The third function served by government is allocating scarce natural resources. This function can only become more important as population increases while raw materials—at best—remain constant. Once something is someone's property, the usual rules of contract can be used to determine whether it has been duly transferred to somebody else. But endless problems arise regarding how something becomes the property of somebody to begin with. How do resources become the property of their first owner? The philosopher Pierre Joseph Proudhon answered this question with his famous aphorism: "Property is theft!" Somebody simply assumes ownership of the resources and it is his property as long as he can hang on to it. There are many terms for this process of creating ownership: "conquest", "squatting", "claiming", "staking out", and so forth. But might is not right, and property in resources (as in everything else) can only be determined by law, not by just grabbing it.
It is often assumed that natural resources that are not already owned automatically belong to the government. This assumption, however, is totally arbitrary and certainly cannot be done by government-as-legislator, which must express its basic decisions in the form of general rules. Although government-as-contractor, like any private person or association, can certainly own property, it has no more right to ownable but unowned resources than anybody else. Government-as-trustee I is trustee only for particular people or groups of people. Since determining which people shall own resources is the problem here, not the solution, government-as-trustee I is no help.
All existing or historical governments have determined ownership of natural resources (land, minerals, etc.) arbitrarily. It is equally arbitrary to assume the government is the owner and then give the resources away or sell them (e.g. in the US, the Homestead Act) as it is to assume the government is the owner and always will be (e.g. in classical "Communist" countries). A solution to this dilemma, however, does exist, at least in theory. It is not arbitrary to assume that the public owns all previously unowned natural resources, since the public is by definition inclusive. Government-as-trustee II, acting for the public, could lease selected portions of these resources to the highest bidder, and the net receipts disbursed in equal amounts to all members of the public in the form of a social dividend. (Government-as-trustee II, for the public, is like the chemical elements whose possible existence was indicated by Mendelyeev's periodic table. It has not been seen yet, but it could turn up at any time.)
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