Barbed Wire and Property

Intriguing property paper:


This paper examines the impact on agricultural development of the introduction of barbed wire fencing to the American Plains in the late nineteenth century.Without a fence, farmers risked uncompensated damage by others’ livestock. From 1880 to 1900, the introduction and near-universal adoption of barbed wire greatly reduced the cost of fences, relative to the predominant wooden fences, especially in counties with the least woodland. Over that period, counties with the least woodland experienced substantial relative increases in settlement, land improvement, land values, and the productivity and production share of crops most in need of protection. This increase in agricultural development appears partly to reflect farmers’ increased ability to protect their land from encroachment. States’ inability to protect this full bundle of property rights on the frontier, beyond providing formal land titles, might have otherwise restricted agricultural development.


  1. An interesting parallel exists between the invention of barbed wire and economic development in the 19th century and the current controversy over intellectual property. We need of a contemporary version of barbed wire if the energies of the creative class are to be tapped. See Overcomingbias (Robin Hanson):

    "Just as farmers developed barbed-wire, someday I expect IP advocates will develop better forms of intellectual property, and better technologies for marking, sharing, and enforcing such property. Using such innovations, I expect we will allow more and stronger intellectual property, and more of the world economy will focus on developing such property. Which, like barbed-wire, will mostly be a good thing."

    • PageRank is indeed a software patent and Google is worth many billions. If Google did not have this initial moat, it is not clear what would have happened when they achieved early success, especially considering what happened to the likes of Infoseek, Lycos, Excite, AltaVista, etc. Those companies were not strong rocks partly because they had no property and nothing could be built on them, and nor was there profit to be had.

      For this reason, Paul, I believe your thesis that software patents suck generally is not fair. Can you offer any constructive criticism, short of shooting the patient?

      From the standpoint of the consumer of technology, these are halcyon days. New mind-boggling stuff at every turn. I have to block it all out just to do work. In the trenches things may seem miserable, capricious and unfair, but the pace of innovation in software remains astonishing. In short, where is the harm?

      And more, if a new innovation is truly great and needed, it will be worthwhile to make a deal with IP gatekeepers, even if they are not the 'just' owners.

    • The order of my comments got reversed.

  2. JVDeLong is right!

    The thing about property including intellectual property in my opinion is that it doesn't entirely matter for progress if you get the ownership exactly right (well it matters to the owners of course).

    The point is that if there is robust ownership, there is stewardship, responsibility and investment, confidence, long-termism, trust and collateral. Owners behave very differently from renters, who can only operate in the short term. Owners are also treated very differently from renters by external partners. The transition from the tragedy of the commons situation to an ownership world is a paradigm shift.

    I believe this is true in IP as well. Take for example the Google PageRank patent(s). (A hit comes up higher if more, and better-ranked pages link to it, recursively.) Those patents were an important property claim that gave Google its own private territory on which to build. The fact that Google could safely invest and build and be seen as a reliable partner was crucial, whether or not Google was ultimately the very first to have this idea.