To whom are individuals important? To themselves, and to others.

All living beings are instinctually focused on survival and personal benefit. Animals attempt to avoid danger and seek food and sexual gratification. When successful they live and reproduce.

Individual animals also benefit from being in a herd, flock, gaggle, or community for protection from other animals. The presence of an individual usually improves the likely outcome of the group.

As a solitary being there are no rules or restrains, other than the physical ability of the individual. In comparison, in a community there are behavioral restraints imposed on individuals. These restraints are intended to be in the best interests of the community with respect to protection and/or food or other asset acquisition. Therefore, the restraints or rules are based on that which has been learned to be in the greatest good for the greatest number.

The foregoing rationale leads to an acceptance that for human animals, the rules governing behavior are either for the benefit of most individuals in the community, or for the benefit of those making the rules. Therefore, it all comes down to the relative property rights of individuals. The individual can either do what they please with their property, or they can only use their property in ways which benefit others and possibly themselves.

Therefore, the distinguishing characteristic in forms of governments is how property rights are permitted, and this, of course, depends on who is making the rules. The international trend seems to be that governments which are initially formed by those having the power to protect, which power over time is lessened by the demands of the increasing numbers of individuals who have fewer assets, and therefore, as individuals, less power.

The above is also the essence of why I believe that it is better for investors to own a portion of revenue flows than of the companies generating the revenues. As it happens, using a revenue royalty is also better for the owners of companies raising capital than a sharing of company ownership.

 

Arthur Lipper, Chairman                 arthurlipper@gmail.com
British Far East Holdings Ltd.