You'll Own Nothing (And Like It)

Speaker 2

I'm Phil Magnus, economist.

Speaker 1

Which served as the basis of our declaration of independence, Locke suggested we have natural rights to life, liberty, and property. And famously Thomas Jefferson changed that last part from property to the pursuit of happiness, possibly to sidestep the fact that part of his property consisted of other human beings. So now it's life, liberty, and the pursuit of happiness. And it's been that way for a while. So let's fast forward to twenty sixteen. And there's a Danish politician named Ida Auken, and he wrote an essay published on the World Economic Forum website that imagined life in the year 2030 in a sharing economy city. And what's probably most rememberable from that piece is the phrase, you will own nothing and be happy. So, since we're only a few years away from 2030, I think we should probably talk about owning nothing and being happy. How does that square with the very American life, liberty, liberty? In the pursuit of happiness. Phil

Speaker 2

Yeah. You know, I I I read essays like this in retrospect and and I I start thinking, you know, what w what are these people after In some cases, these ⁓ World Economic Forum types, they're also the people that say, well, well, stop eating meat and you can eat bugs and stuff, and you'll be happy doing that as well. So ⁓ I really wonder about their judgment on a very basic level. But if you dig deeper into the political philosophy, just like you mentioned, John Locke is the major thinker that Thomas Jefferson draws upon when he writes the Declaration of Independence. And you know that he changed that line from ⁓ property to pursuit of happiness. But if you go into the list of grievances against the king and the Declaration of Independence, several of them are concerned with how government is violating individual rights and property. ⁓ you know, they're taxing us without our consent. ⁓ they are controlling our trade, what we can purchase. They require us to put stamps on things ⁓ in order to acquire them. ⁓ they force us to soldier quarters in our our homes. They're violating our personal. Living space. So these concerns are very pervasive in the Declaration of Independence list of causes. And I think there's a a deeper lesson here that it goes back into Locke. He does order these things: life, liberty, and property intentionally. Life being the first consideration. You know, it's it's really important that you not be killed or murdered. Liberty, what you do with that life, and then property. Which are ⁓ you know, ba basically the material possessions that come about from the first two being operable. And deep in Locke's arguments that he put forth, ⁓ yeah, he wrote two treatises on government. The first is really kind of rebutting this notion of the divine right of kings to basically be dictators. ⁓ but the second is like asking the question, well, where does this come from? And as he's laying out his arguments here, he digs deep into a theory of property. And some of it's kind of rooted in like a historical fable. Well, the first man found ⁓ a tree and he picked fruit and therefore acquired the tree itself by performing labor upon it. But ⁓ there are also deeper meanings here, one of which is ⁓ Locke hints at this, he he looks at human history and says, you know, people have been mired in starvation, and property is our ability to overcome that. It's to take control of nature. And make it more bountiful, make it more useful for human beings. ⁓ in other words, we cultivate crops instead of finding them on trees in the woods. We start selling and trading our wares to not only benefit ourselves, but benefit the people that we're exchanging with. So you get the very seeds of an idea that spill over into later thinkers that come along. They start developing ⁓ economic concepts. And ⁓ you know, this is where Adam Smith emerges out of the era of thought. Where people are asking these types of questions. And one of the things Smith ⁓ keeps coming back to is if you secure property rights, you have clear and stable representations of this in law, it also has economic implications. And one of those economic implications is ⁓ yeah you cultivate abundance, you cultivate better uses and means to discover better uses of what we would otherwise consider nature's bounty in improving upon it, and that means fewer people starve. That means more people have enjoyable lives rather than subsistence lives. Yeah, you said self ownership, which is both life and liberty, but then ownership of things, ⁓ your home, ⁓ your farm. You purchase something, that means somet nobody else can steal it or take it away from you. ⁓ or the government can't can't come in and and decide, hey, ⁓ we know how this property should be used better than you do, therefore we're going to tell you what you can and cannot do with it. ⁓

Speaker 1

we mean by ownership? I I have two young kids and there are times when I'm trying to explain things to them, whether explain like why you shouldn't do this obviously bad thing, but it's obvious to me because I'm a 44 year old man, I'm not a four-year-old. so then I I kind of find myself like being stuck on even just defining words that I think are just so you know it's like, ⁓ everybody knows what ownership is but what does ownership mean? Especially in a world where we have to pay taxes on on it.

Speaker 2

Right. Right, right. Well, you know, it it's I think it's a stabilizing mechanism of law. You have clear defined property rights over something. You no longer have contestation of force where someone comes along and says, Well, you claim you own that, but I want it, and I have a knife, therefore I'm taking it from you. You've got a clear statement in law of ownership. ⁓ well, there's a way to mediate that dispute and the answer is, well, the guy with the knife that's trying to steal it from you is in the wrong and you are in the right. Now there are other circumstances that do emerge under the law that become much more complex under that, but it gives us a ⁓ mechanism to sort through disputed claims over something. And that sorting mechanism allows predictability in it. Once you have predictability entered into economic exchange, you no longer have to worry that, hey, ⁓ I if I buy this piece of land, but maybe five years from now there's a new government in power that doesn't recognize my property over my ⁓ my property claim over this piece of land and tries to take it away from me. ⁓ well that completely alters what I would do with that land. If I don't have secure property rights, maybe I don't build a house on it, or maybe I don't invest in improving that property because I know that the government in a couple of years may be corrupt and come along and ⁓ seize it. Or may recognize somebody else's claim to it that I don't really view as ⁓ as as valid. Now, on the other hand, if you a clear, predictable pathway to the outcome of those types of disputes, that means, well, ⁓ now I start thinking about investing in how to improve on my property. I build a new house on it, or I turn it into a farm, or I put a business there, I improve drainage around it, I build a fence around it, things like that that I am willing to expend resources on. Because I have the certainty of the legal regime to show that my economic activity will not be predated upon. It will not be ⁓ intruded and seized either by a corrupt government or by somebody else that ⁓ is making a false claim upon it that a new government recognized.

Speaker 1

In a line like you will own nothing and be happy. I realize that the idea of happiness is not universal or what makes one happy is definitely not universal. There are other cultures where they have different ideas of what happiness is. And then on an individual level, we all have different ideas of what happiness is. It's kind of like the golden rule. People often bring that up, like, you know, do unto others as you would want them to do unto you. But the problem is, even there, people have different ideas of what they would want others to do unto them. For example, I I used to train ⁓ Brazilian jiu-jitsu regularly and you know I would train with guys who were fighters, some of them who were professional fighters, and they would be very comfortable in a world where the way that they settle their disagreements is by fighting, by fist fighting. Yeah, in their world the golden rule would be like, Okay, we have a problem. I'm going to fight you now. That's not my golden rule. But

Speaker 2

it on

Speaker 1

It's sort of like this attempt to universalize happiness when it comes to say for for example the sharing economy that I believe it's Auken, I think it's even that's the name, how he predicts and how much of the, you know, sharing economy is already here. Like for example, when it comes to like subscription-based models, you have city bikes. You don't have to own a bike. You can now share a bike. You don't have to own DVDs or ancient cassettes, can download movies, video games, music. Ownership is not Ownership in a traditional sense anymore.

Speaker 2

Well yeah, I I think what you're seeing there is technology entering into the ownership space. And you mentioned, you know, people have different tastes. Economists refer to this as subjective value. And you have the you will know ⁓ own nothing and be happy people are basically repudiating the concept of subjective value. They're saying, we know what makes happiness. And yet the evidence of this, the empirical evidence, ⁓ really kind of contradicts them on this. You have multiple studies going back decades showing that, you know, personal happiness tends to correspond very strongly with economic prosperity. Countries that have high GDP per capita, and there's some other indicators on this, of ⁓ you know, what we would consider wealth, also tend to be the happiest countries. Countries where that doesn't exist are like North Korea. ⁓ or tend to be very backward and very corrupt. And a lot of it comes about from that predictability that I mentioned. You have stable and secure property rights. You have predictability ⁓ on how your use of ⁓ you know, economic instruments will basically play out, that nobody's gonna come in and seize them. You see ⁓ new technologies emerging. Yes, they have these bike shear things. ⁓ one thing I'll say as a caveat on those, a lot of them are publicly subsidized, where you'll have New York City or someone will come along and say, ⁓ we think bike shearing's good, so we're going to subsidize the installation of a bike shearing station in this neighborhood. But at the same time, all those services you pay money for. If you want to rent a bike instead of owning your own bike and toting it around with you. ⁓ well, you can swipe your credit card at one of those machines next to the bike sharing station and ⁓ borrow it for the afternoon. So it's basically a ⁓ an extension of the rental ⁓ idea into just a new area with technology. You couldn't do that 20 years ago because ⁓ you know, the ⁓ technology to install a little credit card machine on every single bicycle just didn't exist. But now we have that. Same thing with the scooters that they drop on ⁓ street corners. You can swipe your credit card or you can hook it up to your Uber app that didn't exist twenty years ago and suddenly you have a rental for the afternoon. ⁓ I see that as like an extension of property, not a ⁓ a sharing economy. That's a real

Speaker 1

good point because somebody owns it. Yes. That thing that you're renting, somebody owns it. So it's sort of the shift from the individual citizen owning something to what a faceless Corporate executive or faceless bureaucrat, even the idea of buying a movie. I have purchased many movies through Amazon Prime. They're not our sponsor. I just happen to, you know, purchase them there. And it's like, do I really own this thing forever? Because at some point, I I mean, you know, 10 years down the road, there's gonna have to be some contract negotiation between streaming services and Amazon Prime and the studios, etc. So there's a good chance that you know I'm not going to own the sand lot. Anymore.

Speaker 2

No, no, I I think it raises an interesting point, but ⁓ w w what are you doing here when you click on Amazon Prime to get a ⁓ streaming video ⁓ to purchase it, quote unquote purchase it, well you're buying convenience. You no longer have to stand up and like insert that disc into the DVD, you know, no longer have to rummage through a box to try to find ⁓ the movie you wanted to see that night and go stick it into your machine. You just click a couple of buttons. And it's there and it's searchable. ⁓ so technology has become much more convenient in that respect. It doesn't take up space because it exists on a streaming service. ⁓ you know, I have a box of d of old DVDs for movies that I own, ⁓ and it's like sitting in the other room. And and, you know, occasionally there's a movie in there that ⁓ I can't easily get on a streaming service or or maybe I'd have to pay money for it if I wanted to ⁓ get it on Amazon Prime. Yeah, I'll go pull out the DVD if I wanted to watch that. But I am foregoing the convenience of it. And I think that's what people are really paying for with streaming services is the fact that now it's at your fingertips rather than digging through a box or finding an old VHS tape. If we want to go back even a a a generation earlier, ⁓ and I remember those things, you know, that you had to rewind them and sometimes the magnetic tape would become loose and it's just a giant mess. Now it's click a button and it's there on your TV.

Speaker 1

have a bunch of CDs and a bunch of DVDs and I do not have a C D player nor a DVD player. So basically I just have in my closet ancient technology. Well I I

Speaker 2

I look at this and I wonder, you know, you see something like the vinyl record market, which for decades was just in this slump. They were like these old giant discs made out of plastic that your parents and grandparents had, and they sat in a cabinet somewhere. Well, then people rediscovered, hey, vinyl music, sometimes it sounds better. ⁓ sometimes the fidelity is more accurate than these digitized forms that you can get on ⁓ your your streaming services or Spotify or something. ⁓ sometimes it even Sounds better than a C D player. So there's been a a rebirth of the vinyl market and people get like these high end record players. And now the thing is to search for ⁓ like an original pressing of something by the Beatles from the sixties. And they now command an ultra premium to get those ⁓ original records. In other cases, you know, companies are putting back into print vinyl records that you previously were Unaccessible unless you bought the original version in like 1975. ⁓ so a niche market has emerged in an area where that old technology has been displaced. And I wonder, you know, like 30 or 40 years ago, are we going to be doing that with DVDs or or something or ⁓ one of these technologies that has been set aside for a newer and more convenient thing. And I don't think it means that any single one of them is winning out. I think it actually shows that there's a diversification occurring within the economy around.

Speaker 1

And I think there's also a Fear of over the lack of permanence. Movies can be taking off of streaming services. You know, something that we've seen pro you know, probably over the last, you know, ten years when it comes to things like cancel culture, where you had episodes from popular sitcoms being removed from streaming. The call went out. It's like, hey, if you can get a physical copy of this stuff, do it because who knows if it's going to be here down the road. So I think a similar thing regarding transportation as well. As we move to having more self-driving cars for the most part it really won't make sense for the for most people to to have a car, especially if you live in a city. But there will be, you know, freaks, I guess like myself, who are like, ooh, I I want a car just in case, just in case things go, I guess the sci-fi route.

Speaker 2

What this shows again, diversification of economic instruments is the answer here. A self-driving car could be great if you live in downtown San Francisco. And I say that because they have them. They have these Waymo things that you push a button on the app and it comes and picks you up and it's a self-driving vehicle. And it works well for the slow pace of ⁓ city streets that are full of ⁓ stoplights and things. Like I hate driving in downtown San Francisco. But it's a lot easier to take a Waymo or or even if you want to go more conventional an Uber. On the other hand, if I'm driving out in the country, you know, this supposed new model for the city makes almost no sense to me. ⁓ same thing with electric vehicles. ⁓ maybe they're great if you ⁓ can plug it in at your house and your garage and your daily commute is five miles up the road to the office in the city. On the other hand, if you live out in a rural area or you regularly drive, you know, several hours and ⁓ on long trips and stuff, well, what does that mean? If you have an electric vehicle, it's you gotta find one of these charging stations and a rest stop or a Walmart or something somewhere, and you're gonna sit there for 30 minutes while it recharges. And then you go on and drive for another three hours and then do the same thing over versus like two minutes to fill up at the gasoline pump. ⁓ Well, the gasoline technology, I think, still has the clear advantage there. So again, it's the diversity of options, which is like one of the great things of the ⁓ consumer market, is you pick the technology, you pick the level of ⁓ whether it's automation or ⁓ or driving your own vehicle or whatever it happens to be that suits your needs and your lifestyle. ⁓ not this one size fits all that you get with the ⁓ you will own nothing and be happy approach. You know, that's a central planner asserting that I know what's best for everybody. And I would look at ⁓ any politician that says that and say, Well, you know, you clearly don't. You're exercising a hubris where you have a pretense of knowing things that are unknowable to you, i.e., other people's needs and subjective preference.

Speaker 1

And when it comes to housing, you hear a lot about affordable housing. And usually with affordable housing, it's not like single family ownership of housing. It it always seems to come down to rentals, ⁓ wanting to build more apartments. And in New York City, there's been a a lot of talk about, you know, sort of ⁓ the city taking over buildings. And something that that I wonder is if you have a city or the state taking over these buildings, well then what happens to Property taxes. They are no longer producing or, you know, collecting property taxes, right? And when you talk about cities, so much of everything is dependent upon property taxes. I don't know what the ⁓ the equation looks like sort of down the road in kind of this post ownership utopian world where you don't own anything, you're a consistent renter or somebody owns it but you don't.

Speaker 2

Well, yeah, I I saw a meme that was going around on the internet the other day. And there's a picture of downtown Havana, Cuba. And, you know, all the buildings are decrepit and falling apart. ⁓ the paint is peeling off, bricks are missing. There's ⁓ you know, it just looks like a a war zone. ⁓ it looks abject poverty. And the meme had this little caption at the bottom that says, ⁓ celebrating sixty years of rent control in Havana, Cuba. As a representation, basically if you take ownership away, you no longer have any market incentive that comes with private property to maintain your your facility, to ⁓ s ⁓ improve upon it, to actually serve the people that rent from you. everything is like degrades essentially when you have this ⁓ injection of public ownership or very heavy public regulatory control, which is what rent control effectively does. Then you have issues like you mentioned of the the the the tax base. ⁓ you remove private property, which is a major mechanism of tax generation. I don't think the people that advocate this really have a sensible plan. Instead they're they're drawn to these crazy pie in the sky schemes. All right, we'll we'll replace our ⁓ our loss in regular property taxes or gasoline taxes if we if we ban vehicles and force everyone into electric cars, things like that. We'll replace that. We'll just tax wealth. Or we'll just tax billionaires and pretend that, ⁓ yeah, they'll they'll happily supply everything and then socialist utopia comes about. Well, what really happens whenever these types of taxes are put in place is the billionaires leave. They move to other cities, towns, and states, and they take their resources with them, and suddenly the socialist utopia has no means of funding itself.

Speaker 1

A happy ending. Indeed. You know, I do wonder, are there positives that can come from owning nothing? Or I've seen stories of like ⁓ recently divorced dudes in like their 50s who kind of give up everything, buy a van, and just travel the country and surf. Right. They talk about you know happiness and freedom there not being held down by anything. ⁓ I could see how in that particular example how that

Speaker 2

own the van though. If he told them that they had to like publicly share a van or something with everybody else that wants to do that. you know, I think that would become a a much less appealing lifestyle. I see that as kind of like more of a retirement project. This is someone who ⁓ has made enough money in their life that they can buy a van or an RV or another version of it. Some sometimes they'll buy a sailboat and go sail around the Caribbean. ⁓ sell off all their home and their property on land, but you're buying something else instead. And the fact that you own it also means you can take it where you want. It also means that you're responsible for its upkeep. If the engine on the van goes out, you know, you sure as as hell you want private property to be able to go to the repair shop and fix that engine. ⁓ so it's just another manifestation of the same thing.

Speaker 1

Yeah, I think ⁓ over the course of this episode I'm trying to think of, yeah, what do I think happiness means and what what do I think will will make will make me happy? And ⁓ I don't have that answer. For anyone who came here came here thinking that had that answer, ⁓ maybe Phil has that answer, but

Speaker 2

The secrets of happiness. We're now like a self-help show.

Speaker 1

Yeah, the Dow of Happy Hour Econ. ⁓ well, I remember I was ⁓ it was a couple of weeks back and ⁓ my wife and I and our our kids were at a ⁓ friend's ⁓ barbecue and I was hanging out with the with the other dads and ⁓ a couple of them were talking about getting new trucks and I think one truck that the guy wanted was like fifty grand or something like that and ⁓ you know he was excited about it and ⁓ I I was I guess I was excited for him. I was like, cool, this is something that he wants and he works really hard and he gets it. And I was thinking, fifty grand for a truck, that wouldn't make me happy at all. The fifty grand would make me very happy, but I would definitely be putting that ⁓ You know, I think a lot of people get bogged down with ⁓

Speaker 2

Yeah.

Speaker 1

you know, the idea of consumerism and buying stuff, et cetera, et cetera. But I think behind every single one of those purchases is obviously, you know, someone deciding, I am making this decision ⁓ for what I think is going to better my own life.

Speaker 2

And maybe this is what the founders were really after when they go pursuit of happiness instead of property. Property is one way that you can ⁓ you know express your economic preferences, is ⁓ hey, I purchase a new house, purchase a new boat, buy a new truck. But the pursuit of happiness implies choice in this. ⁓ a new truck may make your neighbor happy, but you have no interest in it. And that's perfectly fine. It's when you take away that choice and say, no, you must. Live in this apartment block, ⁓ take the automated car to work and ⁓ only eat bugs. ⁓ you're taking away people's choice. So I guess another way of putting it is it's not just the numerical acquisition of things of property that makes people happy. It's actually what you do with the choice and what you choose to purchase, what you ⁓ you opt for. ⁓ the pursuit of ho happiness is trying to meet your own subjective preferences. That may be completely different from somebody else, and that's perfectly fine. That's perfectly okay. And yet if you have this Danish politician or someone coming in ⁓ from the WEF or Zoran Mom Dani saying, Well, we know what's best for you, we're gonna make that choice from you. we're we're gonna take away your ability to pick what you choose to spend your money on, and in fact, we're gonna say we're gonna abolish money. Well, what happens there? They've removed your ability to pursue happiness.

Speaker 1

Well, we want to thank all of you for pursuing some happiness with us on this episode of Happy Hour Econ. Please be a part of the sharing economy in that blast this out, share it with everybody, and we will see you next week.