Monday, March 17, 2003

Aborigines need capitalism – or “Back off, and let us run our own Brownstone”?

For Massa Abbott’s information, Indigenous Australians already have capitalism. Goods such as ochre and axes have long been traded, and the pro-owner strictness of Indigenous intellectual property law is enough to make the lawyers at Disney, who are scrambling and stalling to keep Mickey Mouse (et al) out of the public domain weep.

Nor is communal title to land inconsistent with capitalism. I might have thought that Abbott, being a man of mean(s) living in Sydney, had come across the concept of company title. This form of communal title (as opposed to strata or freehold title) is quite close to the hearts and wallets of many of Sydney’s wealthiest apartment-owner residents. Ditto in New York, where the mid-town brownstone “Co-op’s” are famously toney.

Such communal title – unitizable via equitable interests, aka shares – has both advantages and disadvantages. Chief among the former are the veto power, which allows the incumbents to cast a close eye over newcomers, and say “no” if the circumstances call for it. (Bitchy personal vendettas do not seem to cause a “nyet” decision as often as you might first think – artificially constraining asset turnover usually works to the detriment of all owners).

Disadvantage-wise, unitized communal titles are generally inappropriate as investment/rental properties. Not only will the incumbents’ veto generally hold sway here, the basic economics and lifestyle reality of company title – lower upfront price, but higher neighbour interdependency – put any tenant in the awkward position of being a day-to-day “good neighbour” proxy for the owner. Another, closely-related disadvantage is that unitized communal titles are not as easily pledged as security (ie mortgaged) for bank finance etc. Living in a financial system that has invented, and then printed, trillions of dollars of “junk bonds”, this disadvantage should not be misunderstood as a structural or legal impediment, however – drafting can circumvent just about anything, other than the rare case of narky, malicious and hell-bent incumbent owners.

These various advantages and disadvantages of unitized communal titles would seem to, on balance, work in favour of Indigenous communal title owners. As far as I am aware, however, Indigenous communal title has not been, or sought to have been unitized, so far. I very much doubt that this is because the owners would so frighten the banks – as narky, malicious and hell-bent incumbent – to make it pointless to even try. Rather, it seems a case of over-defensiveness, a vestigial wariness of the sort of beads-and-blanket deals that Abbott implicitly but arrogantly dismisses, that is the real stumbling block here.

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