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A Mixed Economy: Ownership Incentives

May 14, 2013 • 327 Views

Thinking about our mixed economy in which government and the market intermingle, I have always gravitated to this quote from former Secretary of the Treasury, Lawrence Summers:

  • “In the history of the world, nobody has ever washed a rented car.”

And now, doing a bit of research on the colonial United States, I wanted to share the same ideas from 18th century economist Arthur Young:

  • “The magic of property turns sand into gold.”
  • “Give a man the secure possession of a bleak rock, and he will turn it into a garden; give him a nine years’ lease of a garden, and he will convert it into a desert.”

Finally though, maybe this comment from a blogger at The Economist can take us a step further. His example is a case study on military airplanes and how maintenance workers who had long term oversight of the same equipment felt “ownership” more strongly than specialists who were responsible for the engine or the wing of thousands of aircraft. His point is that it all depends on how the job is structured.

My bottom line? In our mixed economy, can we retain the incentives of “ownership?’

Sources and Resources: I recommend reading the entire blog from The Economist for a full discussion of the origins and limits of the Summers quote. And, for slightly more about Arthur Young, here is a brief bio.

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