No ownership implies no accountability

Over at the Kiwiblog we are told Public ownership does not mean public accountability. David Farrar writes

From the Dom Post:

A parliamentary report has given a damning assessment of the monitoring and valuation of state-owned enterprises, describing the lack of transparency as “indefensible”.

This has prompted NZX chief executive Mark Weldon to offer free listings for five per cent of SOE shares so the market can enforce a higher degree of transparency and accountability.

The transparency and discipline listings would bring are an excellent reasons to have some private ownership in the SOEs. The public would actually get more and better information on the billions locked up in the SOEs.

The question is, Why is there no accountability to the public? The short answer is because the public don't own the assets in the first place.

A better title for the Kiwiblog post would be "Public ownership does not mean public ownership". The important point here is that without control you don’t have ownership. As Oliver Wendell Holmes Jr. put it,

But what are the rights of ownership? They are substantially the same as those incident to possession. Within the limits prescribed by policy, the owner is allowed to exercise his natural powers over the subject-matter uninterfered with, and is more or less protected in excluding other people from such interference. The owner is allowed to exclude all, and is accountable to no one. (The Common Law, p193, (1963 edn.))

Clearly the “public” does not have the rights Holmes refers to. The government has these rights. Following Grossman and Hart ("The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration", 'Journal of Political Economy', 94:691-719) economists tend to define the owner of an asset as the one who has residual rights of control over the asset; that is whoever can determine what is done with the asset, how it is used, by whom it is used, when they can use it etc; the public can do none of these thing with a public asset. Hence the public doesn’t have ownership.

The public have no ownership and thus there is no accountability to them.