Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives [Hardcover]

There are an awfully lot of good books on the economics of private ownership out there. What makes this one special is it really takes apart what has become the most underreported and underestimated side of inefficiency, and that is property being broken into units so small, they aren't of use anymore. This is important, for example, because it has hindered medical innovation, by forcing people to wait out a nearly endless stream of patents before developing a new drug to combat, say, alzheimer's.

Another big positive of the book is it's nice to give credit where credit is due, and Heller invented the study of this stuff. It's great to hear it right from the horse's mouth.

And, what is definitely most important, it is accessible to any audience. If you are just leaving high school and want to know a good collection of injustices created by capitalism run amok, you would want this book.

If you are a free-market economist (or a college econ student) and want to have a thorough understanding of this form of inefficiency, you would want this book.

But I think this book is best for people that look around and feel like the country has so much potential, so much brainpower, and technological ingenuity, and yet for some reason our economy is on life support. There are a lot of books that point fingers at the failures of officials, and businesses, and individuals, etc. This one not only defines problems but points to solutions, something you almost NEVER come across in popular reading today. A great read all around.

This book is a great introduction to a very interesting topic, written in a way that is easily accessible and understandable both for those in the legal field and those without any legal background at all. Heller skillfully takes readers on a journey through the many areas of life, both historical and contemporary, that are or have been affected by this concept of the anti-commons. Just a few examples include Heller's discussions about robber barons blocking travel through water channels by collecting tolls every few miles, to the difficulties of obtaining rights to music from numerous different owners to create rap songs with mixed samples, to the inhibitory effects on the development of medical treatments because of too many owners owning tiny bits of gene sequences. It is an eye-opening book, and one that everyone should read.

This book arrives at a very auspicious moment. The key concept is that property ownership is not an unmitigated good, and, worse yet, it can lead to economic gridlock and underutilization of resources. In a rising economy, with property values going upward, this book would probably not sell too many copies; but in a declining market, with many homeowners stuck with adjustable mortgages greater than the value of their homes, the downside of property ownership is now more manifest.

Michael Heller teaches real estate law at Columbia University Law School and he is considered one of the foremost authorities on property law. In the current work, he discusses what he calls the tragedy of the anticommuns. The expression "tragedy of the commons" goes back as far as Aristotle, referring to the absence of individual property rights. Heller's "tragedy of the anticommons" refers to uncontrolled proliferation of individual rights, all clamoring for their own stake with total disregard for the common good. He correctly claims that too many property rights can strangle the market. This is an unpopular and inconvenient idea that runs counter to one of the most fundamental beliefs of capitalism.

Heller argues that property rights create gatekeepers. A gatekeeper is someone whose permission we need to get something done. Modern society is complex, and with more and more gatekeepers, the chances of getting things done becomes more difficult all the time. This sounds like commonsense, and economists have traditionally called this the burden of transaction costs. Heller's take on this issue is new and refreshing in that he creates a new vocabulary in describing it.

One of the examples Heller uses to illustrate his thesis is the gridlock that is taking place in the pharmaceutical industry. Many important drugs remain off the market because there are too many owners of patents all claiming rights to future profits.

Another example is the current mortgage crisis. In the old days when banks made loans and kept them on their books until they were paid off, ownership was clear and simple. Now, after loans have been repackaged and sold to investors many times over, ownership is multiple and no longer clear, making it virtually impossible to restructure them.

Although possibly trendy and definitely contrarian, this book does not give any solutions to the problem, other than understanding them better. Property rights are the cornerstone of capitalism as economists and philosophers since Adam Smith have argued, and as Heller himself argues. However, sometimes respecting everyone's rights strangles the economy and something needs to be done for the common good. This book is an interesting discussion of this dilemma.