Dhan Vapasi – Public Property

In a previous post, Restitution of Stolen Property, I had offered to answer questions on “Dhan Vapasi.” Anirudh asked a set of questions, which I answer here.

To understand the concept of Dhan Vapasi (that’s Hindi for “wealth return”), I recommend a visit to the DhanVapasi.com site. I recommend reading the Dhan Vapasi booklet (pdf) for a getting a good understanding of the idea. Rajesh Jain and I had proposed the idea about five years ago.

Though simple, DV is an idea that can transform the lives of hundreds of millions of Indians and help them flourish. But it is very unlikely that it will ever be implemented. Those at the top of the political system will not allow it because DV severely restricts their power and wealth; those who are already comfortably off (say around 10 percent of Indians), don’t particularly feel the need to improve the system; the rest who are poor are too busy barely surviving to be able to afford to understand their rights and to fight for them.

In short, the only constituency that could potentially be in favor of DV is extremely small: people who (1) have the time to understand why returning public wealth is important, and (2) do not have a vested interest in allowing the government to continue the loot of public wealth.

Anyway, here are answers to Anirudh’s questions.

Q: At the end of the auction period, does the scheme envisage any sort of land or property that the government will continue to control even after the auction? If yes, then what sort of property will the government continue to control?

The government must not own any property.

All property should be privately owned, except for those that are specifically meant for public use. That last clause means that the public must have the right to have free and open access all properties that are publicly owned. If access is restricted only to government officials, then that property is not public and therefore must not be “owned” by the government. Government departments that need property that is not public will have to rent those properties from private owners of property.

I have to admit that most people will consider this idea to be insane. Many sane ideas appear insane at first glance. Of course, not all prima facie insane ideas turn out otherwise; most are insane on further reflection.

But this idea of the government not owning any private property is one of the sanest ideas that I have ever considered. Let me explain

Consider a park, such as the Golden Gate Park in SF, or the Central Park in NY City. They are not privately owned. They’re public property, and the public has free and open access to them. It’s not just for city officials to use. Therefore the city government can “own” the parks. Consider the city council hall. Every citizen can use the facilities as needed. The city government can “own” that. But the average citizen is not allowed into the offices of the city government. Therefore those offices are not public property. Therefore the city must not own that property. Therefore they have to rent it from owners of that private property.

I own my house. I paid for it. It’s my private property. It’s not public property. For a person to use my house requires my permission.

Simple idea. If it is public property, public must have the right to use it. The public must have free and open access to it. If the public does not have the right to use a property, it has to be private property. The government may own only public property, not property that it restricts access to only government officials, which then becomes the private property of the officials. For property to have restricted access, the property has to be private. Therefore, if the government wants to restrict access to some property, it has to rent it from private owners of the property.

This principle of renting (not owning) of any property to which the government restricts access applies to all levels of government — from the municipal government, to the state and federal governments.

The government is tasked with governing its defined domain. That is all. Governments must not be in the business of owning property — whether they be land, commercial businesses, buildings, factories, trains, planes, cars, or whathaveyou. If the government needs to use something and wants to restrict access to it, it has to rent it from private owners of the property.

Let’s take a concrete example. The Government of India provides housing to various officials — from the president (who lives in the Rashtrapati Bhavan) on to the various ministers and MPs. They live on “public property” but the public does not have open and free access to those places. Therefore, they are not public property; they are private property. Therefore, the government should rent those properties and not own them.

The government of India needs planes to ferry the prime minister around. Alright, rent or lease the planes needed for that from private parties. Everything has to be paid for by the government, not commandeered for the private use by government officials.

One of the most important side-effects of this principle is that it provides a transparent mechanism to account for the cost of government. For example, MPs and ministers in Delhi live in massive houses occupying prime locations. The rent for each of those hundreds of properties would easily run in crores of rupees per month — for a total of billions of dollars of rent every year. And that’s just the cost of housing politicians, and in Delhi alone. Add the rent for the housing of tens of thousands of politicians, bureaucrats, and other public officials; add their free transportation, add their perks in terms of security and god alone knows what.

India is a really poor country. Most of its poverty is due to the incompetence and malfeasance of the governments (city, state, and central.) And then the people end up paying for the lavish lifestyles of the ruling class. This is criminal. It is morally abhorrent and outrageous.

What I am proposing is that the government be transparent, especially when it comes to their expenses. We must know how much Indians pay to have the privilege of supporting a criminally incompetent bunch of politicians and bureaucrats as their overlords.

The astute reader would have noticed that my position is diametrically opposite of the communist/socialist way. In communism, all property is owned by the government, and there’s nothing called “private property.” In socialism, you do have private property but all the means of production are “public property” — which essentially means that all the means of production are owned by the political elites and the people own nothing.

My position is that all property — whether they be the means of production or just for consumption — must be privately owned. Everyone who uses property must either own it fair and square, or rent it from the owners of said property. The government is not a proper owner of property because the government is a collection of people who are supposed to do the job of governing. There’s nothing in their job description that says that they should own public property to discharge their duties.

If I need something to discharge my duties, I have to either own the means for it, or rent them from their just owners. If I have to have a car to do my business, I should either own or lease a car. It should not be any different for those in government — except that since politicians and bureaucrats cannot buy what they use for their jobs, they have to rent it.

Dhan Vapasi says that all “public property” must be owned by the public, and not by those who are in government. Public ownership means that the property is the private property of the public. Therefore, for anyone to use that property, rent has to be paid to the public. That rent is not some abstract idea — it is to be paid in real time, in real money.

If the government of India is using public property which would rent for, say, $140 billion a year, then each Indian as a shareholder of the public property is entitled to $100 per year as rent from the government.

Now, you’d say, where’s the money coming from that the government uses to pay the rent? From taxes, of course. People pay taxes needed to run the government. This scheme of making the government pay for what it consumes provides the public a means to judge how much it has to pay for the government.

As I said before, this idea sounds insane. But just because something has been done for centuries does not mean that there aren’t better ways of doing it. For most of the history of human civilization, the fashion has been for the government to be monarchical: the king owned it all. The people had no say in who was to be the king. A minor change gave the people some say as to who gets to be king but the king continued to own it all.

The Founding Fathers of the US republic were convinced that they did not want a king. That’s not a minor deviation from the prevailing fashion of having a king; it was a radical idea. And 87 years after the founding of the republic, the idea was expressed by Abraham Lincoln as “the government of the people, by the people, and for the people.” But thanks to that radical idea, the world was transformed. I think it is time to take one further step.

I propose that the government be restricted to its proper function, solely that of the protection of life and liberty of the people. That does not require that it own any property. The analogy is this. You may find it necessary to hire a security agency to protect you and your property. But if you find that the security agency has become the owner of your property and dictates how you should live, then you have to take action. And if you don’t, you have no one but yourself to blame.

I have only begun to scratch the surface of the first issue that Anirudh raised. I will address the other bits in due course.

Be well, do good work, and keep in touch.

 

 

Author: Atanu Dey

Economist.

5 thoughts on “Dhan Vapasi – Public Property”

  1. Hello Atanu,

    I am liking the Dhan Vapasi scheme. More questions –

    You say that the government should not own any property, and the public should have free and open access to all public properties. If the government needs to have restricted access to a certain property then the government should rent it from private owners.

    If the government can rent a property then why can’t they own it? Think about parliament houses, military bases, archeological heritage sites, just to name a few, clearly these places cannot be privately owned and the public cannot have free and open access to these properties either. Ergo, it stands to reason that the government will have to own it, and then restrict its access.

    Fig 3 from page 43 of this report seems to acknowledge the above fact – https://www.dhanvapasi.com/wp-content/uploads/2018/09/DhanVapasiBill.pdf. It breaks up public assets into categories, and marks Critical assets and Essential assets as properties that should not be sold. Even in the US, the government can own land and I think it owns around 27% of the land in the US.

    I have more things to say on including restitution as part of Dhan Vapasi, I will do it in the coming days.

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  2. The thing I like most about the Dhan Vapasi scheme is what you call “an important side-effect of this principle” – it is an excellent way of keeping tabs on how much the government and the profligate lifestyles of the ministers really cost us. It will bring much-needed transparency into the system.

    As Harold Demsetz said, one of the central roles of property rights is to guide the internalization of externalities. ( https://www.econlib.org/toward-a-constitutional-theory-of-property-rights/). Dhan Vapasi scheme, if executed, will ensure this.

    Some additional readings for the Dhan Vapasi scheme from econlib that readers might find helpful –

    How private property is a precondition for social justice and how it will keep individuals accountable and liable for their decisions and actions – https://www.econlib.org/library/columns/y2022/candelapropertyjustice.html
    Why and when do property rights develop by Harold Demsetz – https://www.econlib.org/harold-demsetz-on-why-and-when-property-rights-develop/

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  3. Including Restitution as part of Dhan Vapasi sounds legitimate, at least theoretically. But I noticed that Restitution finds no mention in any of the Dhan Vapasi material( I searched for it in the report, website, booklet, and FAQ section). Why is that? Was including restitution as part of Dhan Vapasi an afterthought?

    Some practical considerations with regards to restitution –

    If restitution goes mainstream, then some claims, though logical on the surface can be very problematic. During the early days of “independent” India, there was the “land back to the tiller” movement where land reforms were enacted to transfer land from the erstwhile landlords to landless farmers many times without just or no compensation through a government diktat. Now if these landlords start claiming restitution for their lost land/property, then it will be a complete mess.

    The same can happen with some of the claims by some erstwhile royal families. Though there are very legitimate claims for temple land reclamation like Kashi, Mathura, Sharada Peeth, Martand temple, etc… some of the claims can be problematic. For example this claim – https://indianexpress.com/article/cities/jaipur/jaipur-royal-family-taj-mahal-land-bjp-mp-diya-kumari-7911623/ by a Jaipur royal family over Taj Mahal land. I am not sure if India as a country has the bandwidth to deal with these kinds of litigations. It wouldn’t be too difficult either to forge documents, to offer as proof in such cases where centuries have passed.

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