can no more staunch these flows than King Canute could halt the tides.
That said, the most oft-forgotten fact about property rights is that they do not exist in nature; they are constructs of human minds and societies. The assets to which they apply may exist in nature, but the rights of humans to do things with them, or prevent others from doing them, do not. Their design and allocation are entirely up to us.
In this book, I take our existing fabric of property rights as both a given and merely the latest iteration in an evolutionary process that has been and will continue to be altered by living humans. Future iterations of the fabric will therefore be a product not only of the past, but also of our imagination and political will in the future. And, while eliminating existing property rights is difficult, adding new ones is less so.
Before we talk about universal property, we need to look at co-inherited wealth, for that is what universal property is based on.
A full inventory of co-inherited wealth would fill pages. Consider, for starters, air, water, topsoil, sunlight, fire, photosynthesis, seeds, electricity, minerals, fuels, cultivable plants, domesticable animals, law, sports, religion, calendars, recipes, mathematics, jazz, libraries, and the internet. Without these gifts and many more, our lives would be incalculably poorer.
Universal property does not involve all of those wonderful things. Rather, it focuses on a subset: the large, complex natural and social systems that support market economies, yet are excluded from representation in them. This subset includes natural ecosystems like the Earth’s atmosphere and watersheds, and collective human constructs such as our legal, monetary and communications systems. All these systems are enormously valuable, in some cases priceless. Not only do our daily lives depend on them; they add prodigious value to markets, enabling corporations and private fortunes to grow to gargantuan sizes. Yet the systems were not built by anyone living today; they are all gifts we inherit together. So it is fair to ask, who are their rightful beneficial owners?
There are, essentially, three possibilities: no one, government, or all of us together equally. This book is about what happens if we choose the third option and create property rights to make it real.
Let’s start with an obvious question: how much is this subset of co-inherited wealth worth? While it is impossible to put a precise number on this, estimates have been made. In 2000, the late Nobel economist Herbert Simon stated, “If we are very generous with ourselves, we might claim that we ‘earned’ as much as one fifth of [our present wealth]. The rest [eighty percent] is patrimony associated with being a member of an enormously productive social system, which has accumulated a vast store of physical capital and an even larger store of intellectual capital.”1
Simon arrived at his estimate by comparing incomes in highly developed economies with those in earlier stages of development. The huge differences are due not to the rates of economic activity today – indeed, young economies often grow faster than mature ones – but to the much larger differences in institutions and know-how accumulated over decades. A few years later, World Bank economists William Easterly and Ross Levine confirmed Simon’s math. They conducted a detailed study of rich and poor countries and asked what made them different. They found that it wasn’t natural resources or the latest technologies. Rather, it was their social assets: the rule of law, property rights, a well-organized banking system, economic transparency, and a lack of corruption. All these collective assets played a far greater role than anything else.2
The preceding analysis doesn’t include ecosystems gifted to us by nature, but Robert Costanza and a worldwide team of scientists and economists took a crack at that in 1997. They found that natural ecosystems generate a global flow of benefits – including fresh water supply, soil formation, nutrient cycling, waste treatment, pollination, raw materials and climate regulation – worth between $25 trillion and $87 trillion a year.3 That compares with a gross world product of about $80 trillion.
These calculations suggest that we are greatly confused about where our wealth today comes from. We think it comes from the fevered efforts of today’s businesses and workers, but in fact they merely add icing to a cake that was baked long ago.
The calculations also suggest that we should devote far more attention to co-inherited wealth than we currently do. Nowadays, economics textbooks don’t even mention such wealth, much less its magnitude. Nor do Wall Street analysts or financial reporters. This is a grievous oversight that greatly impedes our understanding of our economy. It is like trying to comprehend the universe without taking dark matter into account, or analyzing a business while ignoring over eighty percent of its assets.
Figure 1 Where Today’s Wealth Comes From
Paying more attention to co-inherited wealth, however, is just a first step. If we want to change market outcomes, we need to functionally connect this wealth to real-time economic activity. And to do that, we need property rights, managers and beneficial owners.
What is it?
Universal property, as I use the term in this book, is a set of non-transferable rights backed by a subset of wealth we inherit together. Such property isn’t mine, yours or the state’s, but ours – literally held in trust for all of us, living and yet-to-be born. It belongs to us not because we earned it but because we co-inherited it, as if from common ancestors. This co-inheritance is, or should be, a universal economic right, just as voting is a universal political right.
To say that all of us are co-inheritors of universal property does not, however, mean that we should manage it ourselves, or that governments should. That job is best assigned to two types of institutions: trusts with a fiduciary responsibility to future generations, and social wealth funds that pay equal dividends to all living persons within their jurisdictions. An example of the latter is the Alaska Permanent Fund, which has paid equal dividends to every Alaskan since 1980. Examples of the former include large land trusts, such as the National Trust, a conserver of land and historic buildings in the UK, and thousands of local trusts, whose missions include land conservation, affordable housing, education, and community development.
An archetypal, albeit theoretical, example of universal property is the “sky trust” I proposed in my 2001 book, Who Owns The Sky? It is archetypal because it includes features of social wealth funds and fiduciary trusts simultaneously. In it, a fiduciary trust is charged with protecting the integrity of the atmosphere (or one nation’s share of it) for future generations. It auctions a declining quantity of permits to bring burnable carbon into our economy, and divides the proceeds equally. A version of this model was introduced in Congress in 2009 by Representative (now Senator) Chris van Hollen of Maryland and re-introduced several times since.4
A bit of history may be useful here. For millennia, humans lived in tribes in which almost all property was communal. Individual land ownership emerged at the beginning of the Holocene when our ancestors became settled agriculturalists. Rulers granted ownership of land to heads of families, usually males. Often, military conquerors distributed land to their lieutenants. Titles could then be passed to heirs – typically, oldest sons got everything, a practice known as primogeniture. In Europe, Roman law codified these practices.
The Roman Institutes of Justinian distinguished three kinds of property:
res privatae, private property owned by individuals, including land and personal items;
res publicae, public property owned by the state, such as public buildings, aqueducts and roads; and
res
