MK: This book arguably has the most catchy and intriguing introduction I’ve ever come across. Can’t wait to finish this book and produce its summary.
It touches upon the US specifics of property law, but it’s inspiring to see how customs are different even between the states, let along between countries.
1/ First Come, Last Served
Line standing business: stand in line for a day or two, rain or shine, then resell the place in the line to someone who can pay. The place in line is “mine”, it’s considered “property” by everyone involved. The spot is the scarce object worth money.
Standing in line online is even easier: write a bot, which will imitate live human behaviour in order to secure a transaction: get a sought-after ticket or buy a PS5. And that can be made into a business: buying something scarce at face value and reselling it possibly at multiples of the price paid is scalping, and it’s good business.
Is standing in line good (it creates jobs, after all) or bad (it tears off the illusion of equal opportunity and access)?
Roman Law: First Come First Served
Look no further than the royal inheritance by the firstborn son (or child in a few countries). Think of Adam’s sons from the Bible. What about being the first to discover a new land and claiming ownership of it?
The real question is: “Who decides who’s first?”. US law says that “the conqueror”.
This rule is not valid for extraterrestrial bodies (planting a US flag on the Moon doesn’t make the Moon the 51st state, it’s just a symbolic gesture). One young lover “gifting” a star to another lover doesn’t create or change the ownership of this star, whatever the gesture.
On the land (and the bottom of the ocean) the strategy of “who’s on first” is still valid to an extent (e.g., Russia and the Arctic Ocean, China and the South China Sea).
First also applies to things (gold rush) and even business models (Uber, Airbnb, etc.). However, the law also looks into how the “first” actor acts while being the first. Is he just obtaining the benefits without incurring costs, or is there some sort of balance?
Being First: Bright-Line Rules
Bright-line rules define precise terms that tend to be predictable and easy to apply across a range of cases.
It doesn’t matter who did most of the job in coming up with the invention or hunting an animal: whoever deals the fatal blow or whoever applies for a patent IS the first in our picture of the world. This creates strong motivation to finish whatever’s been started, but sometimes this can go too far (overfishing, overproduction, over-everything).
We fix ownership based on guesses about how the world works. It’s casual empiricism. If one hears: “we need policy X to achieve outcome Y”, it always makes sense to inquire about what makes a person think that the outcome will really be Y and not Z or any at all.
The “first-in-time” rule is very useful in life and business. It also appeals to a primitive sense of fairness – as long as you play by the rules while getting to be first. MK: The underlying assumption is that everyone has a fair go, which is an illusion in real life.
Value On the Table
There’s far more value to be captured if the “first in time = first in right” rule is dropped or cheated. In fact, the rule often looks like “first come, last served”.
Access to scarce resource (via ownership or distribution rights) is power. As such, the party in charge of distribution can select the buyers/users according to their vision and can impose extravagant rules of behaviour. Such selection can improve the resource itself or the perception of the resource, including its perceived value. (Think of elite business schools.) So, the traditional “first come” rule applied universally will being in a random crowd instead of the one that can be led to generate value solely from their composition.
But wait, is the “pay to play” rule fair when one can cut the line (or join a shorter line) if they pay more? If the opportunity is available to everyone (ignoring their financial means) – then yes. And if one pays much more – then even the shorter line can be skipped, too (think Disneyland). MK: It’s called “premium experience” and, say, in the case of airlines it’s the business/first class that feeds most airlines.
(Important) Whoever controls ownership design can change people’s behaviours in finely tailored ways that serve owners’ interest.
Time is Money
All examples in this chapter refer to this adage – “time is money”. Dynamic tolls (paying more for the right to use a road based on congestion and/or the time of day) are a good example. MK: in Russia many fines for traffic violations are small enough for people to treat them as regular tolls.
Replacing time with money lends itself to new business models, even though the traditional concept of “fairness” may be thrown out of the window in the process.
Space is Money
Restaurants (subject to strict health regulations and having high rental costs) insist on banning food trucks from their vicinity as they fear competition. Their reasoning is that restaurants were in that area first. Since the variety of food coming from food trucks is way wider than from restaurants, what gets hurt is the local food scene. Taking into account the fact that many (if not most) food trucks are operated by immigrants, restrictions on food trucks effectively mean restraint of trade for them.
But how will this argument change in the age of commoditised food delivery (Uber Eats, etc.)?
Being an adult means developing a fine-grained understanding of which ownership rules apply in which context.
For owners of, say, a supermarket controlling access via a line is just one of the options (most often – the default one). But what are the unstated goals? MK: a fantastic example in case of supermarkets is having self-checkouts: people don’t perceive the experience of using them (which is longer) as standing in line – they’re in control, hence happier, leading to a more pleasant overall experience and higher purchase frequency.
MK: Access to scarce resource is indeed valuable; but what is the resource is provided by the government, i.e., paid for with taxpayer money? (Say, it’s the chance of sitting on a bench at the Supreme Court and listening to the hearings.) Shouldn’t it be made MORE accessible to the public via, say, video streaming? This will increase access and kill someone’s opportunity to resell a place in line to attend the hearings.