Lesson 3: Yours, Mine, Ours: The Rules of Ownership

Activity:  The Rules of Ownership

Download Activity 3: Teacher Guide, Handouts, Visuals (.doc file)

Time Required:

• 3-4 class periods

Materials:  

• Laminated pictures or clip art of objects—i.e., a ski-lift ticket or water park wrist-band, a skateboard, a gun, a pet, a library book, a bald eagle, a hamburger – with different rules of ownership.  One set of 10-12 pictures for each small group of 4-5 students
• One copy of Activities 1, 2, and 3 for each student.
• One transparency or powerpoint slide of Visuals

Procedure:

1. Explain to students that this lesson will help them analyze problems that arise over ownership and use of water. Pose a discussion question:
   • Can you own water?
2. Direct instruction:
   • The formal term for ownership is property rights.
   • The term does not imply that property somehow has rights; it is a short­hand way of referring to the rights people have with respect to property. The distinction is important because people sometimes mistakenly contrast “property rights” with “human rights.” Stress that property rights – especially the right to the fruits of your own labor – are basic human right
   • Display Visual 1. Stress that property rights are established by formal (laws) and informal (tradi­tion, first come, first serve) rules about the privileges (can you use it all up or give it away?) and limitations (can anyone, anywhere, at any time use it?) that attach to the ownership, use, and transfer of goods and resources. Ask students to paraphrase the definition.
3. Hold up pictures of three objects: a ski-lift or water park ticket, a skateboard, and a gun. Through class discussion, complete the chart in Visual 2, listing the privileges and limitations associated with ownership, use, and transfer of each item.
   • When you buy a skateboard, it is clearly yours. If you own a skateboard, you can sell it (transfer ownership) if you want to, or you can let someone else use it, or you can exclude everyone else from using it. You can call the police to keep someone from tak­ing it—your rights are enforceable. However, there are some limi­tations on the way you can use it; in most communities you can’t (legally) ride it on the sidewalks in the downtown shopping mall or on the pavement of the highway.
   • The ski-lift (water-park) ticket gives a skier (water park visitor) certain privileges of use—to ride the lift and ski on the mountain (ride the slides and swim in the pools). The purchaser owns the ticket; her purchase gives rights of use only to her. The purchaser can exclude others from using it. The ticket isn’t transferable; it’s not legal for a skier to leave early and sell her ticket to someone else in the parking lot. (Some tickets are even made so that you can’t take them off your jacket without tearing them, which helps to enforce the non-transferability.) Since the pur­chaser legally owns the ticket, his or her right to exclusive use of it can be enforced by the police or courts.
   • Guns can be bought and sold, although the transactions may be governed by laws concerning the licensing of dealers and bans on certain types of weapons. Also, not everyone can buy a gun; pur­chasers must comply with age restrictions and submit to back­ground checks. Certain rules limit how and where a person may use a gun; for example, you cannot legally use your gun to shoot deer if it is not hunting season. People who own guns have a limited property right in their guns. Others can be excluded from use of them.
   • Privileges and Limitations of Ownership 

Property	Well-defined?	Exclusive?	Transferable?	Enforceable?
skateboard	yes – see signs in mall	yes	yes	yes
water park or ski lift ticket	yes – see print on back of ticket or receipt	yes	no	yes – but may be difficult
gun	yes – local, state and federal laws	yes	yes – with limits	to some extent – illegal weapons & black market exist

4. Students should now understand that ownership has a variety of meanings, and that property rights include a variety of privileges and restrictions.  Divide the class into small working groups, and give each group a set of the laminated pictures of various items (or display the overhead slide).
   • A sample set might include: school and/or library book; bald eagle;  hamburger; air outside a balloon; air inside a balloon; an apartment; a doll, a child or baby; coins or dollar bill; a can of paint; a lake; a stream; a beautiful view of a garden
   • Direct students to answer the follow­ing questions about each item: 
     • Who is the likely owner of the item on the card? (Person, city, or not well-defined?)
     • What are the owner’s privileges and limitations? (Can ownership or use be excluded, transferred, and enforced?)
     • How is ownership of this item the same as / different than ownership of other items in your pile of pictures? 
   • Allow 5-10 minutes for small group discussions.
   • Reconvene the class. Ask each group for a one-sentence generalization about property rights based on their discussion. (Answers should focus on the range and variety of ways in which we define ownership.)
5. Return to the definition of property rights. Display Visual 3 and discuss the four characteristics of property rights with regard to some of the items in the pictures.
   • Are the property rights well-defined? (Are the limitations and privi­leges of ownership clear?)
   • Are the property rights exclusive? (Can the owner keep other people from using the property?)
   • Are the property rights transferable? (Can the owner sell the prop­erty?)
   • Are the property rights enforceable? (Will the police and/or the courts uphold the owner’s rights to the property and punish people who violate those rights?)
6. Distribute Handout #1 and review the first three items with the large group. Ask the students to return to their discussion groups and to complete the next 3 rows on the chart – identifying the characteristics of property rights to: a library book, a hamburger, and a beautiful view of a garden.
   • In large group discussion focus on the issues raised by the view of a garden:  Why aren’t property rights to the view of your beautiful garden clear? (Because it’s hard to define what a view is. It changes all the time; it’s difficult to describe its limits; and it’s virtually im­possible to contain in any way: your neighbor might catch a glimpse of it from over the back fence; the trash collector will see it when he comes to pick up the trash, etc.  However, some states and local areas have tried to define “view rights” that prohibit someone from planting a tree or blocking a view of the coastline, for example.)
   • What happens to the transferability, exclusivity, and enforceabil­ity of property rights that aren’t or can’t be clearly defined? (When you can’t define it, it’s hard to exclude other people. Can you imagine a policeman ticketing people for looking at your garden as they drive by? It’s also unlikely you’d find people willing to pay if you run out and try to charge them for enjoying the view.)
   • Can you think of other examples in which property rights aren’t clear or difficult to define? (Property rights to air are very difficult to define clearly. Who owns the air? Who has a right to pollute it by driving a car, or a right to protect it by prohibiting other people from driving? What about air pollu­tion from tobacco smoke or noise? Whose ownership rights might permit restrictions on smoking or noise-making?)
   • Why are you more likely to have a dispute over your neighbor’s constant loud parties than over the ugly, wrecked car he parks in his driveway? (The neighbor’s property rights to his driveway are much more likely to be clear than his right to make noise. Either the driveway is the neighbor’s and he can park ugly cars there, or else neighborhood restrictions (covenants or zoning ordinances) that the neighbor accepted when he bought the house prohibit his parking an ugly car there. In both cases, the privileges and limitations are clear, and a legal dispute is unlikely. But what would happen if the covenants said only that the property must be maintained in an “attractive manner”? In that case, property rights are less clear and disputes are more likely. The issue of sound waves in the air is, similarly, a problem of unclear rights, and disputes about noise are likely.)

Privileges and Limitations of Ownership, continued 

Property	Well-defined? (How?)	Exclusive ?	Transferable?(How?)	Enforceable? (How?)
Library book	yeslibrary owns the books;library card gives you a use right	yes and no;the library excludes non- card holders from using the books, but makes cards available to all	yes, sometimeslibrary book sales	yesbut may be costly – scanners, guards etc.
Hamburger	yes	yes	yes and nomay require a license to sell food	yes
Beautiful view of a garden	no	could be but could be costly:build a fence? buy surrounding property?	nocan’t easilytransfer what you can’t define	not easilybut could fence it or buy surrounding property

7. Direct students to return to their groups, to add 3 more items, and to complete the charts:
   • bottled water on the grocery store shelf
   • water in a lake
   • water flowing in a stream
8. Discuss:
   • What are the privileges and limitations (the definition of property rights) with regard to water in these cases?
   • Are property rights to water always the same? Give examples to support your answer.
   • Which is likely to generate more conflict: ownership of a bottle of water or ownership of water in a stream? Why?

Privileges and Limitations of Ownership, continued 

Bottled water	Well-defined?			Exclusive?	Transferable?		Enforceable?
Bottled water	yes			yes	yes		yes
Water in a lake		?	?		?	?
Water flowing in a stream		?	?		?	?

9. Pose a hypothetical problem: Suppose that a landowner buys a large piece of property, covering many thousands of acres. A stream, with fish, runs through the property, crosses a narrow beach, and empties into the ocean.
   • Who owns the water that runs through the landowner’s property?
   • Are the owner’s water rights transferable? Exclusive? Enforceable?
   • Should a fisherman be able to fish in the stream? From the shore? From a boat?
   • Should kids be able to float down the stream in inner tubes?
   • Should the farmer upstream be able to draw water from the stream
     to irrigate his hay fields, thus reducing the flow in the stream?
   • Should the town upstream be able to draw water from the stream to supply the needs of households and industries?
   • Should people be able to swim or fish where the stream empties into the ocean?
   • Should people be able to swim or fish from the beach?
   • Should the farmer be allowed to construct a fence across the beach to the ocean?
   • Does the nature of the landowner’s property rights affect the choices he makes
   • (Accept a variety of answers from students. States and localities may arrive at different definitions of property rights; in some states, a landowner cannot prohibit people from floating down a stream that flows through his land—as long as the floaters do not touch the shore. In some states, all beaches are public and a landowner cannot prohibit access. But the specific details of property law are not the point here. It is enough for introductory purposes to emphasize the importance of clear specifications of property rights. If there is no clear specification of property rights or water rights, then many of these questions cannot be answered and dispute is inevitable. Once property rights are clearly defined, dispute is less likely and people can negotiate mutually beneficial transfers. Because of the difficulty of these questions, there is a variety of water-use laws in place around the country.)
10. Optional Extension: Limitations on Use of Property. In the previous discussions, some students may have noted that we often place limits on the exercise of property rights. For example, a community might decide that skateboarders may not skateboard on Main Street or on the sidewalks in front of businesses in the downtown mall. It may be argu­able that such limitations, because they are not conditions of purchase, are limitations of civil rights rather than property rights. But this distinc­tion is less important here than establishing why such limitations exist. In general, we find a strong correlation between the potential for third-party effects (e.g., skateboarders colliding with pedestrians) and the ex­tent of limitation on an individual’s use of his or her property. The limi­tations include covenants that seek to protect neighborhood property val­ues and laws that seek to increase public safety. 
    • Explain that in some cases the assignment of property rights is not enough to protect common resources. When an unrestricted exercise of property rights would affect other people adversely, limits are established.  Ask:
      • What are some ways in which an owner’s use of ____  (examples like empty paint cans, spare rooms in your house, hamburgers) listed on Visual 5 is limited or restricted? (Can’t dump empty cans of paint with other garbage. Can’t rent rooms in your house if zoning laws prohibit it. Can’t smear the ketchup from your hamburger on some­one else’s coat.  Can’t sell hamburgers without a license.)
      • In which cases will property ownership be the least restricted? (In those cases where there is the least potential for third-party effects or externalities—that is, effects on people other than the user or seller. We tend not to have specific rules about hamburger smear­ing, for example, because it isn’t likely to be a problem.)
      • In which cases will property ownership be the most restricted? (In those cases with the greatest potential for third-party effects. Toxic substances in paint can seep into ground water, for example, and skateboarding down Main Street can create traffic hazards.)
      • What reasons might justify these restrictions? (Restrictions on property rights are not, generally, capricious. They usually have to do with effects on other people when one person exercises his property rights. These effects are referred to as “third-party ef­fects” or “externalities.” They frequently involve questions of safety, peace and order, considerations of social value, etc.)
      • How can we use the guideline of third-party effects to explain why property rights to skateboards are transferable, but property rights to ski-lift tickets are not? Or to explain why the transfer­ability of gun ownership is limited? (Transfer of ownership of a skateboard is unlikely to generate third-party effects and is there­fore not limited. But if ownership of a lift ticket is transferred, the owner of the ski area would lose income he is entitled to for the use of his property. Governments fear that allowing some people—convicted felons, for example—to buy guns would endanger pub­lic safety (a third-party effect), so the right to transfer ownership of guns is limited by such requirements as background checks, waiting periods, prohibitions on catalog sales, etc.).