Summary: Chapter 9
introduces the concept of "scientific societies" and explores the
potential for creating partial ownership systems that balance the benefits of
natural law societies with the need for progress and innovation. It discusses
the limitations of purely emotion-based decision-making and advocates for a
logical approach to societal design. The chapter uses examples like Theodore
Roosevelt's creation of the U.S. Forest Service and leasehold ownership to
illustrate how partial ownership systems can work. It concludes by suggesting
that the Pastland group has the opportunity to design a society with an optimal
"degree of ownability" that could potentially avoid the pitfalls of
both extreme ownership and non-ownership systems.
9: Scientific Societies
Not all humans seem to have the same abilities when it comes
to the use of logic and reason. Some
people are highly intellectual and use logic to solve nearly every problem they
face.
Others rely on intuition and feelings. they have instincts that tell them what to
do in different situations. The term
instinct means ‘any behavioral motivation other than logic.’ We normally use the term 'feelings’ to refer
to the mental pressures that push us to do things without having to first think
them through. In other words, you could
say ‘feelings' are another term for 'instincts.' We want to do certain things.
We don’t always think them through and, in some cases when we do think
them through, they don’t make sense.
But we often do these things anyway.
Our feelings are stronger than our intellects.
Sex is a pretty
clear example of this. If not for
emotion/instincts, would people ever do this?
Talk to a kid who is too young to have these feelings and you will see
that it is hard to get them to believe people actually do this. (You put what in where? That can’t be right.)
In many cases, our logical
minds tell us that a person we find attractive and want to have sex with is not
good for us and will make our lives miserable.
Some are strong enough, mentally, to override their feelings and stop
seeing this person. But I know many
people who just can’t do this. they
follow their feelings and this often leads to horrible lives for them.
We are capable of incredible intellectual feats. But we don’t always use these skills and
talents. Thinking through complex
projects is mental work and can be very hard work. It can take a lot of mental effort to work through complex
projects logically.
In some cases, practical realities force us to do this work.
War provides a perfect example: we want to attack and kill and keep killing and killing until all
members of the tribe trying to infringe on our territorial rights and
sovereignty are dead. (These are
instincts that we inherited from our ape ancestors.) But our logical minds tell us that if we fight emotionally, and
our enemies fight logically, we will lose.
If they have jets and isobaric bombs, and we attack them with knives and
pistols, we will be killed. We have to
be logical and refrain from random and angry attacks. We need to organize so that we can have weapons that are as
capable as their weapons. We can't let
the people designing nuclear bombs use their emotions to determine how much
plutonium to go into them. They need to
do mathematical calculations and get the amount perfect.
Over the centuries, people have found that any emotion at
all (even one seemingly unconnected with the project) can interfere in the
scientific calculations and lead to dangerously wrong answers. For example, prior to Galileo’s findings in
1607, people designing cannons thought that heavy objects fell faster than
light ones. It just felt right: a cannonball that weighs 200 pounds (a solid
iron ball) will not fall as fast as one that weighs 100 pounds (a hollow metal
casing filled with gunpowder that will explode when it hits the ground). Because people felt the light ball would
fall at a different rate, and in fact it doesn't, they were wrong in their
calculations of the amount of gunpowder to put into the cannon to propel the
different types of munitions. They
missed their targets when they could have hit them, if they hadn't been
prejudice, and lost wars they would have otherwise won.
In his book, ‘Two New Sciences,’ Galileo showed that there
is a universal law of gravity that works exactly the same way on all
objects. After accounting for air
resistance, all objects ‘fall' (react to gravity) the exact same way and at the
same speed.
Galileo was arrested and put on trial, shortly after writing
this book, for ‘teaching false sciences.’
The things he said didn’t mesh with the things people had been teaching
for thousands of years and were considered to be the absolute truth. (They clearly hadn't been tested in a
scientific way. If they had been, they
would have been proven false.) Some of
the people he was training in his class would one day join the military and
some would become artillery officers.
They would make their calculations in ways that the establishment
thought was false and miss their targets by even more than was common. This could harm the war effort. Galileo was dangerous. He was put on trial and sentenced to life in
prison.
A common
misperception is that Galileo was jailed for claiming the Earth was a planet
orbiting the sun like other planets.
This, the story goes, bothered the religious authorities, who brought
charges against him. This is not what
happened: the records still exist and
he was clearly tried for 'Two New Sciences,' a book that doesn't even mention
astronomy.
The academic establishment
wants students to accept that academics know what they are doing, they always
knew, they will always know, and anyone why disputes the things accepted by
academia is wrong. They don't want to
show that almost everything that was taught as ‘absolute truth’ in the past has
been shown to be wrong. (Children won’t
accept what they are taught if they believe the teachers might be wrong. Then, if they are asked to fight, kill, and
die for their country, they will ask 'why?’)
They can then make up stories like Galileo's fights with the religious
authorities to make it appear that there was nothing wrong with their field.
Some artillery officers heard about the dispute. They tried Galileo’s formulas. They found that they predicted the paths of
cannonballs much better than standard formulas. They began to use them.
Those who accepted the laws based on science and observation hit their targets. Those who didn't, did not. Their feelings still told them
Galileo had to be wrong. But they were
trying to kill people who were firing cannon to try to kill them. Those that hit their targets lived; those
that did not died. Eventually, the ones
that refused to accept Galileo’s ideas either reformed or were all killed off
and his ideas became the standard ideas.
They were taught in military schools and cadets entering military
schools were expected to have a background that would allow them to use these
calculations.
We all think things should work a certain way. Certain things feel right. But we can’t let our feelings get in the way
of our analysis, or we will get the wrong answer. Physics just doesn’t work the way our feelings tell us
will work. (Einstein’s work provides
another example. It doesn't feel right that matter and energy should be the
same thing, or that there should be a top speed that anything can reach. But people who refuse to accept these laws
won’t be able to solve problems in physics, including the problems that have to
be solved to make nuclear bombs.)
Military researchers have to follow science exactly and
leave all emotion out of their calculations, or they would not be able to
design and build weapons capable of protecting their country.
The realities of warfare have forced us to totally banish emotions
and beliefs from analysis these areas.
Try this: look up journal articles about the correct use of prayer to
help work out the ballistics of rockets or the configuration of bomb triggers;
you won’t find any.
The same principles hold for societal design. Unfortunately, in these areas, people
haven't gotten to the point yet where they are willing to accept the things
science tells them, when their feelings tell them something else. So, our societies are designed almost
entirely around feelings, emotions, instincts, and other non-scientific
analysis. We use logic to help us build
weapons. But we don’t use logic to help us understand the forces that
push us to believe that the people born on the opposite sides of certain
imaginary lines are worthy of nothing better than being blown to pieces by
these weapons.
Science in Pastland
Our group in Pastland is in a position to think about the
world differently than people did before the event that sent us into the
distant past. We have a moratorium on
accepting the principles that led to the conflicts of the past. We can think of the interests of our group
as the interests of the human race. We
can do an analysis of the different structures that we can incorporate into our
societies, figure out which will help us, and which will harm us.
We have stared with a natural law society. This is a 0% ownability society. Zero
percent of the rights that are potentially ownable to the world are actually
ownable. We can all see that the
natural law society has forces pushing against progress, growth, and the
development of facilities that will allow us to replace the technological tools
that we brought back with us from the future and build new and even better
technological tools in the future. If
we keep natural law societies, we will not have these things, we will revert to
primitivism, and all knowledge of the better ways of doing things will be lost.
We will realize that the societies that we left behind in
the distant future had forces that led to improvements and progress. We may come up with theories about the
reasons for the difference.
Some may look back at the distant future societies and
realize that people who improved in those societies often got very, very rich
from this. They owned rights to improve
and they owned rights to keep the wealth they got by improving. It might be possible to split out these
particular rights—the rights that encouraged people to improve—from the other
rights that they got and make these particular rights ownable.
We can work out the forces that lead to improvements. Then we, the members of the human race, can
discuss our priorities. If a majority
of the members of the human race want improvements, we can incorporate these
structures into our society.
We don’t have to worry about what is ‘supposed to’ happen to
do this kind of analysis. We don’t have
to search the heavens for invisible beings that may have created us and then
determine the intentions of these beings.
We can simply determine the relationship between the structures that can
be a part of human societies and the incentives. After we understand these
things, we can figure out what incentives we want our societies to have and
then put the required structures into place.
We have seen that 0% ownability societies have advantages
and disadvantages, and 100% ownability societies have advantages and
disadvantages. If it is possible to
build societies around the premise of ownability of no rights, and possible to
build societies on the premise of ownability of all rights, it must also be
possible to build societies around the idea of ownability of some rights
or partial rights to the world.
I want to give a quick example to show you how such a thing might work:
Let’s consider partial ownability of the bounty or
free cash flow the land produces. If we
sold 100% of the rights to the Pastland Farm, the buyer would be buying the
right to get $2.4 million a year in free cash flow and all increases in
production that she is responsible for creating. Imagine that we decide we are
going to sell the right to some free cash flow but not all of it, and
all increases in bounty that take place during the time that rights
to the property are private.
For example, say that we decide that we want only $400,000
of the free cash flow to be buyable and ownable; the rights to the first $2
million will not be sold. We can
do this by creating something called a ‘leasehold’ and selling the leasehold,
but not the property itself. The
leasehold is simply a document. This
document grants certain rights. In this
case, it is an agreement between the human race and the buyer. The buyer will own the permission of
the human race to keep all production of the farm above the first
$2 million it produces each year. (The
buyer will not own any land; she will only own a permission slip.)
Essentially, she will be buying the right to lease
the land for a lease payment of $2 million a year. There are several different kinds of leases people can
create. If a lease is granted by a
document that can be bought or sold, it is called a ‘leasehold’ (rather than
simply a ‘lease’ or a ‘rental agreement’).
The yearly payment is called a ‘leasehold payment’ (rather than simply a
‘lease’ payment or ‘rent’). The
document itself grants ownership of special rights to the land to the buyer of
the document. The buyer will not own
the land itself. She will, however, own
certain rights that we will see are extremely valuable and that can be sold for
very large amounts of money. A document
that grants marketable leasehold rights, and which is sellable after it has
been issued, is called a ‘leasehold title.’
Two kinds of property ownership:
In our world today, there are
basically two ways you can own property.
the first is called ‘freehold ownership.’ If you own with freehold ownership, you pay only a one-time price
to the seller to get rights to the property and never pay anything else. You
get a document called a ‘freehold title’ or ‘freehold deed’ to the
property. Because almost all sales in
the world today are freehold sales, we typically omit the term ‘freehold’ in
our discussions. We say only that they
get a ‘title’ or a ‘deed’ to the property.
It is also possible to buy a
leasehold on a property. Although leasehold sales make up only a tiny percentage
of total sales, they do take place; we will look at examples shortly. If you buy a leasehold on a property, you
pay a price initially to gain control of this property. This price is always going to be less than
the price of a freehold on the same property, because it is not the only cost
you will have to pay. You will also
have to make a yearly payment to the seller called a ‘leasehold payment.’ If
you buy property rights this way, you get a document that is still called a
‘title’ or a ‘deed,’ but it is a different kind of title or deed, called a
‘leasehold title’ or ‘leasehold deed.’
If we decide we want to sell only specific, limited, and
conditional rights to the farm, we can do this using a leasehold ownership
system.
Now consider this:
A 100% ownability system sells 100% of the rights to the
property. A system based on 100%
ownability is a 100% ownability society.
What if we create an entire society on the foundation of a
partial ownability system? The above
example involved selling the right to 16⅔% of the free cash flow. (The buyer would have to turn over $2
million of the free cash flow as a leasehold payment, leaving her owning only
the right to $400,000 of it. $400,000
is 16⅔% of the total $2.4 million in free cash, so the buyer of this document
will be buying the right to get 16⅔% of the free cash flow, plus any
increases in cash flows she is able to generate by improving the
property.) If this system was used for
all properties that the group sold, people would be able to buy rights to
operate land privately which will include the right to keep 16⅔% of the free
wealth that flows from the land. You
might call a society based on a property control system like this a ‘16⅔%
ownability society.’ It doesn’t sell
all rights to the land, but it does sell some rights.
For now, let’s not worry about whether this is the ‘right’
percentage to sell. We will look
through the different percentages we can sell later in the book and compare
them. We will see that we can sell any
percentage of the rights to the free cash flow that we want from 0% to
100%. This means that, if we consider a
scale of possible ownership systems that ranges from 0% ownability societies
(natural law societies) to 100% ownability societies (sovereignty-based
societies) we can go anywhere we want along this range. Is the option here, 16⅔%, the best place to
go? That requires a lot of
analysis. Here, I am just trying to
explain the basic idea. I want you to realize that there is something in
between natural law societies and sovereignty-based societies. The two systems
that have existed on Earth in our history are both extreme systems. The example above is simply designed to show
you that it would be possible for a group of people in the right position to
build something that is NOT extreme.
If you look on the back cover of the book, you will see a
chart. This chart shows the different
possible societies that humans can form.
The ‘degrees of ownability’ are on the vertical (up-down) scale. Go up and you move to systems with
lower ownability. If you go to the
extreme top, you get to 0% ownability societies, or natural law societies. If you go down, you go to systems
with greater ownability. The extreme
systems on the bottom are sovereignty-based societies. The scale on the on the
right side of the chart shows the strength of various different kinds of
incentives that can exist in societies.
Some societies work in ways that send wealth to people who
harm the world and create violence. I
call these incentives ‘destructive incentives.’ You can see by the chart that
destructive incentives don’t exist in natural law societies, they are very
strong in sovereignty-based societies, and they have various strengths at
various intermediate levels.
Some societies work in ways that send wealth to people who
improve the world and make it capable of producing more value with less
inputs. (In other words, they reward
people who increase the bounty or free cash flow of the planet
Earth.) Note that natural law societies
don’t have these incentives at all.
Sovereignty-based societies do have these incentives. Intermediate societies have these incentives
with various strengths.
We will see that the incentives come from flows of value
that can be measured with absolute precision.
Since they are measurable, we can quantify them and put numbers on their
strength. On the chart, higher numbers
mean stronger incentives.
Incentives are not behaviors; they are behavioral
motivations. They are the forces that
push people to act certain ways. In
other books, people have compared incentives to the idea of an ‘invisible hand’
pushing people to act certain ways. For
example, some societies have incentives that push people to deploy their
‘industry’ (their time, skills, effort, talent, and wealth) in ways that lead
to more creation of value on the planet.
People have examined these incentives and said things like:
Every individual
neither intends to promote the public interest, nor knows how much he is
promoting it. He intends only his own
security; and by directing that industry in such a manner as its produce may be
of the greatest value, he intends only his own gain, and he is in this, as in
many other cases, led by an invisible hand to promote an end which was no part
of his intention.
Not everyone reacts to incentives. Some people may feel the
pressure of an ‘invisible hand’ pushing them to do things that create value,
but may not react: they may want to spend time with their families or may not
have the freedom to quit their jobs so they can devote their effort to
something that they think will lead to the creation of value. But the incentive/invisible hand is still
there. It pushes on everyone. The stronger the incentive, the greater
the force of the invisible hand.
This book claims that the problems that threaten us come
from forces that are side-effects of the operation of the sets of structures
our ancestors have created to determine who has the right to use the wealth the
land produces and what rights they have.
These structures work in ways that generate very powerful destructive
incentives. They send wealth to people
who do things that harm the human race and planet Earth. We will see that we can measure the strength
of these incentives with great precision. We can determine the impacts of small
differences in the structures on the strength of the incentives. We can see what changes are necessary to
reduce the strength of the destructive incentives to manageable or acceptable
levels.
As we will see,
constructive incentives and destructive incentives are opposites and work
against each other. If the constructive
incentives are weaker than the destructive incentives, progress, advances in
technology, and mechanization help the human race and make our existence
better; if the destructive incentives are stronger than the constructive
incentives, progress, advances in technology, and mechanization are generally
harmful, as they give the people with incentives to destroy more powerful tools
to do the things these invisible hands push them to do. If the constructive
incentives and destructive incentives have the same strength, we meet
the minimum requirements needed to have manageable and at least potentially
sustainable systems.
Destruction means the
disappearance of wealth; production means the appearance of
wealth. It is possible to create more
wealth than is destroyed indefinitely.
It is not possible to destroy more wealth than is created indefinitely. The minimum conditions for sustainability
lead to creation of wealth that matches destruction of wealth. The chart shows societies that meet this
condition on the line marked ‘minimally sustainable societies on this line.’
Later in this book we will
look at solutions that will cause our societies to gradually evolve in ways
that move them upward on the chart.
We start with highly destructive societies (the societies on the bottom
have the strongest possible destructive incentives) and move to societies with
gradually less destruction. At some
point, we reach minimally sustainable societies. At this point, we are basically ‘out of the woods’ because we
have conditions that allow us to manage the destruction to keep it from
exterminating our race. If we keep
going, we will eventually get to a system with no destructive incentives at all
and with the strongest possible constructive incentives, represented by the
middle line in the chart, labeled ‘socratic societies here.’ All these things are discussed as this book
progresses.
If we understand all of the intermediate options, and know
how to create them, we can basically pick and choose the exact incentives that
we want our societies to have. (We can
do this by mathematical analysis described later, or by merely looking at the
chart.)
Our group in Pastland is in an ideal situation. We have passed a moratorium that is only
going to run a few years more. After it
is over, we will be back basically where we started, with every single option
on the table. We can take advantage of
the next few years to figure out what is possible, find the best system, and
put it into place.
We are actually very lucky in this regard. We have people in our group with many
different backgrounds. Some of these
people happen to have experience in fields that can help us figure out how to
make our societies work the way we want them to work.
Back in the future, partial ownership systems were used in
certain specialized areas. There were a
lot of people who wanted to protect land. They wanted to grant rights to it that would create incentives
for the people who controlled it to keep it healthy and productive and even
make certain specialized improvements to it. (The example below involves one of
the most important of such people, President Teddy Roosevelt of the United
States.) They created partial
ownability systems to make this happen.
We happen to have a few people in our group who have experience in these
areas. They worked with leasehold ownership and other partial ownability
systems their entire adult lives, until they took this trip. We can take advantage of their specialized
skills and backgrounds to help us create a system that brings the exact
incentives we want. If we want systems
with zero destructive incentives (no forces pushing people toward
violence and destruction), and very powerful constructive incentives, we can
create them. We can make our finished
system work any way we want.
Tools To Use To Create Partial Ownability
Societies
Theodore Roosevelt was born and raised in New York. But he always considered himself to be an
outdoorsman and moved to the part of North America called ‘the west’ and spent
a lot of time there. Roosevelt realized
that the land in North America east of the Mississippi had been granted to and
exploited by corporations that only cared about money. They had no regard for the land and
destroyed each area as soon as they arrived.
The corporations were running out of land in the east to
exploit. They were petitioning the
government for grants of land west of the Mississippi. When corporations
arrived, they took out the trees first and sold them, mostly in other countries
(lumber was still relatively rare and therefore expensive, with the bulk of
forests having already been destroyed in Europe, Asia, and the parts of Africa
that Europeans had colonized). They
then concentrated on gold and other valuable minerals. They took everything worth taking and moved
on, offering the land to companies that would sell it as farmland. But the land west of the Mississippi had not
been under the control of the government for very long and most of it was still
intact, preserved in the same pristine condition as the American native people
kept it in.
By the time Roosevelt became president, most of the American
native people had already been removed (either exterminated or transferred to
barren and inhospitable reserves), but the land was still intact.
Roosevelt was in love with the land. He didn’t want it to
fall under the control of the corporations, which he knew would destroy it.
But how could he prevent this?
He knew that the corporations had massive lobbies and
basically owned enough government officials to get their way. If the government
controlled this land, and the Congress had the authority to give it away,
it would be given to the corporations (or sold for trivial amounts) and be
destroyed. To save the land from
corporations, he had to take it out of the hands of the Congress and future
presidents. How to do this?
Roosevelt was an attorney from a family of attorneys. His family and friends knew more about the
law than just about anyone else in the world. He worked with these people to
try to solve his problem. He decided to
create a new kind of organization, one that would control the land but
not own the land. It would be
dedicated to protecting the land and would have the legal authority to
take steps to protect it, but it would not have the legal authority to
ever sell even a single square inch of this land to any corporations or any
other persons. The organization that
would control the land would be called a ‘conservatorship.’
He called the organization he created the ‘United States
Forest Service.’
Roosevelt wanted to protect the land, but he also wanted to
make it available for people to use and enjoy.
He gave the conservatorship organization a mission: it had to provide
uses that would allow people to enjoy the forests, but which would still keep
them healthy and preserve them as forest lands. One of the ways people might enjoy forests is to build little
cabins where they can live in a protected forest environment.
People aren’t going to invest their money in building a
cabin unless they own some rights to it; they need to at least own the right to
live in the cabin and the right to sell this right to others, or it just
doesn’t make sense to build. The Forest
Service could make this right ownable by creating something called ‘leaseholds’
on the land and selling these leaseholds.
The buyers of the leaseholds don’t own the land. (The Forest Service doesn’t own the land and
therefore can’t sell ownership of the land itself; you can’t sell it if you
don’t own it.) But they would own a
document issued by the Forest Service that granted the permission of the Forest
Service to build a cabin on a site and live in it for a period of time. These agreements are issued for a limited
period of time, usually 30 years, after which they expire. So far, the Forest Service has always agreed
to renew them, meaning they will offer an additional 30 years to the term, but
there is an increase in the leasehold rate to reflect inflation.
A leasehold title is a document that grants
certain rights to land to the buyer/owner of the document. These documents are bought and sold in
markets. If you buy one of these
leaseholds (and you can; many are for sale) you will not own any actual
land. If you buy one of these
documents, you will be buying the permission of the conservator (in this case,
the Forest Service) to live on land and make certain changes to it. The Forest Service is very strict about the
things you can do and can’t do on the land. Generally speaking, it wants the
improvements to be small cabins (you can’t build a mansion) consistent with the
natural forest setting. Certain parts
of the lot you have will be private property.
For example, inside the cabin, you will have the same rights to
protection of your property as if you had actually owned the cabin. If someone you don’t want in your house
refuses to leave, you can call the police and they will arrest her and charge
her under the same laws that protect private owners.
You won’t own the land or the cabin, but you will own
certain specific rights to it. If you
ever decide you don’t want these rights anymore, you can sell them; many
of the leaseholds sell for hundreds of thousands of dollars, because people
want the right to live in these homes.
(Most leasehold cabins are near lakes or rivers, or in mountains with
fantastic views of the surrounding land.)
You can advertise the leasehold for sale, accept offers, and sell to the
highest bidder.
Since you will be leasing, not owning, you will have to pay
money over time to keep your rights to the property. You have a landlord: the
United States Forest Service. Your
landlord has created very strict rules designed to protect the land, keep the
forest healthy, and maintain the residential areas in a condition that makes
them look like ‘a forest with small cabins’ and not a ‘residential housing
development with trees.’
If you buy one of these leaseholds, you will have to agree
to follow these rules your landlord has set. However, as long as you make your
leasehold payment as required, and follow the rules, you will own certain
rights. You will own the right
to live in the cabin and this right can’t be taken away from you without due
process, under the same rules that affect people who own freehold rights to
property. You will have a document
called a ‘leasehold title’ registered with the state, in the same way that a
regular title, called a ‘freehold title,’ would be registered. This document
will guarantee you the same protection of your ownership rights as you would
have if you had owned freehold rights to the land.
A Restaurant In Manhattan
You may wonder why anyone would pay money for a document
that only grants them the right to rent the land.
Isn’t rental a totally separate thing, and don’t people do
only one or the other (either buy or rent, with nothing in between)?
Actually, people buy leaseholds all the time. It is possible to mix and match owning and
renting in many ways. I want to give an
example to show you why someone would buy the right to rent a
property that should make it pretty easy to understand.
Say you are interested in opening a restaurant in New York
City. You first look for a building to
buy with an open store on ground level that you can use as a restaurant. Of course, most buildings in New York are
high rise buildings and you aren’t going to find any high rise buildings for
sale at prices that you, or anyone else interested in opening a restaurant, can
afford.
You are not going to buy the building with a standard
freehold ownership sale. You are going
to have to find someone who already owns one of these buildings that has a
suitable space available for lease.
You can’t expect the space that is offered to be perfect for
your particular restaurant. You will
have to put some money into it to fix it up. You may have to put in a lot of
kitchen facilities, and this may cost thousands of dollars. Obviously, you don’t want to make an
investment like this unless you have long-term rights to the space. If you only have a one month lease, for
example, you could put thousands of dollars into the improvements and then the
landlord may simply choose not to renew and you will be out all the money you
put into the improvements.
You want a long-term lease.
The longer the better.
Say that you find two suitable sites. The first is
unimproved, just basically an open room, that is offered on a lease with a rent
of $5,000 a month, on a 20-year lease.
If you choose this option, you will have to put about $500,000 into
improvements, like building the kitchen, putting in the tables and chairs, and
all of the decorations.
The second site is the same except that the person who is
currently leasing it already has a restaurant there that is already open and
already operating. The original lease
of the person who runs this restaurant was for 30 years, but she has had it for
10 years, so there are only 20 years left on this lease. She is offering to let you ‘take over’ this
lease from her. A lease that can be
taken over is called a ‘leasehold.’ The
leasehold payment on this property is also $5,000 a month.
The current operator of this restaurant has put more than
$400,000 of her own money into the restaurant, including buying everything,
getting it open, and establishing a clientele and a reputation, so that the
restaurant currently makes a profit.
She will let you take over her leasehold, but she isn’t going to let you
take it over for nothing. You will have
to give her $500,000. That will cover
the amount she paid to build out the restaurant and a reasonable profit for her
time and effort.
If you agree to her offer, you will both sign some
papers. The papers will transfer the
rights to the leasehold title from the current owner to you, in exchange for a
payment of $500,000. You will be
‘buying her leasehold’.
Your other option is to take on the lease of the unimproved
property. If you do this, you will not
have to pay anything up front to ‘buy the leasehold.’ You will get ownership of the leasehold for free and continue to
own it as long as you make the $5,000 monthly leasehold payment. But you will have to come up with $500,000
anyway to build out the facilities and establish it as a restaurant. You know that this is going to take a lot of
time and it will probably be a year before you even open. After you open, you will have to establish a
reputation and clientele to begin generating profit and it may take a second
year before you begin making a profit.
If you buy the leasehold on the existing restaurant, you can
simply change the name and open the next day, without any lag at all. I hope you can see that buying a leasehold
is not a silly idea at all: it makes total sense.
A Cabin in the Woods
Let’s now look at the idea of buying a leasehold on a
cabin. The basic idea is the same:
Take two properties offered for lease, both at a rate of $50
per month. One is unimproved and has
the right to build a cabin, but no cabin. The second already has a cabin on it.
Someone bought the leasehold and built a cabin for $40,000. That was 10 years ago. The lease has 20 years left to run. She is offering the leasehold for $50,000;
she wants to recover her money and get a reasonable profit for her time.
If you take out the leasehold on the unimproved lot, you
won’t have to pay any cash up front, but you won’t be able to move in right
away. You can put a cabin on it for
$40,000 but you won’t be able to actually move in until the cabin has been
built, inspected by the Forest Service, and approved. This is going to take a
lot of time and effort (the rules for these cabins are very strict and you have
to follow them to the letter or your leasehold can be canceled and you will be
out all the money you invested).
This is basically the same decision as the New York Restaurant.
What if you buy the leasehold on the cabin, live there for a
year, and then have to move to another state so you can no longer live in the
cabin? Are you out the $50,000 you paid
for the leasehold?
Not at all: you can put it back on the market. There is a ‘market price’ for these
leaseholds. In this case, after a year
there will only be 19 years left on the lease, so buyers won’t be able to pay
as much as you paid for it. But
consider the fact that you will have been living in the cabin for only $50 per
month, far less than you could rent even an RV or tent to live in the forest
anywhere else. If you would have been
willing to pay $500 rent for the right to live in this cabin (and many are
rented out for market rates), you actually saved $450 a month or $5,400 by
owning the leasehold rather than paying simple rent. If you sell for $47,500 (19/20th of the price you
paid), you are still $2,900 ahead of where you would have been if you had
rented the property.
If you buy one of these leasehold cabins, you will not
be buying and will not own the land or the cabin itself. You will only be buying and owning rights to
use the land and improvements, together with the right to make certain
improvements that your landlord accepts.
You won’t be buying and owning 100% of the rights to the
land. But you will own more than 0%
of the rights. The leasehold ownership system is an ‘in between’ system, that
allows people to buy and own some rights to land without buying and
owning all rights.
Who Owns The Land?
If you buy a leasehold on a national forest, you may think
that someone must own the land and the cabin.
After all, someone owns everything in our world today, don’t
they? The Forest Service may not be the
owner, you may not be the owner, but someone must be the owner, right?
This is where Roosevelt and his lawyer friends and relatives
have made things very confusing.
Roosevelt knew that if anyone had the right to sell this land,
the corporations would find ways to buy it.
The best way to make sure that the Forest Service never sold the land
would be to make sure the Forest Service never owned the land in the first
place.
Roosevelt made this happen by setting up a new relationship
with the land that he called a ‘conservatorship.’
The American native people who still lived freely in the
west when Roosevelt first visited western lands were basically interacting with
the land as conservators. They didn’t
own the land, and so they didn’t have any authority to sell it (at least not in
their own minds).
They were just there to take care of it.
Roosevelt wanted to set up the Forest Service to have the
same basic relationship with the land as the American native people who had
been taking care of the land for thousands of years before Europeans arrived.
Who does own the land?
Roosevelt knew a few legal tricks. He created something
called a ‘public trust’ to hold the title to the land. The ‘trust’ would own the land and ‘the
public’ would own the trust, so ‘the public’ would be the technical
owners of this land. But the terms of
the trust would make it so difficult for ‘the public’ to actually do any of the
things that owners do that, for practical purposes, no one would be able
to do the kinds of things that owners do to land.
The term ‘public’ is defined in such a way that it includes
people who have not yet been born: the land is to be protected ‘for future
generations to enjoy.’ Perhaps, if all
members of ‘the public’ were to vote on the issue and consent to sell the land,
it could be sold. But the great majority
of the members of ‘the public’ (as defined by Roosevelt) have not yet been born
and therefore can’t consent to anything. You might say that the land is
technically owned by ‘the public’ but, in practice, no one owns this land: it
is unowned and unownable.
Partial Ownability Societies
Our group in Pastland is in a position to form any kind of
society we want. We have seen that we
can interact with the land in extreme ways, allowing 100% ownability or 0%
ownability, but neither of these systems will meet the long-term needs of the
human race. If we want a partial
ownability system, we can build one. In
fact, we can choose from a great many different types of partial ownability
societies, with different ‘degrees of ownability’ of the world.
What ‘degree of ownability’ do we want?
We might choose a high degree of ownability, one that is
close to 100% ownability but not identical; we would expect systems that are
close to 100% ownability systems to work almost identically to
sovereignty-based societies, with only minor differences.
We might choose a low degree of ownability, one that is
close to 0%. We would expect systems
that are close to 0% ownability systems to work almost identically to
sovereignty-based societies, with only minor differences.
We could also choose somewhere that is not close to
either extreme system. If we do this,
we will end up with property control that is entirely different than the
property control systems that we have now.
If we use these systems as a foundation for our societies, we will end
up with societies that operate entirely differently than the societies that
have existed in the past.
If we want something in between, it makes sense to come to
understand the different options. It
turns out that, due to a rather strange set of circumstances, there is one
place in the world where people commonly buy rights that are very close to the
middle of the range. Let’s look at this
system so we can see how it works:
SEO Snippet: Pastland
explores scientific society design, balancing natural law benefits with
progress through partial ownership systems for optimal societal incentives.
Keywords: Scientific
societies, Partial ownership systems,
Leasehold ownership, Societal incentives, Sustainable development