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Describe how clearly defined and enforced property rights are essential to a market economy.
Norway is the world's richest country; average per capita incomes $84,290
The market economy is characterized by the voluntary exchange of goods and services in the absence of any government intervention or centralized planning.
A property right is the exclusive authority to determine how and by whom a particular resource is used.
More broadly, property rights may be seen as a bundle of separate and distinct rights over a particular good — including at least the right of personal use, the right to demand compensation as a prerequisite for its use by other people, and the right to transfer any or all of these rights to others (either permanently by sale or temporarily through some form of contractual arrangement).
Property rights may be exercised by governments through their designated officials (public ownership or public property) as well as by private individuals and other sorts of non-governmental organizations (private property). (as defined by "A Glossary of Political Economy Terms")
In an economy with little to no regulation, it is crucial that an indiviual or business rights are clearly stated so that they are recognized in any case of a discrepancy.
Burundi, the world's poorest nation with average per capita incomes $170
What Makes Countries Rich or Poor?
Jared Diamond, The New York Review of Books, June 7, 2012.
Reviewing a new book by Daron Acemoglu and James A. Robinson entitled
Why Nations Fail
, Jared Diamond points out that nations succeed economically because of the presence of "good institutions" which may be defined as "laws and practices that motivate people to work hard, become economically productive, and thereby enrich both themselves and their countries" (p. 70).
Diamond further lists the specific institutions that motivate people economically:
protection of private property rights
predictable enforcement of contracts
opportunities to invest and retain control of money
open exchange of currency
for a link that lists nations that have the best (or the worst) property protection policies. Notice how many of the nations listed as among the worst are also well known for their serious economic problems.
for a classroom activity game which simulates the role of property rights in the classroom.
for a video lecture discussing property rights in a market economy.
for a link to a John Stossel Interview with Peruvian Economist Hernando de Soto, who describes the importance of individual property rights.
In many nations, property rights are denied to women, making it difficult for them to prosper independently. Click
for a color coded map of the world showing the areas where women have more and less property rights.
for an interesting essay discussing African Americans and their historically denied property rights.
for an explanation of Japanese-American agricultural property seizure during World War II.
for a lesson plan on property rights.
A Glossary of Political Economy Terms
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