Property and animals

By Legal Eagle

A while ago back on the blog, we were having a debate about whether the idea of property, and private property in particular, is a peculiarly human thing.

Certainly, I think animals have a notion of territory. Sometimes they have a very strong notion, and will chase any interlopers off their territory. Our dog had a notion of what was his. He had his own particular chair which no one else used, his own particular horrible chewed soft toys and his own basket. He knew, and we knew, that those things were his. If you got too close to him while he was eating a bone, a long rumbling growl would sound deep in his chest, signalling, “This is mine, all mine, keep away from it.” Still, I tend to agree with Lorenzo that the idea of legally enforceable property rights is a peculiarly human thing.

But should animals have legally enforceable property rights? An Australian researcher has suggested recently that animals ought to have such rights:

Australian research lecturer Dr John Hadley from the University of Western Sydney (UWS) said under his proposal, particular animals would be given legal property rights, and human guardians would be appointed to represent them in court.

But farmer associations are concerned about potential conflict.

President of the South Australian Farmers Federation Peter White said the proposal was ludicrous.

“It never ceases to amaze me how stupid some people can be,” he said.

“Why would somebody give animals more rights than humans?

“I think it would create World War III between environmentalists and between welfare groups and farmers.”

But Dr Hadley said giving animals legal ownership of their habitat might be the key to protecting biodiversity.

“This could be something that produces something useful,” he said.

“By discussing with the guardian, people could be persuaded to try another land management decision, (or) they may delay destroying the habitat until the end of the breeding season.”

He said people who wanted to modify habitat on their property would have to negotiate with guardians through an independent tribunal before taking any action.

My first rather bitter thought was that, for the most part, we haven’t even given indigenous people proper property rights in the land, let alone indigenous animals…

In any case, clearly the rights possessed by animals would not be exclusive rights in any sense. In their strongest incarnation, private property rights give rise to the rights such as a right to exclude, the right to alienate, the right to destroy and the right to use.

I am rather fascinated by the idea of animals having legal rights, as can be seen from a series of previous posts: animals being restrained from trespassing, a goat held on suspicion of committing an armed robbery, Chico the delinquent macaque, Santino the delinquent chimp (who suffered a most awful punishment), potentially tortious dolphins, a dog named “Trouble” who received a large bequest under a will, and lawyers who represent dogs or pets.

In fact, the idea of granting animals legal rights is not as crazy as it may sound. In New Zealand, apes have a right not to be experimented upon, and in Spain, ‘human rights’ have been granted to great apes. Germany has protected the right to dignity of animals in its Constitution.

Nonetheless, there remain questions about who enforces the rights on behalf of animals, how one interprets the wishes of animals, and why animals should be given legal rights when some humans do not yet possess that right. People are more likely to accord legal rights to animals with whom they can communicate, and who are further along the spectrum of sentience.

I can’t really see how Hadley’s proposal would work. Presumably he is thinking that someone could bring an action on behalf of a colony of endangered Leadbeater’s Possums, for example, which sought to prevent development in the area in which the colony lived?

(No, I’m not going to be rivalling DEM any time soon, I’m afraid…)

[ADMIN DEM: I would have gone a different way…]

What kind of property rights would the possums possess? A right to exclude people? Or some lesser usufructuary right (i.e. a right to go on land and gather things)? If the latter, how could it possibly be useful in protecting the animal? How would this proprietary right be measured in time and space? Would it be caveatable? Are there better ways of regulating this kind of problem which do not involve proprietary rights?

I can’t help thinking that granting animals proprietary rights is not the right way to go about protecting the poor possums. While reading Hadley’s proposal, and seeing the incandescent response of the farmers, I suddenly remembered an article by Stephen Dubner and Stephen Levitt about the unintended consequences of trying to protect endangered animals via legal regulation:

Consider the Endangered Species Act (E.S.A.) of 1973, which protects flora and fauna as well as their physical habitats. The economists Dean Lueck and Jeffrey Michael wanted to gauge the E.S.A.’s effect on the red-cockaded woodpecker, a protected bird that nests in old-growth pine trees in eastern North Carolina. By examining the timber harvest activity of more than 1,000 privately owned forest plots, Lueck and Michael found a clear pattern: when a landowner felt that his property was turning into the sort of habitat that might attract a nesting pair of woodpeckers, he rushed in to cut down the trees. It didn’t matter if timber prices were low.

This happened less than two years ago in Boiling Spring Lakes, N.C. “Along the roadsides,” an A.P. article reported, “scattered brown bark is all that’s left of once majestic pine stands.” As sad as this may be, it isn’t surprising to anyone who has examined the perverse incentives created by the E.S.A. In their paper, Lueck and Michael cite a 1996 developers’ guide from the National Association of Home Builders: “The highest level of assurance that a property owner will not face an E.S.A. issue is to maintain the property in a condition such that protected species cannot occupy the property.”

One notable wrinkle of the E.S.A. is that a species is often declared endangered months or even years before its “critical habitats” are officially designated. This allows time for developers, environmentalists and everyone in between to have their say at public hearings. What happens during that lag time?

In a new working paper that examines the plight of the cactus ferruginous pygmy owl, the economists John List, Michael Margolis and Daniel Osgood found that landowners near Tucson rushed to clear their property for development rather than risk having it declared a safe haven for the owl. The economists make the argument for “the distinct possibility that the Endangered Species Act is actually endangering, rather than protecting, species.”

So if you give Leadbeater’s Possum quasi-proprietary rights, I’m willing to bet that some people would be chopping down old hollow trees quicker than you could wink.

30 Comments

  1. Posted May 14, 2011 at 1:06 pm | Permalink

    LE’s point about farmer’s connectedness to the environment should in my view be qualified – excluding agribusiness that has more a quarterly balance-sheet view rather than a long-term perspective, a sense of stewardship (even if only to descendants) common in farming families.

    As to property rights, I suspect the poor ability of some to see the full nature of benefits of anything but exclusionary goods, that non-exclusionary goods probably, with good management, have the potential for greater quasi-keynesian benefit-multiplers within complex systems like the environment, color attitudes to things like environmental services, with collective benefits and the need for collective covering of costs of investment (i.e. tax expenses). NIMBY-ism is the other side of the same coin.

    It’s odd that the mining lobby, an extractive industry, can get special treatment, whereas the fauna and flora that provides competitive advantage in the rewnewal tourist industry (but once lost or degraded, the resource is irreplaceable), gets pushed to the sidelines and treated as a cost rather than an investment in good maintenance and restoration where still possible.

  2. Patrick
    Posted May 14, 2011 at 3:05 pm | Permalink

    ‘benefit-multipliers’ – is there a multiplier greater than 1? I am not aware of any conclusive or even very convincing evidence, everyone simply seems to model a multiplier according to their own utterly imaginary conceptions, no-one ever finds proof post-facto.

  3. Posted May 15, 2011 at 4:44 am | Permalink

    The defining Scots case on the slavery point is Knight v Wedderburn (the latter are still a prominent Edinburgh family). The Court of Session ruling is much more emphatic than Somersett, but then Scotland’s law in that period was almost wholly Roman law, and someone making a slavery argument was asking the Scottish Romanists to ‘tick a series of Justinianic boxes’ when it came to deciding whether something was slavery or not:

    http://www.nas.gov.uk/about/071022.asp

  4. Posted May 15, 2011 at 11:22 am | Permalink

    [email protected]

    As to property rights, I suspect the poor ability of some to see the full nature of benefits of anything but exclusionary goods, that non-exclusionary goods probably, with good management, have the potential for greater quasi-keynesian benefit-multiplers within complex systems like the environment, color attitudes to things like environmental services, with collective benefits and the need for collective covering of costs of investment (i.e. tax expenses). NIMBY-ism is the other side of the same coin.

    Markets with clear rules have shown excellent ability to trade attributes to their most efficient holders. For example, we pay to have the attribute ‘liable to catch fire’ allocated to insurance companies according to rules which work fairly well. The trick is being able to define boundaries to the attributes and to trade them to mutual benefit.

    If one does not have such defined boundaries, one just has a mess. And the experience of officials (actual or quasi) having joint control over attributes with private property owners is not a happy one. (Such as NIMBY and BANANA — build absolutely nothing anywhere near anyone.) It is not a lack of imagination which leads to the scepticism about this proposal, it is the application of experience against comforting theories about good intentions.

    Also, agree with [email protected], multipliers are much more comforting myth than anything resembling empirically established phenomena. The incumbent Government congratulating itself in managing the only apparently successful fiscal stimulus in the developed world can point to maybe 43,000 extra jobs for the expenditure of $42bn, gives a cost of $1m per job: not evidence for a positive multiplier. Particularly as, even in economic theory, the fiscal multiplier in a small open economy with a floating exchange rate is zero (pdf).

    The real reason Australia did so much better in the recent GFC and Great Recession was (1) our Reserve Bank managed monetary policy much better than did the Fed (2) our housing market did not collapse (3) our prudential regulation of banks worked better, admittedly in less stressful conditions (4) the floating exchange rate took much of any economic shock, including a dramatic, if temporary, drop in commodity prices (5) more Australians are employed in ways which allowed their income to dip without losing their jobs (6) China continues to take apparently any commodities we are willing to sell to them.

    I suspect the UK response of fiscal austerity to pay down debt, and so allowing looser monetary policy, will work rather better than the US response of fiscal panic coupled with tight monetary policy followed by mild loosening.

  5. Posted May 15, 2011 at 11:25 am | Permalink

    That should be $43bn. It was not the secret of the universe in play 🙂

  6. Posted May 15, 2011 at 12:57 pm | Permalink

    For more informed scepticism about multipliers, this study (pdf) estimates that more private sector jobs were forestalled/destroyed by the US stimulus than private sector jobs were preserved/created.

    (Of course, if you think the intention was to permanently shift the US to a larger public sector, then that would be a sign of the stimulus “working”.)

  7. Posted May 15, 2011 at 1:03 pm | Permalink

    The should be “public sector jobs were preserved/created”. Sigh.

  8. kvd
    Posted May 15, 2011 at 3:38 pm | Permalink

    [email protected] I largely agree with your points re surviving the GFC, except I think the Reserve Bank’s contribution is grossly overstated, and the basic commonsense of the community is not mentioned at all.

    The RBA basically has two gears (if you ignore ‘do nothing’) – lift or reduce interest rates. I’ve read endlessly about how the RB ‘looks forward through’ various ‘one-off, never to be repeated’ financial events, arriving somehow at a precice movement (up or down) of the only baseball bat they’ve been given – neatly measured in a 1/4 of a percent, or “25 basis points”.if you’re wanting to appear knowledgable on television. No wonder both sides of politics place great emphasis on the RBA’s independence – because they haven’t a clue either.

    I think that Mr Stevens is overpaid, under informed, and just as prone to error as any other bank governor around the world. Further I think he could be replaced in an instant by any normal punter with a modicum of common sense – given all he can “do” is move one lever (out of many) either up or down.

    What was the name of that dog who was first into space? He did an equivalent job, with about equivalent control and similar understanding of his environment.

  9. kvd
    Posted May 15, 2011 at 3:47 pm | Permalink

    Let me just add that, although I am not in thrall to the wisdom of our RBA, at the very least we got one thing right by appointing businessmen to the Board. That, at least, was a good move.

  10. Patrick
    Posted May 16, 2011 at 5:46 am | Permalink

    I’m not that big a fan of the RBA kvd, especially as every man and his dog could see that they were hoisting sails right as we turned into the wind when they raised rates just as the GFC landed!

    But fortune favours the brave and they collect their share of the praise, however vicariously earned.

    That said, I would restate L’s reasons as follows:
    (1) our Federal debt levels were much lower allowing the Reserve Bank free scope to managed monetary policy much better than did the Fed;
    (2) our housing market was much better designed and thus did not collapse;
    (3) our prudential regulation of banks worked better and was not hi-jacked by panicked and wholly captured regulators, admittedly in less stressful conditions;
    (4) the floating exchange rate took much of any economic shock, including a dramatic, if temporary, drop in commodity prices;
    (5) more Less Australians are employed in sheltered over-unionised dead man walking manufacturing jobs ways which allowed their income to dip without losing their jobs;
    (6) China continues to take apparently any commodities we are willing to sell to them, and, unlike the Cartercurrent US administration, we let our companies sell them.

    (hope I didn’t screw that mark-up up)

  11. Posted May 16, 2011 at 5:58 am | Permalink

    [email protected] & [email protected] If you think the Reserve Bank is bad, what about other central bankers one might mention!

    The Reserve Bank did not seriously tighten monetary policy in an unexpected way, which is what the Fed did. Though I will admit Mr Stevens’ recent comments on the Oz housing markets were not inspiring.

    Also, our housing markets are not better designed, they just did not have the utterly mad interventions the US federal government engaged in coupled with unfortunate financial “innovation”.

    But, with those quibbles, I take Patrick’s amusing mark ups 🙂

  12. kvd
    Posted May 16, 2011 at 6:40 am | Permalink

    [email protected] not only am I in awe of your awesome markup ability, but I also agree with your resummarisation. Except I would note that our press and public seemed somewhat more relaxed about the ability of Australia to respond to the GFC, for some reason – which was a good thing.

    For example the GFC was doggedly referred to as the ‘Global Economic Downturn’ by The Institute of Chartered Accountants, while the rest of the world went into rapid meltdown.

  13. Posted May 18, 2011 at 3:47 pm | Permalink

    For those who want to get a picture of how utterly mad US federal housing policy was (and to a significant degree continues to be) this review puts things in context.

  14. kvd
    Posted May 18, 2011 at 5:41 pm | Permalink

    [email protected] it makes depressing reading, but I did wonder about one para:

    According to the Congressional Budget Office, these losses are likely to amount to $389 billion, more than all of the bail-outs of private financial institutions combined.

    I suppose it’s indicative of how easily one becomes inured to these large figures, but somehow $389 billion seems quite small to me. So I’m wondering if this figure is maybe under-/mis-stated?

    Also, I will take this opportunity to correct your @61 – “if you think the RB is bad”. That is not the case at all. Simply put, I don’t consider the RBA to be worthy of the superlatives it receives. I think it has done its job well, and as you rightly say, much better than some of its peers.

  15. Posted May 19, 2011 at 7:36 pm | Permalink

    [email protected] I believe we may be in furious agreement. The $389bn does seem on the low side, only about 5% of total liabilities.

  16. Posted May 19, 2011 at 11:15 pm | Permalink

    For those who want to get a picture of how utterly mad US federal housing policy was (and to a significant degree continues to be) this review puts things in context.

    Fascinating, I think I might look out Guaranteed to Fail based on that review alone.

    He did make a slight error though – the British bank Northern Rock didn’t fail through exposure to sub-prime investments. The business model they chose [run by a man with no experience or qualifications in banking!] was overly reliant on affordable access to the short-term inter-bank lending market rather than retail deposits or mortgages. This meant Northern Rock collapsed when inter-bank lending essentially ceased – nobody was able to quantify how much exposure they or anyone else in the market had to sub-prime/CDOs anymore and the banks simply stopped lending to each other. Yes the failure was kind of related to sub-prime, but only at a remove.

    He’s probably correct that even better regulation wont be able to save Fannie or Freddie which seems a shame as to amateur ears, securitising US-style 30-year term mortgages seems to make a lot of sense (obviously with better risk controls). What probably needed to happen was to turn them both into the world’s largest Building Societies instead of going for a speculative hedge-fund model.

  17. Henry2
    Posted May 20, 2011 at 7:31 am | Permalink

    DEM for World Bank Govenor!

  18. Posted May 20, 2011 at 3:20 pm | Permalink

    [email protected] Fascinating further details on Northern Rock, ta. On the building society model, that was what the Savings&Loans aka ‘Thrifts’ essentially were: as the S&L crisis showed, the US Federal government has shown a truly awful ability to (mis)manage this sector.

  19. kvd
    Posted May 20, 2011 at 4:00 pm | Permalink

    Henry, maybe not World Bank, but the IMF is currently advertising.

    It’s very difficult in comments to adequately express the depth of disgust I sometimes feel about the effective takeover of good ideas (building societies, S&Ls, and co-operatives in general) by the financial wizards. Somewhere along the line, managers became valued by profit instead of probity – and then we all fall down. No matter, there’s always another group of thrifty people to bedazzle with thoughts of higher earnings on things so basic as housing.

    I’ve kept a quote from the SMH (22 October 2010 – discussing a possible interest rate hike) for a while now

    ‘‘I thought they needed one several weeks ago,’’ CLSA Asia Pacific bank analyst Brian Johnson said. ‘‘But it really comes down to: ‘Do you think banks should earn returns on equity of 20 per cent or 15 per cent?’’’

    which sums up the disconnect between those of us (then) paying 25 year mortgages at an interest rate of around 6.25% (financed as to nearly half by depositors receiving around 4.5%) and the Masters Of The Universe.

    At the very least I would suggest there should be a clear legal (very high) fence between people who just want a reasonable return on funds and the pirates who cannot see that 20% returns imply someone else ‘losing’ 20%. More specifically – merchant banking services should never be mixed with the provision of something as basic as a roof over one’s head.

    By all means let the Masters play, but let them play with other peoples’ money – those who can afford a trip to the races.

  20. Posted May 20, 2011 at 8:16 pm | Permalink

    DEM for World Bank Govenor!

    {mutters} Sarcasm does not become you…

    [email protected] – Again, the diversification problem. While concentrating on their ‘core business’ the S&L industry worked just fine, but moving from an investment model to a speculative one wrecked the lot (outright fraud didn’t help in several cases).

    I think bankers need to go back to being content to be boring, and I’m definitely with you kvd on separating the investment and retail banking arms of the big banking institutions (can you even call them ‘banks’ given the levels of speculation they tolerate these days?).

    I’d be no use at the IMF, though. The staff could outrun me every time. 😉

  21. Patrick
    Posted May 21, 2011 at 11:28 am | Permalink

    20% returns imply someone else ‘losing’ 20%

    With respect, kvd, that comment is the stuff of an alternate reality. You ought to know better than that!

    DEM, don’t worry, as good socialists I’m sure they hold some down for you. Egalité and all that.

  22. Henry2
    Posted May 21, 2011 at 11:28 am | Permalink

    {mutters} Sarcasm does not become you…

    No sarcasm intended.

  23. Posted May 21, 2011 at 12:47 pm | Permalink

    Just thinking…. any brute animal is capable of asserting property rights, giving things away, especially things useful to you (even of marginal utility) requires something higher than brutishness. If Aristotelian/Victorian “great chain of being” notions are applied with devil’s advocacy, then the appropriateness of and strength of desire for property rights would be a bell curve over sensitivity, and consistent with the notion that human/skyfairy hybrid said “give away all that you own”.

  24. kvd
    Posted May 21, 2011 at 12:53 pm | Permalink

    With respect, [email protected], I thought you were trekking in PNG – assumed that was you and your mates DEM published? 🙂

    You are quite correct to note that it’s very easy to get a return of 20% on equity, if you’ve for instance got 10 other equivalent sources of funds each earning you a net 2% – but the point remains that this sort of return really is an ‘alternate reality’ compared to the roughly 3-4.5% cash investment rate, or the 6-7% lending rate, and the margin thereby earned.

    Just for interest’s sake (not seeking to make any point of it) the ANZ half year ended 31 March notes ROE of 16.7% with dividend before franking of (very) roughly 9% based on present share price. Those percentages translate to a half year net of $2.8bn.

  25. Posted May 22, 2011 at 5:16 am | Permalink

    To my amateur ears that sounds reasonable for a mature business, kvd. Now here’s my problem – book cooking for fun and profit. Even when they entirely conform to local accounting standards and rules they’re not accurate. I was made deeply suspicious during the GFC when all those banks in crisis posted a series of profitable quarters in the midst of market carnage, until the ONE quarter when everyone seemed to decide it was alright to post a loss and the whole industry did it (even those banks NOT being bailed out). That strikes me as a little convenient.

    How on earth can you accurately judge the value a business as an external investor when you know [email protected] fine that the financial reports aren’t accurate?! It seems like only large institutional investors have the kind of access to the financial administration of a company that would make it possible to really tell what is going on. I’m a big Warren Buffet fan, and on the surface “value investing” makes a lot of sense, it’s just impossible to do. Small investors may as well be throwing darts at a page of the Financial Times.

  26. kvd
    Posted May 22, 2011 at 6:12 am | Permalink

    Now DEM, to suggest the financial reports aren’t accurate is accounting heresy! To mangle a phrase from Hilary Clinton’s husband, it only then remains to figure out what is meant by ‘accurate’, to whom, and for what purpose.

    I completely agree with your conclusion, and I really don’t think it matters much to the small investor if the accounts (of large stable companies) are ‘accurate’ in any sense. You have to look to your own aims and timelines in making your decisions. Like you I admire Mr Buffet, but let’s acknowledge he is both a market influencer, and a company influencer – which gives him two distinct advantages over Josephine Punter.

    For the JP, I think if you want to bet your future on the market, then all you can do is spread your risks over market sectors, in stable companies with a good dividend history, and hope they don’t embark on any significant new venture outside the area of their basic expertise. After that, all you have to worry about is that government policy remains relatively benign as to both your investments, and your own investment vehicle (super fund etc).

    OR you could have a beer at the pub, and use the darts – and probably do nearly as well.

  27. Posted May 22, 2011 at 6:34 am | Permalink

    That or the “dogs of the dow” automatic investing strategy and rely on the reversion to the mean…

  28. kvd
    Posted May 22, 2011 at 6:46 am | Permalink

    [email protected] – yes. It might remove the intellectual satisfaction of thinking for yourself, but this method has a pretty good track record, and passes my basic test of requiring little actual knowledge of the market or specific companies; in other words, it reflects basic reality for the average punter.

  29. Posted May 22, 2011 at 10:04 pm | Permalink

    For the JP, I think if you want to bet your future on the market, then all you can do is spread your risks over market sectors, in stable companies with a good dividend history, and hope they don’t embark on any significant new venture outside the area of their basic expertise

    Like the Royal Bank of Scotland?

  30. Posted May 23, 2011 at 3:52 pm | Permalink

    Two-track banking is a good idea.

    Unfortunately, there would be constant pressure from those ring-fenced into the boring low returns to get at the juicy high returns.

    And kvd is right: in financial matters, there is no substitute for probity.

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