Saturday, January 30, 2016

Privatization: The Scotese Process

This can be done without the blessing or involvement of the federal government.  All land "owned" by the BLM belongs to the American people.  ANY ONE of those people is perfectly within his rights to choose a parcel and publish that its ownership can be re-designated through a "Scotese Process."

A "Scotese Process" is a commons privatization process through which all interested parties are compensated for their interest proportional to whatever amount of money they are willing to give up to keep that interest.  Here's how it works:

One or more escrow companies defines the commons (parcel of land in this case) to be privatized, and advertises its willingness to manage the process for a fee.  Interested parties are then invited to secure their interest by offering a price for the commons and pre-paying a percentage of that price to the escrow company.  Once the invitation period ends, a synchronizing process must be undertaken.

The synchronizing process requires that all escrow companies who may have defined a Scotese Process that interferes with another escrow compnay's Scotese Process work out the differences.  This can and should be an ongoing effort to eliminate all possible conflicts.  The "staking of a claim" has similar properties, whereby a claimant must define the boundaries in a way that doesn't interfere with already-defined boundaries.  The outcome of a synchronization process is one of two possibilities.  Either there is general recognition that all escrow companies have accepted the same definition of a particular commons, or there is not.  The process can (and usually will) continue until the first outcome is achieved.  On the other hand, difficult-to-define commons may cause (all) interested escrow companies to abandon their Scotese Process.

Once there is general recognition of the definition of the commons, there still may be multiple escrow companies interested in administering the privatization.  In this case, they simply compare their highest-bidders to see who wins, and each escrow company submits the required pre-payment to the others on behalf of their own winner.  In this way, a single owner emerges.

When this single owner is found, the escrow company (or companies) compute(s) the total of the bids to determine what portion of the final price each interested party will receive as compensation for their interest in the commons, by dividing that total by the interested party's bid.  The winning bidder then submits payment in full to his escrow company, and the escrow company divides the proceeds among the other bidders, and refunds their prepayments to them as well.  The entire Scotese Process goes into a public court of record so that everyone will know who the new owner of the commons is, and also see who "sold" their interest to that new owner.

Escrow companies in the synchronization process may find it worth their while to combine their efforts and normalize their processes and act as a single escrow company in this context.  There are several variables that escrow companies will need to specify in their public announcement of the Scotese Process, including the percentage of a price that must be prepaid to secure an interest, the deadline for bids, the definition of the commons to be privatized, and the fee they require for providing the escrow service (to be deducted from the final sale price before it is divided up among losing bidders).

The Scotese Process is something I invented but I have never seen it tried (beyond trivial examples in my own house).  I'm sure there are possibilities for failure, and if anyone can point them out so that I might revise the process to avoid them, that would be greatly appreciated.

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