Private Property for the Win! | Cash Course: Economics | PragerU Kids

Before we start this episode, here's a quick preview of what's coming. Ready to take charge of your finances and master the art of money management? Cash course is your ultimate guide to financial literacy. From personal budgeting to macroeconomics. Check out more episodes at prageru.com. The year was 1620. After months on a wind tossed ocean, English settlers walked on shore at Plymouth, Massachusetts. They'd finally reached the new world. A place where they could start over, worship freely, and share everything in common. >> Share everything. >> Yes. In America's first settlement, everyone farmed the same land, used the same tools, and took grain from the same storehouse. No one owned their own land, and most resources belonged to everyone, no matter how hard they worked. >> Sounds fair, actually. >> Well, it didn't last. After 2 years, everyone was sick and starving. Lands lay empty. Crops rotted in the ground. Another colony called Jamestown tried the same approach and wound up eating rats and shoelaces. Having failed, the survivors started farming their own land. That is, they changed to a system of private property. With hard work, responsibility, and some help from nearby Indians, the colony finally thrived. >> I'd better get to work. >> Private property includes land, buildings, and other physical resources owned by an individual or group. Owners have legal control over the use of the property, including generating a profit. This can be an oil field, a farm, or a lemonade stand. Public property, on the other hand, is when the government owns one of those resources and makes it available to the general public. Parks, landmarks, and utilities are often public property. Everyone can use them, and no one controls them for their own benefit. The incentives that each type of property creates have massive consequences for a country. That's why the founders included private property rights in the Constitution because they knew it was a foundation of freedom. Countries that encourage private property, like the US, tend to have higher standards of living than those that don't. >> Yeah, but do they really? >> Actually, yes. Let's take a closer look using a local grocery store. A privatelyowned grocery store is driven by profit, creating a strong incentive for upkeep and responsibility. The owner must ensure the store is clean, well stocked, and organized for the customers. Refrigeration systems must work properly, and customer service must be efficient. Any failure to maintain these standards can result in lost sales and a damaged reputation. The owner's attention to detail and willingness to maintain quality helps the business appreciate or grow in value over time, not just in financial terms, but also in reputation and brand strength. I just love auto supermarket. >> A publiclyowned grocery store run by the local government may aim to ensure equal food access, but often lacks strong economic incentives since there's no individual ownership or profit motive. No one directly gains from any loss or success. This reduces the incentive to uphold product quality, keep up the store, or maintain good customer service. With no single owner who stands to benefit, a public enterprise that sounds noble can quickly fall apart, leading to a lackluster shopping experience. >> Uh, excuse me, anyone there? >> Next, the private ger typically develops deep knowledge of their customers buying patterns. This knowledge enables targeted decisions from selecting suppliers to designing store layouts to which promotions work best. Over time, this expertise makes the store more profitable and allows the owner to adapt to market trends and community needs more effectively. >> Pumpkin spice coffee. Thanks, Otto. In contrast, a government-run grocery store has little incentive to accumulate such knowledge and improve the establishment. This could lead to generic one-sizefits-all decisions that don't reflect the community's needs. Additionally, employees would have little reason to test a new product display or source from a different supplier, even if it might improve sales or customer satisfaction. >> It's full. Where's the pumpkin spice? >> This is pepper. >> It's a spice. >> Lastly, private ownership plays a crucial role in the development of markets. A private ger interacts with a wide range of suppliers from large food distributors to small local farms and negotiates contracts and arranges delivery systems. Moreover, the store could act as an incubator for emerging food brands by providing shelf space and customer exposure. All of this creates economic value beyond the store itself. By contrast, a government-run grocery store might be required to purchase goods through a centralized process that limits flexibility and local engagement. Regulations and oversight would prevent managers from supporting local vendors or trying new products without formal approval. As a result, opportunities to develop new markets would be limited, stifling innovation and supply. You know, I do think private is better after all. While private property is essential, it's not the solution to every problem. Large public resources like sewer systems are important, necessary, and hard to price individually. It makes some sense for the government to fund, build, and maintain infrastructure on that scale. But even then, those services work best when managed locally, not by distant bureaucracies. The pumpkin spice toothpaste is backorded until summer. How am I supposed to brush my teeth? That's too bad. From Plymouth Rock to Suburbia, the lesson is clear. Incentives change when people own their resources. Private property encourages people to work hard, shape their own future, and benefit those around them. Public property plays a role, too. But for long-term success, private property wins. >> Pumpkin spice scented shampoo, candles, and toilet paper. Os is the best. Watch more at pragerukids.com. And parents, don't forget to subscribe.