go away. If I didn’t, the City would condemn my property through eminent domain for him to put up a pharmacy. What else can you call that but extortion? I hope the Supreme Court sets things right.”

As Somin points out, this case seems egregious even by Kelo standards:

It’s hard to find a more blatant example of pretextual condemnation and “favoritism than the Didden case. The plaintiffs’ property was only condemned because they refused to pay $800,000 to Wasser. Had they given in to Wasser’s threats and paid him the money, there would have been no public benefit, because the money would have gone into Wasser’s pocket, not the Village treasury. Moreover, Wasser’s planned use for the property – building a Walgreens pharmacy – is almost exactly the same as the current owners (who plan to open a CVS). So there is no potential economic gain to the community from transferring the land to Wasser; indeed, the area’s taxpayers will be net losers because they will have to foot the bill for the condemnation. Nonetheless, the condemnation did occur within a designated “redevelopment area,” so the Second Circuit Court of Appeals held that it is immunized from legal challenge under Kelo.

This will be the first opportunity of a reconstituted Supreme Court under Chief Justice Roberts and Justice Alito to speak on the eminent domain issue. The result bears watching.

A Perverse Incentive

A Question was asked by a reader:

1500 SWAT raids a day…. Has the Drug War completely corrupted our legal system?

It depends on what you mean by corrupted. It is certainly corrosive to the souls of the police, and their relationship with the public they are, and must be, inextricably a part of.

I was watching the history channel, or discovery channel or some such, and they were talking about SWAT training. They mentioned 5 towns in rural Illinois I just happen to know about, as all having full time SWAT teams, equipped with fully automatic weapons, and full ninja gear etc…

As I said, I know these towns. None of them are bigger than 30,000 people. None of them have a real crime problem. The only crime issue they have is meth labs; but no more than anywhere else in the American midwest these days.

But all five towns have full time SWAT teams; and those teams existence has to be justified somehow.

Last I checked, more than 60% of all departments now had at least part time swat teams or something similar (ESU, high risk warrant squad etc…); now really, is there a need for even HALF of these teams, for a quarter of them?

I understand the need for officer safety; and how the movement of meth into rural America has changed the risks and difficulties of law enforcement for a large portion of the country; but is there any reason on this earth why a town of 24,000 people, where the only real violent crime is domestic; should have a five man full time SWAT team?

Of course not. Most of those SWAT teams didn’t exist before 1994; which coincidentally is when federal funding, and equipment purchase programs were ramped up for SWAT type teams, so that local law enforcement organizations could better fight “the war on drugs”.

Of course most place dont NEED a SWAT team, but almost any law enforcement organization could use more money, more training, more equipment etc… The incentive was there for federal funding to be spent, and federal equipment to be acquired; and where there’s financial incentive, there will be a means created to fulfill that incentive.

Now that they are there, they need to justify their continued existence; so what used to be a normal warrant service all of a sudden ends up with 5 guys with machine guns and balaclavas busting a 90 year old womans door down in the middle of the night.

And this sort of thing is 1500 times a day all over this country. Now of course, most of those SWAT raids are on genuine bad guys (drug dealers mostly, who aren’t exactly boy scouts); but some of them most definitely are not necessary, or worth the higher risk of injury or death to the general public… in fact Id wager a guess a hell of a lot of them are not.

Of course the police will say it’s all about officer safety; but in reality more officers are shot on raids than in standard warrant service (and we’re going to get into a correlation vs. causation issue here)… oh and the number of officers shot in any other circumstances are dwarfed by officers being shot in domestic disturbances, and traffic stops (especially felony traffic stops, which are in fact how most criminals end up getting arrested).

So, in the name of oficer safety; and of course in preventing the evidence from being flushed down the toilet; purse snatchers, and 90 year old women with joints, end up getting killed.

This is properly decried wherever it happens; but police being what they are, the blue wall goes up, defending policy and officer actions; and gets higher, and tighter; separating the police from the public they serve, ever more, with every raid.

Corruption? Not the way most people mean it. Just the perverse incentive toward the militarization of the police, and their estrangement from the public

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

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