Private Property

For example, Jonathan McJohnson owns a 19-inch color television set, which he purchased from the MegaMart Discount Super Center a few years back. Jonathan has the ability to activate this television whenever he chooses. He can turn it on. He can turn it off. He can select any of the 100 cable channels he wants to display on the screen. He can relocate this television to any room of his suburban home. In fact, if he wants, he could sell this television to someone else. Jonathan has ownership and control of this television.

Ownership and control helps create incentives that contribute to an efficient allocation of resources. When someone has legal ownership and control of a resource, good, or commodity, then that someone can direct it to the highest valued used. That someone can retain ownership and control until suitable compensation is received. In other words, if Jonathan McJohnson so chooses to sell his 19-inch color television set, then he can hold out for the highest price.

One or the Other

Consider a few examples of ownership without control:

• Corporate stock is one example in which control is not necessarily attached to ownership. For many who own corporate stock, and thus the assets of the corporation, control is often relinquished to corporate officers. Jonathan McJohnson, for example, owns several hundred shares of OmniConglomerate, Inc., which is an infinitesimally small fraction of total shares. Jonathan owns part of OmniConglomerate, including its factories, equipment, natural resource holdings, etc. However, he has virtually no say over how OmniConglomerate operates or how its resources are used. Those decisions are made by the corporate managers.


• Government is another example, on an even larger scale. Citizens, taxpayers, and the public, in principle, own government property and assets (The White House, military bases, paper clips used by Congress), but have almost no control over how they are used. Once again Jonathan McJohnson, as a taxpaying citizen, provides an illustration. While he owns an incredibly small fraction of U. S. Department of Defense, that does not mean he can take a fighter jet out for a test flight or assume command of a Navy battleship.

If there is ownership without control, then there must be control without ownership.

• The other side of corporate stockholders having ownership without control is the corporate officers who have control without ownership. Oreta Hempleton, for example, is the Human Resources Director for OmniConglomerate, Inc. She owns no OmniConglomerate corporate stock, but she makes the hiring, firing, and employment decisions for the company. She has control, but no ownership.


• And the other side of the public having ownership of government assets without control is government officials having control over these resources without ownership. For example, Admiral Pluckingstick of the United States Navy, does not own the battleship he commands, but he does control it. He can order the crew to turn port or starboard, to go full speed ahead or come to a stop, or even to fire on an enemy nation. He has control, but no ownership.