Property Rights and the Rule of Law

Flashcards about Property Rights and the Rule of Law

Institutions

Codes of conduct and established behaviors upon which the life of a community is built. They are the formal and informal “rules of the game” that shape incentives and outline expected and acceptable forms of behavior in social interactions.

Incentives

The rewards or punishments that shape people’s choices about their behavior.

Property Rights

The formal and informal arrangements that govern the ownership, use, and transfer of assets.

Formal Property Rights

Encoded into law, statute, ordinance, or contract.

Title

The legal evidence of the right of possession or control over property.

Informal Property Rights

May be based on custom, tradition or precedent.

Investment

The process of increasing the stock of capital, which increases productivity and future production. Investment means foregoing current consumption in anticipation of future benefits.

Capital

Includes those man-made resources – buildings, machines, tools, technology, etc. – used to produce goods and services.

Anarchy

The condition of competitive violence, has, to a greater or lesser extent, been the norm through most of human history, rendering it virtually impossible for the poor to own property.

Rule of Men (Rule By Law)

Formal law may exist, but the hierarchy of power determines if, when, and how it is applied.

Rule of Law

A society governed according to widely known and accepted rules followed not only by the governed but also by those in authority.

Collateral

Offered as a surety that reduces the risk taken by banks and other lenders.