Speaker 1: This is Bloomberg Law with June Brussel from Bloomberg Radio.
Speaker 1: I know this is hard for you, but Windsor is coming.
Speaker 1: We know what's coming with it. We can't face it alone.
Speaker 1: Despite John Snow's warning, did you watch Game of Thrones alone?
Speaker 1: The record viewership for the HBO drama indicates maybe not.
Speaker 1: But did you use someone else's log in and password
Speaker 1: to watch the show? You might be surprised to learn
Speaker 1: that HBO doesn't care. In fact, HBO encourages it. That's
Speaker 1: just one of the lessons in the book Mine, How
Speaker 1: the Hidden Rules of Ownership Control Our Lives by Michael
Speaker 1: Heller and James Saltzman, and Professor Heller of Columbia Law
Speaker 1: School joins me, Now, why the title mind One of
Speaker 1: the first words babies. How does that relate to adults? Well,
Speaker 1: let me give you an example. Actually was with my
Speaker 1: kids in the park and they were fighting over a
Speaker 1: little toy shovel and one of them said mine, I
Speaker 1: had it first, and the other said no, I'm holding
Speaker 1: onto it. And I realized that that little fight that
Speaker 1: they had is actually very revealing about ownership works, not
Speaker 1: just for kids, but for us grown ups as well.
Speaker 1: So when my daughter was saying I had it first,
Speaker 1: first in time, my son was saying, I'm holding onto it.
Speaker 1: Possession is nine tenths of the law. They were using
Speaker 1: two of just six simple stories that everyone uses to
Speaker 1: claim everything in the world. Much remarkable is that businesses
Speaker 1: and governments use those exact same stories, the exact same
Speaker 1: mind and first to basically allocate all the resources that
Speaker 1: we all fight about. This is how we decide climate change,
Speaker 1: this is how we decide wealth inequality, and it's also
Speaker 1: how we get in line as adults for everything that
Speaker 1: we all want. Let's start with the axiom possession is
Speaker 1: nine tenths of the law, and you say not really.
Speaker 1: There are hundreds of ownership disputes that we're involved in
Speaker 1: every day without realizing it. Part of why a maxim
Speaker 1: like possession is nine tenths of the law is so
Speaker 1: powerful that it feels natural and just and right. But
Speaker 1: once you understand it, it's just a maxim. What savvy
Speaker 1: businesses can do is turn those upside down. So let
Speaker 1: me give you an example. Say you click by now
Speaker 1: on Amazon to download a book or a movie. When
Speaker 1: you click buy now, you have a little shopping cart
Speaker 1: you have a buy now button, it feels like you
Speaker 1: own that, And actually, studies are shown the pent of
Speaker 1: people believe that buying something online is the same as
Speaker 1: buying a physical copy of the book or the DVD,
Speaker 1: and that's just not true. So what Amazon, Apple and
Speaker 1: other online retailers realize that they can mobilize our deep,
Speaker 1: our childhood instincts about possession, but actually sell us something
Speaker 1: quite different and much less. So it's the case today
Speaker 1: that Apple or Amazon can, and actually they have deleted
Speaker 1: content right off of people's devices, and they have the
Speaker 1: right to do so. But there's a big and growing
Speaker 1: gap between what you feel like you are and what
Speaker 1: you actually own online and the online retailers they get
Speaker 1: an extra unearned premium on every single one of our
Speaker 1: downloads we leave. The customers are not always right. So
Speaker 1: in other words, you might buy a book for your
Speaker 1: iPad or your Kindle and later find out that the
Speaker 1: book has disappeared from your online library the book you
Speaker 1: thought you had purchased. Isn't that crazy? Doesn't happen very often,
Speaker 1: But actually some years ago Amazon deleted by George Orwell
Speaker 1: right off people's devices, which is actually kind of amazing.
Speaker 1: If that was exactly what Big Brother would do. There
Speaker 1: was a licensing dispute, and don't turn up, they couldn't
Speaker 1: sell that version of the book. But there have been
Speaker 1: a number of cases where Apple and Amazon and the
Speaker 1: other retailers have essentially bricked your device. You still have
Speaker 1: the hardware, you still have the shell of your cell phone,
Speaker 1: but they can basically lock you out of your contact
Speaker 1: in ways that people will be surprised. You feel like
Speaker 1: you own it, But the reality today is that possession
Speaker 1: is much more like one sense of the law when
Speaker 1: you're online. Amazon and Apple do they have provisions in
Speaker 1: their terms of agreement that allow them to do that.
Speaker 1: Those terms of agreement that no one ever reads. I
Speaker 1: imagine they do. I'm saying I imagine they did, because
Speaker 1: literally no one ever. I teach this stuff and I've
Speaker 1: never read them. And what's amazing is in those terms
Speaker 1: of service that they call them, they can put a
Speaker 1: lot of stuff in there that you would just never
Speaker 1: No one ever knows, no one ever. They're designed to
Speaker 1: be unintelligible, and all everyone does is just click the
Speaker 1: little I agree button a quick the buy now button,
Speaker 1: and by doing so, the version of ownership that you
Speaker 1: get online is a very highly limited, non transferable license
Speaker 1: that gives them a lot of control over what you
Speaker 1: can do with what you buy. What about subscription services
Speaker 1: like HBO and Netflix. It's become acceptable to borrow someone's
Speaker 1: log in and password and watch shows when you're not
Speaker 1: paying for them. So what are the ownership rules there?
Speaker 1: Isn't that crazy? Like when I ask people, like you know,
Speaker 1: people who share passwords with friends for Hbo, where I
Speaker 1: spend this throup for Netflix? All of my students, all
Speaker 1: of my friends say, sure, of course we do. That's
Speaker 1: just standard practice. And you said, it's borrowing. It's not borrowing.
Speaker 1: It's actually illegal. It's actually a federal crime. It's not
Speaker 1: even close to legal. But here's the thing. HBO knows
Speaker 1: that you're borrowing these passwords. They can track you down,
Speaker 1: and they choose not to. They don't just tolerate, they
Speaker 1: actually encourage best of their core content. How is that
Speaker 1: even possibly the case? Possible? Because HBO and Netflix are
Speaker 1: some of the most stephisticated and savvy businesses about ownership design.
Speaker 1: We all know that rocket engineering puts people on the moon,
Speaker 1: but a few people realize how ownership engineering is us
Speaker 1: all day long every day. So what HBO is using
Speaker 1: in this contact the reason that they're actually encouraging people
Speaker 1: to share passwords, they're using an ownership strategy we call
Speaker 1: tolerated staffs. Tolerated staffs work for them because what they
Speaker 1: are trying to do actually, in the words of HBOS
Speaker 1: president Richard Leppler, he said, what we're trying to do
Speaker 1: it was build video added so they could come after you,
Speaker 1: but instead they want you to think that you're stealing
Speaker 1: just a little. It actually profits them as part of
Speaker 1: a long term customer acquisition strategy. They actually write about
Speaker 1: this in some detail strategy that savvy businesses are using
Speaker 1: in a Harvard Business Review article that's titled even Elon
Speaker 1: must doesn't care about patent should view. And the point
Speaker 1: there is that savvy businesses have strategies life tolerated stuff
Speaker 1: where they're re engineering your experience of ownership for their profits.
Speaker 1: You right that the meek shall inherit very little, and
Speaker 1: you point to South Dakota as the new Switzerland. Howls
Speaker 1: South Dakota become the go to money haven for the
Speaker 1: super rich. What a wild place. I mean when I
Speaker 1: think of South Dakota, I think of like the sturgist
Speaker 1: motorcycle raality, or maybe like Mount Rushmore. But if you're
Speaker 1: super rich, South Dakota is a very special place. It's
Speaker 1: where the wealthiest people, not the one per centers, but
Speaker 1: the one percent of the one percenters go to hide
Speaker 1: their money. It's a place that has cre aided essentially
Speaker 1: legal system that makes payment of taxation essentially optional for
Speaker 1: many kinds of taxes. It also makes facility or responsibilities,
Speaker 1: for examples, to pay former spouses or provide child support,
Speaker 1: or payoff people use injured in all practice cases, or
Speaker 1: business partners use defrauded. It makes all that payments and
Speaker 1: all that responsibility largely optional. And because it's so attractive
Speaker 1: for avoiding responsibility and taxes, it's become in recent years
Speaker 1: the world leading money caymer. It actually crushes Switzerland and
Speaker 1: the payments. This is where the world super wealthy go
Speaker 1: to hide their money. And most Americans don't realize that
Speaker 1: we now have in this country is too actually separate
Speaker 1: systems for wealth transmission, the super concentration of wealth in
Speaker 1: the very small handful of families, the fact that today
Speaker 1: sixty of wealth in America has inherited. It's inherited not earned,
Speaker 1: and only one percent of families have fort of total
Speaker 1: wealth that doesn't happen through market cources. It isn't a
Speaker 1: factive nature. It is results from a deliberate set of
Speaker 1: choices by fas like South Dakota to create this basically
Speaker 1: optional taxation and responsibility system. They've created a way to
Speaker 1: create actually a new aristocracy in America. And I don't
Speaker 1: even mean that metaphorically. The name of the trust that
Speaker 1: avoid stay taxes in particular are called dynasty trusts. They're
Speaker 1: meant to create modern dynasties. For most of us, we
Speaker 1: actually have to pay our taxes and fulfill our responsibilities.
Speaker 1: And if you drive a Honda and hit somebody, they
Speaker 1: can garnish your wages to pay off the claim. But
Speaker 1: if you have a trust set up in South Dakota
Speaker 1: and you're wealthy enough to hystem with your Lamborghini, you
Speaker 1: never have to pay. It's really something that the founders
Speaker 1: would have been appalled by. It's not something that's consistent
Speaker 1: with either a progressive vision of America, and it isn't
Speaker 1: consistent with a conservative vision of America equal either. It's
Speaker 1: been consistent with a vision based on responsibility and uh
Speaker 1: you know, opportunity and working hard. But we've done and
Speaker 1: what we've done in this country is to create an
Speaker 1: alternate legal system UH through which people can basically create
Speaker 1: aristocratic dynasties. Actually very much in mentioned with the founding
Speaker 1: principles of this country and the ownership. Reason for this
Speaker 1: is that property in America is not defined by federal law.
Speaker 1: It's not defined by the Constitution. It's defined by individual states.
Speaker 1: So states like South Dakota can basically impoverish um states
Speaker 1: where people actually want to live, States like California and
Speaker 1: New York EXAs of Florida, where wealthy people live. The
Speaker 1: chief Justice of that state Supreme Court said, well, many
Speaker 1: people may find a way to fly over South Dakota.
Speaker 1: Somehow their dollars find a way to land. Here is
Speaker 1: the money helping the people of the state. What's so
Speaker 1: galling about what South Dakota has done is that no
Speaker 1: one in South Dakota benefits. There isn't one road in
Speaker 1: Sathakota that gets paid by their ability to decrease the
Speaker 1: taxation pays to the states where people actually live. That
Speaker 1: one road get pays now, one school book gets brought.
Speaker 1: The only people in South Dakota. Who benefits are the
Speaker 1: tiny handful of trust administration lawyers and bankers who wrote
Speaker 1: these laws, who updates them every year, and who get
Speaker 1: fees for administering them. One legislature says, there probably aren't
Speaker 1: a hundred people in the states who realize that they're
Speaker 1: creating a studel aristocracy in America. But because of South
Speaker 1: Dakota is taking the lead. Other states, Nevada in particular, Alaska,
Speaker 1: a handful of others are racing to catch up with
Speaker 1: giveaways to the super wealthy. So we now have what's
Speaker 1: called a race to the bottom. It's actually competing with
Speaker 1: each other forever more elaborate giveaways that are sort of
Speaker 1: under the table, hidden in this parallel legal system for
Speaker 1: the super rich. That's fascinating. Let's go on to another rule,
Speaker 1: which is your home is your castle. You say your
Speaker 1: home is really not your castle, right, So what we're
Speaker 1: what we're going through here is um uh. Some of
Speaker 1: the ownership stories has said at the beginning there are
Speaker 1: only six of them, and we turns out that possession
Speaker 1: is one tense of the law. You're a savvy business owner,
Speaker 1: and it turns out that the meekshell not inherit very much.
Speaker 1: If you're in the world of stu upakotas Um dynasty
Speaker 1: truck and now we're going to uh, your home is
Speaker 1: your cassitle. It turns out that your home, that's a
Speaker 1: very powerful feeling we have, that's my space peep out.
Speaker 1: But that notion of ownership is so powerful that it
Speaker 1: becomes a tool that's available for all sorts of governments
Speaker 1: and business businesses to sort of redefine what it means
Speaker 1: to have home in ways that may surprise some of
Speaker 1: your listeners. UM. So one of the so when you
Speaker 1: stay my home ismand castle. If you own a home
Speaker 1: but you have as a sheet of paper, it's a
Speaker 1: two dimensional deeds um, which doesn't necessarily mean anything that
Speaker 1: is attached to your home, like how much airspace above
Speaker 1: is attached, what resources below are attached, how much out
Speaker 1: from the side do you have? All of those questions
Speaker 1: are very much up for grasped. A hundred years ago,
Speaker 1: when we first had air flights, UM, landowners would send
Speaker 1: bills to the plane companies and say, hey, you're your
Speaker 1: trust passing over my land by flying up over overhead,
Speaker 1: and early on in America, we desired that at the
Speaker 1: flight of that's the level of airplanes that wasn't part
Speaker 1: of it was attached to your land. That attachment only
Speaker 1: worked a certain ways up. But today we have the
Speaker 1: question about drone. So, for example, can symbody fly a
Speaker 1: drone above your land? And that's very much a line
Speaker 1: question because potentially they have cameras a book down on you,
Speaker 1: and potentially they also serve, you know, to deliver pizza
Speaker 1: or Amazon boxes. So we're at a moment where, like
Speaker 1: any new resource, ownership of it is up for wraps.
Speaker 1: The ownership of the airspace above your house at the
Speaker 1: drone level, the so called drone away is very much
Speaker 1: contected today and there's no natural or correct or right answer.
Speaker 1: All that you have is the six simple stories of
Speaker 1: ownerships that everyone uses to fight about everything. And it's
Speaker 1: not just the airspace above, it's also all the resources
Speaker 1: below your lands of water, the oil, the gap, um
Speaker 1: do those belong to you? What if your neighbor puts
Speaker 1: a drools a zeper well, it's puts in a more
Speaker 1: powerful pump and sucks the water away from your well?
Speaker 1: Can do that? And the answer is again up prograbed. Uh.
Speaker 1: The specific answer for the well is much in much
Speaker 1: of America, absolutely they can do You have all these
Speaker 1: wild examples in the book what's your favorite? But my
Speaker 1: favorite example actually is I motivated us to write the books.
Speaker 1: Was flying on an airplane working in my laptop and
Speaker 1: the person in front of me leaned back and squished
Speaker 1: my laptop, and I realized that that wedge of space
Speaker 1: behind the seat was an ownership story isn't governed by law,
Speaker 1: but it's very much up programs. Does that space belong
Speaker 1: to the person in front? Do you have a right
Speaker 1: to recline? Is a space attached to the seat because
Speaker 1: the button controls the space? Or does the space belong
Speaker 1: to the person and back for their needs? And from
Speaker 1: my laptop? So my story is possession. I possessed the
Speaker 1: space or first. I was there first, And what I
Speaker 1: realized was that that wedge of space was outside the law,
Speaker 1: but it was a compliment each of us go through
Speaker 1: all the time whenever we fly. If we and what
Speaker 1: happens is we all try to work it out. We
Speaker 1: try to be politely, try to use good manners, and
Speaker 1: the hidden ownership story there is that what we're experiencing
Speaker 1: a personal conflict. But I was experiencing to someone leaning
Speaker 1: into my lap. Turns out to be a highly engineered
Speaker 1: form of ownership that the airlines are using for their profits.
Speaker 1: In the same way that HBO was using tolerated sets
Speaker 1: to build customers, airlines use a different, very advanced tools
Speaker 1: of ownership design, which we call strategic ambiguity str Teachic
Speaker 1: ambiguity is present much more often in your life than
Speaker 1: you realize. And the way the airlines use ambiguity in
Speaker 1: that context is they deliberately keep it unclear who owns
Speaker 1: who controls that wedge of space. They know that we're
Speaker 1: going to all fall back on politeness and good manners
Speaker 1: to story it out and one when that happens. But
Speaker 1: it does is it left them sell that relegis space
Speaker 1: twice on every seat on every flight for you to
Speaker 1: recline and for my needs. So it's extremely profitable for
Speaker 1: the airline. And the reason that these the complicts are
Speaker 1: breaking out today over that wedge of space, the stories
Speaker 1: of planes getting grounded, the viral video, some of your
Speaker 1: listeners may have seen a fight on up in the air.
Speaker 1: So what the airlines are done is they squeeze the pitch,
Speaker 1: the distance between seats down from thirty five inches down
Speaker 1: to just on some planes today, they've made that wedge
Speaker 1: of space a more valuable resource. And whenever any resource
Speaker 1: becomes more valuable, ownership is up for wrapped and they
Speaker 1: realize that you by using ambiguity, they could sell that
Speaker 1: space twice and they can make the business class these
Speaker 1: up front more valuable. They create a market for business
Speaker 1: class by making economy economy of space officially unpleasant. So
Speaker 1: for me, it was that experience of flying that made
Speaker 1: me realize how powerful these ownership stories are in shaping
Speaker 1: every minute of our lives. Every day, all day long,
Speaker 1: we're engaging in these ownership battles and we just don't
Speaker 1: see it. So for me, the AHA moment was seeing
Speaker 1: that that process I was having on the airplane was
Speaker 1: actually an ownership battle. And it turns out of actually
Speaker 1: the simple solution actually news you can use for your listeners,
Speaker 1: which is if you try to pay the person in
Speaker 1: front of you twenty bucks that usually not to recline.
Speaker 1: That often won't work, And if you say just please
Speaker 1: don't recline, that won't work either. But what works three
Speaker 1: quarters of the time, according to one study, is if
Speaker 1: you offer to buy them a snack or a drink,
Speaker 1: they won't recline because then you guys are in it together.
Speaker 1: You're part of a community, and neither of you are
Speaker 1: realizing if the airlines are basically property from that deal.
Speaker 1: But that is actually a practical way to solve the problem.
Speaker 1: From your book, we see that your ownership rules seem
Speaker 1: to be changing at different times. Is there any advice
Speaker 1: you can give to the average person about how to
Speaker 1: make ownership rules work for them? Absolutely? So the key
Speaker 1: first is to understand that it's that ownership is not
Speaker 1: something distant and fancy and something to a lawyer. This
Speaker 1: is such an important piece of what I actually try
Speaker 1: to tell my law students as well. And I said
Speaker 1: this earlier in our conversation. Law is overrated. Ownership is
Speaker 1: up for grabs in your life all day long. It's
Speaker 1: the stories that kids are telling on the playground when
Speaker 1: they're playing over the swing. It's nothing fancier for you
Speaker 1: as a grown up. And this is true not just
Speaker 1: for really big issues like climate change, which we haven't
Speaker 1: talked about, which is an ownership battle, or wealth inequality,
Speaker 1: which more transparently is, but it's very true on sort
Speaker 1: of the employment on what control you have over your jobs. So,
Speaker 1: for example, a lot of people have nondisclosure and noncompete
Speaker 1: agreements in their in their in their contracts people don't
Speaker 1: realize are not enforceable. But once you start to examine,
Speaker 1: like every piece of your life, like, how is it that, um,
Speaker 1: you know people walk around you to the front of
Speaker 1: the Starbucks line, uh to pick up their drinks? Well,
Speaker 1: they have the app. So Starbucks is engineered line waiting
Speaker 1: to basically two different visions of whose first in time
Speaker 1: people simply line up and wait people who use the app,
Speaker 1: and that engineering of lines was on all around you.
Speaker 1: Next time you're standing in line, but it's a long line. Um,
Speaker 1: this may well be an entrepreneur who is actually being
Speaker 1: paid to wait in front of you. So free every day,
Speaker 1: every minute as you go through your day. Once you
Speaker 1: start to notice that, it's very hard, you'll see, um,
Speaker 1: the world in a very different way. And once you
Speaker 1: see it, it's hard to un see it. Once you
Speaker 1: see how ownership really works. My hope is that your
Speaker 1: listeners is that that's part of what empowers them to
Speaker 1: have the tools to be more effective advocates, as as parents,
Speaker 1: but as and as consumers, and also I think that
Speaker 1: citizens Okay works at all those levels. Thanks Michael. That's
Speaker 1: Professor Michael Heller of Columbia Law School. The book is Mine,
Speaker 1: How the Hidden rules of Ownership control our lives. And
Speaker 1: that's it for this edition of the Bloomberg Law Show.
Speaker 1: I'm June Grosso. Thanks so much for listen and eight.
Speaker 1: Please tune into The Bloomberg Long Show every week night
Speaker 1: at ten pm Stern right here on Bloomberg Radio