In dealing with the systems of property, it is important to understand there's sometimes
a grievous mistake in the conventional wisdom, which refers to property as arbitrary constellation
of rights and duties that therefore can be changed at will by the state because there's nothing
of deep substance there.
The correct view on this subject is exactly the opposite.
If you're talking about a system of property that is acquired by a system of first possession,
what you want to do is to make sure that the owner has a useful bundle of rights, that
permit for its maximum development and use.
The current system is one of decentralized acquisition.
People go out and they acquire a piece of land and mark its boundary lines, and then
other people come, perhaps somewhat later in time, and they do the same thing.
And slowly what happens is if you look at the map, the vacant spots get filled in with
individual pieces of ownership.
So, what you do on the map is you start with private possession, and then what you do is
you develop the common elements: the streets, the highways, and the sewers, which allow
you to link things together.
That allows for integration to take place.
You can now mine on the one hand.
Build foundations for your house on the other, and also build upward, so that you're not
confined to simply a plain.
There is always been a great question as to whether or not you're allowed to take as much
land as you want.
When in a state of nature this tends not to be your problem because when you try to make
your land too extensive, you'll not be able to defend it against wild animals.
So, what typically happens is that people choose land which gives them defensible borders.
And so with respect to land, it has the following dimensions.
Property has to be infinite in duration because if there's a time limit, you can never quite
figure out when that time limit expires and what should be done after it expires.
So, infinite horizons essentially allow for development.
Property is also in three dimensions.
And so the first basic approximation is that he owns the soil, owns the depths and owns
the air.
Property which you cannot use is worthless.
And so, therefore, the conventional uses of property for farming on the one hand, mining,
and for building on the other, are generally built into the basic common law definition
of property rights.
With respect to property, the basic rule is that prior in time is higher in right.
So that those people who take possession first essentially are allowed to keep it against
all subsequent takers.
This means in effect that once the property rights were established, no individual is entitled
to disrupt them.
And the basic rule on this is you may do with your property what you please because you
will gain from that particular use, and other peoples will not harm.
But the major qualification on that should be instantly apparent, which is that you're
never allowed to use your property in ways which make it impossible for other people
to use theirs.
And so what happens is the use of property which is allowed in the first interest is
subject to a series of boundary constraints.
Namely that you're not allowed to commit nuisances against your neighbors.
And then what happens is the property that you have is often in need of disposition.
And what the basic rules provide for is that you can so divide that particular property
that you have.
And the way you can divide it is in a whole variety of arrangements.
You can divide it by leases, you can divide it by life estates, you can divide it by mortgages.
And the theory is as you start to divide these particular interests, what happens is the
gains from trade that you can have are greater than if the only choices you have were an
outright ownership, transfer on the one hand or no transfer at all.
So divided interests in property are, in fact, the devices by which social gains start to
take place.