Thursday, December 15, 2011

The Problem of Central Planning

If one wants to see how an economy without private property rights performs (or does not perform as the case may be), he does not have to travel to Cuba or North Korea. There are pockets of such systems on America's Indian reservations. In an excellent article on, John Koppish explains "Why Are Indian Reservations So Poor? A Look at the Bottom 1%"

The report highlights a Crow Indian reservation in Montana in which more than a third of the land on the reservation is privately owned, while the rest is owned communally. Koppish references a study co-authored by Terry Anderson, executive director of the Property & Environment Research Center that demonstrates that private agricultural land is 30-90% more productive than the communal land. Without enforcing private property rights, citizens have neither the incentive to be productive nor the incentive to invest in development of a region's natural resources.

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