The Environment: Recent Episodes
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The Environment includes works on land policy, conservation, climate, and political movements, and how intervention in these areas impacts the economy.
Progressives have distinguished themselves in the past half century by being against progress. That trend is unlikely to change.
Original Article: "Real Progress versus the Progressives"
Leonard Read's famous "I, Pencil" explained the workings of the market in terms of the creation of a simple pencil. However, we should not forget that the reviled fossil fuels are involved at every turn.
Original Article: "Not Even a Pencil Could Exist without Fossil Fuels"
Mainstream economists are quick to claim that environmental problems are caused by "market failure" that can be "fixed" by government intervention. However, the intervention itself is the problem.
Original Article: "Why Government Pollution Control Fails"
President Biden makes the false claim that wind- and solar-generated electricity are cheaper than power generated from coal and oil.
Original Article: "Wind and Solar Are NOT Cheaper than Coal and Oil"
On this episode of Radio Rothbard, Tho Bishop is joined by Mises Research Fellow Connor Mortell to talk about Connor's research project on energy policy. Tho and Connor push back against common narratives—even some promoted by libertarians—of fossil fuels and green energy and the necessity of keeping a human focus on energy policy.
The Radio Rothbard mug is available in the Mises Store. Get yours at Mises.org/RothMug: PROMO CODE RothPod for 20% off
Recommended Resources "How Should We Regulate the Sun (Since Our Government Regulates Nearly Everything Else)?" by Connor Mortell: Mises.org/RR_142_A
"Fossil Fuels Enable Us to Better Fight Fires and Other Environmental Disasters" by Connor Mortell: Mises.org/RR_142_B
"Fossil Future with Alex Epstein" (Human Action Podcast): Mises.org/RR_142_C
Fueling a Freer Future (Mises Institute Primer Series): Mises.org/RR_142_D
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Radical environmentalists have convinced people that we are doomed if we continue to use fossil fuels. We are doomed if we stop using them.
Original Article: "Energy and Economic Efficiency: The Market versus the Politicization of Our Energy Futures"
We’re supposed to go along with Green Energy schemes—as we did with masks, school lockdowns, and vaccinations to stop covid—because our government, media, and “public interest” groups insist that we “follow the science.”
Original Article: "How Greening the Economy Will Destroy America"
The government wants to make gas cars a lot more expensive. But electric vehicles are so expensive in the longer term that gas cars still look like a better deal.
Original Article: "Peak EV: Electric Vehicles Will Fade as Their True Costs Become Clear"
This Audio Mises Wire is generously sponsored by Christopher Condon.
With the government foolishly handicapping the oil and gas industries and pushing other alternatives, the future is not very bright..
Original Article: "What Will Our Energy Future Be? A Few Ideas"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The "first" Children's Crusade of 1212 ended in tragedy for those taking part. The "second" crusade is not going to produce any happy endings, either.
Original Article: "Climate Activism: The Second Children’s Crusade"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Americans typically are told that private enterprise wastes resources while government preserves them. Economic truths turn that canard upside down.
Original Article: "Paradise Valley, Montana: A Study in Free Market Land Conservation"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Florida's government promotes a "shared adversity" plan in which individuals and organizations have distant environmental problems imposed upon them.
Original Article: "Critiquing Florida's Public Policy of "Shared Adversity""
This Audio Mises Wire is generously sponsored by Christopher Condon. '
Daniel McAdams of the Ron Paul Institute joins Jeff and Bob to discuss the economic and political ramifications of the Nord Stream 2 pipeline sabotage.
Read "The Economics of War" from Human Action: Mises.org/HAP363-1 Read a study Bob co-authored on Europe's energy crisis: Mises.org/HAP363-2
Fossil Future: Why Global Human Flourishing Requires More Oil, Coal, and Natural Gas—Not LessBy Alex EpsteinPortfolio 2022xii + 468 pp.
In his remarkable new book, Alex Epstein has changed the terms of the debate about the danger of “global warming” and the alleged need to take drastic action in response to this. One side assures us that we must “follow the science,” which, it is claimed, has proved that the rise in global temperatures caused by fossil fuels, which emit carbon dioxide into the atmosphere, will soon result in catastrophe unless we “green” the economy. The opponents either question the evidence that disaster impends or argue that the threat can be handled without revamping the economy.
Epstein thinks that the danger from global warming has been much exaggerated, but though he presents extensive evidence in support of this, his primary contribution lies elsewhere. He argues that modern civilization depends on fossil fuels and that far from curtailing their use, we need to spread them to the impoverished parts of the world. So great are the benefits from using the fuels that only a true “end of the world” nightmare caused by CO2 emission could require that we shift to other energy sources, and despite the alarmists’ caterwauling, this nightmare is most unlikely to occur. Moreover, Epstein holds that the benefits of fossil fuels are so obvious that only a defect in thinking could have induced people to ignore them. He is a philosopher as well as an energy economist, and he expertly identifies the false thought pattern that has led to our current confusions.
Epstein says, “Whenever we hear about what the ‘experts’ think, we need to keep in mind that most of us have no direct access to what most expert researchers in the field think. We are being told what experts think through a system of institutions and people…. Understanding how this system, which I call our ‘knowledge system,’ works and how it can go wrong is the key to being able to spot when what we’re told the ‘experts’ think is very wrong—about fossil fuels or anything else.”
On the issue of energy, Epstein argues that the system has gone very wrong, indeed, owing to the fact that its leading lights are in the grip of a philosophy that views human beings as an upsetting intrusion on the earth: through their feverish pursuit of growth, people have interfered with the “delicate balance” of nature. Having done so, people must repent and “green” the economy, though some experts opine that it would be better to get rid of us altogether. Concerning this bizarre philosophy, Epstein remarks: “Why does our knowledge system always expect extreme negative impacts from cost-efficient energy’s side-effects and always expect that we will be unable to master these impacts? Because of a false assumption that leads anyone holding it to expect that all forms of significant impact on nature will inevitably be self-destructive. I call this the ‘delicate nurturer’ assumption … [which is] that Earth, absent human impact, exists in an optimal, nurturing ‘delicate balance’ that is as stable, sufficient, and safe as we can hope to expect.”
You might be inclined to object that scientific findings deal with facts, not philosophies: if “climate scientists” predict that continued global warming will have dire consequences, must we not judge their arguments strictly as they stand, without regard to their proponents’ views about the proper place of human beings, however repellent we may find these views? Epstein responds that predictions are far different from claims about what has happened in the past, which can often, though not always, be assessed objectively. Climate predictions are for the most part highly speculative, and the antihuman ideology of the “catastrophists,” as Epstein dubs the climate alarmists, should incline us to view what they say with doubt, all the more so if they have wrongly predicted catastrophes in the past. “Such predictions [about climate] necessarily rely on highly complex science and models that are difficult for non-researchers to assess … it is both far easier and highly informative to assess our knowledge system’s, including designated experts’, track record of climate prediction” (the “designated experts” are those whom the system treats as authoritative). One of these “experts,” Michael Mann, famed for his controversial “hockey stick” graph, is weighed in the balance and found wanting: “Designated expert Michael Mann has written: ‘We probably already exceed the [planet’s] carrying capacity by a factor of eight.’” It is unlikely that someone with this opinion will be eager to suggest policies that promote human welfare, and the same holds true of the notorious Paul Ehrlich, who has many times wrongly predicted disaster but whose oracular status nevertheless remains undiminished. Why listen to such as these?
Epstein must here face an objection. If, as he says, the catastrophists see the world through the distorting lens of their antihuman ideology, isn’t Epstein vulnerable to a parallel challenge? Does his own philosophy incline him unduly to discount arguments that global warming poses a real threat? He could readily reply that his prohuman ideology is correct; that since reality does not suffer from self-contradiction, it will not lead to distortion, and that in any case, he does not have a track record of bad predictions. On this issue, readers must judge for themselves, but to help them do it, Epstein has set forth his reasoning with exemplary clarity.
If the designated experts were not blinded by partisan passion, what would they see? The answer, Epstein says, is that our civilization depends on fossil fuels. Nature untouched by man is no “delicate balance” but rather an ever-dynamic, often hostile place. To survive and flourish in it, we must specialize in what we produce and use powerful machines in doing so. Such machines immensely multiply our natural energy and enable us to master the environment to our advantage. Only the fossil fuels— viz., coal, oil, and natural gas—can be used to produce these machines a cost-efficient way. Wind and solar power are paltry by comparison. Hydroelectric and nuclear power fare rather better, but even they are no match for the fossil fuels, and furthermore, fossil fuels are often required to produce and implement the other forms of energy.
Epstein says about the fossil fuels: “Contrary to our anti-impact, anti-energy knowledge system these are not trivial benefits that are already overwhelmed by fossil fuels’ negative side-effects on the livability of our world—they are fundamental to the livability of our world. The current benefit of the world’s massive use of ultra-cost-effective fossil fuel energy is a radical increase in the productive ability of billions of people—via ultra-cost-effective fossil-fueled machine labor and the enormous amount of mental labor it frees up, along with fossil fuel materials—that makes the world unnaturally livable, i.e., conducive to human flourishing.”
It is here that the primary source of the book’s originality lies, together with the author’s cogent analysis of the conflicting opinions’ philosophical underpinnings. Other critics of the global catastrophists propose palliative measures to cope with what they deem a much lesser threat than their opponents envision; they suggest, for example, a shift to nuclear power and the limitation of such pollution as remains through “cap and trade,” a carbon tax, and the like. Epstein, by contrast, is uncompromising. Not only does he want to maintain the use of fossil fuels; he relishes the prospect of the extended use of these fuels, particularly in poor areas of the world, where people without this resource languish. “Since 1980, the percentage of humanity living on less than $2 a day has gone from 42 percent to under 10 percent today. This wondrous development is the result of increasing and expanding productivity, which is driven by the increasing and expanding use of fossil-fueled machine labor and the enormous amount of mental labor it frees up. But there is still far more progress to be had…. Expanding fossil fuel use will enable everyone, especially the world’s poorest people, to become more productive and prosperous.”
But has Epstein dismissed the perils of untoward climate changes too quickly? Don’t floods that result from a rise in temperature pose real dangers, for example? Epstein responds by again appealing to the benefits of technology, made possible by fossil fuels. Technology enables us to achieve what Epstein calls “climate mastery.” He cites in this connection a telling statistic. Despite the temperature rise that occurred in the twentieth century, deaths from climate have sharply decreased. “In reality, dangerous temperatures—which overwhelmingly come from too much cold, not too much heat—are a smaller danger than ever thanks to two forces: fossil-fueled climate mastery and modestly warming temperatures…. Before human beings had fossil-fueled machines to master dangerous climates, they were overwhelmed by natural temperature dangers, both heat and (especially) cold…. Heat-related deaths are a much bigger problem in the unempowered world today, which is yet another reason why empowerment is a moral imperative.”
One other pleasing feature of the book should be noted, and it is one I confess I especially appreciated. Often books on the climate controversy are filled with technical language, difficult for the untutored reader to understand, let alone evaluate. Epstein has taken great pains to explain what he says in clear and simple terms, and for this, and much else, his readers are in his debt. Fossil Future has the potential to do great good, if its readers have the energy to put into effect the author’s cogent policy recommendations.
Jeff Deist: Alex Epstein is our special guest this week. He runs the Center for Industrial Progress, was formerly at the Ayn Rand Institute, and has a background in philosophy. He wrote a famous book called The Moral Case for Fossil Fuels, and followed that up with a new book called Fossil Future. Alex, let me say this book is incredible. Thank you for writing it! I know from the acknowledgements it was quite a difficult task.
Alex Epstein: I did the book on fossil fuels. That did very well, and then I decided to replace it with something I thought would be better. And it was much harder to do. The first book took me about six months. This one took over three years. Given the moment we’re in right now, there’s a real opportunity to educate people, and there’s a real threat from this anti–fossil fuel movement. What I had done in 2014 was great for then, but I thought something better was possible and was needed.
JD: This is an empirical book. It’s also a philosophical book. I know you did not intend to write an economics book, but Fossil Future involves scarcity, it involves tradeoffs and choices within the context of scarcity, and it talks a lot about externalities—including positive externalities. These are concepts from economics.
AE: Well, as you mentioned, I used to work at the Ayn Rand Institute, so I have a philosophy background and an Objectivist philosophy background. From that perspective, morality is the fundamental science of human action, and I think of economics as related closely to morality. If you have a human-life-based morality, I don’t think you can have a discussion about the morality of fossil fuels that doesn’t think about economics. You could argue that it’s mostly an economics book in the sense of what is the content, because the content focuses on what’s involved in producing and trading energy and then what are the implications for that in terms of human life. And most of those implications you can measure in money, although as you mentioned with externalities, sometimes people abuse money and measurements to ignore the benefits of fossil fuels.
JD: The book is controversial, so we should mention your publisher. Did they take a risk publishing it?
AE: My publisher is Penguin Random House, and the specific imprint is Portfolio, which is their business imprint, but the same guy who runs it also runs their conservative imprint, which is called Sentinel. They’re used to controversial books. They published, or at least they proposed, Jordan Peterson’s latest book, and you know they got some controversy in Canada around that. They’re pretty good at this kind of thing, but it’s unusual. As my first book sold a lot of copies and the publishing industry doesn’t have that many bestselling authors, they cannot afford to turn one down. Fossil Future has done even better than The Moral Case for Fossil Fuels in terms of sales and its lifespan. One byproduct of this for me and for others is that more and more publishers will be open to these kinds of ideas.
Robert Murphy: Alex, I’ve spent a bit of time in the climate change debate. The people who resist the IPCC’s (Intergovernmental Panel on Climate Change) conclusions are skeptical of government intervention. People assume that in twenty or thirty years we’ll all have electric cars and far less CO2 emissions. You argue against phasing out fossil fuels. You argue they are an important part of our future.
AE: Yes, there’s two aspects to it. The main one is that it’s proper that we have a fossil future, and that is why the subtitle to my book is “Why Global Human Flourishing Requires More Oil, Coal, and Natural Gas— Not Less.” But a big part is the economic analysis that concludes that one way or another, fossil fuels are going to be used more in the future, even if some of the bad policies get passed. And part of what I’m arguing is that we shouldn’t pass those bad policies, because even if we are using the same amount of fossil fuel in the future, there’s an enormous opportunity cost of premature deaths and opportunity loss.
By our standards, the world is extremely poor, including energy poor, and one point I make in the book is that there are six billion people in the world who by our standards use a totally inadequate amount of energy, less electricity than one of our refrigerators uses. We live in a world that is energy deprived, and then you learn that fossil fuels provide 80 percent of that energy and their use is still growing, particularly in the parts of the world that care most about low-cost reliable energy. It is insane to talk about phasing them out rapidly. The other side has an enormous burden of proof when claiming that we should be phasing out fossil fuels when the value they provide is so needed and they’re clearly uniquely good at providing it.
JD: Alex, my favorite part of the book is part 4, when you talk about framing the debate. This could apply to so many political issues in our country. You discuss the “anti-impact framework,” which assumes the absurd goal of zero human impact on the environment. You also address “arguing to 100,” which entails not simply moving halfway toward your opponent’s goals. Talk about the importance of reframing the climate change debate in the political sense.
AE: I use a controversial example for clarity, although you’re not supposed to use controversial examples to make new points. I use the example of Trump’s election—and it’s not to endorse or condemn it. It’s just to show the dynamics. I think of every debate as involving a moral good and a moral evil. You can think of it as the good “+100” and the evil “–100.” Think of the American political discussion that occurred before Trump’s election as 100 was “more equality” and –100 was “increasing inequality.” It was all about equality, we want more equality, and it was framed that way. Now, imagine if Trump had tried to argue for his policies within that framework. He couldn’t do it effectively because the policies he wanted to enact would not increase equality and might actually increase inequality. What he did was to reject that framework instead and bring on the immortal hat. “Make America Great Again.” What that really represents is a reframing. He reframed the discussion in terms of American greatness. So, +100 was American greatness and –100 was American decline. And then what he was able to do was to argue that all his specific policies were moving us toward 100! And this is what I call arguing to 100. You set what the moral good is and then you argue that you are getting us there.
Look at the energy debate and how it has been framed. Particularly prior to my work and some others, it has been framed as eliminating fossil fuels, or at least eliminating their CO2 emissions. Look at most institutions in the world—corporations, countries, investment firms. They all have these net zero goals. That’s saying the goal is to eliminate emissions, which really means eliminating fossil fuels. Then the evil is fossil fuels.
Now what’s happened is that many defenders of fossil fuels are stuck in the status quo. Instead of challenging the framework, they accept it and do what I call arguing to 0. Somebody puts forward the Green New Deal, and the Green New Deal is an argument to 100: if we’re going to get to the elimination of CO2, we need to move in this direction quickly, so we need to switch to renewables, and we need these “investments” and taxes to do so. Then the other side says, No, that will be impractical, or it will cost too much, or they’ll make fun of it. I call this arguing to 0 because if the other side proposes positive things and you shoot them down, your best-case scenario is zero. You don’t move at all.
I reject this framing of “our goal is to eliminate CO2 emissions and fossil fuels,” and as I talk about it in the book, the deeper goal underlying that is to eliminate human impact on the earth. I frame it broadly, but our goal should be to advance human flourishing, and when we’re thinking about global issues, that should be the goal. The –100 is increasing human suffering on earth—and once you frame it that way, then people are very open to the possibility that more fossil fuels are beneficial and we need more of them.
So, because I know you’re interested in how other proliberty people can argue the case, the lesson is that you need a positive moral goal, or you can think of it as a vision, and then you need a positive policy to get there. In part 4 of the book, I talk about the policy of energy freedom. I work with elected officials, and one thing I’m constantly telling them is that you need to propose your own profreedom policies—it can’t just be reacting to the bad ones! And just to anticipate one objection, people sometimes think that if you’re proliberty, you can’t be in favor of positive policies because you’re against these things. If there’s a bad policy in place, changing it is a kind of positive policy. I can say we should pull out of the Paris Climate Accords. That is an action that you can say leads to this inspiring vision. And then I would argue—and this gets into government—that people need to think carefully about what the right profreedom policy is; it’s not the most obvious thing. Don’t just do anything. You need a positive vision and a positive policy, and that leads to a totally different level of effectiveness in persuading people.
RM: Alex, your book resonated with me where you explained how it can be that all these ostensible experts on climate change issues are wrong. I like how you framed it: it’s not so much the experts are wrong in the narrow area of their expertise, but the chain through which knowledge is communicated to the public has lots of links in it. It gets distorted. Just one example: William Nordhaus, who won the Nobel Prize for his work on the economics of climate change, is arguably the top economist in this area. His own model shows the 1.5°C cap on global warming would be so economically destructive it would be better if governments did nothing. And yet right after he won the Nobel Prize, the same weekend, the UN came out with its special report on 1.5°C of warming. A New York Times reporter asked Professor Nordhaus, “Do we still have time to halt warming at 1.5°C?” And he said, “No, I think at this point it is too late.” He didn’t add “and thank goodness, because that would be catastrophic.” He just left it at that. So, it is important to show people the dichotomy between what the actual peer-reviewed literature says and how the media communicates it to people.
AE: Interestingly, you guys have picked up on two of what I would say are innovations in the book. In clarifying the issue of fossil fuels, there is how to think about it and then how to explain it to others. There’s arguing to 100 and then the idea Bob is referring to. I use the term “knowledge system” throughout the book, and this is to capture the fact that when we are told what expert conclusions are, we need to recognize that we don’t just get those conclusions directly from the expert researchers in the field. There’s a process by which what those researchers find is synthesized, disseminated, and then evaluated in terms of what actions they might lead to, and I show that at every stage of this process, there are big distortions just in terms of evaluation.
I point out in chapter 1 that many of the expert conclusions that we’re taught, particularly the notion that we should rapidly eliminate fossil fuels, ignore the huge benefits of fossil fuels. I talk about Michael Mann, one of what I call “designated experts” on this issue, because he has a whole book about fossil fuels and talks about fossil fuels in agriculture—but he only talks about negatives or alleged negatives. He doesn’t talk about the fact that the whole world would starve without fossil fuels or their equivalent, and that there’s no reason to believe that their agricultural functions, including as a fertilizer, can be replaced in any reasonable timeframe. This kind of thinking—or nonthinking—is what leads us to an energy crisis or a fertilizer crisis, as we are experiencing today, because people like Michael Mann told us we should make decisions about this while ignoring the benefits.
The IPPC (International Plant Protection Convention) has a report called Summaries for Policymakers, and these summaries are distributed to news outlets, where they get distorted. I call this “dissemination distortion.” I think the IPCC itself is fundamentally a terrible synthesizer of knowledge, mainly because they too ignore the benefits of fossil fuels, including the fact that thanks in large part to fossil fuels, we’re safer than ever before from the climate. This is the result of what I call “climate mastery,” and you cannot talk intelligently about climate and the threat of climate change if you don’t recognize that we’re far safer from climate. There has been a 98 percent decline in climate-related disaster deaths over the last one hundred years, and the UN doesn’t mention this in any of its reports. That’s like a polio report that doesn’t mention that we have a polio vaccine, a preventative to the disease, and that we’re far better off.
I also mention that the researchers themselves face problematic incentives, including the degree to which the government funds the climate research. The government people behind the funding are very interested in catastrophe scenarios that justify increases in their power. And so, what you find is that even if all the researchers are well intentioned and doing their best, the action conclusions that we’re given can be totally wrong. I’m trying to break this common idea that if we’re told that the experts say we should do X, then that must be right. The point is it can be 180 degrees wrong, and in fact, I show the track record is often that wrong—that is, they’ve recommended policies that would have ended billions of lives prematurely.
RM: Jeff mentioned you approach these issues from philosophical background. Wasn’t it Senator Barbara Boxer who attempted to dismiss you?
AE: Yes.
RM: You write about an anecdote from a congressional hearing. It was about somebody who’s an expert on how much CO2 the atmosphere can retain and what increases in CO2 concentration will mean in terms of how much warmer the planet will be in the year 2100. That’s a very dubious thing we don’t know much about. It is a very complex process. But even if someone is an expert, it does not mean that they know, therefore, that the optimal carbon tax is $87 per ton! There is so much going into that conclusion that you can’t be an expert in one little area and then pontificate on what humanity should do, because it involves many different people’s expertise.
AE: Definitely! Part of my point in chapter 1, and this also comes up when I discuss the issue of externalities, is that there is a systemic benefit denial when it comes to fossil fuels. It’s not particularly well known that climate-related disaster deaths are way down—but if you think about it logically, would I rather be alive today, with today’s weather and our ability to deal with it, versus the weather of one hundred or two hundred years ago and our ability to deal with it back then? Of course you would choose living today! What you grasp is that our ability to deal with the climate, or what I would call our climate mastery ability, is so much more important than the exact current state of the global climate system.
What you want to look out for is are there any potential changes that are so dramatic that they are likely to overwhelm us. Whether it’s that the warming is so rapid that it leads to rapid sea level rises or that the storms become two or three times more powerful. If it’s that, yes, then you get worried. But if it’s that it’ll become two degrees warmer or three degrees warmer in a given timeframe or the storms will become 20 percent more intense or it’ll become a little drier or wetter in certain places, that’s just so inconsequential, even climate-wise, compared to your ability to master it. One point about mastery people don’t get is that they can neutralize negatives. What is negative climate-wise depends on your degree of mastery. I love snowboarding and snowmobiling, so I like to go to Snowbird, in Utah. The snow there used to be a negative. It was a threat. But thanks to mastery, the area has been transformed into a positive! You can say the same for the almost tropical conditions where I live, in Laguna Beach. It is considered a positive to live there with the heat, but with less mastery, it would not be nearly as positive, let alone to live in Florida. So many people are moving to Florida and Texas because some of the negatives there have become positives, thanks to air-conditioning that allows you to handle the worst periods indoors.
JD: Alex, your description of our faulty knowledge system is alarming to me because it would affect a lot of other political and economic issues. As you point out, we need “synthesizers” to put knowledge in context. We saw this during covid. What do epidemiologists say? What do virologists say? Well, they might have the kind of specific technical expertise Bob mentioned, but that doesn’t mean they are equipped to determine the value of tradeoffs for society at large over shutting down businesses in response to covid. I think you are very much the synthesizer here. The idea that we don’t need philosophers to make sense of the questions and answers is really dangerous.
AE: I think covid is a great example, and I bring it up in chapter 1. With covid, you have this very clear situation where the experts say we have to lock down, and if you dispute that, you’re against the experts and you’re claiming that you know better. I think one thing that happens is sometimes the profreedom people will too easily jump on a certain contrarian position in terms of the content of the issues because that seems to protect freedom. Some people would underestimate the severity of covid because they feel we can’t have freedom, whereas my view was that the government’s policy fundamentally should be “innocent until proven guilty,” which is the most underrated political principle today. But essentially, if there’s a demonstrable danger from somebody, then you can validly say “you should quarantine.” But you cannot say to everybody “you’re guilty because you could potentially infect somebody in the next two years, so you all have to stay in your homes.” Even if it is quite severe and if you’re more concerned about the severity, then get better at testing so you can validate whether somebody’s infectious.
There’s a tendency of people with status to take different kinds of threats and argue that this threat justifies a vast expansion of my power. Part of what they do is they ignore all the downsides of them getting that power. And in the case of covid, you don’t think about all the negative consequences of locking people down.
One thing that led to the lockdown frenzy also applies to fossil fuels, and that is the question of what is the goal that your policy is pursuing. Because that’s going to determine the standard by which you evaluate whether this policy’s good or this policy’s bad. And with covid, the goal that wasn’t stated explicitly but was operating nonetheless was essentially to eliminate this virus at all costs. That was really the goal of covid policy, and that is a totally unjustifiable goal! Nobody could argue that this one virus should be eliminated at all costs, but it functions that way until you identify explicitly that this is the goal we’re pursuing and it makes no sense.
And it’s a similar thing with energy, where the goal right now is to eliminate CO2 emissions at all costs. That is not a justifiable goal, and when you make it explicit, it becomes clear that doesn’t make any sense as a goal. Maybe it’s an aspect of advancing human flourishing, but it can’t be that we’re going to get rid of whatever it is at all costs. Otherwise, we would literally kill ourselves right now.
JD: In part 3 of the book you lay out the case for why CO2 emissions are not all they’re claimed to be—and might actually be beneficial in many ways.
AE: Part 3 is the most controversial. Just to give the structure of it, part 1 is called “Framework,” and it’s about how what I call our knowledge system is evaluating the issue of what to do about fossil fuels based on an ultimately antihuman framework which I call “the anti-impact framework,” which says that human impact on nature is intrinsically immoral. Our goal should be to eliminate it; it’s inevitably self-destructive. It’s based on this idea that the planet is this delicate nurturer and if we impact it, it’s going to punish us! My point is people who we’re being told are experts are evaluating fossil fuels using the totally wrong framework, and this leads them to ignore the benefits of fossil fuels to human flourishing. And it leads them to “catastrophize” the side effects, because they think every impact we have is going to lead nature to punish us like a vengeful god. That’s their perspective. OK, but then let’s look at it from within a human-flourishing framework, where our goal is to advance human flourishing on earth. Then our premise becomes the earth is not this delicate nurturer. It’s wild potential that we need to impact intelligently.
Part 2 is looking at the benefits. It argues that the benefits of cost-effective energy are incomparably greater than what we’re taught, and that fossil fuels are uniquely capable of providing energy for the billions of people who have energy and the billions of people who need energy. In essence, it’s saying that the livability of the earth depends on our use of fossil fuels. And I don’t think it’s refutable. Somebody could say they’ve discovered a new technology and it can replace fossil fuels. I don’t think it’s plausible, but interestingly, a lot of the climate catastrophists are taking that tack. They’re not actually attacking me on climate and climate mastery; they’re attacking me on how amazing renewable energies are. For an example, take Andrew Dessler who was a guest on the Joe Rogan podcast. He has now apparently become the world’s energy expert. His attack on me is almost all based on the notion that renewables are so wonderful, which is quite a thing to say, given that we’ve tried to replace fossil fuels with renewables, and even restricted fossil fuels, and now we have shortages. And Biden is not going to China for solar panels. He’s going to Saudi Arabia for oil!
Part 3 is saying that fossil fuels are not causing climate catastrophe, but they’re actually driving a climate renaissance in which we’re far safer from climate. There is nothing in the evidence about the future of climate impacts of fossil fuels that is catastrophic, let alone apocalyptic, if you factor in our mastery ability. Once you factor in the mastery ability, it’s hard to be scared about different kinds of climate impacts. My claim about the establishment is that they’re not only ignoring the broad benefits of fossil fuels. They are in particular ignoring the climate mastery benefits. Because their implicit goal is to eliminate human impact because it’s evil. They think our impact on the climate is intrinsically immoral and we shouldn’t do it, and they expect us to be punished for it. It has a religious quality to it, where the commandment is “thou shalt not impact the climate” and the climate is going to punish us vengefully if we do. So much of the climate discussion is this belief that it’s wrong for us to impact the climate and we’re sinners and we shouldn’t do it—versus let’s look clinically at what these impacts are, positive and negative and neutral, and then what are the benefits that come from it. When you do that in a clinical, prohuman, kind of nondogmatic way, you have a totally different view of the whole situation.
RM: Alex, this is a point you make in a few places in the book. You are skeptical of alarmists, whether they really are concerned about human welfare, because if we need to get CO2 emissions down to net zero by 2050, if not sooner, alarmists would be the biggest boosters of nuclear and hydro energy! I think James Hansen is possibly the only major advocate who is pronuclear at this point. It makes you wonder about the sincerity and actual motivation. Clearly, nuclear and hydro should be embraced with open arms if the goal is to dramatically reduce CO2. But there is political resistance. People don’t like expensive energy. And yet they’re against those as well.
AE: You said sincerity and motivation, and I think both of those are very much in question. And this is part of what I point out in chapter 1: part of the reason we should be very suspicious of our knowledge system is that, again, it’s hostile to fossil fuels, but it’s also hostile to nuclear, it’s hostile to hydro, and it’s hostile to all the activities involved in solar and wind power, including mining. Solar and wind involve unprecedented amounts of mining and unprecedented amounts of industrial development, and that’s part of why there is resistance to them. And so what you see is that our knowledge system and our designated experts are hostile to all forms of energy, whereas to your point, if you valued energy at all, you’d be really scared about the negative effects: you would be overwhelmingly pronuclear, prohydro, pro–anything we can do. You would be as worked up about the threat of reduced energy use as you are about climate catastrophe.
Now, in reality, you should be infinitely more worked up about the threat of less energy! But even if you take the AOC-type position that these climate impacts are going to be so terrible, you have to recognize the catastrophic impacts of using less energy. And fortunately—I mean, fortunately intellectually, not existentially—we have an energy crisis right now that’s illustrating that. I’ve been saying for years, including in that exchange where Barbara Boxer said “I don’t appreciate being lectured by a philosopher,” you need to look at the benefits of fossil fuels. I told her and the rest of that group that energy is the industry that powers every other industry. The price of energy determines the price of everything, and we’re seeing that right now, with price inflation being substantially driven by energy prices! Everything I say in Fossil Future is coming true: if you ignore the benefits of fossil fuels, and more broadly the importance of cost-effective energy, you are going to hurt so many people, including their ability to feed themselves.
JD: Alex, if we consider nuclear the cleaner alternative to coal for electricity, I worry about the political and regulatory environment after Fukushima. In the US, only one new reactor has been built, in Georgia, and it’s not online yet. Germany shut down nuclear plants. I fear the future of nuclear power may be somewhat dead in the water.
AE: It’s important to recognize that absent substantial changes in the approach to nuclear energy, it is dead in the water. I think of myself as one of the leaders of what I call the energy humanist movement, consisting of people who are looking at energy issues in humanistic terms. Looking at fossil fuels, energy humanists consider the benefits and the side effects carefully. One kind of error that some pronuclear people in this movement make is that they act like nuclear is more of a near-term replacement than it is. What you’re talking about is very important. Since the Nuclear Regulatory Commission was created in 1974, we have not had a single reactor that has gone from conception to completion under their regulatory regime. In Georgia, we have unbelievable cost overruns. Construction is becoming uneconomical. This is not something that is poised to be a rapid replacement! We need to recognize that the nuclear status quo policy is a disaster and it needs to be changed.
In my work with elected officials, I’m working on an energy freedom platform which has a good shot at having some influence, particularly if the Republicans win. And part 2 of that platform is to decriminalize nuclear energy. I have a list of eight policies that are necessary so that nuclear can compete on a free market. But we need to recognize that it is dead in the water as any kind of scalable substitute, and we need to change that. In 1970, you could build new reactors cheaply, but that political environment is gone for the moment.
RM: You warn that people often overrate the ability of nuclear to replace fossil fuels. In the book, you discuss how energy needs are broader than just electricity production. People say, “That country gets 25 percent of its energy from renewables” when they mean 25 percent of electricity. When you count industrial heating and transportation, which all require energy, the actual percentage is much lower. Would you talk about that?
AE: My favorite example is Bill McKibben, who is one of the designated experts on this issue. When his book The End of Nature was published in 1989, its marketing said that it was warning us accurately about global warming. But his claims in that book have not come true in terms of their severity. And his policies would have been horrific had they been passed! In an interview, he said Germany was getting 50 percent of their energy from solar! Now, he was talking in December and his first error was he used a daily high from June as an average high of electricity coming from solar. But that was a daily high, not the average throughout the day—it’s like a peak during the day. And then, he’s only taking electricity, not energy, even though most of our energy use is not from electricity. It’s for things like transportation, for high-heat uses, and sometimes clean residential heat via natural gas. This is part of the reason Germany is superdependent on Russia, because they use natural gas for so many things, including compensating for the unreliability of solar and wind. He was taking the statistic from June and assumed that it was still true in December. Of course, one of the problems of solar and wind is they’re seasonal: solar is not anywhere near as good in December as it is in June!
McKibben is telling us what to do about energy, but he doesn’t know the difference between electricity and energy; takes daytime highs and equates them with averages; and equates solar in December with solar in June. It’s important to be precise. The fact that so many of our leading thinkers are imprecise should solidify the idea that our whole establishment doesn’t value energy—and there’s a lot of reasons to think it’s hostile to energy.
make this connection in chapter 3, where I analyze what’s going on with experts in our knowledge system: if you think human impact on nature is a bad thing that should be eliminated, you hate the benefits of energy. It’s not just you hate there’s pollution, or there’s CO2 and you think that’s problematic. The very purpose of energy is to do work on the rest of nature. That’s what it is. It’s the capacity to do work. The more energy we use, the more we are going to transform nature to suit our purposes. And “transform” here just means “have an impact on.” So, if you’re against impact, you’re against transformation and you’re against energy, and this is what you get with the most consistent of our designated experts. They’ll say we’re using too much energy, and that is like saying we have too many people. And it’s a deep opposition to humanity.
JD: Yes, that’s a philosophical problem. An opposition to what benefits humanity.
Let’s talk briefly about the developing world, which you suggest we call the “unempowered world.” Something like three billion people on earth basically don’t consume energy. Aren’t we being neocolonialists in the West if we try to thrust our anti–fossil fuel mentality on them? People in Africa or India or China might like to have a car or a condo or air-conditioning too!
AE: Yes, it’s unjust, and this is one of the arguments that I’ve made in Moral Case for Fossil Fuels and again in Fossil Future that has resonated the most and that the other side is most terrified of because it undercuts their claimed humanitarianism. Even when they talk about climate, they’ll say, “I’m so concerned about climate because there will be worse storms in Indonesia, and I really care about those people.” If you care about people, they need energy. They need productive ability that will enable them to deal with storms and to feed themselves and protect themselves from nature and have medical care and education. You need energy for all these things. But you can see they’re making that appeal. They’re claiming to care about the welfare of poor people because that’s an issue that resonates with people. It certainly is unjust to deprive people of opportunity who are already in a low-opportunity situation.
The Washington Post, about a month before my book came out, attempted a cancel campaign on me and tried to characterize me as a racist and said, “He doesn’t care about poor people. He’s just claiming to care and so you don’t need to listen to his arguments.” This “racist” argument was insane, and I was able to preempt the story and refute it, and they watered down the article and didn’t use the word racist. But clearly, they are threatened by this argument that their policies are most harmful to the lowest-opportunity people in the world, and that’s why they want to use this ad hominem, because they have no answer to that argument.
RM: Again, it seems they’re hiding their true motive. We shouldn’t paint with overly broad strokes— sometimes the loudest activists get the microphone in the political debate, rather than the sober and serious people. But the claimed motivations don’t always match. Sometimes they simply say we’re just using too much energy altogether. The issue is they just don’t like capitalism. They think humans’ standard of living is too high, so they implicitly agree more energy use means a higher standard of living. They’re against a higher standard of living; therefore, they want to restrict energy use. They are consistent if you know their true motivations! But they realize they have to sell it to the public using a different framework.
AE: Definitely. You mention painting with a broad brush, and it’s important not to do that. I explain in chapter 3 that most of us have adopted what I call the anti-impact framework. When we’re talking about the world, we’re often doing a contradictory thing, which is optimizing for eliminating human impact and at the same time optimizing for advancing human flourishing. And one place this happens is with climate. Most people’s goal with respect to climate is how do we minimize or eliminate our impact on the climate. They’ll talk about how to stop climate change, but what does that mean? That means stop human climate impact. But from a human-flourishing perspective, that’s a crazy goal. Your goal should be to advance climate livability. As I mentioned before, priority number one should be to increase your mastery of the climate because that allows you to neutralize negatives, and in fact turn negatives into positives.
And yet, if you push them on it, most people, who are prohuman, if their values are clarified explicitly, are thinking about the climate change in an antihuman way. So, I’m challenging readers to think about what their own operating framework on climate change is and are they thinking about this issue in a consistently prohuman way. One of my discoveries in writing this book was that I wasn’t fully doing this. For example, with the climate issue, I was assuming that man-made warming was bad instead of being clinical and saying “Where is it bad for humans and where is it good for humans?” There are a number of places where it is clearly good for humans, and I realized I was thinking that if we created it, it must be bad—versus not having any bias one way or another. Is the result good for us or is it not good for us?
JD: We could discuss this book for hours! You can find it on Amazon and at FossilFuture.com. You can follow Alex Epstein on his website, AlexEpstein.com. And most importantly, you can follow him on Twitter at the same handle, @AlexEpstein, and keep up with what he’s doing. Please defend him, promote him, get this book out there. It is incredibly important. This is civilizational. A lot of people are antiprosperity and don’t understand tradeoffs. They don’t understand the world we live in, and they simply don’t share our goals of greater prosperity for people, and they’re hostile to capitalism. We have to stop these people who want to curtail our future and that of our kids and grandkids. So, Alex, I want to thank you so much for writing the book and for joining us.
AE: So much of the world is changed by influential people, which is why I wanted you and Bob to read the book before we spoke, so we could have an informed discussion. I know that some percentage of the readers will agree and spread the ideas. If you know of influential shows or influential people who would like a copy of the book, I’m very eager to send signed copies to these people. If you know of prominent hosts, prominent people who might be interested, tell them, or you can reach out to me (Alex@AlexEpstein.com). You would not believe how effective that can be, as someone reached out to you and this podcast happened. It’s a superefficient way to get the word out, and it doesn’t cost any money. You just have to introduce us.
JD: Congratulations, Alex. Thanks.
AE: Thank you.
Alex Epstein is an author and commentator who advocates for the use of fossil fuels. He is the founder and president of the Center for Industrial Progress, a think tank in San Diego, California. He holds a BA in philosophy and computer science from Duke University. He is a vocal opponent of the mainstream climate change agenda and has appeared in many forums to promote fossil fuels' continued use and expansion. He is the author of three books: Fossil Fuels Improve the Planet (2013), The Moral Case for Fossil Fuels (2014), and his latest, Fossil Future: Why Global Human Flourishing Requires More Oil, Coal, and Natural Gas—Not Less (2022). AlexEpstein.com and Twitter @AlexEsptein
Who frames the “climate” debate in this country? Or any political debate, for that matter?
We all know the answer. Left progressives have mastered the emotive art of posing supposedly good intentions as actual arguments. They enjoy a childlike state of suspended disbelief that allows them to insist reality can be legislated. Being progressive increasingly means never accepting responsibility for the plainly foreseeable consequences of your proposed policies.
How many times have you found yourself explaining rather than asserting, arguing from your heels rather than requiring your interlocutor to make a positive case for state intervention to fix X, Y, or Z? We see this across a wide range of issues: making the case for government action satisfies the urge to do something (Save the Planet! Flatten the Curve!), while making the opposite case requires refutation and inferential thinking. Sound bites and slogans beat reasoned arguments.
Global warming, climate change, the Green New Deal, and environmentalism in general are pointed examples. The Left successfully frames these phony issues as urgent existential threats to humanity that only immediate government action can eliminate. This puts realists and market economists immediately on a defensive footing. Question begging is the order of the day, as in “Why don’t you care about the earth overheating?”
But we have good news. Our cover story features Alex Epstein, a brilliant young thinker who intends to reframe this debate entirely. Mr. Epstein is the author of Fossil Future, a remarkable new book that ranks among the most important you will ever read. Energy from fossil fuels, he explains, is part and parcel of human civilization and our entire material existence. He shows how the growing movement to restrict or even ban the use of oil, natural gas, and coal is not only delusional in terms of sustaining that existence—at least for the foreseeable future—but also profoundly antihuman.
While he provides mountains of data to advocate continued (and growing) fossil fuel use, the book’s most important contribution may be flipping the script on supposed environmentalists. Under Epstein’s rubric, the question is not “How do we achieve zero human impact on the environment?” but rather “How do we use energy to help create a world of greater human flourishing?”
The first question creates an impossibly loaded goal, literally never achievable but ideal for demonizing human industry and activity. It’s the perfect progressive framing. The second, by contrast, forces antienergy advocates to admit that the well-being of humanity is not their chief concern. It positions humans, energy, and the physical planet as cooperative parts of a whole. And it places the burden of proof squarely on the “catastrophizers” (Epstein’s great term) to justify upending our standard of living to impose their dubious green energy agenda, necessitated by a wholly unproven crisis.
Needless to say, Mr. Epstein has his critics. In a 2016 US Senate hearing, then senator Barbara Boxer from California attempted to dismiss Epstein as a philosopher with no official credentials to testify to matters of “science”—a term she cannot define and undoubtedly misinterprets to mean “the current progressive consensus on issues relating to science.” This exchange is telling:
Senator Barbara Boxer: Mr. Epstein, are you a Scientist?Alex Epstein: No, philosopher.Senator Barbara Boxer: You're a philosopher?Alex Epstein: Yes.Senator Barbara Boxer: Okay. Well, this is the Senate Environment and Public Works Committee. I think it's interesting we have a philosopher here talking about an issue...Alex Epstein: It's to teach you to think more clearly.
Bravo! Anyone who corrects a clueless senator this effortlessly deserves our admiration.
We hope you enjoy this interview with Mr. Epstein, a heroic voice fighting the progressive narrative on climate—along with David Gordon’s full review of Fossil Future. Epstein’s rhetorical reframing of the climate debate applies equally to any number of political issues, and we should all follow his lead in our own battles against false narratives, emotional blackmail, and feel-good pandering.
As always, thank you for subscribing to The Austrian and for your support of the Mises Institute.
Not long ago, Germany's politicians were proudly phasing out nuclear power. Facing a harsh winter without Russian natural gas, the atom suddenly seems like a good alternative.
Original Article: "Germany's Nuclear Choice: Russian Energy Crisis Forces a Reckoning"
This Audio Mises Wire is generously sponsored by Christopher Condon.
We are regularly being told that we are in a "climate crisis." But what if that isn't true? What if CO2 actually is good for the greening of the planet?
Original Article: "Rethinking Climate Change: Are the Apocalyptic Models Wrong?"
This Audio Mises Wire is generously sponsored by Christopher Condon.
When it comes to energy and the environment, Americans not only get the wrong facts, arguments, and narratives–they get the wrong philosophy. Alex Epstein, who recently published perhaps the most important book of our time, joins Jeff and Bob to explain.
Get Alex's new book Fossil Future: Mises.org/Fossil
Green energy advocates want us to believe we easily can transition from conventional fuels to renewables. In truth, such a transition not only would devastate world economies, but also is not technologically possible.
Original Article: "Lighting the Gas under European Feet: How Politicians and Journalists Get Energy So Wrong"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Our friend Saif, known to the world as Dr. Saifedean Ammous, joins Jeff and Bob Murphy for a demolition of the pseudo-economics behind Green energy.
Read Saif's The Fiat Standard: Mises.org/FiatStandard Saif's paper 'Energy Systems and the Knowledge Problem: The Case of Biofuels': Mises.org/SaifEnergy
The Biden administration in its desire to "save" the planet from climate change has decided to destroy one of this country's most productive and important industries in the process, putting the US economy itself in jeopardy.
Original Article: "Destroying America to "Save" It? Biden's Nihilistic Destruction of the Energy Industry"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Europe wants cheap and abundant energy, but politicians demonize nuclear, gas, and oil. All the interventionist proposals that are put forward by European politicians entail a higher cost for long-suffering consumers.
Original Article: "European Environmentalists Have Made Energy Independence Impossible"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The Biden administration will use the SEC to squeeze oil and gas companies on "climate risk." As is typical for progressive schemes that drive up the cost of living, the working classes will suffer the most.
Original Article: "Yes, They Are Coming for the Oil Companies"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Western intellectuals are trying to tear down symbols of traditional colonialism. Yet the West still continues a form a colonialism in Africa: eco-imperialism.
Original Article: "Eco-imperialism: The West's New Kind of Colonialism"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Josiah Neeley is the Texas Director and Resident Senior Fellow in Energy for the R Street Institute. He has a lively discussion, pushing back on some of Bob’s previously articulated points regarding the recent Texas freeze and blackouts.
Mentioned in the Episode and Other Links of Interest: The YouTube version of this interviewJosiah’s article on the Texas freeze.Bob’s article on the Texas freeze. For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on Apple Podcasts, Stitcher, Spotify, and via RSS.
Rob Bradley is an expert in the history of US energy markets. He explains the role of Sam Insull (co-founder of General Electric) in showing what a free market in electricity would look like, and then criticizes Texas’ ERCOT as a central planning agency.
Mentioned in the Episode and Other Links of Interest: The YouTube version of this interviewRob Bradley’s website, Master ResourceRob’s article on the recent Texas freeze and Paul KrugmanRob Bradley’s books Edison to Enron and Capitalism at WorkHarold Demsetz’s 1968 Journal of Law and Economics article, “Why Regulate Utilities?”Robert Bryce’s book Pipe Dreams: Greed, Ego, and the Death of EnronForrest McDonald’s book Insull: The Rise and Fall of a Billionaire Utility TycoonBob’s article on the Texas freezeBob Murphy Show episode 77, where Rob Bradley explains his education under Rothbard and his contributions to energy economics in the Austrian tradition For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on Apple Podcasts, Stitcher, Spotify, and via RSS.
Wind and solar power can work well when placed in an ideal location. Much of the time, however, these projects require a lot of fossil fuel to produce, but then never deliver the promised "zero-carbon" energy.
Original Article: "Why a Green New Deal Is More Expensive Than Joe Biden Realizes"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Since the deep freeze in February caused millions of Texas homes to lose their power, partisans have been fighting over the blame. The governor blamed wind turbines and the green agenda, whereas Paul Krugman said the fault was with natural gas. Bob shows the numbers; natural gas was to blame only in the sense that nobody expected wind to be useful during a winter crisis.
Mentioned in the Episode and Other Links of Interest: Bob’s article at Mises.org, which gives links to all the relevant sourcesThe Foundations of IBC For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on Apple Podcasts, Stitcher, Spotify, and via RSS.
Normally the boosters of renewable energy point with pride to Texas, yet when wind collapsed during the deep freeze, suddenly even its biggest fans admit that nobody ever thought it could do the same job as natural gas.
Original Article: "Wind Power Is a Disaster in Texas, No Matter What Paul Krugman Says"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The World Economic Forum and its related institutions in combination with a handful of governments and a few high-tech companies want to lead the world into a new era without property or privacy.
Original Article: "No Privacy, No Property: The World in 2030 According to the WEF".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
If climate change effects aren't enough to put a noticeable dent in life expectancy, then why is climate change talked about as an apocalypse?
Original Article: "If Climate Change Is Killing Us, Why Is Life Expectancy Increasing?".
The Best American Science and Nature Writing 2017Hope Jahren, ed.Wilmington, Mass.: Mariner Books, 2017, 352 pp.
Jason Morgan (jmorgan@reitaku-u.ac.jp) is an assistant professor at Reitaku University in Chiba, Japan. Quarterly Journal of Austrian Economics 21, no. 2 (Summer 2018) full issue, click here. The Earth’s climate is extraordinarily complex. Unlike dinosaur fossils or organic chemistry or primate behavior, climate is always in flux, with countless factors influencing one another in an endless unfolding of diachronic stochastics. Given this complexity, one might presume that scientists who study planetary climate would be endowed with exceptional patience, scholarly integrity, and intellectual humility. After all, it takes a long time to learn even a little bit about such an intricate system, so part of the job description of climate scientist would seem to be acknowledging that there is only so much that is known about the 1.09 x 1044 or so molecules swirling about in the atmosphere. Even more complex than all that, though, is navigating the public’s interest in the field. Climate is contentious, and a climate scientist will have to keep his cool, sticking to the facts amidst even the most heated rhetorical environments.
And yet, this is precisely not how a startling number of climate scientists choose to behave. Former head of the National Aeronautics and Space Administration (NASA) Goddard Institute for Space Studies James Hansen, for example, once made the rather alarming claim that “it will soon be impossible to avoid climate change with far-ranging undesirable consequences. We have reached a critical tipping point. […] We have at most ten years—not ten years to decide upon action, but ten years to alter fundamentally the trajectory of global greenhouse emissions.”Nansen (2006). And what might happen if the Earth warmed by the five degrees Hansen was warning about? Hansen tells us in detail.
The last time that the Earth was five degrees warmer was three million years ago, when sea level was about eighty feet higher. Eighty feet! In that case, the United States would lose most East Coast cities: Boston, New York, Philadelphia, Washington, and Miami; indeed, practically the entire state of Florida would be under water. Fifty million people in the US live below that sea level. Other places would fare worse. China would have 250 million displaced persons. Bangladesh would produce 120 million refugees, practically the entire nation. India would lose the land of 150 million people.
Rather discomfiting for Dr. Hansen, who thought we had “at most […] ten years to alter fundamentally the trajectory of global greenhouse emissions,” those blood-curdling visions of hundreds of millions of drowning urbanites have now gone fully a dozen years without coming to pass.
Not to be dissuaded from his task—and traipsing rather lightly past the Climategate scandal, in which University of East Anglia scientists were caught in flagrante delicto discussing the doctoring of data to match the received narrative on anthropogenic climate change—Hansen next tried to set a new tone for the climate Armageddonists. The Earth’s failure to implode on cue led Hansen and others to blame the system instead. “The democratic process doesn’t quite seem to be working,” he said in 2009, for example (The Guardian, 2009). Naomi Klein, author of This Changes Everything: Capitalism vs. The Climate (2014), connected the dots between Hansen’s rantings and full-bore income redistribution, hyping the “People’s Recovery,” which attempted to shunt tax dollars into communities experimenting in “nonextractive living” and “new democratic processes”:
Any attempt to rise to the climate challenge will be fruitless unless it is understood as part of a much broader battle of world-views, a process of rebuilding and reinventing the very idea of the collective, the communal, the commons, the civil, and the civic after so many decades of attack and neglect.
It would be hard to beat this orchestral crescendo of embarrassments to real scientific inquiry, this twisting of science into balloon animals shaped like either Chicken Little or Karl Marx. But in The Best American Science and Nature Writing 2017, series editor Tim Folger gives it a try. In large measure, he succeeds, calling into question whether “climate science” has not perhaps become an oxymoron.
First, a word about the 2017 iteration of the series. The editor for that year, Hope Jahren (the author of Lab Girl (2016)), has assembled a rather puzzling collection of genuinely interesting and valuable pieces, interspersed with tendentious politically-correct huff-puffing and special pleading. To take the good entries first, Robert Draper’s essay (reprinted from National Geographic), “The Battle for Virunga,” is a tightly-written piece on the intersection of economics, politics, and wildlife in the Democratic Republic of the Congo. David Epstein’s ProPublica essay, “The DIY Scientist, the Olympian, and the Mutated Gene,” tells the richly human story of Jill Viles, a muscular dystrophy patient whose extraordinary etiological insights helped track down important genetic information about lipodystrophy. And Ann Finkbeiner’s “Inside the Breakthrough Starshot Mission to Alpha Centauri,” taken from Scientific American, is a character-driven look at how new space technologies travel down the R&D pipeline. There are other fine essays in this volume, too: Tom Philpott’s on the political economy of chicken farm antibiotics, Kim Tingley’s on Polynesian navigation techniques, and Christopher Solomon’s well-researched look at Bureau of Land Management machinations in the American West.
Unfortunately, Jahren’s editorial heuristic, saturated in identity politics, leads her in the very unscientific direction of putting the scientist ahead of the science. This is especially odd, given that the writers who take the Cartesian plunge and delve into innerspace are forced to admit to having no idea who they are. Listless atheism marks Omar Mouallem’s “Dark Science,” for example. Ostensibly writing about light pollution and the efforts to combat it, Mouallem lets slip, “I once found myself in the middle of a field staring at a glistening sky. Had I still believed in him, I’d say it looked like God sneezed glitter.” Azeen Ghorayshi’s “He Fell in Love with His Grad Student—Then Fired Her for It” is the Glenn Close-esque tale of Christian Ott, a Caltech astrophysics professor who unburdens himself to his protégé about his deep-seated insecurities while publishing dozens of poems about her online. Sally Davies’ “The Physics Pioneer Who Walked Away from It All” tells us about physicist Fotini Markopoulou, who avers that “between the truth of the physical world and a physics theory, there’s humans. Of course, nothing happens there, because removing the person is the whole point of training as a scientist.” And then there is Michael Regnier’s heartbreaking true story of George Price, the man who literally did just that: removed himself, by killing himself in the name of the scientific study of altruism (“The Man Who Gave Himself Away”).
But the real editorial knifepoint of this book is its global warming agenda. Climate change crops up everywhere, from essays on Greenland (“A Song of Ice”) to Alaska (“The New Harpoon”). However, the pièce de résistance is Nathaniel Rich’s “The Invisible Catastrophe,” reprinted from The New York Times Magazine. This is passive-aggressiveness cranked up to eleven. Here, Rich manages to take a story about a methane leak in Aliso Canyon, outside Los Angeles, and turn it into a schadenfreude smorgasbord, with Rich secretly reveling in the fact that the wealthy residents of Porter Ranch—many of whom are Republicans—are finally getting a taste of their own medicine by being sickened by greenhouse gases.
But even this essay pales in comparison with Folger’s truly unhinged Foreword. Here, we find the favorite trope of the unscientific, namely, that everyone with whom one disagrees is a Nazi. Yes, a National Socialist. And not just any kind of National Socialist, but active, core members of the Party. To be more specific, bookburning Nazis. Here’s Folger:
Modern cosmology was born in Germany a century ago, and within two decades of its birth it almost died there. When Albert Einstein published his general theory of relativity in November 1915, it’s doubtful he could have imagined how profoundly deranged his country would become. On May 10, 1933—the same year Einstein left Germany forever—mobs of young Nazis and their supporters across Germany were feeding bonfires with his papers, along with works by Sigmund Freud, Thomas Mann, Bertolt Brecht, Erich Maria Remarque, and others supposedly contaminated with undeutschen Geist—un-German spirit. More than 25,000 books burned on that day, including those of the 19th-century Jewish poet and playwright Heinrich Heine, who had once written, “Where they burn books, they will also ultimately burn people. […]”
Where is Folger going with all this? Who are the modern-day Nazis in our midst? Why, climate skeptics and Trump supporters, of course:
One measure of the health of any modern society must be the degree to which it supports its scientists. A few days before I started to write this foreword, hundreds of thousands of people in dozens of cities across the country participated in the March for Science. It was an event at once inspiring and worrisome: inspiring because so many took a stand for rationalism—a public rebuke to the nation’s leaders that couldn’t be more different from the German book burnings of the 1930s; worrisome because who would have thought that in the 21st century scientists and citizens would feel the need to gather in support of something so self-evidently valuable as unfettered scientific research?
Yet the march was necessary, urgently so. Scientists at more than a dozen federal agencies have launched rogue Twitter feeds to counter the policies of a frighteningly uninformed president who once tweeted that “global warming was created by and for the Chinese.” We live at a pivotal moment in history[; …] climate change threatens not just “the environment” but civilization itself.
Now, to be fair to Folger, he is hardly the only “scientist” to have had a Hitler-themed meltdown over thermometer readings in Queen Maud Land. We are fallen creatures, and we all let our passions get the better of us from time to time. Scientists are people too, and when they get caught rigging the deck so that every card comes up the Ace of Hockey Sticks, they are apt to lash out at the whistleblowers just like anyone else. If anything, in his extremism Folger is simply following in the footsteps of his fellow “earth scientists.” Like Jacques Cousteau, for instance, who once opined that “world population must be stabilized and to do that we must eliminate 350,000 people per day.”
But there is much more to Folger’s brand of meteorological trolling than there might first appear. For example, there is the revealing research of William N. Butos and Thomas J. McQuade, whose 2015 paper on boom-and-bust cycles in the global warming industry shows the deep intertwinings of “scientific” research and the political economy. From the mid 1990s, global warming became a fashionable topic. From that point, governments increasingly began funding global warming-themed research to the exclusion of other projects. The much-touted “consensus” on global warming turns out to be little more than an illusion created by preferential funding by Washington and foregrounding by the United Nations Intergovernmental Panel on Climate Change (IPCC). As Butos and McQuade point out, science is supposed to be about hypotheses and experiments, but scientists turn out to be as susceptible to chicanery as politicians are once money for research starts to change hands.
Would that that were all. For what lies beneath even this fen of politicking under the rent veil of scientific disinterest is a deep uneasiness, felt most acutely by scientists themselves, over the true nature of their “scientific” enterprise. Folger is driven to accuse his critics of Nazism because he is afraid to confront their arguments head on. Why? Could it not be because of the epistemological bankruptcy of what passes as science?
Now, before the QJAE offices are deluged with hate mail, let me state that I am not a flat earther. I fully accept that pterodactyls and diplodocuses and trilobites were real, that the universe is billions of years old, that the earth goes around the sun, and that electricity is electrons, not voodoo. I also agree that carbon dioxide, methane, water vapor, ozone, and other substances are greenhouse gases, and that reducing the concentration of these gases in the atmosphere will reduce the greenhouse effect that they cause. I watched Mr. Wizard, too, and I am not here to dispute whether force equals mass times acceleration, or whether energy equals matter times the speed of light squared.
No, the claim I make here is much more serious than the denial of these facts would be. I am saying, in short, that scientists today, with rare exceptions, do not do science at all. They do sociology. As Thomas Kuhn pointed out in The Structure of Scientific Revolutions (1962), for instance, science lurches and stalls through a series of paradigm shifts, with the behavior of scientists themselves being the real dark matter moving research and consensus. And Karl Popper, were he alive today, might be interested in applying the falsifiability criterion to wild speculations such as Hansen’s and Folger’s. The line between science and pseudoscience might lie much closer to the latter than many in the general public suspect.
I began this review by arguing that climate is complex. What we need, then, is a science capable of investigating it, and real scientists, for a change, who can rise above herd behavior and try to figure out exactly what is going on with all of those 1.09 x 1044 molecules in our atmosphere. What we do not need are any more quacks or snake oil salesmen who see science as a bandwagon and scientists as responsible for keeping everyone on board. On that note, Friedrich Hayek’s The Counter-Revolution of Science: Studies in the Abuse of Reason (1952) would be a good place to start for learning the key difference between science and scientism, or the ill-starred attempt to bend science towards less noble ends than truth. Perhaps the next edition of The Best American Science and Nature Writing will heed some of Hayek’s sound advice and feature much more writing of a scientific nature. But at the very least, let us hope that it has much fewer comparisons of honest dissenters—those who truly want empirical facts and dispassionate interpretations—to bookburning Nazis.
Climate Change (née Global Warming) is based on three premises: the earth's atmosphere is warming; humans are responsible for that warming; and warming is inherently bad.
But even if we accept these premises, what economic trade-offs are warranted in response? No more air conditioning or private automobiles? Heavy carbon taxes? Outlawing relatively cheap fossil fuels and mandating expensive renewable sources? Slower economic growth in the developing world? One child policies?
Dr. Robert Murphy joins Jeff Deist to discuss how the political landscape and media narratives fail to consider obvious choices and trade-offs inherent in the climate change debate.
Quarterly Journal of Austrian Economics 20, no. 3 (Fall 2017)Community Revival in the Wake of Disaster: Lessons in Local Entrepreneurship by Virgil Henry Storr, Stefanie Haeffele-Balch, and Laura E. Grube, Palgrave Macmillan, 2015
When a community is hit by a disaster, how can it recover? What choices of that community enhance (or hamper) revival? These are some of the interesting questions considered about the economics of mega-disaster.
This volume (and the deep scholarly work that led up to it) was inspired tragically by major disasters around the globe over the last twenty-five years. Such disasters, of course, are not unique to our time. Quite the contrary: In the middle of the nineteenth century, John Stuart Mill, writing in the Principles of Political Economy, Book 1, Ch. 7, remarked on how often devastated communities could recover rapidly in the face of extreme tragedy. Mill’s explanation focused on the accumulation of surplus capital (i.e., saving). A community that has accumulated significantly more capital than other communities will be able to withstand truly devastating events more successfully than can the average community. Mill’s simple insight helps power modern research that seeks to discover why some stricken communities outperform other ones in striving to recover from disaster.
Up to this point, we have used Mill’s capital concept narrowly. Let us now widen our concept of capital to include the social relationships inherent in communities. When we look carefully at these relationships, we detect complex communal connections of both business and social character.
One popular definition of “Social Capital:” is by Pierre Bourdieu: “Social Capital is a resource that facilitates collective action for mutual benefit….” Another is: “Social Capital comes in the form of social networks, norms, and narratives…” Woolcock (2001). Our authors emphasize “…bonding social capital… that exists among like-minded homogeneous groups….” The components of such ties might reasonably be referred to as social capital. Some of these recognized components are:
“Alertness” and the role of the entrepreneur: This is the ability to taste—so to speak—new wine in old wineskins. Our authors put forth good explanations of the two concepts (Chapter 2; pp. 12–16), with similarities and differences described between Kirzner’s entrepreneur and the closely related Schumpeterian concept.
However, if “alertness” alone falters, then it is nice to have something else to fall back on—such as market forces. The authors, like most economists, believe in the power of market forces, which are still seen as crucial in finding a robust equilibrium. The authors are also happy to work with an “in-kind” model of remuneration.
The scholarly reader will appreciate the round-up of the several meanings that capture and compare the different shades of entrepreneurship concepts; e.g., social entrepreneurship, ideological entrepreneurship, public sector entrepreneurship, and Schumpeterian entrepreneurship. The authors allow us to treat these various flavors of entrepreneurship as close cousins.
Chapter 2 is what we could and should rightly call a theory section because it drives the main argument of the book. Its title, “The Entrepreneur as a Driver of Social Change,” encapsulates its meaning perfectly. The roots of most of this particular research derive from earlier work by Joseph Schumpeter and Israel Kirzner. and the authors furnish an excellent review of that literature.
Chapter 3 opens with an insightful game theory model illustrating how one might productively choose a decision path if faced by a “should I stay or should I go” situation due to a catastrophe. To make an informed decision, a “player” would need to be able to judge the likelihood of other players staying in the area. If only a few are staying, then our “player” should probably leave the area as well. But what if others who are announcing false plans too? How does our “player” get the necessary information as to others’ true intent?
One’s ability to “tap” the network would make it easier to analyze the situation and possibly make a joint decision with others about whether to leave or stay. A “loner” would have fewer signposts. Lacking fresh information, he or she “would not know how others in the area are thinking. They would not know about all of the ‘unsettled facts’ that would, in normal times, be routinely available to guide those who are uncertain into a rational decision-choice.”
Social capital carries with it enough knowledge about local events to help in making such a fateful decision. The entire community’s comprehensive knowledge base (i.e., network) is put to work on a pressing problem.
So. To stay or to go. Specifically, should we abandon our homes and move away, or should we try to rebuild?” It turns out that sharing of information among affected parties is crucial, due to what is known or not known by the other “players.” If we know what the “leaders” in the community are most likely to do, it makes it less risky to the “follower” players to act accordingly.
What then about governments as cure for the crisis? In the eyes of many, only government can be effective enough to generate the large-scale coordination between both the private and the public sectors that are often needed in the wake of a large disaster. However, the authors suggest that a key cause of slower-than-expected recovery is more expansionist government policies—such as, for example, ridiculously harsh wage-and-price-control policies, as initiated aggressively by the governors of both New York state and New Jersey. The authors have documented numerous incidents where regulations make it harder, not easier, to get back to something approaching “normalcy.”
With that foray behind us, the authors take us crisply through the burgeoning social-capital literature. They then attach that literature to the topic of “mega-disasters:” how victims can be helped, and how the “heroes” of such a story can be freed to help. Researchers have consistently found a positive relationship between various types of social capital and various measures of societal well-being. They also report a positive correlation between economic growth and social capital.
Unlike machinery, social capital usually normally resides—at least in part—in the human consciousness. Thus, things can be changed up very quickly. Incentives are even more important than in other dynamic situations.
In the case of disasters, the authors play down somewhat the incentives that focus strongly on financial gain, and instead emphasize a more-broad-based concept of “reward.” Their “feed-back” mechanism includes things like social prestige and other such things, from which “high status” in the society may be achieved (p. 28). The authors sort of skip by this fairly radical adaptation, and with this adaptation, has the model morphed into a full-scale sociological one?
The authors make a strong case for their position that well-utilized social capital can make an important difference in the wake of a general disaster (p. 38). In one of the stronger portions of the book, the authors present other findings that corroborate their own findings. This is a very well-developed body of research indeed—and the authors should be congratulated for their body of work (pp. 38–42).
The authors emphasize the common-pool problem, preaching that “A community’s capacity to rebound is related to its capacity for self-governance” (p. 43).
Another theme emphasized by the authors is the superiority of polycentric orders versus a monocentric order. In a crisis, substantial uncertainty emerges as to what path should be taken. Different opinions will naturally emerge. Through differences of opinion, it is more likely that a better path will be discovered through simple trial and error. By contrast, if governance is by rules of a rigid authority, then it will be all the more difficult to find, through experiment, a useful path. Otherwise, we risk wasting precious time and resources, including social capital.
But how—assuming that disaster has struck and the citizenry must face stark and unpleasant choices—can it get out of the disaster? The authors argue that it is precisely at this point where the entrepreneurial spirit is needed most. What is needed are private citizens who are willing to lead, to encourage, to raise spirits. It is here, the authors say, where entrepreneurs need to say: “Help the community members overcome the collective action problem that plagues community rebound!” The authors see entrepreneurs as fulfilling at least three crucial functions (p. 46): providing needed goods and services; restoring of social networks that have deteriorated during the crisis; and their appearance sends a “Let’s go!” signal to other parties who might be hesitating. To some extent, this is the familiar “pulling yourself up by your own bootstraps” story.
We turn next to the energetic and remarkable efforts of those broadly conceived “agents of entrepreneurship” whom the authors identify as the “heroes” of the book.
How is it possible to supply a disaster area privately in the wake of massive destruction? First of all, in a free market, one might expect market forces to do much of the initial job, augmented by entrepreneurs and any remaining social networks. After that initial spurt, buying and selling would surely continue, though at considerably higher prices due to widespread shortages. From this point on, one would expect some social capital networks would that would be coming-online. They would make the initial “profit” also. Skilled labor would enter the area quickly, sensing a profit opportunity. A true devastation would of course be unable to easily return to normal, and the stronger medicine of, let us say, social networks and entrepreneurship. Similar things were observed by the authors in their extensive research on the two storms.
In the 9th Ward in New Orleans, skilled labor and entrepreneurs came together, more or less spontaneously, to help—no questions asked. Similar successes also sprung up in the disaster areas of New York and New Jersey. Entrepreneurs (in the broad sense) sprang into action, and in many cases their actions encouraged the despairing and created action where otherwise there would have been little action.
Chapter 6, “Regrowing Uprooted Social Networks” looks at the recovery of the devastated areas and observes steps that seemed to be helpful in bringing these areas back. The reader meets many of the “heroes” of this tale, and there are many. One challenge to those seeking to bring these areas back, was, surprisingly(?) “help” from government, which often earned poor marks. The tales told a fair share of circumstances where “for their own good” entrepreneurs were not allowed to take steps that they themselves felt were needed. Often, they lost those battles with government. This chapter opens the discussion as to how social capital can be created. The authors primarily use real-life examples, making the narrative more interesting. The remarkable flexibility and reorganizational features of social capital is how easily it can be transferred from one situation to a different one.
Many different skills are useful in the process of creating social capital. The “re-building process” surely must be one of the keys of social capital in the wake of a devastating catastrophe. The heterogeneous nature of social capital is one of the keys of its success. Similarly, such capital has many uses and has great flexibility. If a “hole” in the social-capital fabric opens, social capital can make repairs by calling upon skills of other members of the “social-capital chain.”
Ending this book are a few policy recommendations culled from the authors’ study. They suggest the following guiding lights.
Policymakers should … instead of embracing top-down concepts, instead ensure that our entrepreneurial actors have the space to act.
Eliminate, suspend, or simplify the rules that hamper the entrepreneurial spirit, especially in a true crisis.
In conclusion, the authors suggest a simple, but powerful idea: entrepreneurs are agents for social change, especially so in natural disasters.
In its most basic application, the TANSTAAFL principle is a simple statement of reality: everything of value has a cost. The TANSTAAFL principle can also be interpreted as a mandate for a policy of full-cost pricing. In a world where resources are scarce, everything has a cost. Scarce resources are used most efficiently when the price paid by the final user reflects all costs, including waste disposal, harm from pollution, and depletion of non-renewable resources.
Author Edwin G. Dolan is a leading environmental economist and academic. This 40th anniversary edition includes the full original text along with a new introduction and extensive commentaries on each chapter by the author. The commentaries explore aspects of environmental issues that have changed over time, for example, the arrival on centre stage of climate change, something that merited only a few words in the 1971 edition. They also discuss things that have not changed: for example, the tendency of government to play the role of villain at least as often as that of hero when it comes to protecting environmental values. As the author repeatedly emphasizes, it is as important today as in the past to apply the TANSTAAFL principle: the polluter must pay.
Elections took place across the country this past Tuesday with some interesting results. Voters in Ohio decided they hated monopolies more than they liked marijuana, while residents in Houston voted down the left’s latest egalitarian menace. While there is never a reason to trust the empty promises of pandering politicians, elections can occasionally offer insight into who is winning the battle for ideas. So there may be reason for optimism when you see Hawaiians’ discussing secession or the fact that there is global momentum in the fight against prohibition. While central planners struggle — both in the US and abroad — to maintain the status quo, bad government will never be able to repeal good economics.
The question then turns to how to we advance the cause of Austrian economics, peace, and freedom? That is the topic of this weekends’ Mises Circle in Phoenix, Arizona. One of our speakers, Dr. William Boyes, joined Jeff Deist this week to offer a preview of his talk. The founder of Arizona State University’s Center for Economic Liberty and a successful author of economics textbooks, Dr. Boyes discusses how to advance liberty and capitalism in the face of a statist educational system. One option — our new Online Mises Boot Camp!
In case you missed any of them, here are this week’s featured Mises Daily articles and some of our most popular articles at Mises Wire:
Activists Seek to Impoverish Thai Villagers to Save Monkeys from "Slavery" by David AdamsFor WHO, Red Meat Is a Red Herring by Yuri N. MaltsevThe Fed Desperately Tries to Maintain the Status Quo by Ronald-Peter StöferleHow Beijing and the West Work Together to Manipulate the Global Currency War by Brendan BrownWhy We Need Private Property to Deal with Scarce Resources by Patrick Barron"Social Expenditures" In the US Are Higher Than All Other OECD Countries, Except France by Ryan McMakenZwolinski and Woods on the Basic Income Guarantee by David GordonPot Battle in Ohio by Mark ThorntonPoverty Does Not Cause Obesity by Ryan McMakenWill Regulation Destroy a Revolution in Physics? by Matt McCaffreyMy Irish Eyes Are Smiling by Mark ThorntonA Practical Guide to Hawaiian Secession by Ryan McMakenMexico, Canada, and Ten American States Look Toward Marijuana Legalization by Ryan McMakenYellen on Negative Interest Rates by Jonathan Newman
Leave it to NPR to add guilt to your pleasure. That bon-bon hidden behind your two-year-old bottle of Scotch just took on a whole new layer of sin. With child slavery in the production of chocolate and animal cruelty in the harvesting of coconuts, the conflict confection is born.
According to an animal rights group featured in a recent edition of NPR’s The Salt, abused monkeys are a key ingredient in your Panang curry. While the Thai/Malay practice of using monkeys to harvest coconuts dates back hundreds of years, landing in the crosshairs of activist vegans and SJWs (Social Justice Warriors) is a new phenomenon. Anthropologist Leslie Sponsel, quoted briefly in the NPR article, offered a defense of simian symbiosis. I caught up with Dr. Sponsel at his Hawaii home in hopes of learning more about his fieldwork. “Debate on the morality of enslaving monkeys to get a job done is a Western dilemma, not a Thai one,” Sponsel explained.
A lifelong environmentalist and author of Spiritual Ecology: A Quiet Revolution, Sponsel had reservations about watching primate pickers at work. Instead of calling for a nationwide boycott of coconut products as some have done, Sponsel did what every anthropologist worth his salt is trained to do: take pause and observe. He noted that neither his wife — a Thai Buddhist — nor a fellow Thai professor from a local university framed the practice in moral terms. Add a complete lack of compunction from the local Muslim population and Sponsel concluded that monkeys on task are not a cause, but a part of the “isness” of peninsula living.
The British explorer Robert Shelford observed in his 1916 book: A Naturalist in Borneo:
The modus operandi is as follows: — A cord is fastened round the monkey’s waist, and it is led to a coconut palm which it rapidly climbs, it then lays hold of a nut, and if the owner judges the nut to be ripe for plucking he shouts to the monkey, which then twists the nut round and round till the stalk is broken and lets it fall to the ground; if the monkey catches hold of an unripe nut, the owner tugs the cord and the monkey tries another. ... [At times] the use of the cord was dispensed with altogether, the monkey being guided by the tones and inflections of his master’s voice.
According to Sponsel, “Working macaques are the difference between a livelihood and abject poverty for many South Thailand farmers. Snake bites, stinging ants, and life-ending falls face whoever or whatever goes up those trees.”
Given the best monkeys harvest coconuts at over twenty times the speed of the most skilled man, the incentive to continue a centuries-old partnership is clear. During his fieldwork, Sponsel never observed or heard of monkey abuse by their handlers. He noted that many were treated similar to the way a Westerner treats a family pet. “For some households,” he observed, “they may even rise even to the level of being a family member.”
For a country that sees its stray dog population driven in crates to Vietnam every Tet New Year to become a side dish, the Thai macaques could have it worse. According to Sponsel, “Young ones are trained and kept on a rope or chain tethered to the handler or to a shelter when not working.” It is this practice that has earned the ire of some activists. Sponsel counters that in our society it is a matter of civility to keep a pet on a leash. And who hasn’t seen the mother who ties a string to her own children on a walk through a busy mall! According to Sponsel, the monkeys he observed were well-fed, groomed and cared for. Indeed, he often saw macaques being pushed in carts by their handlers on the way to the plantation.
“This debate is not new,” Sponsel explained. “Back in 1952, Jean Marcel Brulle’s The Murder of the Missing Link tackled our moral obligation to primates.” In an account of science fiction, a man impregnates a female monkey and then kills the newborn to force a jury to deliberate whether murder extends beyond humankind. Be it a hairy chest, or his way with the ladies (simians included), Burt Reynolds played the lead in Skullduggery — a 1970’s take on Brulle’s dilemma.
As some ramp up calls for a boycott, Sponsel cautions the bandwagon. “They should seriously consider how their campaign may negatively impact the livelihood of poor farmers. Some activists appear to be more worried about non-human animals more so than humans; even though the latter are also animals and have rights too.”
In a perfect world, Thai farmers would have machines and monkeys would have unspoiled wilderness. But, for the world we have — one in which habitat destruction wipes out entire populations — coconuts and farmers in need may be all that keeps the macaques in the trees and off the dinner tables.
Our booming green-industrial complex built up by administrations of both parties in the US is effectively using the United Nations, its thirty two “sister” institutions — such as the World Bank, UNESCO, and numerous “tribunals” — and hundreds of training and research centers. This huge international bureaucratic buildup is already employing over a million “international civil servants” to administer what our socialist visionaries hope will become the world government of the future.
An increasingly important “sister institution” of the UN system is the highly politicized "World Health Department" also known as the World Health Organization (WHO) which, as part of a new scare campaign, has issued new declarations that sausages, hot dogs, bratwurst, and ham are carcinogenic, and that all red meat is “probably carcinogenic.”
This new anti-meat campaign, however, is not about your health, but about the “health of the planet.” WHO’s attack on meat is happening just before the Paris gathering on global warming and is a part of the slow motion socialist revolution poorly disguised as “climate change awareness.” As usual, socialist policies today are justified as “necessity for future generations.” Famous Nobel Laureate in physics, Dr. Ivar Giaever, once an Obama supporter, now stands against the president on global warming. “I would say that basically global warming is a non-problem.” Giaever ridiculed Obama for stating that “no challenge poses a greater threat to future generations than climate change.” The physicist called it a “ridiculous statement” and that Obama “gets bad advice” when it comes to global warming. I am sure that Obama and other politicians are peddling the climate change agenda not because of “bad advice,” but because advocates provide them with the argument for central planning and curtailing of individual liberty.
The 2015 United Nations Climate Change Conference, which will be held in Paris from November 30 to December 11, is designed by the Obama administration as the major leap forward toward world government and central planning. It will be the twenty-first yearly session of the Conference of the Parties to the 1992 United Nations Framework Convention on Climate Change (UNFCCC), and the eleventh session of the Meeting of the Parties to the 1997 Kyoto Protocol. The conference objective is to achieve a legally binding and universal agreement on climate, from all the countries, including the US.
All globalists were mobilized for preparation to this event. Pope Francis, for example, published an encyclical called Laudato Si’ help to secure success for the conference. The encyclical calls for immediate action against human-caused climate change. The International Trade Union Confederation, which traces its origins back to the First International founded and addressed by Karl Marx, has called for the goal to be "zero carbon, zero poverty," and its general secretary Sharan Burrow proclaimed that there are “no jobs on a dead planet.”
The war on meat is part of this public relations blitz. Lord Stern of the UK, a former chief economist of the World Bank, believes that “meat is a wasteful use of water and creates a lot of greenhouse gases. It puts enormous pressure on the world’s resources. A vegetarian diet is better.”
Another Stern, this time our own, is a US special envoy for climate change appointed by the Obama administration to secure a strong climate agreement at the Paris climate conference. Ambassador Todd Stern is now traveling to Brazil and Cuba to obtain support from these corrupt socialist governments to stand against “the global threat of climate change.”
In the US, socialist zealots and their “capitalist” cronies have already destroyed the coal industry and the whole energy sector is under attack. Now they are after the meat industry which is, according to them, “unsustainable.” The left-wing Union of Concerned Scientists lists meat-eating as the second-biggest environmental hazard facing the Earth. (Number one is fossil-fuel vehicles.)
In the Soviet Union, when it existed, beef was available only to Communist Party functionaries and everybody else could only find it on the black market. It was “explained” to the masses that meat was bad for their health. In Cuba today you cannot find beef in the food stores. Ground beef (usually mixed with soy), chicken, sausage, and ham are rationed by the government in the amount of a half pound per person every fifteen days. My Cuban friends complain, however, that most of these deliveries are unreliable and can be “canceled” without any explanation.
In the US, the 2015 Dietary Guidelines Advisory Committee worked on concocting a 571-page report of pseudoscientific “evidence” to encourage Americans to avoid red meat. US departments of Agriculture and Health and Human Services will use this junk science to guide federal nutrition policy, including the $16 billion school lunch program.
And it’s all being done at our own expense. The United States is bankrolling the UN and its “sister” institutions, including WHO, from one-quarter to one-third of their operating budgets. Let’s hope we don’t get all the world government we’re paying for.
Kingsman: The Secret Service is a big-budget semi-satirical take on the spy genre, featuring the film clichés audiences now associate with the James Bond and Jason Bourne franchises. These include global intrigue, amazing gadgetry, beautiful women, hand-to-hand combat, and multiple international locales.
Many friends of laissez-faire, and those suspicious of today’s international elites, will welcome elements of a film premised on private-sector heroes and a sociopath who wants to save the world from global warming. Unfortunately, however, the film's lackluster execution will leave many wishing the finished product were more memorable and compelling.
Kingsman centers on a secret stateless crime-fighting organization funded by the private estates of upper middle-class Englishmen whose heirs had been killed in World War I. It’s an “independent international organization” we’re told, and it’s no small affair. The Kingsman organization has access to at least one enormous hangar full of top-shelf privately-owned military equipment, and a team of the world’s smartest, strongest, and most agile secret agents. Th ey function above and separate from any recognized legal system or government edict.
It is this world which the main character, “Eggsy” Unwin (Taron Egerton), aspires to join at the prodding of agent Harry Hart (Colin Firth) who is only alive thanks to the heroics of Unwin's father years before. But, being a super-secret organization, the details of these heroics, and those of other Kingsman “knights” (as they think of themselves), will never be known by the general public. Unlike crass government agents and celebrities who desire adulation for their efforts, it seems, Kingsman agents desire that only justice be done. Unwin must be trained not only in the art of super-spydom, but also in the ways of being a gentleman and wearing fine tailored clothes. These skills, the film makes clear, are learned and not inherited, and anyone can rise to any level of refinement to which he aspires. These are, after all, modern gentlemen. Snobbery — that is, the avoidance of it — is very much a theme in this movie, and for Harry and the other younger members of the Kingsman organization, it’s important to remember that “manners maketh man.”
If this all seems a bit too pat to be realistic, there’s no need to worry about that aspect of it because the film maintains a base level of irony throughout. Nevertheless, the villain himself is genuinely vile. For Unwin, Hart, and the other Kingsman knights, the gravest threat they face is Richmond Valentine (Samuel L. Jackson), a billionaire in the tradition of Bill Gates or Steve Jobs who has become convinced that mankind is a “virus” that is causing global warming and a host of other environmental disasters. The only way to save planet Earth, Valentine believes is to kill off most of humanity.
Valentine has magnanimously preserved a remnant of humanity, however, and before he kills off nearly seven billion people, he invites the elite of the world — various in-cahoots politicians and super-rich families — to a mountain bunker where they will party and watch the near-apocalypse in safety. “You are the chosen ones,” Valentine informs his favorites in the upper crust. But for everyone else, saving the environment requires death in an orgy of global violence.
The movie progresses nicely to the climactic final scenes in which Unwin, having transformed himself in true Pygmalion fashion, and others try to stop Valentine. Unfortunately, the wheels start to come off in the minutes before the final showdown, and the film's weaknesses come most to the fore as the movie turns to uninteresting excess including non-stop streams of expendable evil henchmen in the style of a 1980s video game.
Furthermore, the R-rated Kingsman can’t seem to decide what mood or tone it wishes to strike. In the final sequences the film departs from its lighthearted but gritty tone and becomes suddenly cartoonish, to the point of being distracting at first and boring soon after. One might even begin thinking this is indeed a sanitized PG-13 summer blockbuster were it not for the out-of nowhere teenage-sex-romp elements — which lacked any set-up — that are seemingly cut-and-pasted from another movie into this one in the final minutes.
These weaknesses mar what might otherwise be a well-executed and biting commentary on coercive environmentalism — namely, the impulses behind many governmental efforts to forcibly manage and control natural resources, economic growth, and even human reproduction in the name of “sustainability.” Clearly, Kingsman: The Secret Service is attempting to play to the audience’s disdain for celebrities who lecture us on carbon emissions one minute, but fly around in private jets and live in 50,000-square-foot houses the next. Even more unexpected is the revelation that ultimately, the governments of the world are both clueless and powerless in the face of such evil, and it’s up to the private sector and intellectual heirs of long-dead wealthy English businessmen to save the day. This is a promising premise for a franchise indeed, although perhaps it would be best if taken up by more able filmmakers in the future.
Volume 18, Number 1 (Spring 2015)ABSTRACT: In March 2014, I presented a paper on Austrian Environmental Economics in Auburn, Alabama, as the F.A. Hayek Memorial Lecture at the Austrian Economics Research Conference, sponsored by the Ludwig von Mises Institute, which was subsequently published in the Quarterly Journal of Austrian Economics (Dolan 2014b), along with comments by Art Carden (2014) and Walter Block (2014). This short paper replies by emphasizing the importance of an institutional framework for environmental mass torts, without which a strict application of libertarian ethics leads to corner solutions in which there is a coordination failure.
KEYWORDS: Austrian school, economics, libertarianism, environmentalism, tradable emissions permitsJEL CLASSIFICATION: Q0, A11, A12, B25
Since I’m not a person who follows the climate-change debate or climate science in detail, I don’t get involved in discussions over temperature readings or climate trends. On the other hand, I find it’s a very bad idea to leave the science of economics and political economy up to climate scientists and their friends in politics who tend to be woefully deficient in their knowledge of how economies work or how scarce goods and amenities can be preserved, obtained, or manufactured.
It seems that for the global warming lobby, all that is necessary to set everything right is to hand control of the global economy over to governmental central planners. In their minds, the machinery of government only needs to be set in motion, and everything will be done with righteous precision to preserve the climatological status quo by increasing the cost of energy and cutting economic activity. The costs of such a venture, whether in money or in human lives and human comfort, need never be considered, because, we are told, the only alternative is the total destruction of planet earth.
This “Follow Us or Die!” routine is a propagandist’s dream of course, but in real life, where more rational heads — on occasion — prevail, the costs of any proposed government action must be considered against the costs of the alternatives. Moreover, the burden of proof is on those who wish to use government, since their plan involves using the violence of the state to carry out their proposed mandates.
For the sake of argument, let’s say that global climate change is occurring and that the sea level is rising. This still leaves several unanswered questions for the global warming enthusiasts:
What is the cost of your plan to various populations in terms of the standard of living and human lives?Is the cost of your plan greater than or less than the cost of other solutions, such as the gradual relocation populations from coastal areas.Can you show that your plan has a very high probability of working, and if not, why should we implement it when we could spend those same resources on other more practical solutions and more immediate needs such as clean water, food, and basic necessities?All too often, the response to questions such as these are angry diatribes about how we must act now. But of course, such a position is similar to that of a person who, upon seeing that winter is approaching demands that everyone build the winter shelter his way immediately. “Can’t you people see it’s getting colder?” he says. “If we don’t build the shelter my way, we’ll all freeze.” When faced with questions of whether or not his shelter plan is really the best way to proceed, or if a different type of shelter might be more cost effective, or if others would rather build their own shelter, he angrily declares “you winter deniers don’t care if we all die.”
Naturally, if the group then goes ahead with their belligerent companion’s shelter plan, they may find in the end that the shelter fails to keep out the cold or is structurally unsound. In that case, the group is actually much worse off because it expended large amounts of valuable resources that should have been applied elsewhere.
The True Costs of Global Climate RegulationHere’s a representative paragraph from a publication that claims it disproves the “myth” that economic controls will have a negative impact on the economy:
In the long term, unless we drastically reduce the rate at which we are still emitting greenhouse gases, we are very likely to incur huge costs as a result of climate change. Part of these costs will be in adaptation, and the inevitable disruption. In part costs will escalate due to turmoil and uncertainty throughout the economic world. There will also be costs that cannot be quantified, particularly when we try to value a human life and its loss.
What are these “huge costs”? How many of them will come from “disruption” and how many will come from “adaptation.” If we look more deeply into the proposed plans, we find the attempts at estimating such costs are based on wildly speculative computer models. There is nothing more than the assumption that their course of action is superior to the course of action preferred by others. But again, the burden of proof is on those who wish to use government coercion against others.
Moreover, even the mainstream research recognizes that the proposed cuts in carbon emissions, such as cutting “CO2 emissions to 80 percent of 1990 levels,” are purely arbitrary. Indeed, they must be arbitrary because the people who advocate for such measures have no idea how much carbon emissions should be cut to accomplish their goals, or indeed, if any level of cuts would accomplish their goals, ever.
What we do know, on the other hand, is that fossil fuel energies are behind most of the enormous progress made in the developing world. They make mechanization, transportation, and industrial economies possible. It is the rise of factories and other industrial operations that have pulled countless millions of Chinese (to name one example) out of the drudgery of low-productivity agricultural work and into factories where they can earn more than ten times as much. These workers send money back to elderly family members and they make possible the enormous savings rates that are driving the Chinese economy.
This work is safer, more productive, and provides access to more and better food, better medical care, and better housing, than does agricultural work.
Fossil fuel energy is a key factor in all of this, and to propose that the rug now be pulled out from under these people displays a callousness toward humanity that is truly unnerving.
But, the global warming lobby may say, “the effects of global warming will hurt them.” Perhaps. And if so, they need to prove to us that the costs of global warming will be greater than the costs of making these people less productive, poorer, and possibly destitute.
Less Energy Use Means Less Clean WaterA second major factor here in the necessity of energy is fresh water. The California drought has reminded us that fresh water is a scarce resource, even if the government likes to treat it as if it were not. But even as larger populations demand more water, fresh water can be produced through the use of energy via desalinization and pump-based aqueducts.
Today, most such schemes are still uneconomical because the problem of water scarcity can usually be solved through cheaper means such as importing food from wetter climates and through cheaper aqueduct systems that are primarily gravity-based.
In the future, however, as water does become more and more scarce as populations grow, the most practical answer will indeed become more energy-intensive solutions.
By centrally planning and artificially limiting energy usage, however, what the global warming lobby wants to do is raise the price of water processing, and by limiting the use of such methods, also inhibit technological progress by preventing practical experience in the use of water processing and fresh water production.
Bizarrely, many of these same people claim that government regulation of water is necessary because “rich people” will hoard all the water, but by raising the cost of water processing, the global warming lobby is ensuring more monopolistic control over water and higher prices for everyone.
“But global warming is causing droughts!” some will say. Perhaps. But those people still have yet to prove that their plan will end droughts and produce sufficient water for everyone. They still can’t even prove that droughts like the California drought are due to global warming. And, needless to say, the proposition that global controls on energy will make water flow from the hillsides in some distant future is pure speculation. But, in the meantime, we know the effect on the cost of living for ordinary people will be enormous. In other words, the global warming lobby wants humanity to abandon a real bird in the hand — developing technology in water production — for two very theoretical birds — a future without droughts — in the bush.
An Experiment Built on the Backs of the Most At-Risk PopulationsThus, a world of carbon controls and other central plans designed to prevent global warming, is a world of greater expense for everyone when it comes to food, water, and any basic necessity that involves the expenditure of energy. Which is to say, most everything. Naturally, the people in the least industrialized and poorest parts of the world will suffer the most. The global warming lobby likes to point out that their global warming policies are primarily directed at the richest countries. But if they think that will spare the developing world, they’ve only made clear that they don’t understand how global economies work. Crushing economic activity and consumption in the developed world only serves to lower wages and economic growth in the developing world.
Like the man who hysterically demands that everyone build a winter shelter his way or die, the global warming lobby thinks that its highly speculative, unproven, massively expensive, and poverty-producing plan is the prima facie solution to everything. Naturally, they want to use the coercive power of the state to force everyone to conform to their plans as well, and if a billion poor people have to pay a steep price, well, that’s a price that wealthy and upper middle-class academics and activists are willing to have the poor pay.
California Governor Jerry Brown has announced that private citizens and small businesses — among others — will have their water usage restricted, monitored, and subject to heavy fines if state agents determine that too much water has been used. Noticeably absent from the list of those subject to restrictions are the largest users of water, the farmers.
Agriculture accounts for 80 percent of the state’s water consumption, but 2 percent of the state’s economy. To spell it out a little more clearly: Under Jerry’s Brown water plan, it’s fine to use a gallon of subsidized water to grow a single almond in a desert, but if you take a shower that’s too long, prepare to be fined up to $500 per day.
There Is No Market Price for WaterThe fact that the growers, who remain a powerful interest group in California, happen to be exempt from water restrictions reminds us that water is not allocated according to any functional market system, but is allocated through political means by politicians and government agents.
When pressed as to why the farmers got a free pass, Jerry Brown was quick to fall back on the old standbys: California farms are important to the economy, and California farms produce a lot of food. Thus, the rules don’t apply to them. If translated from politico-speak, however, what Brown really said was this: “I have unilaterally decided that agriculture is more important than other industries and consumers in California, including industries and households that may use water much more efficiently, and which may be willing to pay much more for water.”
In California, those who control the political system have ensured that water will not go to those who value it most highly. Instead, water will be allocated in purely arbitrary fashion based on who has the most lobbyists and the most political power.
Numerous economists at mises.org and elsewhere (see here and here and here) have already pointed out that the true solution to water shortages lies in allowing a market price to determine allocation — and in allowing there to be a market in water — just as there is a market in energy, food, and other goods essential to life and health. Supporters of government-controlled water claim that billionaires will hoard all the water if this is allowed, although it remains unclear why the billionaires haven’t also hoarded all the oil, coal, natural gas, clothing, food, and shoes for themselves, since all of these daily essentials are traded using market prices, and all are used daily by people of ordinary means.
City Water vs. Agricultural WaterFor a clue as to how divorced from reality is current water policy in California, we need only look at the government-determined “price” of water there. Even under current conditions, water remains very inexpensive in California, but for the record, city dwellers have historically paid much, much higher prices for water than growers.
For example, according to this study, water for residents of San Francisco rose by 50 percent from 2010 to 2014, but residents were still paying about 0.8 cents per gallon for water. In Los Angeles, the price growth was a little less over the same period, but the Los Angeles price was also low, coming in a little over 0.6 cents per gallon. City dwellers are told that water is incredibly scarce, but as Kathryn Shelton and Richard McKenzie have noted, the price of water is so low that virtually no one even knows the per-gallon price.
But how much do growers pay for their water? In a recent LA Times article contending that growers “aren’t the water enemy,” it was noted that growers are now paying $1,000 per acre foot. This is supposed to convince us that water prices are incredibly high. But how does this compare to city prices? An acre-foot is about 326,000 gallons of water, so if we do the arithmetic, we find that growers who pay $1,000 for an acre-foot are paying about 0.3 cents per gallon for their water. That’s a little less than half as much as the city users are paying.
Now, city water is treated potable water, so we might expect a premium for city water. Historically, however, the gap between city prices and agricultural prices is much, much greater. Bloomberg notes that as of 2014, the price of water had risen to $1,100 “from about $140 a year ago” in the Fresno area. Going back further, we find that in 2001 many farmers were paying $70 per acre foot. Prices well below $1,000 are far more typical of the past several decades than the $1,000 to $3,000 per acre-foot many growers now say they pay. In fact, if we see what the per-gallon price would be for a $140 acre-foot of water, we find that a city dweller could use fifty gallons per day at a monthly price of 64 cents per month, or a per-gallon price of 0.04 cents.
At prices like these, it is no wonder that there is now a shortage of water. The price of water has for years been sending the message that water is barely a scarce resource at all.
In many cases, the low prices are enabled by decades of taxpayer subsidization of water infrastructure. A year round flow of water to both cities and growers is ensured in part by huge New Deal-era projects like Shasta Dam, and Hoover Dam, which the State of California could not afford to build, but which today California largely relies upon for water, care of the US taxpayer.
In central and northern California, the primary beneficiaries of federal water projects are growers, although it’s the city dwellers, who use a relatively small amount of water, who get lectured about conserving water. Were an actual market in water allowed, however, growers would have to compete for water with city dwellers, whose industries are far more productive than agricultural enterprises and who are likely to be willing to pay higher prices. Even when the private sector owners of water are old farming families (a legacy of prior appropriation), the water would still tend to go to those who value it the most as reflected in the per-unit prices they are willing to pay. That is: city dwellers
What Will We Do Without California Growers?The fact remains that much California farmland is in a desert where it rains under twelve inches per year. Massive irrigation projects have made farming economical in the region, but it’s unlikely that the status quo can continue forever if California dries up and cities begin to compete for more water.
When crops like pecans, which are native to Louisiana where it rains over fifty inches per year, are being grown in central California, we will have to ask ourselves if there is true comparative advantage at work here, or if the industry is really sitting upon a shaky foundation of government-subsidized and -allocated resources.
The rhetoric that’s coming out of the growers, of course, is that California growers are essential to the American food supply. Some will even suggest that it’s a national security issue. Without California growers, we’re told, we’ll all starve in case of foreign embargo.
But let’s not kid ourselves. North America is in approximately zero danger of having too little farmland for staple crops. In fact, one can argue that some of the best farmland in the world — in Iowa for instance — is underutilized because policies like Jerry Brown’s farm favoritism send the message that California will prop up its desert agriculture no matter what.
No, if California farmland continues to go dry, this only means that Americans will have to turn to other parts of the US or imports. After all, many of the crops grown in dry parts of California are much more economically grown in more humid environments, including citrus plants, avocadoes (which are native to Mexico), and various tree nuts. And of course, it’s these crops, which are already fairly expensive and water-intensive that get mentioned when we’re told that California growers must be given what they want until the end of time. This will likely mean higher prices for some of these crops in the short run, the correct response is not government favoritism, but free trade, and letting comparative advantage work. In a world with market prices, it’s simply not economical to grow everything under the sun in the California desert. If markets were allowed to function, with real water prices and free trade, this would quickly become abundantly clear.
Image source: iStockphoto
The Supreme Court has recently heard oral arguments in Michigan vs. EPA challenging regulations slashing mercury emissions from fossil-fuel power plants. However, the central issue was not, as commonly represented, preventing harm from mercury. The central issue is the use of mercury as a bait-and-switch excuse for more stringent restrictions on fine particulate emissions. The EPA utilized what Justice Scalia called “a silly way to read” the law to do what Chief Justice Roberts described as an “end run” around its statutory limits, and the case well illustrates how government agencies are able to use open-ended legislation to get whatever they want.
The 1990 Clean Air Act amendments instructed the EPA to study whether mercury exposure posed a health hazard that would make restricting it “appropriate and necessary.” Justification therefore first required demonstrating harm from mercury.
That proved impossible to do honestly. CDC surveys showed blood mercury levels for American women and children falling and already below the levels found safe by the EPA, FDA, and WHO. The EPA even rejected a high mercury exposure study simply because it found “no observable health effects.” So they cheated.
The EPA instead constructed a model of hypothetical women that “consume extreme quantities (99th percentile) of the most contaminated fish from the most contaminated bodies of water,” according to one amicus brief. It then added on a 50 percent “cooking adjustment factor.” It then estimated “the potential effect of this exposure on their hypothetical children’s neurological development in utero.” Given that power plants add a very small fraction to mercury deposition, that effect was minuscule. Even after more eye-glazing assumptions to inflate the damage, the estimated economic gain from reducing exposure to mercury was $6 million or less annually.
Ignoring the Costs of RegulationHowever, the EPA then estimated that its “solution” to mercury emissions of fossil fuel power plants would cost $9.6 billion annually. That 1,600 to 1 disproportion clearly puts the lie to any assertion of those mercury regulations as “appropriate and necessary.” So the EPA sidestepped that minor detail by asserting they were not required to consider costs in coming to a health hazard determination.
But there is no way to know whether a regulation is appropriate (or sensible, suitable, or proper) in the absence of a consideration of the costs. Both the word itself and the reality that every choice imposes a cost means that costs are undeniably relevant. One might also mention that “arbitrary and capricious agency action” on the part of the EPA and other government agencies impose separate costs of their own on society.
The Legal Gift That Keeps on GivingHaving supposedly justified regulating mercury by creatively “finding” benefits and ignoring the costs, the EPA turned to what has become their “go-to” mechanism for finding that their policies’ benefits outweigh their costs — fine particulate pollution. Virtually every dollar of benefits they estimated from mercury reduction ($36 to 89 billion annually, though using very misleading methodology) actually comes from reduced fine particle emissions, not mercury reductions.
However, the EPA has regulated fine particulate pollution for thirty-five years under Sections 108-110 of the Clean Air Act, as part of the National Ambient Air Quality Standards (NAAQS). And under Section 109, the EPA already sets national ambient air quality standards that, “allowing an adequate margin of safety, are required to protect the public health.” If the federal fine particulate standard they set in 2013 is “adequate to protect public health,” how can the benefits from further reductions in fine particulate emissions be tens of billions of dollars yearly? They can’t.
Legal Entrepreneurship by Government AgenciesSo why does the EPA want to stack the mercury restriction deck with a fine particulate wild card? Because under NAAQS, they can set a standard for fine particulates that states must meet, but states determine how to meet them. The EPA cannot single out coal-fired power plants as their intended “victims.” Further, they cannot dictate the form or extent of their victimization. But if they can employ minuscule or imaginary mercury damage as an excuse, and dress up tighter fine particulate restrictions on power plants as if they addressed mercury damage, they can ramp up their limited power to determine fine particulate standards into almost unlimited direct command and control over whoever they choose to target, even though the Clean Air Act denies them such power.
In other words, the law as passed by Congress provides so many options and so many tools to the EPA, that it’s only a matter of mixing and matching different pieces of law to target whomever they want to get whatever they want. The mercury “backdoor” the EPA is claiming, continuing an ongoing pattern, shows their intent to increasingly get whatever they want regardless of what the law may say.
Image source: iStockphoto
Featuring Thomas DiLorenzo, Doug French, Bob Higgs, Yuri Maltsev and Bob Murphy at the Mises Circle in Indianapolis: "Agricultural Subsidies: Down on the D.C. Farm," on 14 May 2011. Sponsored by Weaver Popcorn Company.
Scarcity is an important aspect of our lives as it affects us everyday, although many people may overlook it when they generally enjoy high standards of living. But scarcity makes itself obvious to high-income people at times, as it will in September, for example, when people will line up for hours to get their hands on the iPhone 6. Ludwig von Mises explained the situation well in Human Action:
The available supply of every commodity is limited. If it were not scarce with regard to the demand of the public, the thing in question would not be considered an economic good, and no price would be paid for it.
Indeed, scarcity is a reason most people work since their financial resources are limited and finite and work provides them the income necessary to accumulate resources to exchange for the goods and services of another. Consumers demand scarce goods (housing, clothes, a night out, travel, school supplies) and people have to economize their decisions based on scarcity.
In the case of water scarcity, however, we find that the challenge of scarcity is met in some very peculiar ways.
For examples, we can look to the Indian River Lagoon, Lake Okeechobee, and the Everglades where water is plentiful, but clean water is scarce. Moreover, we might look to the western United States where an arid climate makes all types of water scarce.
Yet in all of these places there is one thing in abundance — clean and drinkable bottled water.
Why is it that we can we have too much dirty water in one place, not enough water in another, and be surrounded by an abundance of bottled water?
Murray Rothbard explains:
The first thing to be said about this is that on the free market, regardless of the stringency of supply, there is never any “shortage,” that is, there is never a condition where a purchaser cannot find supplies available at the market price. On the free market, there is always enough supply available to satisfy demand. The clearing mechanism is fluctuations in price. If, for example, there is an orange blight, and the supply of oranges declines, there is then an increasing scarcity of oranges, and the scarcity, is “rationed” voluntarily to the purchasers by the uncoerced rise in price, a rise sufficient to equalize supply and demand. If, on the other hand, there is an improvement in the orange crop, the supply increases, oranges are relatively less scarce, and the price of oranges falls consumers are induced to purchase the increased supply.
In the case of droughts government monopolies set prices arbitrarily and this sends consumers distorted prices. Just as bad crops increase the price of oranges so should droughts increase the price of water. Individuals then internalize their decisions to make best use of the scare resources — their own finances and the water commodity. Government distorting prices prevents individuals from acting most efficiently to conserve scarce resources.
The Indian River Lagoon and other areas in South Florida are impacted by the lack of clear pricing signals to individuals. Meanwhile, bottled water is so easy to obtain that this past weekend at the Indian River Lagoon Clean Water Rally, free clean bottled water was given away during an event to protest the lack of clean water in the environment.
Floy Lilley writes:
Bottled water is the only water product that Americans have routinely priced and marketed. We now happily pay as much as four times the cost of gasoline for potable water that we could have for free from fountains and taps. Of course, economists will tell us factually that bottled water is not the same good. The square Fiji bottle is a sexy statement; and the ubiquitous bottle of water in hand is a fitness and convenience statement. Subjective valuation determines price. A real market in this water product does exist.
Markets for other water products are, meanwhile, mainly nonexistent. We routinely do not pay market prices for most other forms of water. Until recently, water has been viewed and treated as a free good by all Earth’s peoples. As with all free goods, water experiences unlimited demand. But water cannot meet unlimited demand. Water needs prices in order to signal scarcity and inform demand. Different categories of water need different prices to reflect the different preferences of users. Free can no longer be water’s price. The profligate glory days of limitless water everywhere seem to be over.
The lack of market pricing affects the Indian River Lagoon as it encourages pollution. By allowing farms and industries to pump byproduct into the water the waterways are essentially being used as a free garbage dumping ground. The permitting of pollution by government recklessly encourages more pollution by firms rather than firms benevolently opting to pay to have it properly disposed. The business who pays extra to have waste properly treated and disposed of may not be able to compete with the businesses who opt to take advantages of government allowing dumping of byproduct into waterways at virtually no cost.
The lack of market pricing occurs largely due to lack of ownership and governmental edict. With “public” ownership bureaucrats and politicians charged with maintaining resources lack capital value interest in the resources. They only preside over the current use as Hans Hoppe taught us, “it makes exploitation less calculating and carried out with little or no regard to the capital stock. Exploitation becomes shortsighted and capital consumption will be systematically promoted.” The long-term calculations of the bureaucrat is distorted by this.
Ownership being replaced with stewardship and the lack of the profit and loss mechanism prevents the water bureaucrats from making the most efficient decisions. It is not for the lack of caring but the inability to make economic calculation as Mises explained in Bureaucracy:
Bureaucratic management is management of affairs which cannot be checked by economic calculation.
... The bureaucrat is not free to aim at improvement. He is bound to obey rules and regulations established by a superior body. He has no right to embark upon innovations if his superiors do not approve of them. His duty and his virtue is to be obedient. ... Nobody can be at the same time a correct bureaucrat and an innovator.
Yet if the same waterways were privately owned the property owners could charge for the all uses of waterways. Non-pollutive by products may be charged less than damaging pollutive byproducts which negatively affect water quality. The scarcity of the water quality would set prices to discourage pollution and incentivize firms to find cleaner and more efficient production methods.
Furthermore with ownership provides the long-term capital value incentive which encourages conservation. We see this in forestry where forests are replanted to ensure the forest owner has income in the future. We see this at Adams Ranch where the stock of cattle is not wiped out all at once. Adams Ranch does a particularly good job of conserving grass to feed and support their cattle because the land they have to raise cattle on is limited. If grass goes so does the cattle.
In the case of the Lagoon, waterway owners might decide not to allow pollution. Instead, deciding that the boaters, fisherman, divers, swimmers, etc., are a preferable source of revenue for decades into the future.
Prices would help owners calculate that using the water for leisure and conservation is more efficient and useful than making it unusable dumping grounds. Prices would help consumers appreciate the use of clean waterways. Up the Kissimmee River Disney is able to charge huge entrance fees to maintain a safe clean park and facilities. In other unmaintained areas people dump litter in the river, like they do on the roadways. Notice, other than on trash day, people do not litter their own driveway. That is because of the tragedy of the commons. Nobody has an incentive to keep it clean as nobody owns it.
When we fail to understand the basics of scarcity and prices, however, we are left with the current and dominant view of water in which everyone owns it, and action to maintain it can only be undertaken communally. We see this attitude reflected in recent social media posts (1, 2, 3,) on the Indian River Lagoon, including: Thousands of people came out to rally for the lagoon cleanup and to raise awareness and money. Obviously, a clean lagoon is valuable to many people, but we will never know just how valuable as long as government precludes pricing from working in the lagoon’s favor.
In other words, let’s allow the people who care to put money where their mouths are and allow the marketplace to incentivize the people who are most motivated to have a long-term stake and interest in conserving the capital value of the lagoon.
Only the market can provide this, for no matter how hard bureaucrats try they cannot imitate market forces. Lilley explains:
And, no, command economies cannot play at market. There is no third way. Only private property and the rule of law can create a viable market; bureaucratic mandates can deliver only shortages, higher costs, and poorer quality.
The Fed and it's friends blamed cold weather for much of the year's lackluster economic growth. But cold weather does not explain the economic slowdown because cold weather does not stop economic activity, it merely shifts it to other activities and products, writes Devin Leary-Hanebrink. This audio Mises Daily is narrated by Allan Davis.
Volume 17, no. 2 (Summer 2014)ABSTRACT: We welcome Professor Dolan’s (2014) contribution to Austrian economics, and the contributions of all economists associated with the Austrian school of thought to environmental issues. Although not an Austrian economist himself, Dolan has made more of a contribution to the praxeological school than perhaps any other non-Austrian economist. An expert in environmental economics, Dolan (2014) is an attempt to assess the Austrian contribution to this field. He finds it wanting. Sad to say, I must make the same assessment of Dolan (2014). My (Walter BlockWalter Block, Ph.D. (wblock@loyno.edu), holds the Harold E. Wirth Eminent Scholar Endowed Chair and is Professor of Economics at the Joseph A. Butt, S.J. College of Business, Loyola University New Orleans.) claim is that his misunderstanding of Austrian economics is only matched by his mischaracterization of free market environmentalism.KEYWORDS: Austrian school, economics, environmentalismJEL CLASSIFICATION: Q0, A11, A12, B25Professor Edward Dolan, a mainstream not an Austrian economist, is nevertheless a good candidate for the prize to be awarded to an outsider for the greatest contribution to the praxeological school. He did this by editing Dolan (1976), a very important bulwark of Austrian economics.Enquiring minds must be excused for wondering why a non-Austrian economist was chosen to edit this very important Austrian book, and who was responsible for this decision. In Dolan (2014) our author once again enters into the deep and treacherousIt is deep and treacherous because it appears that Austrian economics is so easily misunderstood by non-Austrians such as Dolan. waters of Austrian economics. This time he attempts to assess the contributions, if any, of praxeology to environmental issues. He does not find much with which to agree, and is quite forthright in rejecting this literature. The present paper is an attempt to defend Austrian economics against his many critiques of it.
Dolan (2014) starts off on the wrong foot, by announcing he will judge Austrian economics on the basis of three criteria:
• “Have Austrian economists addressed problems that people think are important?
• Have they been able to offer proposals of practical value to economic policy, or is their work limited to pure theory?
• Do they offer unique solutions to economic problems, or just different ways of reaching the same results as the dominant paradigm?”
The first one is problematic. The answer is unclear. Praxeologists are well-known for studying issues such as banking, unemployment, inflation, socialism, etc. Surely, there are at least some people who think these are important. However, there are very few people who do. Most are concerned more with football, or boxing, or gardening, or poker or bowling or clothing or music.
So, do “people” think what Austrians do is important? It is difficult to know how to answer this. Suppose we were to ask this question of physicists, or botanists, or chemists or mathematicians, or other physical or social scientists. Such disciplines would also fail this criterion, if we take a head count. Would not a better criterion along these lines be: “have Austrian economists arrived at truth?” This, surely, is the question we should ask of other intellectual schools of thought, from whatever discipline. It is almost but not quite irrelevant what the masses of people think of our analyses.
The second one also presents difficulties. Economists, at least qua economists, do not “offer proposals.” They are limited to studying cause and effect. They pose and answer questions such as the following: If A occurs, will it lead to B? C is already in existence. What caused it? Economists may properly offer “if-then” statements: If you want to reduce unemployment for low-skilled workers, lower the level of or entirely eliminate the minimum wage law. If you want to increase unemployment for low-skilled workers, then introduce the minimum wage law and/or increase its level. But, to “offer a proposal” such as “introduce the minimum wage law and/or increase its level” or “lower the level of or entirely eliminate the minimum wage law” is surely beyond the scope of the economist, qua economist.Dolan (2014) accuses mainstream economists of “trying to maximize efficiency or social welfare.” Surely, some of them do, nay, most of them do, but when they engage in such activity they are no longer doing so as positive economists. They are entering the area of normative economics. Dolan unfairly condemns the entire “neoclassical approach” for this error. But, surely, there is at least one neoclassical economist who refrains from such confusion. Do not ask me to mention one, since this is indeed a common error on their part. Even if we cannot point to a single extant example, as a theoretical matter it is unfair to condemn all those who espouse the dominant paradigm because its basic principles do not necessarily lead in this direction. It takes him out of the realm of the value-free positive economics, and places him in the arena of normativity. Surely, we must distinguish between the normative and the positive.Dolan (2014) himself distinguishes between normative and positive law, but, unhappily, fails to apply this insight to economics. For example, he writes: “we will pay particular attention to the distinction between normative legal principles—the way the law should look if it is to serve the purposes of economic coordination and libertarian justice—and principles of positive law as actually practiced today.” See on this distinction between normative and ositive economics: Barnett (1995), Block and Cappelli (2013), Rothbard (1960, 1997).
As to the third criteria, an objection can be made to the word “just.” Even were it true that Austrians reached identical conclusions about how the economy works as members of the mainstream paradigm, this would still be an important contribution. After all, it would serve as a check on our neoclassical colleagues in the dismal science, and one day we might diverge. But, in the event, we already have. Austrians dissent from the dominant paradigm in terms of their analysisNote, I do not say “public policy recommendations.” of socialism, central planning, anti-trust, welfare economics, the business cycle and a whole host of other issues.
Dolan (2014) would have been greatly improved had he distinguished between Austrian economics and libertarianism. He thinks that “the third component of the (Austrian) paradigm is that property rights are the (key) to resolving environmental problems.”Material in parentheses supplied by present author. Nothing could be further from the truth. First of all, no economic school of thought, Austrianism certainly included, “resolves” anything. The dismal science qua dismal science is limited to exploring and explaining economic reality. Economists, but not in their official capacity, along with everyone else, may then use these findings to “resolve” things. But as value free social scientists, they are precluded from making public policy recommendations.
Secondly, while property rights are indeed the key to resolving environmental problems, this is a basic element of libertarianism, a normative pursuit, not economics, a positive one. Dolan (2014) favorably quotes Dawson (2011, 19) who says “The Austrian or libertarian policy must therefore be to privatise ‘climate change policy,’ repealing all existing climate change legislation….” In other words, Austrian economics and the libertarian political philosophy are synonyms. Anyone who says this or anything like this, whether it be Dolan or Dawson, is committing one of the most basic errors in all of social science. Yes, there are libertarian “policies”: those compatible with the non-aggression principle (NAP) and private property rights. But there are no, there can be no, Austrian “policies.”Nor is this any slip of the tongue or the finger on the part of Dolan. He commits this error elsewhere. For example, he writes “Many Austrian writers have strong ideas about how property rights should be defined.” No, no Austrian writers, qua Austrian economists, have any ideas about this, strong or weak. Dolan (2014) cites Rothbard (1982) in this regard, but the latter, while certainly an Austrian economist, wrote that essay not as a value-free economist, but as a value-oriented libertarian.
Our author now launches into his formal critique of libertarianism, not Austrianism, his views on this to the contrary notwithstanding, under the heading of three different challenges. We shall respond to them in the order mentioned by Dolan.
CHALLENGE NO. 1: THE INSTITUTION GAPDolan’s first critique focuses on the libertarian theoryNot the Austrian economic theory; I shall not again mention this point. of justice in property titles. It is of course based on the Lockean-Rothbardian-Hoppean theory of homesteading.To mention the three authors who have made very significant contributions to this theory. For other explications and defenses of homesteading, see Block (1990, 2002a, 2002b), Block and Edelstein (2012), Block and Yeatts (1999–2000), Block vs. Epstein (2005), Bylund (2005, 2012), Grotius (1625), Hoppe (1993, 2011), Kinsella (2003, 2006), Locke (1690), Paul (1987), Pufendorf (1673), Rothbard (1973, p. 32), Rozeff (2005), Watner (1982). In order to achieve just title to property, one must “mix his labor” with the virgin territory to be owned. Dolan objects to this crucially important element of libertarianismNot Austrianism; I know, I know, I promised, but I just can’t resist. on the grounds that it “would frustrate the efforts of conservationists like Ted Turner or environmental organizations like Ducks Unlimited who buy up millions of acres of critical habitat for the specific purpose of leaving it unused.” My first reaction to this objection is: we need not be unduly concerned with Ted Turner and Ducks Unlimited. If they do not like this libertarian notion of awarding property rights to the first user of unowned areas, let them lump it. What possible criterion should be employed to determine who owns what other than this method? Should it be command? Here, the sovereign determines who shall own what property. But what right does the sovereign have to distribute property? Should it be claim? Then, whoever claims anything gets to own it. I hereby claim ownership of the sun, the moon, and the other planets in the solar system. Note how moderate I am: I do not lay claim to all heavenly bodies. An economist was asked: “How is your wife?” Came the answer: “Compared to what?” Even if the homesteading theory were imperfect in that it did not satisfy the crucially important desires of worthies such as Ted Turner and Ducks Unlimited, it is far and away the best possible method of dividing up land not yet used. Fortunately, however, we need not rely, solely, on these defenses of homesteading. Block and Edelstein (2012) show how we can have our cake and eat it too: how homesteading can be upheld, and also satisfy the fervent not-to-be-denied desires of the likes of Ted Turner and Ducks Unlimited to own totally virgin territory.
Our author instructs libertarians that the Fifth Amendment requires compensation for government takings, and yet U.S. courts have not upheld this requirement.Epstein (1985) will be glad to learn of this from Dolan (2014). See also Whitehead and Block (2002). Dolan (2014) also waxes eloquent in criticism of libertarianism that “today’s courts are… (not) willing to stand up against the NSA.” He also upbraids libertarians for somehow not realizing that the bench does not support the NAP on “preponderance of evidence” versus “beyond a reasonable doubt” and on “negligence” versus “strict liability.”Parenthetically, I must also object to Dolan’s (2014) use of the phrase “rent seekers” to depict corporate capitalists. For reasons in favor of rejecting this terminology, see Block (2000, 2002c).
On the basis of all of this, Dolan presses his criticism; he accuses libertarians of being guilty of what Demsetz (1969) has called the “nirvana fallacy.” States the latter: “those who adopt the nirvana viewpoint seek to discover discrepancies between the ideal and the real and if discrepancies are found, they deduce that the real is inefficient.”
How can libertarianism be defended against these not very powerful denigrations? In several ways. First, it is just plain silly to think that libertarians fail to realize that actual courts do not uphold private property rights and the NAP. Unfortunately, Dolan (2014) does not offer any cites to the literature where libertarians claim we are now living in the fully free society. This criticism thus fails. With as much reason, Dolan might just as well have accused libertarians of thinking that modern courts have legalized all victimless crimes.
Secondly, Dolan (2014) completely misconstrues Demsetz’s (1969) very valuable nirvana fallacy. Let us first apply this to equilibrium. There are certain economic welfare benefits that pertain to equilibrium states, but not to the real world of disequilibrium. We of course never reach the evenly rotating economy, but we are always heading in that direction. That is, plan coordination is only fully realized in the imaginary construction of the evenly rotating economy. The mainstream economists seize upon this, and claim free enterprise to be a “market failure” since the real world economy does not possess these characteristics. Demsetz’s (1969) nirvana fallacy can put paid to this criticism of the free enterprise system.
Here is what Dolan (2014) says about perfect competition:
Austrians are quick to condemn neoclassical economists when they slip into nirvana mode. Consider the economics of antitrust. The traditional neoclassical approach has been to compare existing market processes with the ideal construct of perfect competition. Finding that the messy realities of the former fall short of the perfect efficiency of the latter, they declare a “market failure” and recommend a set of remedial laws and regulations. The Austrian approach instead, is to compare the messy details of real-world markets with the even messier institutions of real-world antitrust law and policy. (p. 202)
The problem with this, the disanalogy, is that while equilibrium has several undoubted beneficial aspects, the same cannot be said for “perfect competition.” Indeed, a case can be made that this type of industrial organization would be a disaster (Barnett, Block and Saliba, 2005). But even if we posit (contrary to fact conditional coming up), that perfect competition is ideal, is an aspect of nirvana, Dolan’s (2014) attempt to equate this with the supposed failure of libertarians to realize they do not now live in a fully free society cannot be maintained. In other words, Dolan is making the following argument: LibertariansIt is of course Austrian economists who do this, not libertarians. attack mainstreamers for setting up an ideal system, perfect competition, and then complaining that the real world does not live up to this bit of nirvana. But libertarians are guilty of the same exact fallacy. They set up an ideal system, courts that uphold the NAP, and then complain that the real world does not live up to that ideal.
Why does this fail? It flops because there is a relevant difference between the two complaints. That is to say, yes, there are two ideals: free enterprise courts for libertarians, and perfect competition (or equilibrium) for neoclassical economists. But when perfect competition (or equilibrium) fails to occur in the real world, the mainstream paradigm scholars blame this on market imperfections. They call for (more) government intervention in order to address this problem. Whereas in sharp contrast, libertarians do not at all favor more statism in the face of judges who would not know a private property right if it bit them in the nose; rather, they advocate the exact opposite, e.g., economic freedom. Here is another disanalogy. Libertarians are fully aware that current courts do not support private property rights, despite Dolan’s (2014) claims to the contrary. There is no analogue in the other cases.
CHALLENGE NO. 2: THE PROBLEM OF ENVIRONMENTAL MASS TORTSHere is Dolan’s (2014) opening salvo:
The property rights approach works best when the number of parties involved in environmental dispute are few and proximate. When they are many and remote, neither face-to-face bargaining nor common law litigation works well. Many of the most important environmental issues of our times fit this pattern, including urban smog, acid rain, ozone depletion, ocean acidification, and anthropogenic climate change. I will refer to this class of problems as environmental mass torts. (p. 204)
Our author employs a “hypothetical Vermont farmer, call her Nancy Norman,” maintains that she would be unable to stop Midwestern power plants from harming her maple trees, and implies this would be unfair, uneconomic, problematic. Why? There are several reasons. Let us consider each in turn.
First, if the Midwestern power plants polluted first, our girl Nancy is “coming to the nuisance.” Thus, she should not win her case against them. But what is wrong with that? If Midwestern power plants indeed homesteaded the right to place pollutants into the air, homesteaded them in effect, then they would have the property right to continue to do so. If airports were there first, engaging in noise pollution, that is allowing airplanes to take off from and land on their property, then Dolan’s argument would presumably shut them all down, if some Johnny-come-lately to the neighborhood objected. That is, the newcomer would be “coming to the nuisance” and would have no proper choice other than to accept the extant level of pollution.
Second, “Norman would have to prove actual damage. In any legal action, she would have to bear the cost of expert testimony regarding the science of acid rain, and would have to rebut defendants’ testimony that some other agent, say a fungus, might be harming her maple trees. The testimony would have to establish her contentions beyond a reasonable doubt.” But what, pray tell, is wrong with that? If I accuse Dolan of stealing my car, I would have to prove this claim before any court, even an extant one, would award me damages. And proving this might be expensive to me. But surely Dolan would not want the court to compel him to pay me under any other circumstances. Why should Nancy not have to jump through the same type of hoop? The burden of proof properly rests with those who wish to overturn property titles, not the other way around.
Third,
Norman would have to sue each polluter individually, unless she could prove they acted in concert, which presumably they do not. She would have to prove strict causality, not just regarding the point that acid rain in general damaged her trees, but that each individual defendant contributed causally to the damage.” (p. 205)
Now this is a far more serious complaint than the other two. Here, at last, there is a real problem, an important challenge put forth by Dolan for us to consider.
There are two responses that can be made by the libertarian who favors private property rights as a solution to this difficulty. On the one hand, consider a different kind of pollution, one emanating from automobiles. Each car, even with a catalytic converter, lets off an insignificantly small amount of toxin. It would be cumbersome in the extreme for Nancy or anyone else to sue them all. Each one could hide behind a de minimus defense. Rothbard (1982) offers the following solution:
While the situation for plaintiffs against auto emissions might seem hopeless under libertarian law, there is a partial way out. In a libertarian society, the roads would be privately owned. This means that the auto emissions would be emanating from the road of the road owner into the lungs or airspace of other citizens, so that the road owner would be liable for pollution damage to the surrounding inhabitants. Suing the road owner is much more feasible than suing each individual car owner for the minute amount of pollutants he might be responsible for. In order to protect himself from these suits, or even from possible injunctions, the road owner would then have the economic incentive to issue anti-pollution regulations for all cars that wish to ride on his road. Once again, as in other cases of the “tragedy of the commons,” private ownership of the resource can solve many “externality” problems.
This nails it.For the case on behalf of road privatization, see Block, 2009b. To be sure, not every case of what Dolan calls environmental mass torts can be handled in this manner. But, surely some of them can, preeminent amongst them roads and highways.
On the other hand, consider just how far extant law has deviated from what libertarian jurisprudence would be, based on private property rights and the NAP. Another quotation from Rothbard (1982) will make this clear:
In the classic case of Holman v. Athens Empire Laundry Co. (1919), the Supreme Court of Georgia declared: “The pollution of the air, so far as reasonably necessary to the enjoyment of life and indispensable to the progress of society, is not actionable.”
But this sort of thing has been going on since at least as early as the 1870s (Horwitz, 1977). Polluters have been given a legal carte blanche since that time. Is it any wonder that firms have taken advantage of this lacuna in the law? Any company that kept its airborne garbage to itself when not required by law to do so would put itself at a disadvantage via its competitors.
Under proper libertarian law pollution would indeed be “actionable” as a trespass of soot particles. If so, then several effects helping out “Nancy” would come to fruition. Whenever the Nancy of the day was beset by dirt emanating from the local factory, she could have availed herself of a lawsuit. There, if she offered evidence buttressing her complaint, she would be granted damages and an injunction against such further incursions. Since she would have had to prove her case, there would have been an incentive for the market to promote environmental forensics. This would have led, via the “invisible hand,” plants to use cleaner burning, albeit more expensive anthracite coal, rather than the cheaper but dirtier sulfur variety. Firms would have had more of an incentive to install smoke capturing or prevention devices in their chimneys, thus keeping more of this effluent to themselves, and allowing less to seep out to the Nancys of the world.
From early days of the U.S. until about 1870, these phenomena were actually taking place (Horwitz, 1977). But then, at the outset of the progressive period, the legal philosophy of Holman started to take root. If pollution was no longer actionable, this called a halt to environmental forensics, to meshes in chimneys, to cleaner burning fuels, etc. So, of course Nancy is in trouble nowadays. She can no longer sue those who trespass on her property. But posit that the earlier quasi-libertarian legal philosophy had prevailed uninterrupted until the present day. Suppose that modern technology were harnessed in the direction of enhanced and sophisticated environmental forensics, meshes in chimneys, cleaner burning fuels, etc. Then, Nancy’s predicament would all but disappear.
The trouble with Dolan’s analysis is that he looks at the modern world and finds it wanting. He blames this on free enterprise and private property rights. He does not seem to realize that present conditions are a function of the law, and legislation and court findings were not, to put it mildly, in favor of protecting property rights in pollution since at least the late 19th century. It is as if Dolan were to blame unemployment, inflation, the business cycle, poor housing conditions, etc., on the free enterprise system, when these difficulties actually emanate from phenomena such as minimum wages, unions, the federal reserve system, rent controls, etc.
Let us take another hack at this. Contrary to Dolan, there is no problem, no problem whatsoever, with specifying an ideal system, criticizing present reality on the ground that it does not measure up and working to rectify matters so that we make improvements toward the goal. In my own view, this all depends upon the case in point. That is, the “devil is in the details.” It is the specifics that can be problematic. For example, the medical researcher posits a world in which there is no cancer. He notes that at present this dread disease afflicts people. He attempts to improve the situation through medical research. If anyone thinks this presents a difficulty, he should have his head examined. On the other hand, if this medical researcher is so filled with venom for cancer, so determined that no one shall die of this affliction, that he shoots all cancer patients in order that they not die from that malady, then there is indeed something rotten in Denmark. Or, consider a criminologist who wants to reduce crime, and notices that at present, this ideal situation has not yet been reached: there are still rights violations. If the means through which he wants to decrease criminal behavior is to legalize all drugs, then bless him. On the other hand, if he intends to achieve this goal by making legal crimes such as murder, rape and kidnapping, then we are in great difficulties.
The problems with neoclassical economists regarding perfect competition are two-fold. First of all, it is by no means an ideal situation to have an indefinitely large number of firms in every industry, limited to selling homogeneous products. Worse, if anything, is their fetish to break up large corporations, simply because they are big, into teeny, tiny mom-and-pop firms.
A similar difficulty arises regarding equilibrium. This, too, is not an ideal situation, one toward which we should strive in the real world. Mises (1922) says the following about this concept:
To assume stationary economic conditions is a theoretical expedient and not an attempt to describe reality. We cannot dispense with this line of thought if we wish to understand the laws of economic change. In order to study movement we must first imagine a condition where it does not exist. The stationary condition is that point of equilibrium to which we conceive all forms of economic activity to be tending and which would actually be attained if new factors did not, in the meantime, create a new point of equilibrium. In the imaginary state of equilibrium all the units of the factors of production are employed in the most economic way, and there is no reason to contemplate any changes in their number or their disposition.
Posit, however, arguendo, that despite Mises’s clear, concise and correct analysis, that for some reason it is “good” to move our present economic situation toward, or even to attain, equilibrium. Again, the means toward this end are crucial. One of the aspects of the evenly rotating economy is that there will be no profits earned. So, one way to make our economy congruent with equilibrium would be to ban profits at present. Needless to say, that would be highly problematic. But another way to achieve this end would be to ban all government laws such as rent control, tariffs, minimum wages, that retard our ability to act in a coordinated way with each other. That, of course, would be highly desirable.
Let us now return, finally, to the libertarian desire to see heaven on earth: a situation in this vale of tears where the NAP is no longer broken. To this end, the libertarian works to end all cases of murder, theft, rape, arson, kidnapping, etc. Why is this a problem, if all the means used, too, are also compatible with the NAP? It is clearly not. Thus we can see Dolan’s error. He falsely analogizes between the libertarian desire to promote peace and justice, and the goal of mainstream economists to impose perfect competition. Yes, in both cases an ideal situation is compared to an actual one, and the goal is to transform the latter into the former. But of this a valid analogy cannot be made. Just because it is unjust and improper to make the world safe for perfect competition via anti-trust legislation does not at all imply it is illicit for libertarians to try to shape the world in the direction of the NAP.
The problem rests not with trying to change reality so that it matches some ideal. It all depends upon how this is done, and which ideal we are talking about. In the libertarian view, imposing perfect competition violates the NAP. However, introducing the libertarian legal code is an unmitigated good. Dolan argues that because the imposition of perfect competition has all sorts of drawbacks, this must also pertain to installing the NAP as the law of the land. Nothing could be further from the truth.
A last minor point in this section: I cannot see my way clear to agreeing with Dolan (2014) that there is any disagreement between Rothbard (1982) and Anderson (1989). The latter urges jail sentences for incessant polluters who drop garbage on other people’s property whether in the macro sense (orange peels, egg shells, coffee grinds) or the micro (these types of things, but all ground up into dust). The former would agree, given that this was proven beyond a reasonable doubt. Does Dolan think Anderson would acquiesce to prison terms for the accused in the absence of any proof? Nothing I read in Anderson leads me to that conclusion. Anderson is no wild man watermelon, calling for jail sentences for those who exhale.
CHALLENGE NO. 3: BRINGING THE PRICE SYSTEM TO BEARThere is a difficulty in this section right at the outset: it is mislabeled. Dolan characterizes this as bringing the price system to bear; but what he really has in mind are not at all market prices. Instead, he is defending something very different: tradable emissions rights, emissions trading, pollution fees, taxes, etc.
If someone fails to distinguish between a market price on the one hand and tradable emissions rights, emissions trading, pollution fees, taxes on the other, it is highly problematic. For this is a most basic distinction. A price is an amount of money someone voluntarily gives up in order to attain a good or service. A commercial interaction where prices play a role is necessarily a non-coercive one. These other entities are at best semi- or demi- or quasi-prices. They do not occur in free markets, but rather under market-like circumstances. It cannot be denied that there are certain similarities between the two. Perhaps that is what has confused Dolan. But if we are to make sense of these phenomena, we must peer beneath the surface to the underlying reality, something not undertaken by this author.For a critique of these socialist schemes, see McGee and Block, 1994. We must sharply, maniacally even, separate in our minds what is agreed upon by all parties (prices) from what is not (taxes, government fees, etc.).
Dolan (2014) attempts to hoist Rothbard (1982, p. 77) by the latter’s petard. He defines tradable emissions rights (TERs) markets as the purchase and sale of homesteaded,What happened to Dolan’s (2014) previous critiques of homesteading, pray tell. Here, he relies on them fully. and therefore legitimately owned rights to pollute. In other words, for this author, what is traded in a TER is something owned by the seller, under libertarian law. Let us allow Dolan (2014) to speak for himself on this matter:
An Austrian case for emissions trading follows naturally from Rothbardian homesteading of pollution easements. Rothbard (1982, p. 77) uses the example of noise pollution from an airport. At time T, he imagines, an entrepreneur sets up an airport in an open area with no one nearby to be bothered by the noise. The facility emits X decibels of noise into the surrounding unused airspace, thereby homesteading the right to X decibels. If someone builds a house nearby at time T+1, says Rothbard, they have no cause for action against airport, since they have “come to the nuisance.” However, if the homeowner bought the property for a price that reflected ambient noise of X decibels, and at time T+2 the airport increases its noise emissions to 2X decibels, the homeowner would have a cause of action for 1 decibel of excess noise.
Rothbard specifies that the titles to pollution easements created by homesteading are transferable by sale, gift, or bequest. Furthermore, they are separable, in the sense that it is permissible to sell them without selling the airport itself.
If purchases and sales of noise easements became frequent, some entrepreneur would no doubt set up an exchange to trade them in standardized units. Soon a fully developed, fully private emissions trading scheme would spontaneously emerge, with the supply of easements for each type of pollution capped by the number that had been legitimately homesteaded. Once population density increased to the point that no part of the relevant airspace or watershed remained unused, there could be no further homesteading and the caps would become permanent. (p. 209)
There are problems with this. First a minor one. I think there is a typo here. Dolan (2014) should have said “the homeowner would have a cause of action for 1X decibels of excess noise.” That is, “1X decibels,” not “1 decibel.” The major difficulty is that Rothbard is talking about emissions, noise in this case but it could have been soot, or smells, or anything else, that was homesteaded. That is, these rights were legitimately owned by the seller. But this is not at all what tradable emissions is all about. Rather there is no recognition in mainstream depictions of this phenomenon.
The typical case is as follows. There are three firms, call them A, B and C, that together emit into the air and/or water 50 tons each of pollution, or 150 tons total. These emanations are trespasses onto the physical property and bodies (lungs) of innocent victims. Due to hockey stick considerations, the authorities have decided that 100 tons of such lawlessness is optimal. How to achieve this goal? In the bad old not TER method, called “command and control,” each firm would be legally required to cut back from 50 to 33.3 tons, and that would be the end of it. This order could be mandated in the form of a regulatory requirement or a very high tax on any emissions in excess of the 33.3 tons, it matters not which for our purposes. There is not even a hint that these 150 or 100 tons emissions are justified on the basis of libertarian homesteading. The new presumably good method, the one based on quasi-market principles (TERs), is to allow each of these three companies to purchase and/or sell rights to engage in pollution to their heart’s content. Possibly, there will be no purchases or sales, and each company will cut down its rate of emissions by one third. Or, one of them, A, perhaps with newer plant and equipment will decrease by 50 percent or more because it can do so relatively cheaply, and B may stand pat, while C may even increase its tonnage, and pay A for this privilege of not only not having to cut but to actually increase its level of emissions.
The point is, Dolan (2014) is extrapolating from a case where the rights to emit noise, or whatever, was licitly owned, to one where it most certainly is not. Thus, his failure is to distinguish NAP violations from non-NAP violations. It cannot possibly be underestimated how important this distinction is. Without it, we might as well have markets in rape rights, or murder rights, or kidnapping rights, or theft rights. What we are talking about here is nothing less than a contradiction in terms on Dolan’s part.
Next, Dolan (2014) considers pollution fees. States he on this matter:
Pollution fees are another way to inject prices artificially into a world where muddled property rights and imperfect courts prevent them from emerging spontaneously. I find that neoclassical economists tend to like pollution fees better than emissions trading, but for Austrians, they are probably an even harder sell. They object that pollution fees are a form of tax, and that all taxes are bad. Even so, that does not mean they are equally bad. (p. 210)
Obviously, this author should have mentioned libertarians, not Austrians, since only the latter, not the former, can say anything even remotely resembling the claim that “all taxes are bad.” Libertarians, of course, must agree with Dolan (2014) that some taxes are worse than others. For example, an income tax of 5 percent is worse than one of 4 percent. But our author is not content with this truism. He goes further:
…the effects of pollution fees must be compared not with the operation of a nonexistent tax-free market, but with a situation in which pollution goes altogether unpriced. Whatever one’s distaste for taxes, the latter situation is, arguably, even less congenial to economic coordination. (p. 210)
And here again we must agree with Dolan: it is difficult to say which is worse: a tax or allowing some to trespass pollutants onto other people’s property. It all depends upon the extent of each. However, there is no reason to believe that these are the only realistic options. As we have seen in our criticism of Dolan above, the market is indeed capable of not so much “pricing” of pollutants, but forbiddingSue the road owner not the individual motorist; improvements in forensics technology. them.Well, illegitimate ones that have not first been homesteaded.
Dolan (2014) now considers, and rejects, objections to TERs and pollution taxes. The first is the calculation objection: governments have no way of knowing the proper, efficient taxes, nor the optimal amount of pollution (150 tons in our example). He does so on the ground that libertarians “offer no institutionally practicable alternative” to the present system. Nonsense. Rothbard (1982) entirely fits this bill.Others who support Rothbard on this matter include: Block (1994, 1998, 2009a, 2011a, 2011b, 2012), DiLorenzo (1990), Horwitz (1977), Lewin (1982), McGee and Block (1994). Second, he maintains that the proper comparison is between TERs and pollution taxes on the one hand, and “the current mish-mash of command-and-control policy, CAFE standards, ethanol blend ratios and the rest (which) is a mess.” But what about full free enterprise? Not some “nonexistent ideal of perfect enforcement of property rights,” but rather an actual system based roughly on the property rights system stemming from homesteading that was working until about the 1870s, coupled with advances in modern forensic technology. Is this free market system to be swept down the memory hole, merely because during the progressive period (Horwitz, 1977) it was jettisoned? Here, Dolan (2014) is making the mistake that might well be characterized as misplaced concretes: the government does not allow free enterprise to work, therefore market cannot be efficacious. Contrary-to-fact conditionals would appear to be beyond his ken.
Dolan (2014) next errs when he conflates two very different things. First is the undoubted fact that it is difficult, well-nigh impossible, for a court, any court, to come to a precise estimate of damages for contaminants that cause cancer. Second are the very well-founded critiques of Cordato (2004) and Carden (2013) to the effect that TERs are subject to the Austrian critique of socialist central planning. Dolan argues in effect that since the first is factual, and it is, we may safely ignore the second. Not so, not so. Our author argues in this manner because he really cannot appreciate that libertarian law can deal with what he calls environmental mass torts. His arguments on that score have been found wanting. The present mistake is but an implication of that one. Try this as a mental experiment. Assume that U.S. law and court decisions pre-1870, coupled with modern progress in environmental forensics, really could function adequately, at least as well as it did before that turning point in our history. Then, would Dolan (2014) be in a position to reject the contributions of Cordato (2004) and Carden (2013)? I contend that Dolan would then not be able to take on this perspective. Dolan (2014) underestimates the power of the argument put forth by Cordato (2004) and Carden (2013). Yes, the judge has no objective way to award damages. But the market processDolan’s appreciation of the market process is not as robust as it could be. Perhaps he could benefit from reading some of the Austrian literature on this subject: Boettke and Prychitko (1998), Cowen and Parker (1997), Ebeling (1985, 1990), Ekelund and Sauman (1988), Fink (1982), Foss and Mahnke (2000), Foss and Christensen (2001), Gordon (1995), Kirzner (1982, 1992, 1997), Lachmann (1976, 1977), Langlois (2001), Robertson and Yu (2001), Thornton (1994), Wagner (1989), Yeager (1986). can achieve objective prices; if they are the wrong prices, someone will lose profits and go bankrupt. True, only in equilibrium will the prices generated by the market be the ones that maximize utility of all participants in commerce. But, we are always and forever tending in that direction. In sharp contrast, the judge has no such market process working in his favor, at least not the one employed by the state apparatus.
Dolan (2014) makes a good point in his defense of TERs on the grounds that they do not compensate this victim of pollution. He offers a second-best argument: they are better for coordination purposes when the prices of emissions are raised without making the victim whole than when they are not raised and the victim is still not compensated. True enough. But, we must insist, libertarian law in a realistic setting is still preferable to the TER system in that it does both.
The last objection to TERs dealt with by Dolan (2014) is that they in effect support stolen property. Who is the theft from? Why, from the victims of pollution. They have had their property and their lungs inundated with trespassing dust particles. Who are the thieves? This is as readily answered: the trespassers. Why does our author reject this criticism? He sees this as a “legitimate objection” but still defends TERs on the ground that “proper design of the trading scheme could overcome it, at least in part.” But if this is a “legitimate objection” which can only be overcome in part by proper design,“Proper design” would appear to be part of the Nirvana fallacy against which Dolan (2014) constantly inveighs. why not reject TERs as socialistic (McGee and Block, 1994)?
CONCLUSIONA fair summary of what appears above is that Dolan (2014) consists of a tissue of errors. Nonetheless, the Austro-libertarian community, I think, must be grateful to this author for his efforts to undermine the veracity of this school of thought. Why? Because these are important challenges. If we cannot answer them, we might as well pack up shop. Hopefully, Dolan (2014), plus the present response, will convince others who might be on the fence on these matters that the Austrian school of economics, and the libertarian political philosophy, are still going concerns. Who knows? Possibly Dolan himself might come to that precise conclusion.
Let me close with one substantive point, where Dolan (2014) does not appear to have done his homework. He says: “In my view, Austrian economists qua economists have to deal with climate change and the link in the spirit of ‘What if Chicken Little is right this time?’ That is, they need to propose solutions that would work if at some point real scientists persuade them that climate change is a real threat.” Obviously, the absolute last time this will be mentioned, Dolan confuses Austrianism and libertarianism; he should have posed this challenge to the latter, not the former.
In the event, he has been anticipated on this very point. This appears in Block (2012): Question: “…how can we solve the problem of global warming without infringing the property rights of the emitter?” Response (Block, 2012):
If we are still in arguendo mode, positing a vast polluter, then we are not at all violating his rights when we compel him to cease and desist. Hey, he is in effect a murderer. We stop him in self-defense, just as we would a guy running at us, screaming and brandishing a knife or gun.
In other words, if Chicken Little is right, and underarm deodorants,See The Dangers of Deodorants: How You Can Be Eco-Friendly and Still Smell Good. aerosols,See Scholarly articles for aerosols effects on global warming. refrigerants,See Natural Refrigerants. etc. really cause global warming, which in turn leads to cancer and other dread diseases,We are now deeply into argumentum arguendo. then by gum and by golly, the libertarian would prohibit them at the point of a gun. Using these products would under these wild-eyed assumptions be akin to shooting howitzers up into the air, with no consideration of where they may land. But the point is, libertarians have already responded to this “spirit” called for by Dolan. And the answer is clear. Then, they would be NAP violations.
Volume 17, No. 2 (Summer 2014)It has been 40 years now since South Royalton conference on Austrian Economics. Already by the 25th anniversary, one participant had declared that conference to be the moment of rebirth for the school. (Vaughn, 2000) The number and youth of the participants at this 40th anniversary gathering confirms that Austrian economics is alive and well. But is alive and well enough?
In the introduction to the proceedings of the South Royalton conference, IEdwin G. Dolan, (ed.dolan@sseriga.edu) is Professor of Economics (retired) at the Stockholm School of Economics, Riga, Latvia. is Professor of Economics (retired) at the Stockholm School of Economics, Riga, Latvia. suggested that Austrian economics had the potential not just to survive but also to achieve what Thomas Kuhn (1962) calls a scientific revolution. Such a revolution would fundamentally change the way practitioners of a field saw the world as a new paradigm came to replace the dominant one. What can we say of the success of Austrian economics in that regard?
As I noted then, the Austrian school does possess one key component of a scientific revolution, a distinctive paradigm, but that is a necessary, not a sufficient, condition. To assess the progress toward a real scientific revolution, we have to ask three additional questions.
• Have Austrian economists addressed problems that people think are important?
• Have they been able to offer proposals of practical value to economic policy, or is their work limited to pure theory?
• Do they offer unique solutions to economic problems, or just different ways of reaching the same results as the dominant paradigm?
Papers presented at this conference range from marketing and entrepreneurship, to history and method, to money and macroeconomics. Such a broad scope shows that it would be impossible to survey all of Austrian economics as it has developed over the past four decades. Instead, in this presentation, I will take a case study approach. The case I have chosen to focus on is Austrian environmental economics, a field I have followed more closely than others over the years.
PREMISES OF AUSTRIAN ENVIRONMENTAL ECONOMICSThe Austrian paradigm, as applied to environmental economics, has three components.
The first is a characterization of environmental issues as problems coordination. As Roy Cordato (2004, p. 7) puts it, they are “not about harming the environment, but about human conflict over the use of physical resources.”
The second component is a comparative institutional method. Rather than trying to maximize efficiency or social welfare, as in the neoclassical approach, Austrians ask what set of institutions can best facilitate (or, perhaps better, least impede) coordination among the conflicting plans of various potential users of environmental resources.
The third component of the paradigm specifies that property rights are the key to resolving environmental problems. To quote Cordato again, “it is logical that both the origin and the solution of the problem is to be found in a lack of clearly defined or enforced property rights.” (2004, p. 9)
These three components of the Austrian paradigm lead naturally to policy prescriptions that envision a minimal role for government. Graham Dawson (2011, p. 18), addressing climate change, expresses a view that Austrian writers extend to environmental problems of every kind:
The policy implication is that government has no cause to intervene in market exchange where property rights have been allocated and legislative procedures exist that that make it possible for the victim to take legal action against the polluter....
The Austrian or libertarian policy must therefore be to privatise “climate change policy,” repealing all existing climate change legislation…. There simply should not be a public policy towards “climate change.” Instead, the courts should build up a body of common law and establish precedents to guide the actions of the users of fossil fuels.... (Dawson, 2011, p. 19)
It all sounds easy, but between the statement of theoretical principles and their practical implementation lie several significant challenges.
CHALLENGE NO. 1: THE INSTITUTION GAPThe first question to ask is, how successful have Austrian writers been in specifying the property rights and enforcement mechanisms they see as necessary to achieve environmental coordination? The answer requires turning from easily stated generalities to some of the more difficult details. In doing so, we will pay particular attention to the distinction between normative legal principles—the way the law should look if it is to serve the purposes of economic coordination and libertarian justice—and principles of positive law as actually practiced today.
What Property Rights?Many Austrian writers have strong ideas about how property rights should be defined. In one of the most widely cited treatments, Murray Rothbard (1982) begins from the bedrock principle of homesteading, or first use. Polluters should be allowed to homestead the right to dispose of wastes in unused waterways or air space. People who later “come to the nuisance” by buying land near a smelly feedlot or a polluted waterway have no valid claim to relief. Elsewhere (1998, p. 63), he extends the principle of homesteading to land that is legally owned but unused.
Rothbard makes it clear that these are normative principles that today’s courts do not consistently follow. The resulting gap between normative and positive law is of more than theoretical importance. For example, if courts were to recognize homesteading of owned but unused property, they would frustrate the efforts of conservationists like Ted Turner or environmental organizations like Ducks Unlimited who buy up millions of acres of critical habitat for the specific purpose of leaving it unused.
What Courts?Austrian writers loosely refer to “the courts” as the instruments for enforcement of property rights, but just what courts? Unfortunately, the courts we have now are not always diligent in upholding property rights.
For example, consider how U.S. courts have treated regulatory takings. The Fifth and Fourteenth Amendments to the Constitution provide that “private property shall not be taken for public use without just compensation.” Libertarians have long held that this language should apply not just to cases in which the government takes title to property, but also to those in which regulation reduces its value or the ways the owner can use it.
Suppose, for example, I own a property that I intend to use for farming. A new regulation then defines part of it as a protected wetland, no farming allowed. Let’s stipulate that wetland protection is something that many people value. No matter—the Fifth Amendment would, on the face of it, seem to require that I be compensated for the loss to my farming operation. Yet in practice, U.S. courts have consistently held that if a regulation serves a public purpose, no compensation need be paid as long as the government does not actually take title to the property in question.
For another example, consider the Fourth Amendment’s restrictions on unreasonable searches and seizures. Unreasonable searches and seizures, whether they are stop-and-frisk searches for drugs by local police or searches of cell phone records by the NSA, are violations of property rights. The idea of a constitutional prohibition on overly broad searches came out of the experience of colonial-era merchants like John Adams and Elbridge Gerry who objected to raids on their homes and businesses by British officials, acting under “general writs,” in search of seditious documents or contraband tea or whatever. Sadly, today’s courts are even less willing to stand up against the NSA than against the EPA.
Why don’t our courts protect property as diligently as Austrian writers think they should? Part of the reason, I am sure, lies in the selection of judges by political appointment or popular election. It is not just Democratic judges who are shaky in their support of property rights. Republican judges, rather than being pro-market, often reach the bench because they are “pro-business”—a code word for subservience to corporate rent seekers. If Austrian environmental economics is to rest on a solid institutional foundation, the issue of how to get better courts and judges deserves more attention.
What Standards of Proof?Even with clear definitions of property rights and courts truly dedicated to enforcing them, plaintiffs would have to prove violations of their rights in each specific case. Rothbard and other Austrian writers have clear ideas about the standards of proof that courts should apply, but again, these often differ from current practice.
For example, in many, if not most, civil cases, the prevailing standard of proof is preponderance of evidence, also known as balance of probabilities. Austrian writers instead tend to favor beyond a reasonable doubt. The distinction is hardly trivial. Imagine a case in which plaintiffs claim that their property is being harmed by climate change. Would a court be convinced by existing scientific evidence that climate change is harmful and that human activity contributes to it? Quite possibly yes, if the standard of proof were preponderance of evidence, but no, if the standard were beyond a reasonable doubt.
The choice between negligence and strict liability is another example. A negligence standard, which today’s courts commonly apply in tort cases, is not entirely toothless. Properly implemented, it at least encourages people to take cost-effective measures to safeguard other people’s property. However, most Austrians prefer the less frequently applied standard of strict liability, which requires people to take responsibility for harm they cause even when it is unintentional.
Taking these three issues together—what property rights, what courts, what standards of proof—we see that there is a major gap between existing institutions for defining and enforcing property rights and the ideal versions of Austrian theory. The gap matters, especially when we move from theory to policy. Unless Austrians can at least outline the crucial institutional bridge between the ideal and the possible, they risk falling into what Harold Demsetz (1969, p. 1) calls the nirvana approach:
The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing “imperfect” institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements. In practice, those who adopt the nirvana viewpoint seek to discover discrepancies between the ideal and the real and if discrepancies are found, they deduce that the real is inefficient. Users of the comparative institution approach attempt to assess which alternative real institutional arrangement seems best able to cope with the economic problem; practitioners of this approach may use an ideal norm to provide standards from which divergences are assessed for all practical alternatives of interest and select as efficient that alternative which seems most likely to minimize the divergence.
If we replace the neoclassical term efficiency with the Austrian term coordination, Demsetz’s point is highly relevant. To argue that an ideal set of courts could do a better job of resolving environmental problems than can existing government regulations is to follow the nirvana approach, yet writers like Rothbard, Cordato, Dawson, and others tread perilously close to doing just that.
That is all the more striking, since Austrians are quick to condemn neoclassical economists when they slip into nirvana mode. Consider the economics of antitrust. The traditional neoclassical approach has been to compare existing market processes with the ideal construct of perfect competition. Finding that the messy realities of the former fall short of the perfect efficiency of the latter, they declare a “market failure” and recommend a set of remedial laws and regulations. The Austrian approach instead, is to compare the messy details of real-world markets with the even messier institutions of real-world antitrust law and policy. Dominick Armentano, an alumnus of the South Royalton conference, has used this comparative institutional method to build a strong case for antitrust repeal. (Armentano, 1999)
The bottom line here is that if Austrian environmental economics is to be fully persuasive, its policy proposals need to be better rooted in a comparison of the existing policy regime with alternatives that have real institutional meat on their normative bones. As we will see in the next section, the property rights approach to environmental issues has made more progress in this regard when dealing with some kinds of environmental issues than with others.
CHALLENGE NO. 2: THE PROBLEM OF ENVIRONMENTAL MASS TORTSIn areas like grazing, conservation, forestry, fisheries, and urban development, the property rights approach has made real progress, not just in theory, but also in practice. Examples abound. National organizations like the Nature Conservancy and local ones like the San Juan Preservation Trust, in the small community where I live, protect millions of acres of critical habitat. In doing so, they use a full range of property rights tools, including not just purchases, but also conservation easements, mitigation banks, and more. (Dolan, 2011). Terry Anderson and Donald Leal (2001) of the Property and Environment Research Center show how the property rights approach has led to better coordination of the varying interests of ranchers, farmers, hunters, and conservationists in the American West. In an urban context, property developers use covenants, easements, and other devices to coordinate the conflicting interests of individual owners in condominiums and planned developments. David Zetland (2014) has detailed how markets and property rights can help coordinate the overlapping plans of farmers, homeowners, and industry for use of scarce water resources.
However, there are limits. The property rights approach works best when the number of parties involved in environmental dispute are few and proximate. When they are many and remote, neither face-to-face bargaining nor common law litigation works well. Many of the most important environmental issues of our times fit this pattern, including urban smog, acid rain, ozone depletion, ocean acidification, and anthropogenic climate change. I will refer to this class of problems as environmental mass torts.
As Anderson and Leal put it, air pollution and related mass torts “challenge the paradigm.” (2001, p. 8) Poorly defined property rights are part of the problem, but even if rights were clearly established, the larger issue would be the procedural barriers and burdens of proof that pollution victims would face in any attempt to prevail in court. These do not arise solely from the shortcomings of laws and courts as they now exist. On the contrary, it would be even harder for pollution victims to prevail before an ideal court that followed the rigorous standards proposed by Rothbard and those who follow his lead.
Here is Rothbard’s (1982, p. 87) succinct statement of those standards, as applied to air pollution:
Aggression may take the form of pollution of someone else’s air, including his owned effective airspace, injury against his person, or a nuisance interfering with his possession or use of his land. This is the case, provided that: (a) the polluter has not previously established a homestead easement; (b) while visible pollutants or noxious odors are per se aggression, in the case of invisible and insensible pollutants the plaintiff must prove actual harm; (c) the burden of proof of such aggression rests upon the plaintiff; (d) the plaintiff must prove strict causality from the actions of the defendant to the victimization of the plaintiff; (e) the plaintiff must prove such causality and aggression beyond a reasonable doubt; and (f) there is no vicarious liability, but only liability for those who actually commit the deed.
Later in the same article, Rothbard (1982, pp. 93–97) specifies additional standards for joint torts and joint plaintiffs. He limits compulsory joinder of defendants to cases where polluters have acted in concert, and joinder of plaintiffs to cases where each plaintiff actively and voluntarily participates and common interests predominate.
Consider how these standards would work out in the case of a hypothetical Vermont farmer, call her Nancy Norman, who claims that acid rain is harming her maple trees.
• Defendants, such as Midwestern power plants, could argue that their emissions began before Norman purchased her property, so that she was “coming to the nuisance.” Unless she had inherited her farm from a line of ancestors dating back before the industrial age, older pollution sources would be off the hook and she could only go after more recent ones.
• Because Rothbard treats harm from invisible and insensible gases like SO2 and NOx as a nuisance, not a trespass, Norman would have to prove actual damage. In any legal action, she would have to bear the cost of expert testimony regarding the science of acid rain, and would have to rebut defendants’ testimony that some other agent, say a fungus, might be harming her maple trees. The testimony would have to establish her contentions beyond a reasonable doubt.
• Norman would have to sue each polluter individually, unless she could prove they acted in concert, which presumably they do not. She would have to prove strict causality, not just regarding the point that acid rain in general damaged her trees, but that each individual defendant contributed causally to the damage. (Rothbard approvingly quotes an authority who says, “Currently, a party who has been damaged by air pollution must prove in court that emitter A damaged him. He must establish that he was damaged and emitter A did it, and not emitter B. This is almost always an impossible task.”)
• Finally, it would be difficult to undertake a class action. Although Norman might be able to join with other maple farmers, if she could secure their active participation, she could not, under Rothbard’s standards, join with defendants claiming that acid rain caused other forms of damage, say, to fisheries, buildings, or personal health.
Taking all of these considerations together, Rothbard acknowledges that an individual pollution victim would have no chance at all of prevailing in a tort action against multiple, remote polluters:
The prevalence of multiple sources of pollution emissions is a problem. How are we to blame emitter A if there are other emitters or if there are natural sources of emission? Whatever the answer, it must not come at the expense of throwing out proper standards of proof, and conferring unjust special privileges on plaintiffs and special burdens on defendants. (Rothbard, 1982, p. 88)
Instead, he says, if the burden of proof is insurmountable, then pollution victims “must assent uncomplainingly.”
Not all advocates of a property rights approach agree with Rothbard on these points. For example, Martin Anderson (1989), as quoted approvingly by Block (1990), puts it this way:
If you took a bag of garbage and dropped it on your neighbor’s lawn, we all know what would happen. Your neighbor would call the police and you would soon find out that the disposal of your garbage is your responsibility, and that it must be done in a way that does not violate anyone else’s property rights.
But if you took that same bag of garbage and burned it in a backyard incinerator, letting the sooty ash drift over the neighborhood, the problem gets more complicated. The violation of property rights is clear, but protecting them is more difficult. And when the garbage is invisible to the naked eye, as much air and water pollution is, the problem often seems insurmountable....The only effective way to eliminate serious pollution is to treat it exactly for what it is—garbage. Just as one does not have the right to drop a bag of garbage on his neighbor’s lawn, so does one not have the right to place any garbage in the air or the water or the earth, if it in any way violates the property rights of others.
What we need are tougher clearer environmental laws that are enforced—not with economic incentives but with jail terms.
Although this passage does not use Rothbard’s careful legal language as Rothbard, it clearly takes a different approach. Its key features include:
• A tilt toward the rights of victims rather than polluters when procedural considerations make it hard to protect both perfectly.
• The implication that a public prosecutor could act to prevent known harm even when specific victims have not filed suit or even been identified.
• The possibility of injunctive remedies or criminal sanctions in addition to, or instead of, payment of damages under tort law.
Despite their differences, Rothbard’s approach and the move toward a victim-friendly alternative have one thing in common: Neither does much to solve the coordination problem in cases of environmental mass torts. Under Rothbard’s approach, polluters would have little incentive to accommodate themselves to the conflicting plans of remote pollution victims. Under the alternative version, it might be the polluters who, because of the difficulty of negotiating pollution easements with downwind property owners, would have to “assent uncomplainingly” to costly abatement measures.
The bottom line: There can be no coordination unless the property rights of both polluters and their victims are clearly defined and diligently enforced. In the case of environmental mass torts, that appears to be a practical impossibility, as proponents of the property rights approach themselves acknowledge.
CHALLENGE NO. 3: BRINGING THE PRICE SYSTEM TO BEARIn the hands of Rothbard, Cordato, and other Austrian writers, the property rights paradigm leads to a dead end when applied to urban smog, acid rain, ozone depletion, climate change, and other large-scale forms of pollution. It turns out to be incapable either of ensuring equal justice for polluters and victims, or of resolving the coordination problem. Much of the reason, I think, is that these writers take an excessively legalistic approach. Yes, property rights are important, but it is wrong to focus on direct negotiations backed by tort law as the principal mechanism through which they achieve coordination. Something is missing.
Fortunately, we do not have to look outside Austrian framework to find the missing piece. As famously articulated in Friedrich Hayek’s (1945) essay on the use of knowledge in society, the price system, not property rights per se, is the key mechanism that facilitates economic coordination among large numbers of widely scattered actors. That being the case, we can restate the problem as one of how to bring the price system to bear on the problem of environmental mass torts.
Where property rights are adequately defined and enforceable, prices arise naturally from the interplay of supply and demand. Hayek uses the market for tin as an example. Sellers expand supply when the price is higher than their estimated cost of production. Consumers buy more when the price is below the maximum they are willing to pay for an additional unit. Coordination occurs without the need for face-to-face negotiation or even the knowledge of who your customers are or why they want your product. The law is there as a backstop, but only as a last resort in cases of fraud or breach of contract. Most of the time, mutual self-interest and the desire to protect commercial reputations are sufficient to ensure that the parties carry out their agreements.
Things are not so simple, though, when the legal backstop is missing, as it is when property rights are murky and enforcement is impracticable. Since prices and markets do not emerge naturally in such a setting, the only choices are to get along without them altogether or to take artificial measures to bring them into play. In Hayekian terms, we might think of it as artificial insemination of knowledge—not nature’s way, but better than nothing when nature fails.
The two leading approaches for doing this are emissions trading and pollution fees. I think Austrian economists succumb to the nirvana fallacy when they dismiss these policy alternatives too quickly. The comparative institutional method demands that these proposals receive unbiased evaluation. It turns out that there is much to like about them, even from an Austrian point of view. Let’s look first at the positive features of these policies and then at some common objections to them.
Emissions TradingAn Austrian case for emissions trading follows naturally from Rothbardian homesteading of pollution easements. Rothbard (1982, p. 77) uses the example of noise pollution from an airport. At time T, he imagines, an entrepreneur sets up an airport in an open area with no one nearby to be bothered by the noise. The facility emits X decibels of noise into the surrounding unused airspace, thereby homesteading the right to X decibels. If someone builds a house nearby at time T+1, says Rothbard, they have no cause for action against airport, since they have “come to the nuisance.” However, if the homeowner bought the property for a price that reflected ambient noise of X decibels, and at time T+2 the airport increases its noise emissions to 2X decibels, the homeowner would have a cause of action for 1 decibel of excess noise.
Rothbard specifies that the titles to pollution easements created by homesteading are transferable by sale, gift, or bequest. Furthermore, they are separable, in the sense that it is permissible to sell them without selling the airport itself.
If purchases and sales of noise easements became frequent, some entrepreneur would no doubt set up an exchange to trade them in standardized units. Soon a fully developed, fully private emissions trading scheme would spontaneously emerge, with the supply of easements for each type of pollution capped by the number that had been legitimately homesteaded. Once population density increased to the point that no part of the relevant airspace or watershed remained unused, there could be no further homesteading and the caps would become permanent.
Such a spontaneously emergent emissions trading scheme would facilitate coordination of the plans of the various affected parties in a way completely consistent with Austrian principles. The mechanism of coordination would be the price of easement units as traded on the exchange. For example:
• The airport would use the price of easement units in deciding how much to invest in abatement technologies like noise deflecting walls and berms.
• It would communicate the value of easements to airlines through the price it charged for landing fees. Airlines, in turn, would use that price in scheduling flights and perhaps in negotiating lower landing fees in return for investments in quieter engines.
• As the local community grew in size and wealth, property developers or voluntary community associations could buy up some easement units to hold them off the market, with a payback through lower noise levels and higher property values.
In short, if we accept the homesteading principle, then nothing about emissions trading per se is offensive to Austrian principles.
Pollution FeesPollution fees are another way to inject prices artificially into a world where muddled property rights and imperfect courts prevent them from emerging spontaneously. I find that neoclassical economists tend to like pollution fees better than emissions trading, but for Austrians, they are probably an even harder sell. They object that pollution fees are a form of tax, and that all taxes are bad. Even so, that does not mean they are equally bad.
Yes, taxes can pose barriers to coordination. Payroll and income taxes make employment less attractive to workers and hiring less attractive to employers. Corporate taxes distort incentives for choosing one form of business organization rather than another. But, within a comparative institutional framework, the critique of such taxes presumes that the alternative would be coordination through functioning, tax-free markets for labor, capital, and their products.
Pollution fees have a different status. As we have seen, though, where property rights are not clearly defined and or adequately enforced, markets for pollution cannot emerge and coordinating conflicting uses of environmental resources becomes problematic. That changes matters in two key ways.
First, it means that the effects of pollution fees must be compared not with the operation of a nonexistent tax-free market, but with a situation in which pollution goes altogether unpriced. Whatever one’s distaste for taxes, the latter situation is, arguably, even less congenial to economic coordination.
Second, it means that the effects of pollution fees must be compared to those of other taxes. No one that I know of proposes just adding pollution fees on top of all other sources of government revenue. The proper approach is that of a revenue-neutral tax reform in which pollution fees would replace payroll taxes, corporate taxes, or whatever other existing taxes are most harmful to coordination. In that context, it is appropriate to reject pollution fees only if they are worse than any other tax.
Again, we have to choose between the nirvana approach and that of comparative institutions. For many Austrians, nirvana means a society with no taxes at all. As libertarian philosophy or science fiction, I find such an anarcho-capitalist utopia quite charming. However, there is also a less radical, more practically minded thread within the Austrian tradition, that of Hayekian classical liberalism, which envisions a limited government supported by limited, minimally intrusive forms of taxation. From a classical liberal point of view, pollution fees deserve a fair hearing.
The Calculation ObjectionLet’s turn now to three objections that Austrian writers have raised against both emissions trading and pollution fees. The first is the calculation objection. Cordato states it this way:
[B]oth of these approaches are fundamentally forms of market socialism and suffer from all of the problems that Austrians have typically made against central planning. Most specifically, a central authority must know in advance what the efficient outcome is. In the case of the tax, a central authority must know in advance the exact amount of the externality costs being imposed by the polluter, and the correct price and output, not only for the good in question but, since efficiency only makes sense in a general equilibrium context, for all other affected goods and services. In the case of tradable permits, the knowledge requirements are essentially the same. This is because the central authority must first determine the “efficient” level of emissions for the particular pollutant, which also must be determined within the context of a general equilibrium solution. (Cordato, 2004, p. 11)
Art Carden (2013, p. 30) echoes this, saying:
Tradable permits and Pigovian taxes are market-like, but they still rest on a planner’s conceit that the optimal amount of a particular activity can be known independent of what is revealed by trade (or more generally, by consent).
For several reasons, I think this objection misses the mark. First, the context is wrong. As Cordato himself notes, the origins of the objection lies in the socialist calculation debate. There, Austrian economists sought to establish that real markets could better solve the coordination problem than could central planning or “market socialism.” That debate centered on ordinary goods like coal, cement, or clothing, for which markets, backed by clearly defined and enforced property rights, actually existed. In the socialist calculation debate, the socialists were the ones who succumbed to the nirvana fallacy by invoking optimal central planning or pseudo-market mechanisms to balance supply and demand in imitation of perfect competition. Austrians, meanwhile, grounded their arguments firmly in a comparison of real world markets with real world socialism.
In the case of air pollution, the shoe is on the other foot. The starting point is a reality in which there are no markets for pollution and no prices. Cordato and others point out that this reality falls short of their nirvana of clearly defined and consistently enforced property rights, but they offer no institutionally practicable alternative.
Second, it is wrong to say that environmental administrators would have to know every detail of the optimal outcome in order to improve coordination. The correct comparison is neither the utopian concept of perfect efficiency nor the nonexistent ideal of perfect enforcement of property rights, but rather, the set of environmental policies that we now have. Arguably, the current mish-mash of command-and-control policy, CAFE standards, ethanol blend ratios and the rest is a mess. Emissions caps or pollution fees could miss the neoclassical optimum by a considerable margin and still be an improvement over the status quo.
Third, those Austrians who employ the calculation objection seem to forget their own concepts of how markets actually work. In real life, relatively few decisions are guided by exact calculations. To take an example from business, engineers at an auto company might, with a fair degree of precision, be able to calculate the optimal mix of fuel and air for the engine of a new model. However, marketing managers tasked with setting the level of advertising for the new model would have to rely on implicit knowledge and rules of thumb. They would be well aware that the difficulty of measuring some quantity does not constitute proof that its optimal value is zero. Better to guess at the proper advertising budget than not to advertise at all.
Matters would be much the same for a common law court. If a farmer successfully sues a railroad for emitting sparks that burn a field of wheat, the court might be able to use data on wheat prices, acreage, and crop yields to calculate damages with reasonable accuracy. But instead, suppose a spill from a plastics plant contaminates an adjacent well and the well owner comes down with cancer. Assuming that the plaintiff can prove causation, what are the appropriate damages? Medical costs only? Medical costs plus time lost from work? The above plus pain and suffering? The above plus punitive damages to discourage similar abuses in the future? There is no exact answer; the court must give a reasoned judgment based on rules of thumb established by precedent. Yet the inability of judges to perform exact calculations in cases like this does not seem to keep Austrians from placing great faith in tort law.
The Compensation ObjectionA second Austrian objection is that emissions trading and pollution fees solve only part of the coordination problem. Yes, if properly implemented, such policies could deter pollution, but they don’t compensate victims. Failure to compensate is not only unjust; it distorts choices about the use of environmental resources and inhibits coordination.
By analogy, consider shoplifting from grocery stores. As intermediaries in the market for apples, grocers facilitate coordination between farmers and consumers. Shoplifting interferes with that function. To offset losses, grocers have to lower the prices they pay to farmers. Given misleading information about the value of apples, farmers might mistakenly convert their land to housing developments. Shoplifting losses also causes grocers to raise prices to consumers, who might turn to snack alternatives they would otherwise find less satisfying, say cookies. The result would be more houses and cookies, and fewer apples, than we would find under full coordination.
In an ideal world of clearly defined and strictly enforced property rights, grocers could hire private guards to nab the shoplifters, take them to court, and demand restitution to cover the value of the stolen goods plus the costs of the guards and court proceedings. With their losses made whole, grocers could then pay more to farmers and charge less to consumers. Coordination would improve.
Suppose, though, that instead of private guards, government police nab the shoplifters and throw them in jail without compensating anyone. Like pollution fees or emissions trading, jailing shoplifters deters the unwanted behavior but does so without making the victim whole. Still, criminal sanctions offer a partial solution to the coordination problem, in that less shoplifting allows grocers to somewhat raise prices paid to farmers and somewhat reduce those charged to consumers.
The same goes for policies like emissions trading or pollution fees. When it is not possible both to deter aggression and to compensate victims, it is better at least to do the one than to do neither.
The Stolen Property ObjectionWalter Block (2004) raises yet another objection against emissions trading. Markets in emissions quotas are illegitimate, he says, not because trading itself is objectionable, but because they are trading in stolen property, like selling stolen televisions from the back of a truck.
Block is not entirely clear from whom the relevant emissions rights have been stolen. If he has in mind a framework of Rothbardian homesteading, then the rights would be stolen from polluters. If he has in mind that downwind property owners have a right to protect themselves against trespass and nuisance, then the tradable permits are stolen from the victims. In either case, they are stolen.
This is a legitimate objection to some versions of emissions trading, but it seems to me that proper design of the trading scheme could overcome it, at least in part. Without going into great detail, I see several possibilities.
First, if one believes that existing pollution levels have been legitimately homesteaded under a “first user” theory, then the solution would be to grandfather in that level of pollution when the trading scheme is instituted. That would fully protect polluters’ rights since they would not have to sell their emissions quota unless they chose to do so.
Alternatively, if polluters are not seen as having legitimately homesteaded the rights, then the trading scheme could include some mechanism to compensate victims. Perhaps the original allocation of permits could be sold at auction. The proceeds could then be distributed through a victim compensation fund or simply through a general tax rebate if all taxpayers were seen as equally victimized by the pollution. True, it might not be feasible to negotiate release of the relevant property rights with each individual victim. If so, the state might have to invoke eminent domain, as it would when taking property for a highway. Even in that case, the “stolen property” objection would be mitigated if the government observed Fifth and Fourteenth Amendment principles to compensate pollution victims for the regulatory taking.
CONCLUSIONSWhat does all this mean for progress toward an Austrian scientific revolution in environmental economics? Let’s take a last look at the questions posed at the beginning of this paper.
First, in taking on the coordination of conflicting plans for the use of scarce environmental resources, Austrian economists have definitely addressed a problem that other economists agree are important. My only disappointment here is that when they encounter difficult cases like climate change, some Austrian writers try to duck the economic issues by retreating into amateur criticisms of the relevant science. That is a problem I dealt with at length in an earlier paper (Dolan, 2006), so I won’t repeat myself here. In my view, Austrian economists qua economists have to deal with climate change and the like in the spirit of “What if Chicken Little is right this time?” That is, they need to propose solutions that would work if at some point real scientists persuade them that climate change is a real threat.
Second, Austrians have offered proposals of practical value to economic policy, as judged by a comparative institutional standard, for problems such as land management, water rights, forestry, urban land use, and others where the parties are few in number and proximate to one another. Unfortunately, Austrians have contributed little if anything to the solution of the problems of mass torts that remain the headline environmental problems of our day.
Third, even where Austrian writers have successfully addressed environmental problems, it is hard to say that their successes spring from their unique Austrian paradigm. There is not always a great practical difference between the conclusions reached by Austrians and those reached by others who ground their approach to property rights in the neoclassical tradition. The one case where I see the possibility of a uniquely Austrian approach—a version of emissions trading based on Rothbardian homesteading—has been completely neglected.
Taken together, these shortcomings leave Austrian environmental economics with a split personality. On a theoretical level, Austrian writers delight in claiming the moral high ground, condemning polluters as aggressors against property rights. On a practical level, however, they leave pollution victims in the lurch. They invite them to sue, but propose a set of legal standards that would guarantee that polluters would always win. They oppose all government measures to reduce pollution, whether through regulation or through measures to make polluters pay. As a result, at least in cases of environmental mass torts, the Austrian paradigm is a polluter’s dream and a victim’s nightmare. It offers far too little of any practical value toward securing property rights, too little toward facilitating environmental coordination, and too little toward promoting libertarian justice. Much work remains to be done.
Volume 17, No. 2 (Summer 2014)MyArt Carden wcarden@samford.edu is Assistant Professor of Economics, Brock School of Business, Samford University. The title is taken from Buchanan (1964). education in Austrian Economics began in earnest shortly before I started grad school at Washington University in Saint Louis. The Center for the Study of American Business had just become the Murray Weidenbaum Center and had left a small mountain of books on a table in the Economics Department’s mailroom for anyone to take. Among the books I picked up were Ludwig Lachmann’s Capital, Expectations, and the Market Process and a book that was central to the “Austrian Revival” of the 1970s: Edwin Dolan’s edited volume Foundations of Modern Austrian Economics. I was therefore flattered to see myself cited in his paper “The Austrian Paradigm in Environmental Economics: Theory and Practice” and to be invited to offer a comment. Dolan’s call for applied research that makes distinctively Austrian contributions, addresses important problems, and offers suggestions for public policy is important, and it should inspire scholars to look for specific areas to which the Austrian paradigm contributes. It’s a call that has been answered by Austrian-influenced scholars like Elinor Ostrom, and, in turn, the people Ostrom and others have influenced.
My position on Dolan’s paper could best be described as “qualified agreement.” Dolan is exactly right: Austrian economics offers a “distinctive paradigm,” and this is “a necessary, not a sufficient, condition” for “a scientific revolution.” Some scholarship in the Austrian tradition today opens itself to the charge that it is textual exegesis—what did Mises really mean? What did Rothbard say about X? Which block quote from The Constitution of Liberty is most relevant to this particular issue?—rather than applied scientific investigation. It would be easy to dodge Dolan’s challenge, appeal to Hayek’s claim that one of our jobs as economists is to make the politically impossible possible, and go on asking about how a perfect Austrian/Libertarian Utopia would actually work. This takes up the scientific challenge Karl Marx and the socialists ignored, but Dolan is correct in noting that there are still serious institutional difficulties that make the real world a much more complicated place than our models (mainstream or Austrian) suggest.
As matters of abstract theory, exercises that assume perfect (or nearly-perfect) institutional environments can help us identify the relevant moving parts. Consider the powerful insight we get from a version of the Coase Theorem: if property rights are clearly-defined and well-enforced, and if transaction costs are low, then people will bargain to efficient outcomes. What Dolan suggests is not a substitute for abstract theorizing but a complement to and application of such work. Dolan is right that Austrians and libertarians commit their own version of the Nirvana Fallacy by assuming that the courts work. “Why would we expect them to,” “why don’t they,” and “what are the sources of transaction costs that prevent coordination” are powerful and important research questions. Adding a richer institutional environment to the analysis is a next step now that the theoretical groundwork is in place.
Dolan valuably exhorts people to adopt a comparative institutional perspective on how property rights emerge and how societies develop ways to cope with collective action problems and manage common pool resources. Here I want to be clear: I am referring to “property rights” in a positive sense rather than a normative sense. Positive political economy—or wertfrei praxeology—is in the business of explaining the implications of different arrangements of institutions, not of determining whether a particular institution is just or not.
There are obvious examples in which a crime has clearly been committed: a neighbor who dumps garbage on my yard has clearly violated my property rights and should be made liable for any damage. Things are not so clear when my neighbor burns garbage. This is an example from Martin Anderson (1989) as quoted by Block (1990) and discussed by Dolan.Identifying and enforcing property rights is costly, and there remains a lot of valuable empirical work to be done on the cases in which invasions become so onerous that people start to take legal action. Empirically, does the pleasant smell of burning leaves or burning garbage tend to offset the pollution damage? Do the external costs and benefits matter at the margin?
This is an empirical question, but I would suspect that any private court willing to jail people for minor trespasses (like trace amounts of smoke from my neighbor’s grill invading my lungs) will not stay in business for very long. Custom and the institutions of civil society are also extremely important, as Block (2008) acknowledges, and this is where the legal gray areas emerge. We take for granted in our neighborhood that it is OK for people to grill out or burn yard waste in a fire pit occasionally, and informal social approbation or sanction will often be sufficient to make sure that legal intervention is not necessary.
Austrian and libertarian analyses of environmental problems—or of all problems—would benefit from deeper engagement with the history of property rights as they have actually evolved. Hasnas (1996, 2009) has explored the history of property rights and has noticed that the evolution of law has little to do with abstract justice and a lot to do with facilitating coordination and cooperation. Todd (2009) offers a brief and accessible treatment of the history of property rights that would help scholars working in the Austrian tradition to offer the richer institutional and historical context Dolan wants. The growing field of environmental history would benefit from engagement with economics, and in turn economists interested in environmental issues can likely find the detailed historical case studies that provide the analytical stuff of robust, unique, and policy-relevant contributions.
Pigovian taxes and emissions trading are clear improvements over command-and-control, but they come with their own institutional baggage. The knowledge-and-calculation problems Cordato (2004) and Carden (2013) explore are clear, but there are other germane questions in political economy that are relevant to taxes and emissions trading. In addition to the problems highlighted by Cordato (2004) and Carden (2013), Pigovian taxes and emissions trading schemes will likely create unintended (and negative) consequences when markets are incomplete. Taxing carbon emissions, for example, will move production and consumption decisions from the taxed margin to untaxed margins. While this might lead to environmental improvements, it also might lead to greater emissions of even more dangerous greenhouse gases like methane.
Second, the calculation objection to emissions trading schemes is more than a simple “how do you know?” conversation stopper. Finding the “right” amount of emissions to allow might require some trial and error, but credible commitment remains an important potential obstacle. What incentive is there for a state to specify a particular level of carbon emissions that will be allowed each year and then not change this in response to political pressure? The information needed to know whether a particular regulation “works” quite literally does not exist, and the key difference between firms and governments is that firms trying to decide how much to advertise have market tests for their decisions. Governments do not.
We need to do a better job separating Austrian economics from libertarian political philosophy. I worry that Dolan has conflated the two as he uses “Austrian” and “libertarian” interchangeably throughout his article. While it is easy to switch between one and the other in analyzing environmental problems or law, they have to be kept separate for analytical purposes. Positive questions like “What happens given secure private property rights?” “What kinds of property rights do we observe in practice?” and “How do those property rights emerge?” are different questions from the normative question about which property rights are actually property rights.
Fortunately, scholars are already doing what Dolan suggests. There are a lot of people who publish in Austrian journals and who attend scholarly meetings like the Austrian Economics Research Conference and the Society for the Development of Austrian Economics who are doing work exploring how people manage common pool resources or address collective action problems. I do not need to rehearse an exhaustive list here, but Peter Leeson’s work on anarchy and piratical communities and Christopher Coyne’s work on institution-building should be required reading for anyone in the social sciences. My former undergraduate student Trey Carson is, as of this writing, working on a project at George Mason University discussing how private and government actors reacted to the Memphis Yellow Fever Epidemic of 1878.
One obviously does not need to publish in Austrian journals or attend Austrian meetings to make contributions that are either a part or a complement to the Austrian tradition. Elinor Ostrom is a perfect example; her work on polycentric order, institutions, and emergent governance was influenced by Hayek and won her a well-deserved Nobel Prize in 2009. Anthropologist Jean Ensminger’s work on land titling in Africa shows how developing property titles at odds with underlying cultural rules and norms can be destined to fail (Ensminger, 1992). William Easterly, another Hayek devotee, has written three books about our failure to create economic development from the top down, and in his most recent book (Easterly, 2014) he explores the development debate that never happened between F.A. Hayek and Gunnar Myrdal and goes on to explain development experts’ enthusiasm for top-down as opposed to bottom-up approaches to poverty.
Dolan offers a powerful exhortation toward better, more applied research that answers important empirical questions. Austrian economists have a unique set of tools, and the abundance of raw material emanating from law, history, and other fields means that we have an almost unlimited number of ways to use those unique tools to improve our understanding of a complex world and how it works. We should follow Ronald Coase’s advice and “look out the window” to see how it actually works. Ostrom did, and she changed the world of scholarship on these issues.
So let us get to work. As Dolan points out, we have an entire world to understand and a unique set of tools with which to understand it.
Volume 8, No. 3 (Fall 2005)Almost nowhere, however, are lay readers presented with a more sober and realistic perspective according to which the institutional framework of market economies has always been conducive to greater resource creation than depletion, that increased carbon dioxide concentrations will have benefits as well as costs, and that past and current energy crisis can typically be traced back to political interventions rather than physical shortages or market failures. Of course, one can always find some reasonable textbook (Boyle, Everett, and Ramage 2003) and work on synthesis that will hint at this perspective, but they are not targeted at a broad audience. It is in this context that Robert L. Bradley and Richard W. Fulmer’s primer, Energy: The Master Resource is so valuable. Unlike almost every other popular book on the subject, it is squarely rooted in the optimistic tradition that was best exemplified by the late Julian Simon. Indeed, the title reflects Simon’s observation that, if human ingenuity is the “ultimate resource” that created all others, energy is the “master resource” that enables human beings to convert one material into another. Bradley and Fulmer deal succinctly with the basic physical concepts, history, technology, economics, and public policy of energy. They discuss both long term trends and recent controversies in a nontechnical and abundantly illustrated way that will appeal to students, policymakers, and the interested public.
Volume 10, No. 1 (Spring 2007)
Re-Thinking Green: Alternatives to Environmental Bureaucracy is an excellent book of easy-reading essays dealing with environmental policy from the perspective of “free-market environmentalism” which combines ideas of public choice theory and Austrian economics. Authors, including Roy Cordato and Bruce Yandle, critically review the past 30 years of environmental regulation with the focus on its tools as well as its doubtful results. Not surprisingly, most of those evaluations do not end up very complimentary to current environmental policy. The economic arguments and empirical observations presented in the book remove the readers’ “rose-colored glasses” regarding government action and force them to think about alternative solutions.
Volume 7, No. 2 (Summer 2004)
Perhaps the best concise summary of this book is given by editor Alexander Tabarrok in his concluding chapter. As he points out, where most urbanists see market failures, the authors of The Voluntary City see market opportunities. Needless to say, such a perspective will come as a shock to theorists and practitioners whose raison d’être is built around notions such as public goods and externalities.
While The Voluntary City is mostly an attempt to provide a stepping stone to illustrate how services that are currently provided by politicized bureaucracies could be better delivered through market-based arrangements, the editors have had the good sense to frame their discussion not so much in terms of market versus public planning, but rather along the lines of civil society (which includes not only market processes, but also nonprofit firms and other not-for-profit organizations) versus bureaucratic-political procedures. (But while this may be a good rhetorical strategy, I suspect that in its present-day incarnation, the nonprofit sector has essentially become nothing more than a grab bag of cheap-labor extensions and lobby groups of government agencies and that casting too much hope in it might prove disappointing. Yet, reminding readers of what it once was and might again be is a useful task.
Volume 7, No. 2 (Summer 2004)Let us begin our analysis by making the distinction between free markets in their pure, laissez faire or capitalist dimension, on the one hand, and market socialism on the other. Markets for the libertarian are at the very core of this philosophical perspective. Free markets are based upon legitimately owned private property (Hoppe 1989, 1993; Rothbard 1978, 1982). To conclude. I don’t mind it, so much, that a bunch of socialists have proposed some new convoluted environmental schemes. But I do mind it, very much, that in this effort they would choose to march under the banners of private property, economic freedom, and free markets. They must be exposed for the central planners they are, and cannot be allowed to get away with what is, in effect, fraudulent advertising.
Volume 9, No. 2 (Summer 2006)The economic theory of intergenerational sustainability is essentially neoclassical in nature and purports to provide a prescriptive framework for deciding how current generations can use "available resources" to assure and enhance the well being of both current and future generations. Intergenerational sustainability is premised on the notion that this generation is failing to meet its societal or public responsibility to "maintain" a "broadly defined capital stock" for the purpose of sustaining a broadly defined income for the benefit of future generations.
Volume 5, No. 2 (Summer 2002)A rational response to the possibility of large-scale environmental change is to establish the economic freedom of individuals to deal with it, if and when it comes. Capitalism and the free market are the essential means of doing this, not paralyzing government controls and “environmentalism.” Both in the establishment of economic freedom and in every other major aspect of the response to environmentalism, the philosophy of Ludwig von Mises and Carl Menger must lead the way.
Volume 15, Number 1 (Spring 2012)This paper examines several problematic aspects of George Reisman’s Capitalism: A Treatise on Economics , specifically, five problems in the economics of natural resources. I argue first, that Reisman’s work lacks sufficient grounding in economic theory. Second, his exposition neglects important arguments in the environmental literature. Third, it avoids problems of uncertainty, leading to a faulty theory of economic development. Fourth, he does not sufficiently explain or to criticize potential fallacies in the environmental movement. Fifth, the rhetoric Reisman deploys in his arguments confounds rather than supports his exposition.
KEYWORDS: resource economics, environmental economics, property rights, economic growth, uncertaintyJEL CLASSIFICATION: D23, O13, O33, Q32, Q51INTRODUCTIONProfessor George Reisman’s Capitalism: A Treatise on Economics has set itself a goal which is ambitious to say the least—nothing less than “[a] complete and integrated understanding of the nature and value of human economic life.” Among the many topics he pursues toward this end, Reisman attempts to provide a comprehensive analysis of environmental and resource economics inasmuch as these relate to capitalist economies. This portion of the treatise has been mostly neglected in other commentaries.Cf. Kraus (2009), and the sources cited throughout this paper. While Reisman has certainly brought many interesting arguments to light in this regard, I wish to discuss five aspects of his exposition which appear unsatisfactory. First, two important elements are missing from Reisman’s presentation—a unifying economic framework, and a discussion of the extant literature. After discussing these, I turn to Reisman’s theory of capitalist development and technological advancement. Lastly, I address Reisman’s critiques of the environmental movement, in terms of both his economic arguments and his rhetoric. The final section provides concluding remarks.
THE GAPS IN REISMAN’S RESOURCE ECONOMICSI begin by examining what Reisman’s exposition of resource economics appears to lack. The first general comment is that there is no truly economic theme which serves as the foundation for Reisman’s treatment of environmental economics. While there are of course many distinct problems in environmental economics, it is important to deploy a framework through which to understand the basic issues. Rothbard (1982), for instance, analyzes resource use in light of property rights, and Cordato (2004) in terms of property rights and individual plan formation. In Reisman’s case, however, the themes which bind the presentation together are not generally economic. Rather, Reisman tends to focus on non-economic arguments or value judgments regarding the desirability of capitalism, technology, and economic progress (Reisman, 1996, pp. 90–91, and throughout). Reisman vigorously rejects the notion of value-freedom in economics (Reisman, 1996, p. 36), holding human life and reason to be ultimate values. But whatever the merit of these values, they are not economic explanations, and do not grant any specific, overarching economic insight. Reference to such values does not necessarily solve the problems posed by the economic theory of resource use. This value-based approach is strange considering that Reisman insists his book is strictly an exposition of the principles of economics, and not a treatise on philosophy (1996, p. 36). To be sure, one or even a few fundamental principles will not be able to explain every problem relating to environmental economics, but placing one’s theory on clear economic foundations is obviously essential in an economic treatise. The reality of this problem will, I believe, become clear in what follows.
To take another obvious example, there is an odd absence of an economic analysis of property rights regimes and their specific implications for resource economics.I emphasize this point because using a theory of property rights is one useful way to develop a genuinely economic theory of resource development. The concept of property links individual decision-making with other attendant economic concepts: means and ends, uncertainty, costs, entrepreneurial judgment, and so on. There are brief examples (as when Reisman mentions the influence of the profit incentive on privately owned forests [1996, p. 75], or the ownership of bodies of water [1996, pp. 83, 85]) where property rights enter the discussion, but these are exceptions, and there is no systematic analysis of how private, public, and communal property rights regimes influence resource use.There is however some discussion of contract law with regard to the problem of externalities, which is unfortunately limited to only a few pages (1996, pp. 96–98, 335–336). Property rights appear almost an afterthought to Reisman’s presentation. In fact, he even passes up opportunities to mention property rights when a discussion would significantly strengthen his argument. For example, immediately after mentioning problems with government ownership of resources, he dismisses the near-extinction of the American buffalo as an insignificant event (1996, pp. 75–76, 84). Reisman claims that the buffalo’s extinction would have imposed needless costs on mankind, and that the near-extinction was necessary for economic progress. What matters for him is that the benefit exceeded the cost for mankind. Reisman could, however, have pointed out that the buffalo were overexploited because they were an economic “commons,” and were thus subject to the tragedy of the same (Anderson and Hill, 1975). This would have been one way to ground the discussion in both economic theory and history, and bolster Reisman’s case for capitalism, regardless of whether people accept Reisman’s value judgments about resources and their proper use.
The importance of emphasizing economic reasoning over ideological judgments in environmental economics has been pointed out in Shaw (2002). In this regard, Reisman’s case is atypical: a standard environmentalist approach is to assume that altering nature is always harmful in some way. Reisman seems to err in the opposite direction, by being too willing to assume away environmental damage as insignificant. Even if one accepts Reisman’s judgment that mankind’s well-being is the only valid ethical standard, it does not follow that “one cannot regard man’s activities in relation to nature with anything but awe and admiration” (1996, p. 84).
The second major point, related to the problem of economic foundations, is the troubling fact that despite the enormous literature on environmental economics, there is very little discussion in Capitalism of the fundamental problems of the resource economics literature. To take some canonical examples, there is no mention of Garrett Hardin’s famous article “The Tragedy of the Commons” (1968), or the extensive literature which the article has engendered. Neither is there mention of the transaction costs literature inspired by Coase (1960), which dominates much of the writing on environmental economics. These sources are usually required reading for resource economists, as well as students of the various branches of natural resource science. Forsaking these, Reisman deals mostly with common objections made against free markets and capitalist production, or with the psychology of environmental preservation advocates. To the uninitiated, it might appear as if resource economics consists only of popular or non-economic objections to capitalism.
Another important tension which is not resolved is the relation of capitalism to prevailing systems of economic intervention. Even though Reisman employs a clear definition of capitalism as “a social system based on private ownership of the means of production… characterized by the pursuit of material self-interest under freedom and… a foundation [based on] the cultural influence of reason” (1996, p. 19), he appears to apply the concept indiscriminately to various periods in human history. To take only one example of many, he claims capitalism (and its attendant element, human reason) was responsible for the great increases in life expectancy beginning with the industrial revolution and continuing to the present day (1996, pp. 76–77). But in claiming this, Reisman refers to the Western world in general, which consists of economically heterogeneous countries, whose specific economic policies have changed much and mostly moved away from “capitalism” over the last two centuries. Reisman would hardly deny the spread of economic interventionism. But if one acknowledges that the Western world has moved steadily toward greater government influence over the economy, then it becomes difficult to see how one can simply attribute any historical event to “capitalism.”This sort of objection has been raised against Reisman by other authors. Cf. Carson (2006), which contains a response to criticism by Reisman (2006) regarding the definition and historical reality of capitalism. Intervention permeates all aspects of economic life. How then does one isolate the effect of capitalism? How can one simply declare which events are caused by capitalism and which are not? This must be thoroughly supported by economic analysis; it is not something that may simply be assumed. It requires the careful use of economic theory in historical studies, and the performance of what Mises refers to as “historical understanding” (Mises, 1998, pp. 51–58). Reisman’s argument appears incomplete without such a historical explanation, and careful setting aside of false causes.
As noted above, there are few purely economic principles which guide Reisman’s analysis. In his effort to defend the capitalist system, Reisman doggedly pursues what he views as the fallacies of resource economics, and never truly develops a theory of environmental economics, but only a theory of capitalist progress (discussed below). To this end, the argument shifts between different and sometimes incompatible claims: from “resource overexploitation is impossible” to “overexploitation is not significant” to “overexploitation is caused by economic intervention” (each of these receives mention in this paper). The reader never really gets a feeling for a foundational theory of resource use under capitalism. The unifying theme is simply that capitalism and economic progress are desirable, full stop.
ECONOMIC PROGRESS UNDER CAPITALISMWe may now turn to the third important argument examined in this paper: the theory of capitalist progress developed in Professor Reisman’s treatise. This theory is prominent in his discussions of natural resources and environmentalism, and is in some sense a substitute for a theory of resource economics. Economic progress is for Reisman the answer to many objections raised against capitalism regarding its possible negative effects on the environment. Reisman surveys many arguments which criticize the way resources are allocated under capitalism, and his responses provide insight into his theory of economic growth and progress. We shall examine several of his claims in turn. While Capitalism deals with many problems in the philosophy, law, and economics of natural resources, this section shall focus mostly on the economic aspects.
The first argument addressed by Reisman is the idea that human economies are exhausting the supply of natural resources, and that this exhaustion is quickly leading toward a crisis for humanity. As a way of refuting this claim, Reisman points to the current availability and abundance of natural resources. He emphasizes that the entire planet Earth—in fact the entire universe—is composed of matter and energy (natural resources) which merely wait to be exploited by human beings:
The problem of natural resources is in no sense one of intrinsic scarcity. From a strictly physical-chemical point of view, natural resources are one and the same with the supply of matter and energy that exists in the world and, indeed, in the universe…. What nature provides is a supply of matter and energy that for all practical purposes is infinite. Yet at the same time, nature does not provide a single particle of natural resources in the form of wealth. The bestowal of the character of economic goods and wealth on what nature provides is the work of human intelligence. An essential economic task of man is progressively to apply his intelligence to achieve a growing understanding of nature and to build progressively more powerful forms of capital equipment that give him growing physical mastery over nature. (1996, pp. 63, 65; emphasis in original)Cf. Reisman (2002), which contains much the same argument. Reisman is correct in claiming that things only possess goods-character in virtue of their relation to human wants. But goods-character is not bestowed in general: wealth is the outcome of a speculative process of entrepreneurial investment. Entrepreneurs must decide how to use resources to satisfy consumers in the face of possible failure. Hence, the importance of grounding a theory of resource economics in a theory of property rights.
The tricky part, as Reisman observes, is “usability, accessibility, and economy” (1996, p. 63), in other words, bestowing goods-character on the resources of the world. As we shall see though, this is not, in Reisman’s view, a very important problem. This relates to the theory of uncertainty, which is discussed below. But for now let us focus on a different aspect of the above passage. In support of his claim about the abundance of resources, Reisman also points out the immense technological advances made since the industrial revolution; advances which made extraordinary amounts of resources available which were either previously inaccessible or for which man had no economic use (1996, p. 64). The quantity of resources available to the economy is staggering compared to recent centuries, and Reisman concludes from this that resource overexploitation is simply impossible. The general rule seems to be that any exploitation is good exploitation. No attention is given, for example, to the idea of a socially optimal level of exploitation, as is typically found in the literature.Cf. Brätland (2000) for a summary, as well as an exposition of an Austrian view.
However, there are difficulties in using Reisman’s historical answer to address concerns about the future of environmental exploitation. Reisman appears to project the technological advances of the past into the future, claiming even that “There is no limit to the further advances that are possible” (1996, p. 64), and arguing that increases in productivity and resource availability will increase as fast, or faster, than human beings can use them. Reisman concludes that concerns about the extreme scarcity of natural resources are therefore unjustified. However, all Reisman demonstrates is that society has in the past discovered and exploited natural resources at a rate far exceeding any which has existed in human history.[8] We must note once again, however, the tension between the capitalism of Reisman’s economic theory and the experience of pseudo-capitalist economies in history. The issues which concern the sort of argument Reisman is attacking are not the problems of the past (economic history), but those of the future, and the future availability of natural resources (resource allocation in the face of uncertainty).
Reisman claims that “Clearly, the only effective limit on the supply of such economically usable natural resources—that is, natural resources in the sense in which they constitute wealth—is the state of scientific and technological knowledge and the quantity and quality of capital equipment available” (1996, p. 64). To begin, even if we accept the notion that the possibilities for technological advancement are both limitless and can be known to entrepreneurs (which we are by no means bound to do), this does not require that technological and economic possibilities will become realities. For this to be the case, technological innovations such as those Reisman describes—the great inventions and innovations of the industrial revolution, for example—must first be imagined, financed, and realized through a time-consuming process of production. This is the fundamental problem of the entrepreneur-capitalist, whose function it is to bear the uncertainties of the future and make accurate judgments about them. Uncertainty pervades the entire process of production and resource exploitation (Mises, 1998, pp. 286–291).
Entrepreneurial success at any given time is a practical matter, because of uncertainty and the limitations on human knowledge, learning, and memory, all of which can be faulty to the extreme. If one assumes away these problems, capitalist development can only succeed. And it is precisely the element of uncertainty which is left out of Reisman’s treatment of natural resources. As Brätland (2008) argues, resource exhaustibility is a specifically entrepreneurial problem, because “resources” have little economic meaning without reference to an entrepreneurial plan.Brätland further argues that natural resources are not “nonaugmentable land,” but capital goods. He summarizes the problem of resource extraction in a manner which speaks directly to Reisman’s presentation: Exhaustibility has relevance only within the context of a particular entrepreneur’s plan; economic exhaustion motivates investment in capital goods that maintain the value of the entrepreneurial enterprise. The exhaustion’s only importance arises in the process by which the entrepreneur seeks to make and develop new discoveries…. This restructuring process requires entrepreneurial judgment in selecting the respective stages of the production process in which to invest. The stages include: (1) land-surface access, (2) exploration, (3) development, and (4) resource extraction. To the extent that these speculative efforts succeed, capital is maintained. However…. investment processes that are narrowly focused on a mechanistic cycle of physical replacement are not necessarily valid examples of successful capital maintenance. (Brätland, 2008) Brätland infers from this that resource exhaustion is not a problem so long as entrepreneurial behavior is not artificially restricted. Although this conclusion is similar to Reisman’s, it appears to be more firmly grounded in economic theory. Unfortunately, there is no systematic discussion in Capitalism of either the function of entrepreneurship, or of the critical problem of the uncertainty which the entrepreneur bears,This absence is mentioned in Tabarrok (1997). Cf. Reisman’s telling response to this criticism (Reisman, 1998). It is possible that Reisman’s difficulty with uncertainty may stem from his definition of “wealth.” If wealth is merely “material goods made by man” (1996, p. 39), then even failed entrepreneurs produce wealth, in the sense that they produce something, even if the product earns a loss for the entrepreneur. Uncertainty never enters the picture. This leads to a sort of automatic-success-theory of the entrepreneur, in the sense that entrepreneurs produce wealth by definition. Reisman does discuss the need to anticipate future consumer wants (1996, pp. 179, 180), but only as a part of the somewhat mechanical process of capital reallocation; there is no hint that the capitalists might not know exactly which innovations will revolutionize production, or which industries are destined for elimination through the process of “Creative Destruction,” to use Schumpeter’s happy phrase. There is also a brief discussion of uncertainty with regard to investment opportunities (1996, p. 722), but unfortunately no link to Reisman’s earlier arguments regarding natural resources. and thus this crucial aspect of the capitalist process is neglected in favor of an automatic view of economic progress.
It seems that for Reisman the whole process of resource exploitation under capitalism is a technological exercise performed mechanically, which will continue, as he says, “Until the sun begins to cool” (1996, p. 63):
So long as men preserve a division-of-labor, capitalist society and are free and motivated to think and to build for the future, the body of scientific and technical knowledge at the disposal of mankind will grow from generation to generation, as will the supply of capital equipment. On this basis, man can steadily expand his physical power over the world and thus enjoy an ever-greater supply of economically useable natural resources. There is no reason why, under the continued existence of a free and rational society, the supply of such natural resources should not go on growing as rapidly as in the past or even more rapidly. (1996, p. 65)
As indicated above, this exposition says nothing about the necessary uncertainty which characterizes action, nor does it discuss the possibility of the limits (even temporary limits) to individuals’ abilities to forecast the future, be it the future state of consumer wants, of the availability of capital goods, or of natural resources. The possibility of the failure of entrepreneurs to successfully develop new methods of exploitation is simply not addressed.Mises argues against the idea of an automatic tendency for society to progress, pointing out that capital accumulation is not simply a given (Mises, 1985 [1957], pp. 369–370). He does, of course, attribute the increases in standards of living in the last two centuries to capitalism, but the point is that he does not seem to infer that anything is guaranteed about progress under capitalism.
Incidentally, this criticism does not imply that natural resources will be overexploited under capitalism, or that the process of capitalist development will grind to a halt due to a lack of technological progress. All I mean to say is that Reisman has not given us sufficient reason to believe that the process of capitalist development will continue indefinitely. We are not obliged to admit either that the rate of technological advance or the economic development of natural resources will match the increasing needs of the world economy for any length of time, or even that any progress will occur at all, much less that in capitalist society “economic progress is the norm” (1996, p. 69). Reisman does not, for example, furnish evidence (empirical or theoretical) that the quantity of resources available to individuals is not currently decreasing (in the economic sense), or even that resource usage is not increasing at a decreasing rate, or some other scenario. That these situations are impossible is taken as a matter of course in Capitalism, provided only that the capitalist system is allowed to flourish. Reisman has unfortunately conflated the conditions for progress with the occurrence of progress, an attitude due, at least in part, to a neglect of the problem of uncertainty. With the above arguments, Reisman has not addressed the problem of extreme scarcity with an economic theory, but rather has attempted to tackle scarcity in terms of the current quantity of natural resources, which he contrasts with an empirical-historical estimate of human economic progress.
Even with perfect certainty however, capitalism might face other obstacles to progress. Preference, specifically time preference, plays a fundamental role in determining the pattern of investment, and thus of natural resource use. This topic alone is worthy of much discussion, but I will make only one observation, to wit that Reisman does not account for changing rates of time preference in his discussion of natural resources.Note that Reisman’s opposition to the pure time preference theory of interest (1996, pp. 792–797) does not imply anything about the fact of time preference or its relevance for resource economics. Specifically, he does not consider the possibility that time preferences might rise dramatically, resulting in capital consumption and a decline in resource discovery. This would certainly halt economic progress. Setting aside the likelihood of such an event actually occurring in a capitalist society, there is no reason why such an event is conceptually impossible.Cf. Mulligan (2007) for a discussion of the significance of this “Ikiru effect.” Yet the existence of such a possibility further demonstrates that progress is by no means automatic. This theory assumes that no economically destructive changes occur in individual preferences. Reisman holds that in capitalist society time preference is necessarily low (1996, p. 58), but even if this is true, it does not prove that in any period time preference will be low enough to encourage the discovery of new resources at a rate faster than the exploitation of old resources. In any case, the low time preference of some individuals is only a necessary, but not a sufficient, condition for economic development.
Ultimately, Reisman does not provide sufficient reasoning to explain on economic grounds why capitalism must progress, and not merely that it might. To take another example, Reisman lists several characteristics of the division of laborReisman’s six characteristics of the division of labor which increase productivity are (1) the multiplication of knowledge through specialization, (2) the benefits accruing to geniuses, (3) individual specialization, (4) geographical specialization, (5) increases in the efficiency of learning processes, and (6) the increased use of machinery in production. in order to explain why the division of labor increases productivity (1996, pp. 123–128); principles which are proposed, in part, to demonstrate the necessity of progress under capitalism. Of these characteristics, none has any necessary ability to reduce uncertainty or necessarily to make the predictions of capitalist-entrepreneurs free from error. Employing any of these methods of productivity increase might result in entrepreneurial success, but none of them must. Likewise, Reisman’s analysis of the profit motive shows only that consumers and capitalists have an incentive to innovate and improve (pp. 45–46, 106, 176–180), but not that capitalist-entrepreneurs will ever succeed in innovating or improving. Having an impetus to do something does not imply success in doing it. The division of labor and the profit motive are the primary conditions which, according to Reisman, ensure economic progress. Yet ultimately, all he can truly say with confidence is that under a capitalist system, the possibility of progress, and the corresponding potential to expand production, is larger than under any alternative system of social organization. Given the above arguments, we can see that additional conditions are necessary, beyond the mere existence of a capitalist society, in order to guarantee economic growth. What is required is an explanation which incorporates uncertainty and human preferences—an explanation not provided by Reisman.
Reisman again runs into difficulties with his critique of the conservation movement, particularly in his discussion of environmental pollutants. Some would argue that the disposal of dangerous wastes such as radioactive material should be prohibited because such pollutants render land useless for extremely long periods of time. Reisman claims however that such an argument cannot be accepted based solely upon the loss of land use. Reisman’s counterargument runs as follows:
We do not need every last piece of land that we possess… we have hundreds of thousands of square miles of land—deserts and mountains, for example—that as far as their contribution to human life are concerned might as well be covered with sea water. The marginal utility or importance of such land is simply zero. Even if some of it were totally lost to use forever, it would make absolutely no difference to human life and well-being. In insisting on the sacredness of every square mile of land, we place ourselves in the position of a kind of irrational miser— not a miser of money, but… of water in a country that is filled with lakes, rivers, and streams. It is as though we were a farmer needing, say, a thousand gallons of water a day for every purpose that water can serve, and having ten thousand gallons a day available, and yet losing sleep at night over the loss of a cupful somewhere. (1996, p. 73)
It is true that not every piece of land is a necessary part of some current production process. Once again, however, we run afoul of the problem of uncertainty. Just because some given amount of land exists unused today, does not mean that it will be unused in the future. Resources not currently exploited may become highly valued in the future, for whatever reason. Certain units of land currently enjoying zero marginal value to human society might attain positive value as other units of land are rendered unusable through pollution. It is unlikely that Reisman would disagree with this statement in theory. Yet somehow he still appears to believe that land is essentially superabundant for human beings, and that it always will be. Such an approach would put him in the impossible position of denying that the value of a marginal unit of unused resources can ever change significantly from its current valuation, which he surely cannot believe. Why is it impossible that in the future mankind will use up, through long-term pollution, enough land to render previously unvalued land suddenly highly valued, perhaps even vitally necessary to human survival? Reisman does not provide us with an answer, but once again assumes that the discovery of resources under capitalism will always reach levels adequate to support an expanding economy, no matter the rate at which expansion might occur.
Reisman never tires of emphasizing that due to human ingenuity new resources which were previously useless in terms of production will acquire economic value. But if this is true, how can he simply dismiss the effects of long-term pollution in the future on lands which currently have no marginal utility? By claiming, at least implicitly, that land is so abundant that we can afford to lose “some of it” (1996, p. 72) without significant problems.Further, what does Reisman mean by “some” land? What is the limit to the land we can permanently do away with? But in fact, Reisman’s development theory, because of its emphasis on the successful expansion of production, essentially requires that valueless lands acquire positive marginal value as the capitalist system progresses. It is therefore contradictory for Reisman also to claim that “Even if some of [this zero-marginal-utility land] were totally lost to use forever, it would make absolutely no difference to human life and well-being” (1996, p. 72). If the success of capitalism is as certain as Reisman claims, then we may very soon require the use of sub-marginal land. And clearly, if such land is destined in the future to be valuable, its loss today represents a loss of future income and wealth. This may not be a sufficient reason to refrain from developing (or polluting) valueless land in the present. But where long-term pollution is concerned, there is certainly a trade-off between present and future consumption which must be made, and in any case, the assertion that the loss of these lands would make “no difference to human life and well-being” is not necessarily true, even by Reisman’s own reasoning.
REISMAN’S CRITIQUE OF ENVIRONMENTALISMResponses to Environmentalist Criticisms
This brings us to a fourth problem—Reisman’s criticism of the doctrines of environmentalism. There are many aspects of the environmental movement addressed in these sections, and here too there is no overarching theme to the exposition (besides the theme of the inherent value of capitalism, and its benefits trumping its costs). Instead, Reisman focuses on certain individual arguments made by environmentalists. Although many of Reisman’s arguments are intuitively appealing, one often finds reasoning insufficient to support his conclusions.
On occasion, Reisman’s critique of environmentalism even exhibits what is perhaps best described as desperation on Reisman’s part to discover something,anything amiss in the claims of environmentalists, even if this attempt appears to involve unfortunate misunderstandings of the environmentalist argument. Witness this comment on the opposition to chemical food preservatives: “Since everything physical in the world is a chemical, it is absurd to fear chemical preservatives. Such a fear is tantamount to the fear of preservatives as such and thus fear of the very fact that food does not spoil as rapidly” (1996, p. 80; emphasis in original).Note the rhetorical implication: why must individuals “fear” chemicals, and not simply “oppose” them? In other words, why not some other, less emotionally-charged attitude toward chemicals? First, this argument depends entirely upon assuming the uniform definition of the word “chemical.” Yet given the context of this statement, it appears (although we have no way of knowing because Reisman does not cite an example of the opposition to “chemical preservatives”) that Reisman means “chemical” in its broadest technical sense. Environmentalists who oppose chemical preservatives however might simply use the term to mean “artificially created by man,” or “not naturally found in nature” or some other definition which focuses on the “unnatural” or potentially dangerous nature of “chemical preservatives.” In such a (plausible) case, the objection that everything is a chemical is irrelevant. It may certainly be the case that the word “chemical” is used loosely in the environmental literature (again, we have no references to go on), but this remains a possible false conflation of two different meanings of a common word.
Second, and more importantly, the above line of reasoning contains an error of a sort common in Reisman’s writing. Specifically, it ignores the possibility that economic goods could have different uses and be valued in different contexts, some more worthy of skepticism than others. Reisman’s argument moves from the fear of chemical preservatives to the fear of preservatives in general. But this generalizes an opinion which might be much narrower. Opposing the use of a resource, the use of chemical preservatives, for example, when that resource is used for a specific purpose (preservation of foodstuffs) is not the same as opposing the use of that resource in general. For instance, I do not fear aftershave in general, but I do fear drinking it by the gallon. Context and specific purpose condition my valuation and fear of the good in question. A contextual opinion cannot be generalized in the way Reisman does. Trepidation about the dangers of certain substances is not therefore “absurd on simple logical grounds” (1996, p. 80). We require information as to the specific context of the opinion. Trepidation may certainly be misguided and based on faulty assumptions or logic, but Reisman has not demonstrated this.A variation of this argument, related to the above discussion of long-term pollution from radiation, is contained in Reisman’s defense of the use of atomic power: “Nor are the alleged dangers of storing atomic wastes a valid objection [to atomic power]. Nature itself has always stored such highly radioactive elements as radium and uranium without significant danger to human life” (1996, p. 117, n. 44). Reisman has neglected to see the possibility that there could be a difference in the methods of storage of nature and of human actors, or that the relevant qualities and quantities of the elements might differ. It is doubtful that environmentalists oppose the storage of radioactive materials in nature; what they most likely object to is their concentrated storage in locations which would result in human exposure to dangerous substances. It does not matter whether the threats from atomic energy are real or imagined: the relevant point is that Reisman has constructed a faulty analogy based on the conflation of two very different problems, a natural problem and an economic one.
This type of argument is found again when Reisman discusses the environmental movement’s attempt to “smash science and technology” (1996, p. 79). It is difficult to imagine two categories broader than “science” and “technology,” but Reisman firmly asserts that the environmental movement opposes both.Cf. Reisman (1996, pp. 86–88, 99) for claims that the environmental movement is necessarily opposed to science and technology. Yet is it really true that environmentalists oppose all science and technology? Or is it perhaps the case that under some particular circumstances environmentalism opposes the use of certain scientific advancements, or specific technologies? Is it reasonable to assume that all science is a target of environmentalism, as opposed to science which might wreak some supposed environmental havoc? This position is especially strange considering that Reisman acknowledges the environmentalists’ desire for “alternative energies” such as wind and solar power. Yet are not these technologies novel scientific developments?Reisman first argues (1996, p. 64) that solar power is a potential energy source, merely awaiting economic development. Just a few pages later, however, he denounces solar and wind power as “utterly impracticable as significant sources of energy” (1996, p. 80). Although he is referring first to solar power’s potential and later to its current productivity, we are left wondering why the environmental movement’s support for solar power could not lead to productive innovations in solar technology, or how support for solar power is anti-scientific. They may be economically inefficient or prohibitively expensive to adopt en masse, but this does not make them any less technological or scientific.
One further problem deserves attention. In his discussion of global pollution, Reisman points out that in many cases it is impossible to identify an individual as a source of pollution, and thus that it is impossible or unnecessary to restrict the behavior of individuals who cause such pollution. Effectively, no individual is responsible, and therefore there is no significant economic conflict to address. Reisman argues,
Negative effects which are not caused by any individual, but which are the result of the combined actions of the members of the group to which the individual belongs… should properly be regarded as the equivalent of acts of nature…. The fact that the separate, independent actions of vast numbers of people may result in significant negative consequences to someone by virtue of their cumulative effect is simply not the responsibility of any of the individuals concerned. It should not be a basis for prohibiting his actions. To prohibit the action of an individual in such a case is to hold him responsible for something for which he is simply not in fact responsible. It is exactly the same in principle as punishing him for something he did not do…. Such phenomena as floods downstream possibly resulting from the actions of tens or hundreds of thousands of separately acting individuals, each of whom as an individual causes no perceptible harm to anyone, should be regarded in exactly the same way as floods that result when few or no human beings are present upstream. (1996, p. 92; emphasis in original)
Setting aside any moral implications of this argument, the aggregation of individual behavior into a collective “act of nature” completely eliminates the acting individual from this portion of the analysis. Individuals, using scarce means to achieve ends, disappear from the picture entirely. To treat aggregative problems such as human-caused flooding as acts of nature necessarily removes them from the sphere of economic activity (although there may be further economic effects of this act of nature: these must presumably be taken as given). Looking at things this way appears to be simply a way of absolving individuals in capitalist society from any harmful actions purely through defining terms such that no problem ever appears. This difficulty persists throughout the discussion. Why this method of distinguishing between economic and natural phenomena? Why must events fall outside the realm of economics simply because liability cannot in practice be easily attributed to specific individuals? In the above example, all individuals involved, whether causing or suffering the consequences of group action, are still engaged in economic activity at a “microeconomic” level which produces real and important economic consequences. It remains unclear why this should be an “act of nature” and not simply an economic problem of group action.
An analogy might be made between environmental economics and price theory. An individual making a small purchase from a large firm might be insignificant for the behavior of that firm; a miniscule part of the firm’s business and process of decision-making, which is influenced by the actions of millions of consumers. However, it would certainly be odd to suggest that because of this, the price of a good should be treated as an act of nature. To be sure, this analogy is imperfect—even individual consumers can be identified in the accounts of large firms—but it is suggestive regarding the potential problems with aggregating economic actions into noneconomic events. Actually, it is difficult to establish whether or not this analogy is appropriate, because Reisman does not explain the criteria used to separate economic and natural (non-economic) activity. Further explanation is required as to the boundary between economic and natural problems; the exact point at which many individuals acting economically become equivalent to an act of nature.
The Rhetoric of Capitalism and Environmentalism
Some words must be said about the rhetoric of Reisman’s treatise. Others have already commented on this aspect of Reisman’s work—some positively (Tabarrok, 1997), some negatively (Kirzner, 1999)—but the point bears special emphasis with regard to the problem of environmentalism. To put the problem lightly, it is often difficult to extricate Reisman’s economic arguments from the many broad claims he makes about the environmental movement’s values and psychology. The rhetoric of Capitalism appears designed to imply not only the economic, but also the intellectual and moral poverty of environmentalism (1996, p. 99). There is a difference, however, between forcefully stating an argument and deliberately using harsh and abrasive language against one’s opponents without special justification for invective. I argue that the latter possibility is unfortunately the case with Capitalism.
The claims Reisman makes regarding environmentalists, all his assaults on their academic integrity notwithstanding, are such as to give the reader pause to consider his objectivity. For example, environmentalists are described as “those who wish one dead and whose satisfaction comes from human terror, which, of course, as I have shown, is precisely what is wished in the environmental movement—openly and on principle. This conclusion it must be stressed, applies irrespective of the scientific credentials of an individual” (1996, p. 83).This brings up another problem: the problem of using homogeneous terms such as “the environmental movement” to refer to literally millions of individuals who presumably have differing views on all manner of environmental principles. Reisman’s terminology is used throughout this paper, but it conceals the heterogeneity of beliefs concerning the environment, a fact which Reisman partially admits, but dismisses (1996, p. 81). One section is titled “The Dishonesty of the Environmentalists’ Claims.” Here, Reisman asserts that “[t]he environmentalists reach for whatever is at hand that will serve to frighten people, make them lose confidence in science and technology, and, ultimately, lead them to deliver themselves up to the environmentalists’ tender mercies” (1996, p. 86). At their worst, environmentalists are sometimes even “depraved individuals who would rather kill than live, who would rather inflict pain and death than experience pleasure, whose pleasure comes from the infliction of pain and death” (1996, p. 102). These are only a sampling of Reisman’s opinions on the environmental movement, but they highlight the verbal extremes with which Reisman characterizes his opponents (who are rarely identified by name).Reisman does occasionally temper his criticisms of environmentalism with qualifying statements to the effect that not all environmentalists are “poison” (1996, p. 81, 82–83), proposing instead the odd claim that only “several parts per ten” are poisonous. Yet even this qualification belies his ultimate conclusion: “The problem is that the mixture is poisonous. And thus, when one swallows environmentalism, one inescapably swallows poison” (1996, p. 82). It is not clear why accepting environmentalist principles necessitates accepting bad principles at the expense of good, and not, for example, the other way around.
Returning from his ruminations on the motives and psychology of environmentalists, Reisman arrives at the astounding conclusion that “[i]n the absence of verification of sources totally independent of the environmental movement and free of its taint, all of its claims of seeking to improve human life and well-being in this or that specific way must be regarded simply as lies, having the actual purpose of inflicting needless deprivation or suffering” (1996, p. 87; emphasis added). It is not clear how Reisman, often citing only a few quotations from the popular press, can proceed to project this opinion onto the entire environmental movement.
This difficulty is probably due to the fact that, when discussing all the hatred and vitriol which supposedly flows from the environmental movement, Reisman’s claims are rarely substantiated with textual evidence. We must simply take Reisman at his word when he states that the environmental movement believes this or that. Even worse, we are not even given criteria to judge the relative weight of any reference Reisman makes to the environmental literature. But surely a movement that is responsible for “the creation of a horde of hysterical bumpkins in the midst of modern civilization” (1996, p. 79) should have left behind some records which would (even implicitly) indicate their designs. Environmentalism must have left some sort of, if I may be allowed a happy word, “footprint.” Without a great deal of primary sources serving as a foundation for his claims, Reisman’s characterization of the environmental movement could be perceived as a groundless attack or a straw man.
It is possible that Reisman’s rhetorical flourishes are due to his distance from the environmental movement, and his lack of a systematic exposition of what the movement believes in its own words. Reisman believes himself to be paraphrasing the tenets of environmentalism, but extraordinary claims, large paragraphs, even entire sections appear without any citation to the environmental literature. For instance, a section titled “The Alleged Pollution of Water and Air and Destruction of Species” contains no citations to any environmental writings. Another, “The Environmental Movement’s Dread of Industrial Civilization,” contains only one citation to an opposing author (Carl Sagan). The citation in question merely lists some of the more dangerous environmental effects of the industrial revolution, and their possible long-term costs in terms of human health, a citation which does not actually support the ambitious section title by stating the position of Reisman’s opponents. These sorts of references do nothing to expose us to the “Pathology of Fear and Hatred” which allegedly characterizes the environmental movement. When citations do appear, they are often taken from the popular press, precluding the possibility that they might represent a sustained, systematic presentation of the environmental movement’s principles. Even in cases where he finds what seem to be damning statements from leading environmentalists, Reisman appears to misinterpret these comments, confusing serious argument with exaggeration for literary and pedagogical effect (1996, p. 81).
Once again, it may be the case that Reisman is correct in some of his judgments about the environmentalists, but he fails to adequately demonstrate this to the reader, and much less does he do his topic complete scientific justice. In pursuing a calm and careful study of environmentalism and environmental economics, it may be useful to contrast Reisman’s approach and presentation with similar research in the same field. An important recent work is Nelson (2010), which traces the intellectual and religious origins of the environmental movement, presenting environmentalism as a secular religion. Nelson avoids the difficulties of Reisman’s work by carefully examining the history of the environmental movement, its declared (and implicit) values, and its arguments for environmental preservation. It is also relevant in light of Reisman’s writings because it juxtaposes environmentalism with another secular religion: growth economics, which appears to share much with Reisman’s own views on economic progress.
In any case, we are left with the uneasy feeling that Reisman has little acquaintance either with the literature of the environmental movement or of resource economics in general. Ultimately, we cannot avoid the conclusion that, disturbing as it may be, this is not a sober analysis of the environmental movement, but a caricature and a straw man. The unfortunate truth appears to be that Reisman, in attempting to defend the capitalist system economically and ethically from environmentalist criticisms, has fallen prey to the very “hysteria” which he attributes to the environmental movement.
CONCLUSIONThe problems of resource economics are certainly among the most pressing in applied economics and merit serious, systematic attention from economists. Unfortunately, this is an attention Capitalism does not provide. Professor Reisman, as both a student of Ludwig von Mises and as a prominent analyst of the capitalist system, surely deserves a sympathetic hearing, and I must emphasize that I am in agreement with certain conclusions he reaches. Yet as this paper shows, his exposition runs afoul of several important problems which require resolution. First, economic principles must form the groundwork of research into the problems of resource allocation. Second, there is a significant literature which must be addressed in serious treatments of the subject. Third, economic progress is not automatic, even under the best of conditions. Fourth, much clarification is required to understand—and accept or refute—the claims of the environmental movement and avoid simplistic dismissals of environmental doctrines. Fifth, invective in economics does not strengthen either the case for capitalism or against environmentalism, but rather undermines both. All these problems lead inevitably to the conclusion that Capitalism cannot be considered a canonical presentation of the problems of environmentalism or resource economics. While to some extent Professor Reisman’s writing might provide excellent food for thought, considerable problems accompany its digestion.
Volume 7, No.1 (Spring 2004)Austrian economics lacks a formalized, self-conscious theory of environmental economics. But in fact all of the major elements of such a theory already exist and in that sense what is needed is to piece together the relevant aspects of Austrian economics in order to draw out and focus a theory that is already there.
The purpose of this paper is to do just that. In developing an Austrian theory of environmental economics, very little new theoretical ground will be plowed. But by bringing together Austrian concepts of costs and the praxeological foundations of economics we discover a unique perspective on pollution and the role of property rights in solving environmental problems. Furthermore by placing environmental problems within the context of personal and interpersonal plan formulation, we discover that they are not about the environment per se but about the resolution of human conflict.
Volume 3, No. 1 (Spring 2000)The Hotelling Principle defines socially-optimal conservation of an exhaustible resource i a mathematically-defined, equilibrium environment in which no human action can occur. Nevertheless, the economics profession generally tends to view the Hotelling Principle as offering the promise of being operational and to have potentially sufficient empirical content to serve as the basis of prescriptive policies for the socially-optimal conservation of an exhaustible resource. We have examined the Hotelling Principle from the Misesian perspective of praxeology and the axioms of human action.
(Summer 1998)An Interview With Randall G. Holcombe
Randall G. Holcombe is DeVoe Moore professor of economics at Florida State University and an adjunct scholar of the Ludwig von Mises Institute in Auburn, Alabama. He is author of eight book including Public Finance and the Political Process (1983), An Economic Analysis of Democracy (1985), Economic Models and Methodology (1989), and Public Policy and the Quality of Life (1995), along with many articles in academic journals, including the Review of Austrian Economics and the Quarterly Journal of Austrian Economics. He is also editor of Fifteen Great Austrian Economists (Auburn, Ala: Mises Institute, 1998). He was interviewed at the 4th Austrians Scholars conference, April 3-4, 1998.
AEN: What gave rise to your book on the quality of life?
HOLCOMBE: After the collapse of the Soviet Union and the fall of the East Bloc, it is widely recognized that markets do a better job of producing goods and services than central planning. The facts speak for themselves and have brought some degree of closure to the debate originally kicked off by Mises shortly after the Soviet Union was created.
At the same time, there is this idea that there are other aspects to our lives that aren't about producing goods and services. Instead, they are about the quality of life itself, and the market is not that good at protecting that. Sure, people say, let the market handle production, but we still need a central plan to preserve and enhance our quality of life.
The Mises-Hayek argument against socialism turns out to be highly relevant to these debates. They weren't just arguing against socialism; they were arguing for the necessity of market prices as signals that make economic coordination possible.
My book revisits the Austrian case against government planning, and then looks at a number of these quality of life issues to show how market mechanisms are better than government planning in enhancing our quality of life.
It's appalling to me that people are constantly finding problems for the government to solve, even though the evidence shows that government isn't much good at anything it does. Government control may sound good in the abstract. But what it really means is: whoever has the most political power decides what's done.
AEN: In the course of your argument, you come to the defense of so-called urban sprawl. What does this phrase mean?
HOLCOMBE: There's no good definition of "urban sprawl," but that doesn't keep government from legislating against it. There is a section of Florida's growth management legislation that says our land-use plans are supposed to prevent the proliferation of urban sprawl. When people use the phrase, they mean low-density development that spreads out from downtown. Other people think of unsightly strip shopping centers.
I use the definition provided by Florida's Department of Community Affairs, the agency that tells local communities how they can and cannot develop. The DCA says one indicator of urban sprawl is leap-frog development, where development is not contiguous with other development. Another indicator is strip or ribbon development, which run along corridors or highways. A final example is low-density, single-use development, where there are miles upon miles of houses with no businesses.
But when you look at these development patterns, they actually can be the components of efficient development. Let's say you have a housing subdivision that leapfrogs undeveloped land. The developers are seeking out lower land costs and people who purchase homes there are seeking more space for the dollar.
Since nobody wants to build a shopping center on the outskirts of town, leapfrogging creates an economic opportunity for commercial development. It will already be surrounded by residential areas on either side. This is a good way to develop land.
In the same way, nobody wants a house on a major thoroughfare. But if you have strip or ribbon development, and there is undeveloped land in between these developed strips, there's a good place for residential areas. You can live on a quiet street and yet have convenient access to major shopping.
Finally, low-density, single-use development is typically brought about by zoning laws that prevent multiple-use development. The same people who push for zoning regulations then turn around and complain about the results their policies bring about. If we just leave the market alone, the result is an enhancement of the quality of life.
AEN: What are the consequences of anti-sprawl legislation?
HOLCOMBE: As with all central planning, you end up with a miniature version of what Mises called "planned chaos." It creates less efficient land use patterns than you would get if you just let property owners decide how to use property on their own.
It also generates a big transfer of wealth from some property owners to others. If you have property in what is sometimes called an urban-service area, you can develop your property. But if you own land outside that area, the value of your property is pushed down.
If undeveloped land is declared undevelopable, the present value is reduced. Sometimes this can have huge consequences. If you are a farmer and are trying to borrow money against the value of your property, your borrowing ability may be restricted, even if you did not plan to develop your land.
Typically this wealth transfer runs from the poor to the rich. People who live in apartments are poorer relative to people who live in owner-occupied houses. Development restrictions push up the prices of both. That raises the wealth of homeowners, but hurts renters. You can see why some interest groups might favor land restrictions. But they still create inefficient land-use patterns and coercively transfer wealth.
AEN: You also talk about the law of nuisance.
HOLCOMBE: A nuisance is something you do that annoys your neighbors. Prohibiting this has a long history in common law as a good way to control externalities. For example, the law of nuisance is what prevents somebody from putting a cement factory next to your family's home. What's happened in the case of land-use specifically, is that zoning laws have replaced the law of nuisance.
It used to be that cement companies would not open up next door for fear of creating a nuisance and being shut down. Now the managers can go to the zoning board and appeal for the land to be zoned industrial. Then they have a defense no matter how much of a nuisance they cause.
There's an interesting case in Florida. Runoff from sugar farms was polluting the Everglades. A former governor of Florida sued the farmers claiming that the runoff is a nuisance. The sugar farmers shot back that there are government regulations that control their operations, including their runoff flow. They claimed that because they are in compliance, they are not subject to the law of nuisance. When the suit was brought, the court agreed, and threw out the suit. That is now being reconsidered.
AEN: You also write about restrictive covenants.
HOLCOMBE: A restrictive covenant is a contract among owners which allows them to guarantee that property will be used in a certain way. When I bought my house, along with it came a long list of regulations drawn up by the homeowners association. They aren't government regulations; they are private and designed to keep property values high. These covenants are increasingly common and very efficient market means of insuring the quality of life. The key is that they are entered into voluntarily. They are used in areas where there is no zoning, but also in areas with heavy zoning restrictions.
AEN: How to the initial owners know the kinds of private regulations that are going to enhance property values?
HOLCOMBE: They can't know for sure since knowledge is never perfect. The question is: what institutional arrangements are most suitable for discovering the best method? It turns out that markets are much better at planning for the long term than governments.
If you own property, you have an incentive to maintain the value of property, even long after you are dead and gone. At any time, you or your heirs can sell the property. With government ownership, there is no incentive to maintain property values because it is always unclear who is going to control it in the future.
Let's assume that the environmentalists are really sincere about improving our quality of life. Without having a direct stake in the value of property, there is very little they can do to preserve and enhance the environment. With government, you can't buy an outcome; you can only rent it. The next legislature can always undo what the present one does. Private ownership is the key to protecting an asset.
AEN: And this is true even with land preservation?
HOLCOMBE: A retired friend of mine owns a tree farm. He just cut down a stand of trees and then replanted. Those trees he planted aren't going to be ready for harvest until well after his lifetime. So why would he do that? Why would he plant trees that someone else will profit from? Well, he owns the property and wants to make it as valuable as possible right now, and today's value depends on the expected yield in the far-distant future.
It's private ownership that gives the incentive to think for the long term. Sometimes on television, you see these awful pictures of forests that have been clear-cut and the ground is eroding. The idea is to say: look what the evil loggers have done! But invariably, these pictures are of national forests, which are owned by the government. The timber rights are given on a contract basis, and the recipients have no incentive to preserve the value of the land because it's not theirs.
AEN: But the cause and effect relationship is not immediately obvious to the person who sees these pictures.
HOLCOMBE: That's true in many areas of economics. An example reappears just about every rainy season: flood insurance, which the government subsidizes. With this insurance, people can say, "I love this house down by the river. It might flood, but, hey, I've got my government flood insurance." The nature of the insurance affects the way people behave. Private insurance takes account of relative risks, but public insurance causes people to disregard risks.
AEN: And assessing risk is a key to the quality of life.
HOLCOMBE: Product quality in general illustrates the point even better. If the government didn't assume a monopoly on the regulatory function, private regulatory agencies would pop up everywhere to certify quality. Underwriters Laboratories is a good example. It is entirely private and non profit, but it produces the most trusted seal of safety there is. These days, you almost can't bring an electric product to market without having the UL stamp on it.
Another example of a private regulatory agency is Best Western Motels. They own no motels. But they'll let you put the sign up that says "Best Western" if you meet their guidelines. They've got dozens of pages of regulations that you must meet: how wide the halls are, the temperature in the bathrooms, the quality of the doors, the quality of the television reception, and on and on. If you meet their regulations, you pay them for their sign.
Why would anybody pay to be regulated like that? The answer lies in an understanding of consumer preference. You're driving down the street thinking about stopping at a motel. There's "Mom and Pop's Motel" but you've never heard of it. There's also "Mom and Pop's Best Western Motel," and you choose it because the risk of poor service is reduced. Companies are willing to pay private regulatory agencies like Underwriters Laboratories and Best Western in exchange for certifying their products.
AEN: And can this approach be extended to areas like medicine and law?
If we did away with state licensure of doctors tomorrow, allowing anyone who wants to practice medicine to do so, credentialing agencies would spring up everywhere. The American Medical Association would certainly work as a private credentialing organization.
And it would have competitors. A patient might say, "I've been going to an AMA doctor, but I'd like to try a different kind of doctor." Licensure of doctors serves as a cartelization device to keep out competitive approaches. Doctors get infuriated with me when I say that, but it's true.
The same is true of law. You might argue that we need state licensure of lawyers because courts are run by the state. But even here, look at the huge increases in private arbitration. They correct for the unresponsiveness of government courts. It's proof the government need not monopolize courts or lawyer certifications. Private agencies can take over the function of guaranteeing quality judicial services.
This whole approach has been eliminated by government regulation, which crowds out private regulation. Government uses tax dollars to finance its regulation; generally firms prefer this to spending their own money to certify good quality. Sometimes people say that the rarity of private regulation makes the case for government regulation. In fact, private regulation is rare because government regulation is so widespread.
AEN: Why is private better than government regulation?
HOLCOMBE: Government regulations do not ensure the quality level that consumers desire. Regulatory agencies are not responsive to consumers but to lobbying pressure, typically applied by the very industry being regulated. So government regulations end up protecting certain big players in an industry against market forces. Quality standards become an arena for using coercive instead of market pressure against competitors.
Also, there is no rational cost accounting with government agencies. How much should be spent when evaluating quality? What constitutes quality? At what point do the costs of raising quality exceed the benefits? Bureaucratic regulations cannot answer these questions with any degree of assurance. Markets are needed to sort out these issues.
Government involvement with health care--not just licensure but also subsidies and direct benefits--has eclipsed the role of the consumer. I was talking to a doctor the other day, an old-timer, who told me that one of the first questions his patients used to ask him was: how much will this procedure cost? Now that question has no relevance because consumers are rarely personally affected by the costs of procedures. This is a consequence of government involvement of all sorts.
AEN: It seems like every year or so the Congress passes another bill increasing government control over medicine.
HOLCOMBE: This raises a crucial problem of democracy. Instead of looking to the Constitution or to individual rights as a normative standard, public policy tries to give people what they want. Early on, the Clintons assumed, wrongly as it turns out, that people wanted full socialization of medicine. The interesting thing about that debate was not the outcome but the process, which depended so heavily on public opinion.
If the majority polled had said they wanted the Clinton plan, it would probably have passed. Polls seem to be driving public policy across the board. Every news story comes with a little poll attached, as if this were the crucial consideration. This is not the way a free society is supposed to function.
AEN:Your newest studies for Austrian journals have been in public-goods theory
HOLCOMBE: I've been interested in the subject since my student days. Many of the interesting questions in economics have to do with the public sector. From economics we learn how markets allocate resources when markets are left alone. But then, according to the public finance literature, we need this huge public sector because there are supposedly problems with the market.
Modern public finance theory starts out from mathematical conditions for the stability of competitive equilibrium. These models provide clear conditions that have to be met for market institutions to allocate resources efficiently. This allows us to look at the math; when the condition isn't met, there is a role for government. From there, developed this whole literature of "market failure" in the 1950s.
The theory says there are generally four reasons why markets might not work: externalities, public goods, monopoly, and economic instability. That taxonomy is still in principles of economics books today. The presumption is that government must intervene.
AEN: Yet even the classical economists said government should perform functions the market cannot perform.
HOLCOMBE: Yes, but more for philosophical reasons. Today, it is based on a seemingly scientific foundation. Beginning in the 1950s, economists began to advance Paul Samuelson's idea of a public good. This is a good in which additional consumers can consume the good without reducing the consumption of any existing consumer. In other words, once the good is produced, additional consumers can consume all they want.
An example of that is a radio broadcast. Once the signal goes out, anyone can listen to it without reducing anyone else's ability to listen. This feature supposedly makes the good unlikely to be efficiently provided through market means. This is as opposed to soft drinks; if I drink one, there's one less to drink.
AEN: Ironically, though, the market produces radio broadcasts.
HOLCOMBE: Yes, and, in fact, most public goods, as defined by economic theory, you can think of are provided in the market. The best example I can think of is computer software. Once the code is written, additional users can take advantage of it at no cost to the existing user. It's simply a matter of making a copy.
No matter how many are made, it doesn't reduce the consumption of any other consumer. There can be ten or a million copies at no cost to the existing users. Issues of copyright aside, then, software has the characteristics of a public good, but look how well the market produces it. In fact, the government thinks the market produces it too well: witness the campaign against Microsoft.
AEN: It raises the question of how well government produces public goods.
HOLCOMBE: I've actually done some research on this. Logically, if anything seems to fit the description of a public good, it is passing legislation. I'm not talking about enforcing it. I'm just speaking of the legislative process itself: the legislature gets together and passes laws.
Following public goods theory, you might think the size of the jurisdiction wouldn't matter for the cost. As with software, what difference does it make for your costs whether these laws are for a thousand people or a million or ten million people? But it turns out to make a huge difference. A colleague and I looked at the costs of legislatures across the 50 states and adjusted for legislative output. There is a very close correlation between the number of people in a state and the cost of operating its legislature.
If you double the size of population, you nearly double the cost of legislation. Legislation is like hamburgers at a picnic: if you've got twice as many people, you've got to cook twice as many burgers. Additional users don't use the good for free. So legislation--which most plausibly looks like a public good--actually fails the Samuelsonian test.
AEN: What about other supposed public goods?
HOLCOMBE: Right now, I'm doing a study of national defense, and in my initial results, there appears to be a one-to-one correspondence between the number of people in a country and defense spending. The more people the government is defending, the more it spends in doing so. So, defense turns out to fail the Samuelsonian definition as well. And, really, that's not too surprising. What's surprising is that the theory of public goods has survived despite its lack of theoretical or empirical merit.
AEN: Why has idea survived?
HOLCOMBE: Why does most government propaganda survive? The people who have promoted public goods theory as a justification for government intervention are researchers with a vested interest in supporting the activities of government, either because they work in government schools and universities or heavily subsidized private ones.
If you want to get a more compliant population, you can beat them into submission. But it would be easier and better to convince them that your way of thinking is right. That's the role of public education. Public educators even admit this. They say the main role of public schools is to socialize children, that is, propagandize them.
Public-sector institutions have an incentive to look for and support theories that back public-sector spending. Economists, like anyone else, have an incentive to support institutions that support them. That is why government-supported research produces theoretical developments biased toward government intervention.
AEN: Yet Samuelson's rationale for big government hasn't exactly become common wisdom.
HOLCOMBE: One of my pet peeves is how economists use terms in two ways. We define terms in a technical way to use among ourselves--and Samuelsonian public goods theory is a good example. It means: "the marginal cost of an additional consumer consuming the good is zero." Then we have the man-on-the-street definition of the same thing: "things that are produced by government." But it turns out that the two terms are completely different. Yet in policy pronouncements, economists gloss over the difference in order to justify government intervention.
AEN: Is there an optimal size of government?
HOLCOMBE: I'm currently doing some work with James Gwartney and James Lawson on the effect of the size of government on economic growth. This is a pure empirical study. We are trying to discover what difference the size of the public sector makes on the rate of economic growth.
We looked at time-series data in particular countries like the U.S., at a cross-sectional data set of more than 20 OECD countries, and a larger data set from 60 countries around the world (none of them from the present or former centrally planned economies). No matter how you look at it, there is a very strong and systematic relationship between economic growth and the size of government. For all the data we have, the smaller the public sector, the higher the rate of growth.
We had no observations of countries with public sectors smaller than 15 percent of GDP. Empirically, we can't know too much about how much growth very small government would permit. But in the United States today, government expenditures at all levels are 35 percent of GDP. We could cut that by half and vastly expand our growth. We should keep going until we run out of spending we don't need. I like the founders' view of government, that it should be as small as possible.
AEN: It's a big question, but how did we get from the founders' view to the current view of government?
HOLCOMBE: I've been working on a book for some years tentatively titled, From Liberty to Democracy: The Transformation of American Government. So you can guess my answer from the title. When the founders created this country, the underlying philosophy of American government was liberty. What the founders meant by liberty was freedom from government oppression. Their view was that liberty's enemy is government. So they wanted a government that would only protect rights and liberties. That was the point of the Constitution.
But today, most people think the underlying philosophy of government is democracy. How do we decide what public policy should be? We find out what the majority wants. This idea is completely antithetical to the founders' view. By degrees, we became increasingly democratic and let this notion of liberty fall by the wayside. There is a relationship between the rise of democracy and the decline of liberty. Democracy, as we understand it today, is antithetical to liberty.
AEN: But didn't the founders want rule by the people?
HOLCOMBE: They wanted popular government, but not for the people to determine public policy. Initially, the one area of government in which people had a direct role was the House of Representatives, though there was no guaranteed right to vote. But the Senate was chosen by the state legislatures, until the 17th amendment in 1914.
The president was chosen by the electoral college. The electors were chosen by the states. The Constitution never specified how the states picked their electors. Originally, it was most common for them to be chosen by their state legislatures.
If a majority of the electors voted for one person, he would be president. Otherwise the decision would go to the House. The founders figured the electors would vote for somebody from their state. Because of that, nobody would get a majority. Therefore the House would choose the president.
So the electoral college was to be a kind of search committee. They would be knowledgeable people, know the strengths and weaknesses of the possible candidates, and the electors would forward a slate of candidates to the House. As it happened, it didn't work out that way. A majority of electors usually agreed on one candidate. And by the 1820s, most states had already gone to popular election of electors. By 1828, political parties were out campaigning for presidents.
AEN: And Andrew Jackson was the main player.
HOLCOMBE: Andrew Jackson was an interesting character. On the one hand, he was committed to Jeffersonian ideals of limited government. He ran for president because he thought presidents after Jefferson had unjustly expanded the scope of government. He wanted a return to the founders' ideals.
I'm sympathetic with that, but he also thought the best way to control the political elite in the country was through more democratic representation. As soon as elected officials are made more accountable to the public, they also have to be looking for ways to win elections. You end up with public policy as a popular opinion poll instead of commitment to a principle like liberty. Unwittingly, then, Jackson became part of a longer-term problem.
AEN: Why, when you ask the public what it wants, is liberty not the answer?
HOLCOMBE: We tend to take liberty for granted. And these days, there's also a big status-quo bias. Despite the complaints about government's intrusions into our lives, people think we have it pretty good and have a hard time imagining huge changes away from the status quo.
I was discussing the finance of highways in my economics class. I asked about the toll that finances the Florida turnpike. My students all said it makes sense. Then I asked about the interstate highways and whether they should be similarly financed. Well, they didn't like that idea. They wanted free access to one but not the other. My interpretation is that they have a status-quo bias.
When most people are getting along pretty comfortably, it's hard to convince them that we have strayed far from the principles that produced this level of comfort and prosperity. But prosperity is increasingly threatened as we move farther from the principles that produced it.
It's my job as an economist to explain how small changes in policy can have huge effects, and in ways that are not always immediately predictable, unless you are thinking carefully.
AEN: What attracted you to economics in the first place?
HOLCOMBE: It offers a simple, palatable theoretical structure. And with theory, so much of the workings of the world are revealed to you. Immediately I loved the power of pure theory. The bottom line of this theory is that the market works. The hard part is the supposed exceptions to the market rule, and that's what attracted me to public finance.
AEN: As a student, did you have defined views on these matters?
HOLCOMBE: Unlike a lot of people who say they were socialists or some such when they were young, I already leaned toward pro-market views. All the intellectuals I knew were interventionists. Sometimes, I felt like an anti-intellectual because I couldn't agree with the interventionist view. So the discovery of the Austrian School was a revelation. First it was Hayek, and then Rothbard, and then Mises, and finally, I felt I had an intellectual foundation for what already seemed intuitively plausible.
AEN: And you continue to work within this framework.
HOLCOMBE: Yesterday, at this Austrian Scholars Conference, I delivered a paper on entrepreneurship, building on some ideas of Austrian economist Israel Kirzner. I asked the question: what is the origin of entrepreneurial opportunities? You might think that if an entrepreneur discovers a profit opportunity and uses it, that entrepreneurial opportunity is used up. Where do new ones come from? My answer is that they come from entrepreneurship itself.
A good example is computers. Someone had a great idea for an infrared mouse on computers. But first someone had come up with a graphical operating system, which would not have been possible if someone had not come up with the good idea of a personal computer, which previously required the idea of the microprocessor, and so on. I argue in a forthcoming issue of The Quarterly Journal of Austrian Economics that this is the primary source of economic growth.
AEN: How does this view compare with mainstream growth theory?
HOLCOMBE: In the mainstream view, growth is created by combining inputs. The natural way to bring about growth, then, is to increase inputs. The production function takes it from there. My paper suggests that while inputs are crucial, entrepreneurship is more important.
If you look at the old Soviet Union, they used the production function approach to growth. They invested in capital, they tried to push the technological frontiers, and they had an educated population. They were concentrating on the inputs--exactly according to mainstream theory--but neglecting the environment in which growth takes place. If you create the environment, the inputs take care of themselves. Yet even today, the IMF and the World Bank use mainstream growth theory that points to a central-planning model.
AEN: You've also written a book on economic method.
HOLCOMBE: When I began that project, a friend advised me against "falling into the black hole of methodology." I can see his point. My chapter on "Theories of Utility and Entrepreneurship" was the initial one, written just as a paper. It became a 40-page paper, then an 80-page chapter, then I started to divide it into pieces. The only way I could extract myself from the black hole of methodology was to consolidate it into a whole book and send it off to a publisher.
Economists typically go about their discipline the way everyone else does, and they don't often think about the methodology they follow or whether it makes sense. It was a learning experience for me to explore how economists go about the search for truth, and to sort out what we as economists actually know about the world, versus conjectures about what may be true, versus outright propaganda. Too often economists construct elegant theories that have no connection to the real world.
AEN: And what did you conclude?
AEN: I end up being critical of methodological positivism, in which empirical evidence is used as a demonstration of the proof of theories. There's a good case for looking at empirical data and looking for regularities to see how the real world works. Econometrics is a lot like looking out the window: you want to make sense of what you see. If you are looking at a page of thousands of numbers, it is reasonable to ask yourself if there are any regular relationships between them. But the notion that you are testing a theory in doing this is outright wrong. You really can't test theories in any formal, empirical sense.
AEN: This was Mises's fundamental methodological claim.
HOLCOMBE: I completely agree with him. Most theories we want to test we came up with by looking at the data anyway. That's especially true in macroeconomics, in which there is only one set of data. Everybody knows it. It's not like pulling balls out of an urn, a statistics game in which you try to estimate the color composition of the urn of balls based on sample drawings. In economics, you are not doing that because everybody already knows the data. You've already looked at the urn.
Also, economists don't really test theories; any empirical test must simultaneously test both the theory and the assumptions necessary to connect the abstract theory with real-world data. Whenever the empirical test turns out to contradict the theory, we don't reject the theory. We reject the supporting assumptions and go back to look for more data. We assume our test was wrong, change the specifications of the model, and run some more regressions until the data turns out to back the theory we had to begin with. Then we say: Aha! The data confirms the theory!
So economists don't really test theories and they never reject theories. I challenge economists in general: if we really think we are testing theories, show me a theory that has been rejected on the basis of an empirical test. There are not many. Nevertheless, the data are still useful for looking at regularities.
AEN: Also in your methodology book, you highlighted the Austrian notion of rationality.
HOLCOMBE: In the Austrian view, all behavior is rational, from the point of view of the individual. A person acts, ex ante, to improve his position. That means there is no behavior that is not intended to be utility-enhancing, but it also means there is nothing to allow for prediction. Austrians agree that demand curves are downward sloping, for example, but this follows not from data but from logic.
The neoclassical view assumes that people are wealth maximizing, income maximizing, or profit maximizing. These assumptions give you "testable" hypotheses. That is where the misuse begins. Social scientists are always blasting economists for believing only in "economic man." We respond by saying, "actually our view is much broader." Yet the neoclassical theory of public goods and externalities is built entirely on this same caricature. Well-known economists base their public-policy recommendations on it.
Despite so many examples where people act charitably toward others and go out of their way to respect the rights of others, so much government coercion is justified based on the idea that we must prevent people from having any opportunity to be shirkers or free riders.
AEN: Do you consider yourself an adherent of the Austrian School proper?
HOLCOMBE: I don't know exactly where I fit in the taxonomy of the Austrian School--which, as this Scholars Conference demonstrates, is quite diverse. I've learned a great deal from Austrian writers, and I am a strong supporter. But there are scholars, many of them here, who have dedicated their academic careers to pushing the frontiers of the school. I have worked in different areas. I am enthusiastic about promoting the ideas of Austrian economics, both to my students and to the academic mainstream. The good news is that economists in the academic mainstream are increasingly interested in discovering what Austrian economics has to offer.
Volume 23, Number 1 (Spring 2003)
Timothy D. Terrell is interviewed about fiat money and money creation, Libertarianism, and Government intervention.
Volume 1, No. 2 (Summer 1998)A Geographical Perspective on Austrian EconomicsPierre Desrochers About a year ago I more or less suddenly realized that I have spent my whole professional life as an international economist thinking and writing about economic geography, without being aware of it. —Paul Krugman, Geography and Trade It has long amused high school philosophers that medieval theologians debated hotly about how many angels could stand on the head of a pin. It has only recently struck economists as strange, although not funny, that the bulk of economic theory assumes that all economic activities take place on the head of a pin. Given the capital equipment involved in most economic activities, compared to the harps and wings of angels, one would think that the pin-headed economic assumption the more ludicrous to maintain. Perhaps its greater longevity in economics says something about the relative realism involved in economics and theology. —Michael Bradfield, Regional EconomicsIt has long been recognized that in order to postulate strict laws and equilibrium, neoclassical economists have oversimplified their basic models to such an extent that they have, until very recently, almost entirely excluded processes relating to time and space. As economic geographers would have it, most economists have long inhabited a “spaceless wonderland” and have behaved as if the invisible hand was located on the head of a microscopic pin. Topics like the location of the various elements of an economic system, their connection and interaction in space or the spatial impact of economic processes, most certainly because they made basic assumptions like perfect competition untenable, were thus simply tossed aside and, it seems, in time unconsciously forgotten.Despite the fact that they were not prisoners of these constraints, Austrian economists’ treatment of geographical space has been rather limited, with perhaps the exception of Fetter’s turn-of-the-century contribution to the theory of rent (Fetter 1977). Otherwise, one can find echoes of a distinct Austrian perspective on geographical space in the few comments Mises made on the important role that the limited convertibility of capital goods plays in human geography (Mises 1966, p. 513). Murray Rothbard wrote somewhat more extensively on the “economics of location and spatial relations” and on “interlocal exchange,” but he followed the lead of traditional location theory by focusing almost exclusively on transportation and sunken costs. He wrote:
[The distribution of people and business over the face of the earth] will differ from location to location in accordance with the distribution of natural resources and the distribution of capital equipment inherited from ancestors. Another factor influencing location will be positive or negative attachments to certain areas. . . . The actual dispersal over the face of the earth is caused chiefly by the distribution of productive land and natural resources over the earth’s surface. This has been one of the chief forces limiting the concentration of industry, the size of each firm, and population in purely industrial areas. (Rothbard 1993, p. 551)
Hayek’s classical argument on the importance of “particular circumstances of time and place” (Hayek 1948) could have opened the way to a different line of argumentation. By that now-famous phrase, he meant things such as the heterogeneity of capital goods (i.e., that some goods are tailored for the specific needs of a very small number of consumers) and the importance of non-material components to goods (such as ease of availability, quality of service, reputation of a supplier, etc.). Obviously, these circumstances will differ greatly from one location to another, but his treatment of the impact of geographical space on these circumstances remained rather casual.To be sure, most economic geographers would not debate Hayek, Rothbard, and other Austrians’ views on economic geography, but most of them would argue that there is much more to be said on this topic. Somewhat curiously though, they would be pointing toward the importance of local conditions on a number of issues that Austrians have been addressing for a long time, such as the diffusion of tacit knowledge, and importance of local conditions on economic coordination.Once the sole province of economic geographers and regional scientists, regional growth and development theory has been supplemented in the last two decades by a number of new offerings, both theoretical and empirical, by business school professors, political scientists, economic sociologists and, lately, by some economists.[1] In the wake of the spontaneous and spectacular rise of some regions of the world (Silicon Valley, Third Italy, M4 Corridor, Orange County, Baden-Württemberg, etc.) and the decline of once-prominent manufacturing centers (some portions of the American Midwest, Wallonie, Lorraine, etc.) which could not be accounted for by the theories then available, a large number of scholars have begun taking a new look at the industrial and social characteristics of a given place (be it a city, a town, or a region) in providing (or not) fertile soil for economic development and technological innovation. The distinctive feature of most of these analyses has been the movement away from mechanistic and static “resources allocation” or “location scanning” perspectives towards more qualitative and dynamic analysis of technological change emphasizing the role of competition, cooperation, innovation, entrepreneurship, information diffusion, small business culture, flexibility, adaptability, and many other factors at the regional level. To put it somewhat succinctly, some places are said to be better than others at integrating the formal and informal collective processes essential to the production of permanent innovation. All participating agents profit from the advantages to be gained from being located in those special places, but the biggest benefits are said to be enjoyed by entrepreneurs and small firms who rely much more on their local economic environment than large, multi-plant corporations. The message emerging from this literature is two-fold: (1) where prosperity exists, it is regionally based; (2) the sources of this prosperity are to be found in the regions themselves and not in some exogenous factors.This article is therefore intended as a complement to the Austrian tradition and will point out more specifically the importance of local conditions for the production of innovative goods and services. In doing so, it will borrow heavily from the main thrust of work in economic geography in the last decade, although it is not intended to be an exhaustive review of recent articles and current debates,[2] nor of the fate of planned science parks.[3] In fact, the views expressed in this article should not be taken as representative of those of the majority of economic geographers, for they depart from most of this literature on at least two counts. First, this author’s views are not rooted in a belief that the “complex web of transactional relations” or the “network of synergy-producing interconnections” in a certain region—variously labeled industrial districts, innovative milieux, regional innovation systems, geographic industrial concentrations, technology districts, etc.—is an economic entity in its own right.[4] The purpose here is rather to illustrate how individuals living in the particular socio-economic environment of a region can have an economic advantage over other individuals living elsewhere. Second, it will be this author’s purpose to illustrate that there is a body of economic geography theorems that are valid for all human action irrespective of time, something which is at odds with the “post-fordist”[5] theoretical framework now prevalent in economic geography.
Traditional Economic Analysis of Geographical SpaceFew economic phenomena can be considered ubiquitous. Somewhat paradoxically, one that qualifies best as a certainty, urbanization, has been virtually ignored by most economists. There is, however, a long tradition of spatial-economic analysis that can be traced back to some aspects of the work of classical economists (most notably Ricardo) and the German Raumwirtschaft tradition (featuring most notably the work of von Thünen and Weber), and that culminated in this century in the development of the fields of economic geography, regional science, and urban economics.[6] But to state matters briefly, until perhaps fifteen years ago the dominant approach toward geographical space was to view it as an abstract support for locational factors on which a purely exogenous “economic development” was equilibrating economies of agglomeration (centripetal forces) on the one hand, and diseconomies of agglomeration (centrifugal forces) on the other. Overall, these frameworks have mostly proven useful in explaining the locational behavior of consumer services and retail trade. Despite the completely static character of these schemes, some of the ideas used in those models are undoubtedly of great value, chief among which are “agglomeration economies,” i.e., the benefits that derive from the spatial concentration of a certain number of firms. Agglomeration economies are of two types: those relating to the agglomeration of firms of the same industry in one area (localization economies), and those relating to the agglomeration of various industries in one location (urbanization economies).
Localization EconomiesIt has long been observed that most industries are not evenly distributed through space, but, rather, are usually highly concentrated in a few places. Thus, throughout history various cities have, at one point or another, been labeled “the capital of the world” in a highly specialized area of production. The universality of this phenomenon has long been established. For example, the Italian city of Sassuolo is famous for its ceramic tiles, Carpi for its woodworking machinery, Montebelluna for its ski boots, Arezzo for its jewelry, and Prato for its wool textiles. In Germany, Soligen has a long tradition in cutlery, Remscheid in toolmaking, Nuremberg in pen and pencils, Velbert in locksmith wares, Pforzheim in jewelry, etc. (Porter 1990).Such geographical agglomerations of firms can be found at the city, neighborhood, or sometimes at the street level, usually depending on the capital requirements of each industry. Los Angeles’s aeronautical firms are scattered throughout the city, whereas the firms involved in the specialized production of gems and jewelry in various metropolitan areas are usually packed close to the cores of their cities (Scott 1994). For example, in the middle of this century, the following trades were to be found within the confines of a few streets in Birmingham (England): goldsmiths, silversmiths, electroplaters, medalists, gilt and imitation jewelry fabrication, gem setting, stamping and piercing, engraving, polishing and enameling, die sinkers, jewelry repair, refiners, general outwork, factors and merchants, dealers in bullion and precious stones, jewelers’ material suppliers, manufacturers of optical goods, watchmakers, and miscellaneous manufacturers (Wise 1949).Vertical disintegration is known to be positively associated with geographical agglomeration. Typically, apart from highly capital-intensive industries (steel, petrochemical, etc.), these dense agglomerations are usually made up for the most part of a huge collection of small firms from the same or closely interconnected branch of industry employing only a handful of workers, though often enough large producers are found in them. Thus, more than 60 percent of the firms in Birmingham’s jewelry district had ten employees or fewer, and all were bound together in a dense structure of transactional interrelations. Closer to us, before mini-computers ran into trouble in the late 1980s, more than 70 percent of software firms along Boston’s Route 128 employed fewer than 25 people, and more than 60 percent of manufacturing companies in that area employed fewer than fifty (Rosegrant and Lampe 1992, p. 27).What are the advantages of a cluster of apparently redundant small firms over the economies of scale that a single large firm should bring? It mainly has to do with permanent innovation, flexibility, and sudden shifts in market demand. In short, the real economy is a turbulent, uncertain and highly dynamic phenomenon. Silicon Valley’s Sun Microsystems will provide an illustration.[7]
While specialization is often an economic necessity for start-ups, Sun did not abandon this strategy [of outsourcing] even as the firm grew into a multi-billion dollar company. Why, asked Sun’s Vice President of Manufacturing Jim Bean in the late 1980s, should Sun vertically integrate when hundreds of Silicon Valley companies invest heavily in staying at the leading edge in the design and manufacture of integrated circuits, disk drives, and most other computer components and subsystems? Relying on outside suppliers greatly reduced Sun’s overhead, while ensuring that the firm’s workstations contained state-of-the-art hardware.
This focus also allowed Sun to introduce complex new products rapidly and to alter their product mix continuously. According to Bean: “If we were making a stable set of products, I could make a solid case for vertical integration.” Relying on external suppliers allowed Sun to introduce an unprecedented four major new product generations during its first five years of operations, and to double the price-performance ratio each successive year. Sun eluded clone-makers through its sheer pace of new product introduction. By the time a competitor could reverse-engineer a Sun workstation and develop manufacturing capability to imitate it, Sun had introduced a successive generation. (Saxenian 1990, pp. 5–6)
Although Silicon Valley is a recent phenomenon, the geographical clustering of small firms is in no way new, and tales similar to Sun’s can be found in various historical records. Indeed, many people noticed the phenomenon long ago and began positing various explanations for it.[8] The most well-known classical treatment of this question is Alfred Marshall’s succinct characterization of “industrial districts.”[9] Although Marshall apparently first noticed the phenomenon by looking at the cutlery industry of Sheffield and the cotton weaving industry of Lancashire, he noted that “indications of a like stage of things are found in the histories of oriental civilizations and in the chronicles of medieval Europe.” He thus referred to a book written in about 1250 which noted such specialized production of scarlet at Lincoln; blankets at Bligh; burnet at Beverley; russet at Colchester; linen fabrics at Shaftesbury, Lewes, and Aylsham; cord at Warwick and Bridport; knives at Marstead; needles at Wilton; razors at Leicester; soap at Coventry; horse girths at Doncaster; skins and furs at Chester and Shrewsbury; and so on (Marshall 1986, p. 223). From these observations, he would derive his notion of “external economies of scale” to refer to the sources of a productivity increase that lie outside of the individual firm. As he put it:
the economic use of expensive machinery can sometimes be attained in a very high degree in a district in which there is a large aggregate production of the same kind, even though no individual capital employed in the trade be very large. For subsidiary industries devoting themselves each to one small branch of the process of production, and working it for a great many of their neighbors, are able to keep in constant use machinery of the most highly specialized character, and to make it pay its expenses, though its original cost may have been high, and its rate of depreciation very rapid. (Marshall 1986, p. 225)
In Marshall’s view, producers derive external benefits by sharing the fixed costs of such common resources as specialized infrastructure and services[10]; skilled labor pools[11] and specialized suppliers; and a common knowledge base. Although in the following decades many districts faded away with the obsolescence of their production, or through mergers,[12] or deliberate state planning,[13] most of them proved remarkably resilient and new ones kept appearing spontaneously. In Italy, the phenomenon became so widespread by the mid-1970s that it prompted some local sociologists and economists to resurrect Marshall’s analysis. In Switzerland, the painful but quick adaptation of the local watch districts, following the serious setback brought about by the introduction of Japanese digital watches, also prompted a closely related literature. In the United States, high-technology analysts witnessing the spectacular rise of Boston’s Route 128, California’s Silicon Valley, and Orange County realized that, contrary to popular belief, agglomerative tendencies were not vanishing, and that the more “high-tech” an industry was labeled, the more likely it was to be geographically localized. As more scholars became involved in this research agenda, thousands of geographically concentrated industries were “discovered” the world over, from Thailand to France, Denmark to Japan, and Mexico to Portugal (Courlet and Soulage 1995; Garofoli 1992; Hansen 1992; Maillat 1995; Saxenian 1994; Sternberg 1996; Storper 1995). It has also been noted that metropolises are typically patchworks of industrial districts. Thus New York has, among others, its garment, financial, diamond, and advertising districts, while Los Angeles has its film and TV, clothing, furniture, and jewel manufacturing districts (Scott 1988).
Urbanization EconomiesAlthough most cities are usually specialized in a few lines of work, they are also the hosts to many other activities supplying the most ordinary to the most prestigious piece of equipment or services to a whole range of industries. The spatial agglomeration of various activities will, for example, allow the operation of airports, hospitals or cultural activities, as well as law, accounting, and various consulting firms of the first order. The recent “core competencies” and “just-in-time” strategies of many firms has also reminded us of the benefits of a greater division of labor between firms in close geographical proximity to one another. It thus obviously makes sense for any business to externalize a function that can be done more effectively by a specialized external firm, but there are also many advantages for a subcontractor serving firms in a wide range of industries to be located close to its customers, both in terms of reducing transaction costs and increasing speed of delivery (i.e., by making daily deliveries, saving the buyer warehousing space, reducing the risk of running out of a needed item while it is being shipped from a long distance, etc.).
On the Persistence of Agglomeration EconomiesAgglomeration economies have existed from time immemorial, but non-specialists typically assume that they are something on the verge of collapse. Alfred Marshall thus wrongly believed, like many earlier and later popular writers and scholars, that production on a large scale and the fall of transportation costs of both knowledge and people—which he associated in his time mostly with the railway and the telegraph—would deal a major blow to geographic concentration. Like other prophets of the end of economic geography, however, he was proven wrong. The same can be said for the advanced telecommunication systems of recent years that show no signs of wiping out geographically concentrated industries and cities. The efficient allocation of resources over geographical space plays an obvious role in shaping the economic landscape of our world, but it cannot be the whole story behind the persistence of the geographic concentration of economic activity. What is it then? As a number of writers have pointed out, one must look at the importance of geographical proximity for innovation.
On The Advantages of Geographic ConcentrationTo understand the persistence of geographical clusters of innovative firms, we first need to return to Marshallian analysis. As we have seen, Marshall identified the importance of a common knowledge base as the third major force behind agglomerative trends. As he put it:
When an industry has thus chosen a locality for itself, it is likely to stay there long: so great are the advantages which people following the same skilled trade get from near neighborhood to one another. The mysteries of the trade become no mystery; but are as it were in the air, and children learn many of them unconsciously. Good work is rightly appreciated, inventions and improvements in machinery, in processes and the general organization of the business have their merits promptly discussed: if one man starts a new idea, it is taken up by others and combined with suggestions of their own; and thus it becomes the source of further new ideas. (Marshall 1986, p. 225)
In short, Marshall rightly pointed out that people of related trades gather close to each other because geographical proximity increases the concentration of tacit knowledge and the speed of information flows. As Austrians have long pointed out, innovation is all about continuous learning. The crucial knowledge in an industry is not standardized information, routine patterns, or even the public knowledge of science. The important knowledge is uncodified and is not available in any formalized mode of communication. It is what is new, what are the latest changes, and what is the specialized know-how that individuals have acquired through practice and mistakes. To compete effectively in many industries, it is not enough to look at trade journals or computer screens, to communicate via telephone conferences, or to monitor plants in remote locations via modern communication means. Being where your partners and competitors are is an important asset. Socializing with them allows the opportunity to ask for advice or for a specific bit of information, but it can also lead to unexpected benefits. Informal encounters where one person says to a second, “What are you working on?” and where a third jumps in and adds “I know somebody you’ve got to talk to; I’ll call you with the number” are often very fruitful. Although exchanges of this kind might last less than two minutes, they may prove to be the most productive encounter of the entire day for everybody involved. It was true in Marshall’s time and earlier. It is still true in today’s geographical clusters of innovative firms.According to Saxenian, it is not simply the concentration of skilled labor, suppliers, and information that distinguish Silicon Valley, but the dynamics of its social networks.
A variety of regional institutions—including Stanford University, several trade associations and local business organizations, and a myriad of specialized consulting, market research, public relations and venture capital firms—provide technical, financial, and networking services which the region’s enterprises often cannot afford individually. These networks defy sectoral barriers: individuals move easily from semiconductor to disk drive firms or from computer to network makers. They move from established firms to start-ups (or vice versa) and even to market research or consulting firms, and from consulting firms back into start-ups. And they continue to meet at trade shows, industry conferences, and the scores of seminars, talks, and social activities organized by local business organizations and trade associations. In these forums, relationships are easily formed and maintained, technical and market information is exchanged, business contacts are established, and new enterprises are conceived—This decentralized and fluid environment also promotes the diffusion of intangible technological capabilities and understandings. (1990, pp. 96–97)
Some authors studying less dynamic firms in stagnant regions have, however, downplayed the role played by social networks in local environments and have stressed that most small firm owners and managers tend to be individualistic and too busy to engage in constant networking (Rallet 1993; Julien et al. 1994; Joyal 1996). Be that as it may, geographical proximity in an urban setting has some undeniable advantages for those individuals who are willing to use them, namely timeliness in getting or delivering something and the opportunity of frequent face-to-face communication. Often enough, if most economic actors do not realize the importance of physical proximity when they first go into business, it later becomes apparent to them, through trial-and-error, that it is an important asset in any innovative business venture.We shall now look in more detail at the advantages of geographic concentration on the transmission of tacit knowledge, human cooperation, and entrepreneurship.
Geographical Proximity and the Diffusion of Tacit KnowledgeThe main argument in favor of the importance of physical proximity for the transmission of tacit knowledge is that deconcentration cannot be accomplished easily for activities dealing with creative work, mainly because long-distance communication is still inadequate for the continuous and detailed engineering or technical adjustments that are needed in the course of technological creation. Technology transfer typically involves specialized knowledge and is thus a personal interaction process. Information systems and data bases are enabling tools, but successful technology transfers still require the personal contact with the persons possessing effective knowhow. It has also been pointed out that local distributors and representatives are usually considered poor alternatives to the actual producers (Gertler 1995).Following von Hippel (1988), we can assume a situation in which a firm’s staff of engineers has to develop a new product (exchanges of technical information take place frequently between firms, but it is not possible to apprehend the magnitude of these activities in financial or statistical terms). When required know-how is not available in-house, it is often not in publications either. It either does not exist or is only in the minds of other technical people. Since in-house development is always time-consuming and expensive, there is often a high incentive to seek the needed information from people working in other firms. And although engineers and technologists have met other technical people at various meetings, trade shows and conferences, they are more likely to be acquainted with and ask for help in the staff of nearby firms, if only because it is more convenient.von Hippel has described this process, but in an a spatial context, in this way:
The informal proprietary know-how trading behavior I have observed to date can be characterized as an informal trading network that develops between engineers having common professional interests. In general, such trading networks appear to be formed and refined as engineers get to know each other. . . . In the course of such contacts, an engineer builds his personal informal list of possibly useful expert contacts by making private judgments as to the areas of expertise and abilities of those he meets. Later, when Engineer A encounters a difficult product or process development problem, A activates his network by calling Engineer B—an appropriately knowledgeable contact who works at a competing (or non-competing) firm—for advice. Engineer B makes a judgment as to the competitive value of the information A is requesting. If the information seems to him vital to his own firm’s competitive position, B will not provide it. However, if it seems useful but not crucial—and if A seems to be a potentially useful and appropriately knowledgeable expert who may be of future value to B—then B will answer the request as well as he can and/or refer A to other experts. (von Hippel 1988, p. 77)
The importance of physical proximity in producer-user relations is also well documented. Considering the fact that in many industries, users, and not manufacturers, create most innovations (von Hippel 1988; Slaughter 1993),[14] this point seems indeed most relevant and explains why, historically, physical proximity between the producer and user of machinery seems to have been indispensable. In short, as Rosenberg (1970, p. 570) noted almost three decades ago, successful instances of technological change typically involve
a direct confrontation between the user of a machine, who appreciates problems in connection with its use, and the producer of machinery, who is thoroughly versed in problems of machinery production and who is alert to possibilities of reducing machinery (and therefore capital) costs.
To quote the down-to-earth language of a Silicon Valley president:
I don’t care how well the specifications are written on paper, they are always subject to misinterpretation. The only way to solve this is to have the customer’s engineers right here. There is no good way to do it if you are more than fifty miles away. (Saxenian 1990, p. 17)
In reporting the results of a survey of users of advanced manufacturing technologies in southern Ontario, Gertler (1995, p. 16) wrote that his interviews revealed an
emphatic and widespread agreement that site visits between user and producer—ideally throughout the entire acquisition [of a new technological] process—were absolutely crucial for ultimate success when the technology was new, complex, and expensive.
Typically, face-to-face contact was deemed especially important during the installation and initial operation of a newly acquired technology. But actually, the importance of face-to-face communication went beyond the effective exchange of information. It was also judged extremely useful in delivering training to the user’s technical and operative personnel. As he put it, printed manuals were often considered “next to useless” and videotapes were regarded as poor substitutes to “being there.” Gertler also mentioned the following anecdote to illustrate implementation difficulties resulting from geographical distance.
One [Ontario] medium-sized manufacturer of plastic products described how a service person for a machinery producer in Ohio failed repeatedly to solve the user’s technical problem despite repeated contact via telephone and fax. In frustration, the producer finally “sent a box of parts” by courier for the user to try. This strategy too was unsuccessful. After the user had incurred considerable expense and delay, the service person finally paid a site visit to the user’s plant, whereupon the problem was solved “in about five minutes.” (Gertler 1995, p. 11)
This author has also alluded to the difficulties faced by European producers in serving the North American market directly from Europe or through American distributors. Some evidence thus indicates that, unless the information transmitted is relatively standardized, new telecommunications technologies still cannot be substituted adequately for face-to-face contact.The conventionally held view that telecommunications technology will produce a decentralization of economic production is, as we have seen, a very old one. But history tells us otherwise, as typically better communication technologies are associated with a higher geographical concentration of decisionmaking centers and highly specialized productions of goods and services, while only the most standardized operations usually become truly footloose. And although, under particular circumstances, some people might like to work from their home offices, in the end it is probably true that most humans are really social animals who like to be with other humans.
Geographic Proximity and Human CooperationHuman cooperation is, of course, nothing new to Austrian economists (Mises 1966, p. 143). But cooperation of the type mentioned before is not always easily done, for the most important question is always: “Can I trust this guy?”, something which is still impossible to establish over a telephone or a computer. Lack of full trust or a sense of insecurity typically implies some concealment of information or the expensive hiring of attorneys. Geographical proximity, because of the frequent interactions and long-term contracts or commitments between people that it allows (whether in working environments or in social activities), often plays a crucial role in building the trust bonds that are needed in this process or in a successful customer-supplier relationship. As a Silicon Valley CEO put it:
We’ve never been successful for any length of time outside of a local area. We might get a contract initially, but the relationship erodes without constant interaction. Sophisticated customers know that you must be close because these relationships can’t be built over long distances. (Saxenian 1990, p. 22)
Many authors have, however, pointed out that regions dominated by large firms or branch plants, as well as almost all scientific parks, are less likely to develop cooperative behaviors than others in which the industrial structure is predominantly made up of small- and medium-sized businesses who need to get most of their inputs from their region (Piore and Sabel 1984; Hansen 1992).
Geographical Proximity and EntrepreneurshipAnother area where the recent economic geography literature differs markedly from older offerings is in the focus now being put on entrepreneurship, but more specifically on “spin-offs” or “start-ups.” Following Côté (1991), we can describe a typical situation. While employed, a dynamic worker acquires specialized knowledge and credibility in a particular line of business. He gets to know a number of workers who also possess specialized know-how in production, management, marketing, finance, and so on. He learns about the marketplace and about the features and weaknesses of products that sell. He also gets to know who matters in the industry, the important clients, the key distributors, the potential mentors. He learns about marketing practices and techniques, upcoming developments, and so on. Although he has seen reports on TV about great entrepreneurs, it is the successes of a former co-worker or of an acquaintance in his neighborhood that has made him realize that he too could make it on his own.Then one day, this salaried worker sees an opportunity in the marketplace, a fragment of work in which his current employer is not interested. Leaving the security of a salaried job, however, is not an easy decision. The potential entrepreneur recognizes that he is taking a risk with his money, his future, and that the opportunity that he wants to seize must be developed as quickly as possible in order to achieve a good position in the market. Finding competent employees quickly, various inputs at an affordable price, potential buyers, and maybe an investor who believes in him weighs heavily in his decision to launch or not launch his business. It is at this junction that agglomeration economies are often the key. Their importance is highlighted by the fact that most “spin-offs” always tend to be located close to their former employers. Thus, to take a typical example, the highly successful medical equipment industry of Minneapolis-St. Paul can in many ways be traced back to Medtronics, whose spin-offs include, or have included: Cardiac Pacemakers Inc., Renal Systems, Stimulation Technology, EMPI, Aequitron Medical, Med Tel, Medical Devices Inc., Pharmadyne Corp., Vivatron Inc., WR Medical Electronics Company, Population Research, Angiocor, Biomedicus Inc., Sei Med Life Systems, and Mentor (Miller and Côté 1987, p. 92). As one might expect, it has also been pointed out that cooperation with the parent company is often secured if the new product is different from that produced in the mother enterprise and that spin-off activities not only lead to the exploitation of product niches, but also to an intensive interplay among local firms (Hansen 1992).
The Problem With Recent ReconceptualizationsIf it is well known that people in organizations continually absorb new technologies (by buying them from external suppliers, inventing their own, or doing some of both) and that they also diffuse their own in numerous ways (by employees changing jobs, client-supplier relations, sponsor relations, incubation of entrepreneurs, etc.), it seems fair to say that local conditions often play a crucial, if neglected, role in this process. Although a large number of reconceptualizations have done a lot to point out the importance of local conditions, in the opinion of this writer most of these contributions do exhibit a major flaw. It is that, although their main goal is to explain the impact of local conditions on technological innovation, the analyses offered typically focus on highly specialized districts or holistic concepts. They implicitly ignore the most fundamental aspect of any type of creative process, which is that innovation typically proceeds by combining heterogeneous facts, ideas, faculties, and skills.As a design engineer has put it: “[the main thrust of an engineer is] to gather knowledge from diverse places in order to help solve technical problems” (Fores 1979, p. 853). This obviously has happened countless times in the past. Practical metallurgy thus began with the making of necklace beads and ornaments in hammered native copper long before knives and weapons were made. Ceramics began with the fire-hardening of fertility figurines molded of clay. Rotary motion was first used in the drilling and shaping of necklace beads, and it is most likely that the playful rolling of beads strung upon a wire is an antecedent to the idea of a pair of wheels turning purposefully on the axle of a cart or carriage, and so on (Smith 1982). There is actually plenty of evidence, both quantitative and qualitative, showing the importance of the diffusion of technical knowledge between industries (Glaeser et al. 1992; Desrochers 1996; Feldman and Audrestch 1997).If there are reasons to believe that small- and medium-sized firms get most of their technological inputs from their region’s industrial base, there are also many reasons to believe that they do not limit themselves to one industrial fragment of it. This is a point that the urban theorist Jane Jacobs addressed more than twenty-five years ago (Jacobs 1969). In short, her argument is based on the contention that the spatial concentration of large groups of people permits a great deal of personal interaction, which in turn generates new ideas, products, and processes. Although her argument on the importance of local conditions for the cross-fertilization of ideas and techniques is often sketchy, it proved to have remarkable insight.[15] It was also in many ways a forerunner of the current qualitative work now being done in economic geography, although, following Lucas’s endorsement (Lucas 1988), it mostly drew the attention of scholars with a more quantitative frame of mind. Some of them have presented evidence pointing toward the greater importance of industrial diversity on local job creation in both American (Glaeser et al. 1992) and Canadian cities (Coffey and Shearmur 1996), while others have used data on new product announcements at the city level to conclude that the presence of diverse industries within the same science-base in a city appears to lead to increased innovation (Feldman and Audretsch 1997). However, quantitative analysis cannot properly address the impact of local conditions on the cross-fertilization of knowledge, and only by looking closely at the actions of individuals will we gain any real insights into the processes at work (Desrochers 1996).Gutenberg’s invention of the printing press will afford a first illustration. In many ways, this story helps us to understand why historically most inventions have been made in cities, and why the combination of agglomeration economies and of various people interacting together indeed seems to be a major factor in technological creation. At the dawn of the fifteenth century, printing was no longer a novelty in Europe. Printing from wooden blocks on vellum, silk, and cloth apparently started in the twelfth century, and printing on paper was widely practiced in the second half of the fourteenth. Oddly enough, though, the starting point of Gutenberg’s invention was playing-cards on which a few words had been printed by way of rubbing wood-blocks on a sheet of paper. As he wrote in his correspondence to a clergyman:
Well, what has been done for a few words, for a few lines, I must succeed in doing for large pages of writing, for large leaves covered entirely on both sides, for whole books, for the first of all books, the Bible. How? If is useless to think of engraving on pieces of wood the whole thirteen hundred pages. . . . What am I to do? I do not know: but I know what I want to do: I wish to manifold the Bible, I wish to have the copy ready for the pilgrimage to Aix-la-Chapelle. (Koestler 1969, p. 122)
Gutenberg then searched for a device more resistant than wood-block, which lead him to notice the seals used to authenticate documents, but rubbing them on paper did not give a clear print. He found the solution one day, while attending a wine harvest near his city.
I took part in the wine harvest. I watched the wine flowing, and going back from the effect to the cause, I studied the power of this press which nothing can resist. . . . God has revealed to me the secret that I demanded of Him. . . . One must strike, cast, make a form like the seal of your community; a mold such as that used for casting your pewter cups; letters in relief like those on your coins, and the punch for producing them like the foot when it multiplies its print. There is the Bible! (Koestler 1969, pp. 123–24)
Closer to us is Stan Mason, a prolific inventor who has made innovations in a wide range of industries.[16] Mason has frequently claimed that he doesn’t know a thing about a lot of things, but that he does keep a very thick Rolodex. According to one reporter, “for most projects, Mason calls in three or so outside experts to noodle the problem, usually without each other’s knowledge [and then] picks the best solution” (Cyr 1997, p. 47). Being based in the Connecticut extension of the New York City metropolitan area gives Mason the opportunity to easily access the tacit knowledge of a large number of experts, and clearly this seems to have been an asset in his case. Similarly, Petroski (1994, p. 35) describes the extraordinary ingenuity of Jacob Rabinow,[17] a man who lived almost all of his life in the bustling industrial and commercial diversity of New York City. His creativity was greatly enhanced by living in a city where he had contact with a variety of people and their wide range of technical problems. Rabinow was able to apply the knowledge he gathered to a broader range of problems than if he had lived in a less diverse environment.Another classical type of intersectoral diffusion is that many technology transfers between industries actually take place as a result of firms adding to, or switching, their product lines. This typically happens when individuals in a firm have developed a new technique in response to a particular problem in one industry and when it later becomes apparent that this technique, or the know-how associated with it, is applicable in another industry. This is a process that defies the economists’ notion of products or well-defined industries.[18] While trying to match patent classification and SIC classification for further statistical analysis, Schmookler (1966, p. 23) made some interesting comments on this issue.
[A major] deficiency arose from the fact that I could not assign many [patented] inventions to a single industry. In part this resulted from my own ignorance, but often it reflected the interindustry character of technology. Thus, a given improvement in the diesel engine may be used in generating electricity or driving a locomotive, a given bearing may be used in a shoemaking machine or a lawn mower, and a given knife may be used in harvesting or in kitchens. In consequence, the patent statistics used below generally do not include power plant inventions, electric motors, bearings, or other instruments or materials whose industry of origin was either multiple or simply not evident. Unfortunately, this means that the railroad data do not include inventions in the field of the steam or diesel engines, and that neither the farm nor the construction data include inventions on tractors.
This phenomenon is well documented, but to this writer’s knowledge, nobody has specifically looked at the impact of local conditions on this process. Although this was not the primary focus of their study, researchers have recently begun addressing this issue in some detail in the context of the skills acquired by various Montréal firms in developing new materials and technologies for a magnetic fusion facility (Trépanier and Bataïni 1995). Thus sometimes the specific technology, but more typically the know-how that was developed in providing new components and apparatus for this particular facility, has been reused in fourteen other domains such as telecommunication, aerospace, and electronics industries. In most cases, geographical proximity was deemed crucial in the development of new technologies by providing a setting for frequent face-to-face communication between people working in various industries and in the magnetic fusion center itself and, in a later stage, by providing either local customers or a network of various technical people on which the firms could rely were they to run into particular problems in selling and implementing their new expertise outside of Montreal’s metropolitan area.After a reasonably diligent search (Desrochers 1996), I think that we can identify five frequent modes of intersectoral diffusion, although it is true that they are only variations of the combined problem-solving process involved in any creative act. Some of them occur in the diffusion of products or processes: (1) an individual working alone or for a firm[19] sells his new product or process to firms from various industrial sectors; (2) a product or process already sold to firms in many industries is improved in a specific manner, and this improvement in the product or process then benefits all the previous customers. Others occur in the production of products or processes: (a) individuals working for two or more firms from various industries collaborate to develop a new product or process; (b) a product or a process already used in one industry is noticed and picked up by an individual working in another industry, with or without the collaboration of individuals working in the industry of origin; (3) an entrepreneur/manager hires workers from another sector so that they can apply their knowledge to a new production. If there are still no detailed studies of the impact of local conditions on these processes, it seems fair to postulate that the phenomena described earlier will probably play the same role here.Without getting into the specifics of each of these modes of diffusion, the following example will provide an illustration of these processes. In the 1980s, aerospace manufacturers began using carbon composite material instead of aluminum to make tail sections, wings, noses, and fuselages. Used first in tennis rackets and skis, composite material is just as strong but typically only weighs about half as much as aluminum. But it is also far more expensive and much more difficult to handle because if the composite material is not kept refrigerated before being cut to the proper shape, the material will be wasted. Properly refrigerating a huge aircraft while in production, however, was no simple task. When production managers at Northrop began wrestling with this practical dilemma, one of them decided to call up the refrigeration specialists at Sara Lee. Not long after that, knowledge and expertise gathered through decades of refrigerating large facilities became part of modern aircraft production technology (Rothschild 1990, p. 128).Examples of this type abound, either in historical records, technical magazines, or newspapers, but although the reasons for these transfers are intuitively well understood, their timing and the circumstances that are conducive to them are still not very well documented, probably because they usually don’t leave any of the “paper trails” which social scientists are used to following. Nevertheless, they appear to be an important determinant of technological progress. One may hope that they will generate more interest on the part of students of regional growth in years to come. The final words here belong to scientist/entrepreneur/manager turned academician Ralph Landau.
Once, in a philosophical discussion with a representative from my corporate partner . . . we examined why our relatively small research organization consistently seemed to produce extraordinary results when many other similar organizations in large companies did not, despite the obvious advantages they were offered. We attributed it in part to the fact that we had employees who lived close to the large metropolitan center of New York and who were intimately involved with global problems through the participation of the entire organization in world affairs. This gave them an extremely cosmopolitan perspective.
In private life, these people enjoyed many of the features that only a large city can offer. In fact, the kind of person who is attracted to New York is very often the kind who would not fit into the culture of a large company. For New York one can substitute few other major cities in the United States. Nevertheless, research organizations are often located on predominantly semi-rural or rural campuses where it is supposed that people can think more effectively. I have often felt that this is not always so and that the research environment for an industrial organization requires a feeling of intense energy—even pressure—and the knowledge that there are important problems that must be solved every day. (Landau 1996, p. 2)
ConclusionEconomic geography as an area of inquiry has enjoyed tremendous popularity in recent years, as it moved from essentially the two sides of location theory—the cost-oriented analysis of optimum plant location and the demand-oriented analysis of sales areas—to more qualitative analysis of networks of firms and the regional systems they generate. The main message emerging from the new literature is that if geography is not always a necessary condition for innovation, some environments are more likely than others to bring forth a stream of innovations. There are still, however, a number of problems with recent contributions and thus a number of reasons to believe that an Austrian perspective on regional analysis could add much to the study of these questions.Somewhat paradoxically, the new popularity of economic geography has not so much been the outcome of economic geographers and regional scientists somehow being able to market their work to a larger audience, but rather the result of a number of outsiders to the discipline who have stressed the importance of geographical space to an audience unfamiliar with these issues, often enough making a name for themselves in the process or confirming their reputation as “authentic visionaries.” Thus, few people paid attention to the “Third Italy” phenomenon before Michael Piore and Charles Sabel presented the work of Italian scholars to the world in their 1984 bestseller, The Second Industrial Divide. Clusters of innovative firms were “discovered” by many people through Harvard Business School’s Michael Porter in his 1990 Competitive Advantage of Nations. Lately, business guru Kenichi Ohmae (1995) has been praised by one Wall Street Journal reviewer for advancing the “provocative thesis” that nation-states are dinosaurs waiting to die and that there are mysterious creatures, region states, each inhabited by five to twenty million people, that have somehow emerged as real natural units. By and large, these works have been welcomed by economic geographers and regional scientists as interesting additions to their own work.The same can probably not be said about the work emanating from more mainstream economists who began “discovering” geography at the turn of the decade, mostly through the work of Paul Krugman (1991). Thus, the reviewer in the Southern Economic Journal obviously had a vocabulary problem when describing his admiration for Krugman’s “meaty ideas” such as his insight of bringing “Alfred Marshall up to date” and for making the important observation that “most localizations are not high-tech” (Khalil 1992). In what has now become a typical disclaimer, prominent mainstream economists have recently written: “The second set [of theories of international trade patterns] interacts increasing returns with transport costs to create what Krugman . . . has clubbed models of ‘economic geography’” (Davis and Weinstein 1996).The point here is not to express the frustrations of geographers and regional scientists with the recent work of mainstream economists,[20] something which has been done in much detail elsewhere (Martin and Sunley 1996; Hansen 1995), but rather to underline the fact that many economists, from the neoclassical mainstream to the various neo-institutionalist subdivisions, have admitted the value of a geographical perspective to our understanding of a market economy. Only Austrians as a group seem to have been spared the “geography fever” of recent years, although Austrian economics has recently been making some headway in regional analysis (Kirat 1993; Hite 1995). It is to be hoped that this article will have convinced some long-time Austrian scholars of the importance of a geographical perspective to our understanding of market processes, and that before long regional analysis will benefit from their unique perspective.ReferencesAllen, M., ed. 1997. Ideas that Matter: The Worlds of Jane Jacobs. Owen Sound, Ont.: Ginger Press.Arthur, B. 1990. “Positive Feedbacks in the Economy.” Scientific American 262 (February): 92–99.Bradfield, M. 1988. Regional Economics. Toronto: McGraw-Hill Ryerson.Coffey, W. 1992. “Géographie, économie et science régionale.” In Encyclopédie de géographie. A. Bailly, R. Ferras, and D. Pumain, eds. Paris: Economica. Pp. 159–76.Coffey, W., and R. Shearmur. 1996. “Employment Growth and Change in the Canadian Urban System, 1971–94.” Working Paper no. W-02. Ottawa: Canadian Policy Research Networks.Côté, M. 1991. By Way of Advice. Growth Strategies for the Market Driven World. Oakville, Ont.: Mosaic Press.Courlet, C., and B. Soulage. 1995. “Industrial Dynamics and Territorial Space.” Entrepreneurship and Regional Development 7: 287–307.Cyr, D. 1997. “How to Solve Almost Anything.” US Airways Attaché (November): 46–48.Davis, D.R, and D.E. Weinstein. 1996. “Does Economic Geography Matter for International Specialization?” NBER Working Paper #5706. Cambridge, Mass.: National Bureau of Economic Research.Desrochers, P. 1996. “Création technologique et diversité locale.” In Stratégie et croissance des PME. R. Beaudoin, et al., eds. Trois-Rivières: Université du Québec à Trois-Rivières. Pp. 492–508.Dicken, P., and P.E. Lloyd. 1990. Location in Space. Theoretical Perspectives in Economic Geography. 3rd ed. New York: Harper Collins.Feldman, M.P., and D.B. Audretsch. 1997. “Science-Based Diversity, Specialization, Localized Competition, and Innovation.” Paper presented at the 67th annual meeting of the Southern Economics Association, Atlanta, Georgia, November 21–23.Feldman, M.P., and R. Florida. 1994. “The Geographic Sources of Innovation: Technological Infrastructure and Product Innovation in the United States.” Annals of the Association of American Geographers 84, no. 2: 210–29.Fetter, F.A. 1977. Capital, Interest, and Rent: Essays in the Theory of Distribution. Kansas City, Mo.: Sheed Andrews and McMeel.Fores, M. 1979. “The History of Technology: An Alternative View.” Technology and Culture 20, no. 4: 853–60.Garofoli, G., ed. 1992. Endogenous Development and Southern Europe. Aldershot: Avebury.Gertler, M.S. 1992. “Flexibility Revisited: Districts, Nation-States, and the Forces of Production.” Transactions of the Institute of British Geographers n.s. 17: 259–78.———. 1995. “‘Being There’: Proximity, Organization, and Culture in the Development and Adoption of Advanced Manufacturing Technologies.” Economic Geography 71, no. 1: 1–26.Glaeser, E., H. Kallal, J. Scheinkman, and A. Shleifer. 1992. “Growth in Cities.” Journal of Political Economy 100, no. 6: 1126–52.Griliches, Z. 1990. “Patents Statistics as Economic Indicators: A Survey.” Journal of Economic Literature 28: 1661–707.Hansen, N. 1992. “Competition, Trust, and Reciprocity in the Development of Innovative Regional Milieux.” Papers in Regional Science 71, no. 2: 95–105.———. 1995. “Regional Science, Regional Policy, and the ‘New’ Regional Economics: Future Possibilities in Historical Perspective.” International Regional Science Review 17, no. 3: 337–42.Hayek, F.A. 1948. Individualism and Economic Order. Chicago: University of Chicago Press.Hippel, E. von. 1988. The Sources of Innovation. New York: Oxford University Press.Hite, J. 1995. “We are not Rats: Seeking a Regional Version of Austrian Economics.” International Regional Science Review 18, no. 2: 177–83.Hoover, E., and F. Giarratani. 1984. An Introduction to Regional Economics. 3rd ed. New York: Alfred A. Knopf.Jacobs, J. 1969. The Economy of Cities. New York: Random House.Joyal, A. 1996. “Milieu innovateur, développement local et PME québécoises innovantes.” In Stratégie et croissance des PME. R. Beaudoin, et al., eds. Trois-Rivières: Université du Québec à Trois-Rivières. Pp. 272–86.Julien, P.-A., J.-B. Carrière, L. Raymond, and R. Lachance. 1994. “La gestion du changement technologique dans la PME manufacturière au Québec: une analyse de cas multiples.” Cahiers de recherche 94–06. Université du Québec à Trois-Rivières: Université du Québec à Trois-Rivière.Kealey, T. 1996. The Economic Laws of Scientific Research. New York: St. Martin’s Press.Khalil, E.L. 1992. Book Review of Geography and Trade by Paul Krugman. Southern Economic Journal 59, no. 2: 337–39.Kirat, T. 1993. “Innovation technologique et apprentissage institutionnel: institutions et proximité dans la dynamique des systèmes d’innovation territorialisés.” Revue d’économie régionale et urbaine 3: 547–64.Koestler, A. [1964] 1969. The Act of Creation. London: Hutchinson of London.Krugman, P. 1991. Geography and Trade. Leuven, Belgium: Leuven University Press jointly with MIT Press.Landau, R. 1996. “Entrepreneurs, Managers, and the Importance of Finance.” Daedalus 125, no. 2: 19–37.Lichtenberg, R. 1960. One-tenth of a Nation. Cambridge, Mass.: Harvard University Press.Lucas, R. 1988. “On the Mechanics of Economic Development.” Journal of Monetary Economics 22: 3–42.Maillat, D. 1995. “Territorial Dynamic, Innovative Milieus and Regional Policy.” Entrepreneurship and Regional Development 7: 157–65.Marshall, A. [1920] 1986. Principles of Economics. 8th ed. London: MacMillan.Martin, R., and P. Sunley. 1996. “Paul Krugman’s Geographical Economics and Its Implications for Regional Development Theory: A Critical Assessment.” Economic Geography 72, no. 3: 259–92.Massey, D., P. Quintas, and D. Weild. 1992. High-Tech Fantasies: Science Parks in Society, Science, and Space. London: Routledge.Miller, R., and M. Côté. 1987. Growing the Next Silicon Valley. Lexington, Mass.: Lexington Books.Mills, E.S., and B.W. Hamilton. 1994. Urban Economics. 5th ed. New York: Harper Collins College Publishers.Milne, W.J. 1993. “The Interaction between Regional Science and Economics: An Economist’s View.” Review of Regional Studies 23, no. 1: 66–72.Mises, L. v. 1966. Human Action. 3rd rev. ed. Chicago: Contemporary Books.Ohmae, K. 1995. The End of the Nation State: The Rise of Regional Economies. New York: Free Press.Petroski, H. [1992] 1994. The Evolution of Useful Things. New York: Random House.Piore, M.J., and C.F. Sabel. 1984. The Second Industrial Divide: Possibilities for Prosperity. New York: Basic Books.Porter, M.E. 1990. The Competitive Advantage of Nations. New York: Free Press.Rallet, A. 1993. “Choix de proximité et processus d’innovation technologique.” Revue d’économie régionale et urbaine 3: 365–86.Rosegrant, S., and D.R. Lampe. 1992. Route 128: Lessons from Boston’s High-Tech Community. New York: Basic Books.Rosenberg, N. 1970. “Economic Development and the Transfer of Technology: Some Historical Perspectives.” Technology and Culture 11, no. 4: 550–75.Rothbard, M.N. [1962] 1993. Man, Economy, and State. Auburn, Ala.: Ludwig von Mises Institute.Rothschild, M. 1990. Bionomics: Economy as Ecosystem. New York: Henry Holt.Saxenian, A. 1990. “The Origins and Dynamics of Production Networks in Silicon Valley.” Institute of Urban and Regional Development (University of California, Berkeley): Working Paper 516.———. 1994. Regional Advantage: Culture and Competition in Silicon Valley and Route 128.Cambridge, Mass.: Harvard University Press.Schmookler, J. 1966. Invention and Economic Growth. Cambridge, Mass.: Harvard University Press.Scotchmen S., and J.-F. Thisse. 1994. “L’intégration du facteur spatial dans les modèles théoriques de concurrence.” Problèmes économiques no. 2373 (avril 27): 7–15.Scott, A.J. 1988. Metropolis. From the Division of Labor to Urban Form. Los Angeles: University of California Press.———. 1994. “Variations on the Theme of Agglomeration and Growth: The Gem and Jewelry Industry in Los Angeles and Bangkok.” Geoforum 25, no. 3: 249–63.Slaughter, S. 1993. “Innovation and Learning during Implementation: A Comparison of User and Manufacturer Innovations.” Research Policy 22: 81–95.Smith, C.S. 1982. A Search for Structure: Selected Essays on Art, Science, and History. Cambridge, Mass.: MIT Press.Sternberg, R. 1996. “Regional Growth Theories and High-Tech Regions.” International Journal of Urban and Regional Research 20, no. 3: 518–38.Storper, M. 1992. “The Limits to Globalization: Technology Districts and International Trade.” Economic Geography 68, no. 1: 60–93.———. 1995. “The Resurgence of Regional Economies, Ten Years Later: The Region as a Nexus of Untraded Interdependencies.” Revue d’économie régionale et urbaine 4: 605–44.Trépanier, M. and S.-H. Bataïni. 1995. Évaluation des retombées socio-économiques et technologiques du CCFM. Rapport synthèse. Montréal: INRS-Urbanisation.Waldrop, M.M. [1992] 1993. Complexity. New York: Touchstone.Williams, K., T. Cutler, J. Williams, and C. Haslam. 1987. “The End of Mass Production?” Economy and Society 16, no. 3: 405–40.Wise, M.J. 1949. “On the Evolution of the Jewelry and Gun Quarters in Birmingham.” Transactions of the Institute of British Geographers 15: 57–72.Pierre Desrochers teaches geography at the University of Montreal.[1] The recent work of mainstream economists will not be discussed at length in this article, mainly because in the opinion of this writer (and of most regional scientists and economic geographers) most of it is not very original. Additional comments and references on that issue can be found in the conclusion of this article.[2] There have been many reviews of this literature in recent years. See, among others, Courlet and Soulage (1995), Garofoli (1992), Hansen (1992), Maillat (1995), Saxenian (1994), Sternberg (1996), and Storper (1995).[3] To put things briefly, most science parks which have attempted to replicate the processes that will be described in this article have been failures. See, among others, Côté (1991) and Massey et al. (1992) for a broader discussion of this topic.[4] A number of authors have pointed out that the conceptual apparatus used in the last two decades has still not been clearly defined, still lacks operational feasibility, and has often led to analytical confusion (Sternberg 1996). Storper (1992, p. 85) has even written that these concepts are sometimes so vague that they can be cut “to fit any circumstance, and that no particular factor or combination thereof corresponds to the cases.”[5] In short, the fordist mode of production, consisting of the mass production of standardized outputs using single-purpose equipment, is allegedly being replaced by newer production systems more attuned to greater demands for quality and variety, relying mostly upon flexible machine tools, programmable multi-task production equipment, just-in-time deliveries, and greater worker responsibility for work organization and quality control (Piore and Sabel 1984). For a critical look at this thesis, see Williams et al. (1987) and Gertler (1992).[6] On the relationships between economics and spatial analysis, see, among others, Hoover and Giarratani (1984), Dicken and Lloyd (1990), Coffey (1992), Mills and Hamilton (1994), Milne (1993), Feldman and Florida (1994), Scotchmer and Thisse (1994), and Hansen (1995). There are at least three theoretical traditions in spatial analysis, all of which are discussed at length in the classic textbook in economic geography (Dicken and Lloyd 1990): the neoclassical, the behavioral-organizational, and the structuro-marxist.[7] There will be a number of references to Silicon Valley in this article, but similar answers are obtained in all unplanned geographically localized industries (whether in manufacturing, financial services, entertainment, etc.). The emphasis on Silicon Valley is used mainly to illustrate that even in the industries most likely to use sophisticated means of communication, physical proximity still has some important benefits.[8] Classical articles on this topic are F.S. Hall’s Census monograph, “The Localization of Industries” (U.S. Census of 1900, Manufactures, part 1, pp. cxc–ccxiv); chapter 5 of A. Weber’s 1909 Theory of the Location of Industries; and A.P. Usher’s note on the location of industries in the 1912 U.S. Census of Manufactures. A classic analysis of the clustering of certain manufacturing industries on the basis of agglomeration economies external to the individual firm is Lichtenberg’s (1960) study of the New York metropolitan-region in which he identified eighty-seven industries dominated by external-economy factors of location. For a more colorful description of geographically concentrated industries, one can also look at some of the earliest articles (1937) of a young freelance journalist, Jane Butzner—who would later marry an architect by the name of Robert Jacobs—on the flower and diamond districts of New York City. These articles were recently reprinted in Allen (1997).[9] Marshall’s characterization of industrial districts reportedly appeared in the first edition of his Principles in 1890 (see chapter 10, book 4 of his Principles of Economics, 8th ed., 1920, for the quotations used here).[10] For example, various firms in the petro-chemical industry will cluster their installations to save on the cost of pipelines, oil ports, etc.[11] Marshall (1986, pp. 225–26) noted that this benefited both the workers and the employers: Employers are apt to resort to any place where they are likely to find a good choice of workers with the special skill which they require; while men seeking employment naturally go to places where there are many employers who need such skills as theirs and where therefore it is likely to find a good market. The owner of an isolated factory, even if he has good access to a plentiful supply of general labor, is often put to great shifts for want of some special skilled labor; and a skilled workman, when thrown out of employment in it, has no easy refuge. Social forces here co-operate with economic: there are often strong friendships between employers and employed: but neither side likes to feel that in case of any disagreeable incident happening between them, they must go on rubbing against one another: both sides like to be able easily to break off old associations should they become irksome. These difficulties are still a great obstacle to the success of any business in which special skill is needed, but which is not in the neighborhood of others like it.[12] Thus, Detroit’s auto industry before Henry Ford and Alfred Sloan, was made up of a huge number of small firms.[13] The silk and textile district of Lyon thus fell victim in the 1960s to the French state’s campaign of economic modernization (i.e., unilateral mergers), whereas the gun district of Birmingham (U.K.) was dealt a major blow by state encouragement of mass-production in non-central areas.[14] Kealey (1996) reminds us that this is a point Adam Smith made in the Wealth of Nations.[15] This article can thus be interpreted as an attempt to clarify and elaborate on Jacobs’s work.[16] A man who, among other things, perfected the stringless Band-Aid package, the squeezable ketchup bottle, wilt-proof microwave cookware, placenta bins, double-sided acne pads, and plastic underwire supports for bras. His clients have ranged from medical entrepreneurs to Pepsico. In inventing across industries, this inventor reflects the rule rather than the exception.[17] Born Jacob Rabinovich, he produced a huge number of inventions ranging from self-regulators for watches and clocks to the automatic letter-sorting machines used by the Postal Service.[18] As the prominent mainstream economist Zvi Griliches has put it, the idea of a well-defined industry “may be a mirage anyway” (Griliches 1990, p. 1666).[19] There can, of course, be more than one individual involved.[20] Although a comment is probably worth making here. The most prominent mainstream economists involved in the “new regional economics” are also regulars of the trendiest academic think tank, the Santa Fe Institute, where they closely interact with luminaries of diverse fields (physics, cognitive psychology, computer science, etc.) (Waldrop 1993 [1992]). As might be expected, their work shows tremendous cross-fertilization of ideas from these other fields, yet some of them, such as Brian Arthur (1990) and Paul Krugman (1991), cling to the view that the regional specialization of industries is somehow the most efficient form of spatial organization. One of the few exceptions in that group is Jose Scheinkman (Glaeser et al., 1992). This probably shows that there is nothing mechanical about the cross-fertilization of ideas, and that any attempts at formalizing this phenomenon as if it was somewhat automatic is probably misguided.
Although Frédéric Bastiat disproved it years ago, many still believe that natural disasters increase economic growth, writes Frank Hollenbeck. This audio Mises Daily is narrated by Allan Davis.
The F. A. Hayek Memorial Lecture, sponsored by Butler Shaffer. Recorded at the 2014 Austrian Economics Research Conference in Auburn, Alabama, on 21 March 2014.
Everyone is well-aware of record snow in the northeast and a drought in the west. I think back to when I was a Philadelphian who had never crossed the Mississippi and realize how foreign the weather of California is to the average east-coaster. In the San Francisco Bay Area and the Central Valley, alike, it does not rain between about April 1st and October 1st. I don’t mean “it doesn’t rain much.” I mean it Does. Not. Rain. At. All.
In the Bay Area, the winters are quite wet, with a light rain falling most days in certain areas (microclimates are another foreign concept to much of the country). In Fresno and the rest of the Central Valley, rainfall totals 6-12 inches on average, with all of that accumulating from October to March. But, we have the Sierra Nevada’s to our east to catch moisture in the form of snow, and store it for the dry season. The snow melts and, historically, flowed through large rivers such as the San Joaquin, to the Pacific. Prior to federal water projects, steamboats came to dock in Fresno. Here’s what the San Joaquin River looks like today. And here it is about 100 years ago (or here’s another before and after comparison). There is a dam right outside of town, built during the New Deal, of course.
Clearly, the state has not been a good steward of the environment. But at least clean water is getting to people who need it, right?
It doesn’t matter what constituency you belong to in California; chances are you are unhappy with your allocation or quality of water. Last week, it was announced that some farmers in the valley are getting cut out in the drought. They think the city folks in San Francisco and Los Angeles are taking more than their fair share. The “city folks” think industrial agriculture is taking more than its fair share. Residents across the state are constantly being admonished to conserve, with rationing of various types taking place. Cambria, a coastal community (where fog is the predominant form of moisture) essentially ran out of water, and that was before the current state-wide drought. Studies of tap water in poor agricultural communities shows alarming levels of toxins. And, of course, environmentalists are concerned about the effect of diverting water to people or wildlife.
None of these special interests are specific to a drought; this is an ongoing battle, even in “wet” years. This year, however, the stakes are raised. Not only is rainfall low, but the snowpack in the Sierras is low. There hasn’t been enough precipitation in the mountains, and when there has been precipitation, it has often been too warm for snow and it has fallen in the form of rain. That gives us some water now, but does not bode well for the long dry season ahead.
Sadly, all eyes have turned to local water officials, Governor Jerry Brown, and, of course, President Barack Obama. Obama recently came to visit the Central Valley for the first time ever for precisely this reason. The same constituencies have the same tired arguments and complaints with no play being given to ideas outside of the box. It is no surprise to anyone who reads the history of the state’s involvement in water issues: the status quo is ingrained and it is extremely difficult to imagine an alternative. A transition out of this mess is even harder to imagine. But once you realize that it is not a question of if the system will fail, but when, you realize it is essential that we de-socialize water in the arid west immediately.
Real Water RightsThe total privatization of water is the best way to avert disaster in the arid west. The disaster is not necessarily imminent, but it is inevitable because there are no significant incentives to conserve this resource in its current socialized state. Privatization does not mean selling dams and reservoirs and municipal water companies to private investors who are then allowed to operate as protected monopolies. Privatization means that you own the rights of the water on your land, and individuals can own real estate in water (lakes, rivers, oceans). A transition to such a state of affairs is likely to be painful, as 100+ years of damage by socialization of water must be undone. But, I am certain that the process will be relatively quick compared to the long, drawn-out suffering that is in store if water socialism is allowed to continue.
I know that a private water supply would be an improvement over present conditions, but that is neither why I am in favor of it nor likely to persuade the mainstream. For those liberals who see that a free market in water certainly could be no worse than the economic and environmental destruction done by the government monopolies, a disdain for profit and misguided faith in democracy prevents their endorsing privatization. But, the history of the Bureau of Reclamation and the present state of local, state, and federal water ownership shows that water is not controlled by a democratic process. The very existence of several disparate groups, each with their own agendas, has meant that special interests control the water. Western farmers have been receiving water subsidies, paid for by taxpayers, and will continue to receive special water allocation regardless of droughts or environmental lobbying because they currently supply an enormous amount of food to the nation and the world, and constitute a substantial portion of the economy.
Most farmers of the valley, and many residents of the valley cities, vote Republican and espouse free-market rhetoric and a more individualistic attitude. Except, of course, when it comes to water subsidies. It is always the Democrats in D.C. who are at fault when water is tight, but Valley residents seem to be unaware that it was the Progressives of the past who built the dams and aqueducts.
The Progressives’s Bureau of ReclamationJim Powell’s Bully Boy brings up an interesting point about the Homestead Act luring poor people to farm the arid lands out west. This had several repercussions: deaths due to harsh winters, a glut of farmers and farmland (later leading to more lobbying by farmers for relief), and a need for irrigation (and distorting the market to invest capital in irrigation technologies). Rather than allow the west to remain unsettled as farmers and irrigation companies died, both figuratively and literally in the former case, Teddy Roosevelt’s bizarre focus on preventing foreign invasion led him to break rank with the Republicans and provide irrigation subsidies to western farmers. Powell adds, “It was curious that Roosevelt, who crusaded against private monopolies, approved of the Reclamation Service [now Bureau of Reclamation] as a dam-building monopoly.”
The Reclamation Act led to another market distortion and, ultimately, corruption. Land speculation took off as investors tried to predict where the feds would build a dam and encourage settlement. The Owens Valley scandal, in which water was unethically diverted from local irrigation to Los Angeles by the Reclamation Service, led to further distortions. The city government acquired the water monopoly and below-market water prices followed, encouraging a further increase in population.
Municipal Water MonopoliesThis story continues to the present day. Until last year, residential water in Fresno (delivered by the municipal water monopoly) was not metered. Residents were charged based on the size of their lot. To encourage conservation, the city enacted rationing laws: you can be fined for watering your garden or lawn on the wrong day and at the wrong time of the day. But the laws are openly ignored because enforcement is too costly. In addition to rationing, my husband tells me that there were public service announcement campaigns when he was growing up describing when one should, and should not, flush his or her toilet.
In order to get residential metering to be politically palatable, promises were made that average water bills would not be higher, so rates were set low enough to ensure that residents would not face suddenly higher bills. These rates are too low to be sustainable in that water use is continuing to lower the water supply faster than it is replenished by nature. To the shock of no one who is paying attention, after the water meters were approved and installed city-wide, the city notified customers of proposed rate increases over the next several years. Hearings were held, and maybe, one day, water rates will increase, but probably not nearly enough to encourage true conservation. The kind of conservation that occurs when a free market pricing system encourages allocation of scarce resources is based on the most pressing needs. As Murray Rothbard wrote in 1977, “If the water industry were free and competitive, the response to a drought would be very simple: water would rise in price.”
We are in a drought and water prices have not increased on paper. The municipal bureaucracies can not react quickly to changing conditions (indeed, one may note that they can only react glacially). Water rates are a political question as much as they are an economic or ecological question.
The Perennial Left-Right “Battle”But, for some farmers, water prices will increase to infinity in practice: there will be a government-induced shortage and farmers will not be allowed to use more water no matter how much they would be willing to pay. But the solution is not, as the local Tea Party implies, to continue to give farmers below-cost water while cutting off water to the big, liberal cities.
There are parts of the west where farming does make sense and would continue to thrive in a free-market water system. But the choice of crops, location of farms, and farming practices would have to be quite different from the average seen today. A distinct benefit of farming in the eastern Central Valley of California — where we can see the snow-pack on the Sierras that ensures some amount of water for irrigation year round and where rivers and streams flowed before various government water projects dried them up — is that the growing seasons are very long and, indeed, some vegetables can be grown year-round. Many vegetables have growing seasons that complement those where winters are harsh; lettuce does not do well in our very hot summers, but thrives from early fall through mid-spring, precisely when it is not growing in the east.
I know of a local organic farm that pumps water from wells on its land and eschews the aqueduct water allotment provided by the taxpayers out of principle. It can be done, but there is no economic incentive for the majority of valley farmers to conserve water and choose crops and farming practices that are a better match for the water supply. Thus the big-city liberals are correct that the valley farming practices are wasteful and it is environmentally harmful to divert ever more water to the farms. The supposedly free-market conservatives in the valley should understand that a socialized water system will lead to waste.
But I wonder if the big-city liberals are aware of the environmental irresponsibility of enforcing city-ownership of reservoirs hundreds of miles away. Returning to Powell’s analysis in Bully Boy, the aims of government control of water are internally at odds with each other:
[Roosevelt’s Inland Waterways Commission] offered platitudes promising something for everybody: “Plans for the improvement of navigation in inland waterways ... should take account of the purification of the waters, the development of power, the control of floods, the reclamation of lands by irrigation and drainage, and all other uses of the waters or benefits to be derived from their control.”
But some of those aims conflicted with others. If the primary purpose of a dam was to produce hydroelectric power, there had to be a reasonably full reservoir behind it. If the primary purpose was flood control, however, a reservoir had to be empty so there would be capacity for floodwater. If a reservoir was empty, or if water was substantially drawn down for irrigation or for industrial or household use, navigation would be impossible.
And where does environmental stewardship come into play when the city must make sure that residents, tourists, and businesses have cheap, running water so they can continue to pay taxes to cover city officials’ salaries?
It is hardly a paradox why the special interests on the left (protect the environment and send water to the cities) and the right (protect the farmers) ignore the history of water in the west and the obvious failings of the present system. “The alternative, of course, is unknown and unseen.” The alternative has certainly never been seen by those currently living in the arid west, and that is a survival tactic for the biggest special water interests of all: the Bureau of Reclamation and the state and city water authorities.
[LewRockwell.com, February 26, 2014]
The political debate over what should be done about endangered species seems to be continuing without end. Calls are already emerging this year to place a multitude of species on the endangered list, including the emperor penguin, the Arizona toad, the African lion, as well as many others.
The current endangered species list of both plants and animals numbers over 9,000. This is considerably higher than the 78 different species mentioned under the original Endangered Species Preservation Act of 1966. Nearly 50 years later, 72 of these 78 species still remain on the list, with only 2 recovered, 3 extinct, and 1 removed due to an error in the data.
Since Richard Nixon signed the comprehensive Endangered Species Act of 1973, intended to “halt and reverse the trend toward species extinction, whatever the cost” (emphasis added), only 30 of these 9,000 species have actually recovered, with ten having gone extinct. This gives the Act, enforced by both the U.S. Fish and Wildlife Service (FWS) and the National Oceanic and Atmospheric Administration (NOAA), an abysmal success rate of less than 1 percent despite an average yearly budget of nearly $2 billion.
Also signed in 1973 by 80 different governments was the CITES treaty, designed to “ensure that international trade in specimens of wild animals and plants does not threaten their survival.” Examples are the illegal rhino horn and elephant tusk markets.
In a recent move that is likely to come as a surprise to many animal lovers around the world, the South African government is asking the international community to legalize the rhino horn trade as a means to save the animal and to fight poaching.
The justification for this is clear: by banning the sale of the horns and thus making them less available, the price for them has gone through the roof, creating incredible monetary incentives for poachers. Meanwhile, the rhino has been stripped of a major source of its value in legal markets, which has caused private owners of rhinos to question the profitability of providing heavily for the animal’s security.
Such perverse forces are at play regarding the entire endangered species list, as the very status “endangered” makes it near impossible to make any money from the animals.
Although some animal-protection activists no doubt abhor the idea of profiting from animals, making such profits illegal has clearly done nothing to protect those on the endangered list, as it appears that so few of these species will ever be delisted. It is far more likely that the only way to save them is through free markets and privatization, as was seen in the case of the American bison, also known as the American buffalo.
The American BisonOne major reason for the dramatic decrease in bison (buffalo) population figures from the tens of millions that lived in 1800 to only a few hundred living in the 1880s, is what economists call a tragedy of the commons.
When property is privately owned, there are incentives to save and conserve resources because of the possibility that a more opportune time for their employment may appear down the road. To the extent that such resources generate income for their owners, plans will be made so as to preserve them into the foreseeable future. In other words, an individual who sells buffalo products for a living will be in dire financial straits if the entire bison population is eradicated.
A tragedy of the commons situation emerges wherever there is common (public) access to property. Under such conditions, massive costs are imposed by attempting to save resources because after all, if you don’t use it, someone else will. The tragic aspect of common ownership then is that the resource in question becomes over utilized at unsustainable levels, as was seen with the un-owned (wild) buffalo.
For hundreds of years, the Native Americans hunted the buffalo for food and resources, but the human population was so small at this time that there were no concerns of endangering the animal.
Everything changed with the Industrial Revolution where not only was the American population massively expanding, but so was the demand for buffalo products. Of course most of the plains buffalo were located far enough west that this land was largely un-owned by whites, resulting in an indiscriminate slaughter; the years 1872 and 1873 alone recording more than 3 million bison killed.
Furthermore, the railroads assisted in this annihilation because buffalo herds were at one point so large that they were known to delay trains for days on end. This is another example of the commons problem — as was the increasing prevalence of “hunting for sport”: if the buffalo were privately owned, interfering with the railroads would constitute trespassing, a liability the bison owners would have an incentive to avoid.
The second major reason for the near extinction of the buffalo was state-controlled land and all of the moral hazards that accompany it.
Official federal government policy also helped speed the decline of the bison. In addition to the vast tracts of unsettled land, there were still considerable Native American populations calling the region home. The U.S. government, however, wanted this land for itself and proceeded to force the natives onto so-called “reservations.” War naturally broke out with the U.S. military. Led by the bloodthirsty General William Sherman, the U.S. military adopted a scorched-earth policy which included attempts to eradicate the bison herds from the plains.
But even disregarding such ill-intentioned people, those within the government that truly wanted to preserve the buffalo were unsuccessful too.
Although Idaho, Texas, New Mexico and other states passed laws similar to the Endangered Species Act, they often failed to do so before it was too late and the buffalo were already gone. In 1872 Yellowstone National Park was opened as a safe haven, but poaching still remained a substantial problem. Henry Yount, remembered for his time at Yellowstone as the first national park ranger, resigned after only 14 months on the job because he knew his efforts alone were hopeless.
Thankfully for the bison, Charles Goodnight, James McKay, William and Charles Alloway, as well as a host of other private ranchers began to scoop up wild buffalo throughout the 1860s and 70’s. From 1884 to 1902, the bison population in Yellowstone actually decreased from 25 to 23, but also by 1902, an estimated 700 were privately owned. This trend has continued for more than a century, as by the 1990s the ratio was 25,000 publicly-owned to 250,000 privately-owned bison.
ConclusionWhether speaking of the South African government, the FWS and the NOAA, or the U.S. government in general, the continual failures to protect endangered species emerge as the result of an allocation problem.
Whereas private owners use basic accounting to determine if they are making profits or suffering losses, government activities are not subject to such constraints because the state is able to externalize its costs onto others through taxation. Private firms who displayed such an unbroken record of failure would have closed their doors years ago.
The bison experience shows us that not only are governments often responsible for putting many species in danger in the first place, but that their efforts at species preservation cannot match the success of private ownership.
The Free Market 30, no. 9 (September 2012)For real life-headlines worthy of The Onion, one needs look no further than the doings of the U.S. government and its agencies. One week after Hurricane Sandy devastated the New York area, with a new storm on the way and almost 10,000 Staten Islanders still without power and scavenging for food, “FEMA Center Closed Due to Bad Weather” hung on the door of a newly-opened Staten Island FEMA office. Ten FEMA offices in the disaster- stricken area actually closed as the second storm hit.
So much for “first responders.”
Skepticism of governmental rescue efforts springs from more than natural cynicism. For perfectly practical reasons, state authorities have rarely been first to respond to disasters, and often get in the way when they finally do. It stands to simple reason: major incidents typically occur with alarming suddenness, too quickly and messily for lumbering bureaucracies to gather information and organize an effective response. Only local individuals and small, flexible groups are suited for prompt, decisive reaction.
(Not surprisingly, this observation is identical to an argument against central economic planning: vast political assemblages are simply unable to quickly process large volumes of information. When information must disseminate through myriad layers of decision makers elevated by influence rather than competence, the result is typically misuse—and in any case, never timely.)
The 240 million calls made to 911 emergency services in 2010 alone underscore the fiction that state agencies respond or act first. History shows that individuals— whether acting alone or through social, charitable, or business organizations—are the first to react to crises and to make a difference, only afterward calling for (and at times enduring) state aid. The following are a few examples.
The Great Chicago Fire, 1871
During the early hours of the Great Chicago Fire in October 1871, firefighters were ineffective owing to having fought several serious fires the day before; thus many volunteers—home and business owners—made up the first line of defense between property and the racing flames. Order was initially kept by citizens, with the private Pinkerton Agency later taking over.
The military arrived two days after the fire started and immediately imposed martial law— against the wishes of both the local population and mayor.
Johnstown Flood, 1889
The South Fork Dam (Pennsylvania) burst in May of 1889, and within minutes quick thinking residents with long forgotten names like Daniel Peyton and John Parke had abandoned their homes and businesses, mounted horses, and raced along the path of the flood to warn residents in imminent danger. The manager of the Western Union office in Johnstown, a certain Mrs. Ogle, stayed at her post to relay warnings down the valley despite entreaties to leave. By the time she had advised the final station of the impending cataclysm, she added, “This is my last message,” and was shortly thereafter overtaken and killed by the massive flood.
The Red Cross and the Army took several days to arrive, with one onlooker noting that the military arrived, turned out in their finest dress uniforms.
Galveston Hurricane, 1900
In September 1900, a massive hurricane more devastating in terms of dollar-equivalent damage than 2005’s Katrina, struck Galveston, Texas. On the evening that the storm struck, even as the scope of the damage was unclear and destruction ongoing, survivors gathered at the privately- owned Tremont Hotel to organize immediate rescue and relief efforts. For several days they dealt with the calamity locally, single-handedly.
San Francisco Earthquake, 1906
As often occurs after an earthquake, shaken but courageous survivors and pedestrians were the first to extricate victims from collapsed buildings. And when fires broke out shortly after the ‘quake, volunteers ran just ahead of the rapidly advancing flames, yelling into buildings and hammering on doors to alert residents. All over San Francisco, thousands fought fires and dynamited precariously teetering structures when firemen were too few, too late, or too exhausted to continue. Banker Amadeo Giannini first safeguarded depositors’ funds in his house, and then set up a desk in the street—a plank across two barrels. From there, he continued to not only take deposits, but make handshake-secured loans throughout the exigency, many of which jump-started the rebuilding of the city.
Accounts documenting the behavior of military personnel in post-earthquake San Francisco are mostly forgotten but bear repeating. One officer directed troops to shoot three citizens stranded on a rooftop who couldn’t be rescued. Another San Franciscan recalled seeing a soldier murder a policeman during an argument over disposing of bodies, and a banker was shot and killed searching the ruins of a bank he owned. A number of citizens, in fact, were shot for alleged looting while searching the ruins of their own homes.
Easter Tornado Outbreak, 1913
On Easter weekend, 1913, tornadoes wreaked havoc across major portions of the Great Plains and Midwest. In Omaha, Nebraska, the local, private telephone exchange served as the nerve center for the rescue efforts, with operators courageously staying at their posts before, throughout, and after tornadoes ripped through the town. Immediately after the destructive torrent subsided, hundreds of citizens gathered together, offering their homes, provisions, and money to care for the newly homeless, destitute and injured.
During the same outbreak in flash-flood ravaged Dayton, an otherwise unknown citizen named John H. Patterson hastily gathered 150 carpenters from the National Cash Register Co. and oversaw a boat building frenzy which saved numerous lives. And when troops arrived, their first act was to put the area under martial law.
Examples abound in the modern day as well. During the LA riots in 1992, after the terror attacks of September 11, 2001, and in countless other earthquakes, storms, floods, fires, blizzards, building collapses, mine cave-ins, crashes, and freak accidents of every variety, the most critical, earliest lifesaving and recovery efforts were administered not by tax-financed, uniformed agencies but by the people who were closest, whether they stood ready or not.
FEMA’s failure to act during Hurricane Katrina was, in some quarters, blamed on “racism”; yet days after Sandy struck the NYC metropolitan area, no official aid had arrived in the predominantly middle class, Caucasian and Asian neighborhoods in devastated Queens neighborhoods: communities that endured not only severe flooding but the subsequent destruction of over 100 homes by fire. With a vast array of historical evidence before us, lethal maladroitness—the type which closely accompanies command authorities with a monopoly on force—provides a more judicious explanation than simple bigotry.
In the Rockaways, three or four days after the storm struck, only the police were scarcer than electrical power and gasoline, so citizens took upon themselves the defense of their homes and property. And before FEMA offices opened and the Red Cross arrived with cookies and coffee—well-intended, but hardly what was critically needed—people like Roy Niederhoffer, a New York hedge fund manager, hastily organized makeshift caravans of rented trucks and personal vehicles stuffed with aid and supplies: canned food, flashlights and batteries, donated clothes and over-the-counter medications to homeless, cold and hungry victims. Another New York firm, Kenseal Construction, dropped off a truck-load of generators, flood lights, and cleaning supplies to a waterfront neighborhood in downtown Brooklyn.
And let’s not forget smaller, unmistakably valuable private actors: black-market gasoline sellers, instrumental in keeping the price system working when natural or artificial measures (i.e., rationing) suppress it; store owners who offered deeply discounted or free products to the afflicted; individuals in Hoboken, N.J. who hung power strips out of windows to let passersby charge their phones and laptops; and the many people who invited neighbors to stay in their homes until insurance payments come through or desperately needed repairs are made.
Governments are far better equipped to create chaos than to respond to it; better at hindering solutions than unearthing them. So in the wake of Hurricane Sandy, as always, let us honor the real first responders.
Environmentalists and mining companies are fighting over the fate of the remote Klappan Valley in northern British Columbia. The different sides struggle for government approval of their particular plans, but almost no one fully acknowledges the property rights of the first owners of the valley, the indigenous Tahltan people.The Tahltan have lived in and around the Klappan Valley since before there were any states at all in North America. They defended this rich territory against rival tribes, as Tahltan leaders put it, "from time immemorial, at the cost of our own blood," long before European contact.Wade Davis, The Sacred Headwaters, p. 21. They defended it against the mercantilist Hudson's Bay Company in the 1800s. And now they are defending it against the corporate cronies of the central government.
Over the last few decades, Canadian governments have granted licenses to numerous mining companies, allowing them to operate in Tahltan territory. The most controversial project is Shell Oil's coal-bed methane-fracking operation. It holds the risk of rendering the valley's water source (called the Sacred Headwaters), and the plentiful salmon-spawning grounds it supplies, unfit for life.There would be no problem if the mining projects held no threat of interfering with established Tahltan uses of the land.
Like everyone else, the Tahltan want to share in the wealth of the global division of labor. Most of them want some mining on their land, because they expect to benefit from jobs working in or supporting the mines.
But they also want to balance the extraction of new resources with the preservation of old ones — the rivers and lands that they have loved, protected, built campsites on, buried their dead in, and profited from materially for centuries.
After futilely objecting to several potentially destructive mining projects through various legal and political means, a group of Tahltan mounted a blockade on the road leading to their valley in July 2005. The blockade lasted 62 days, and was broken only after the arrival of the Royal Canadian Mounted Police.
Conflict and PropertyDisagreements over what should be done with any object are easy to resolve if some person or group clearly owns it. If you own a tree that you enjoy climbing, and I think it would be better used for firewood, my only choice is to convince you to chop it down and set the thing ablaze.
No matter how much I want to burn that tree, the decision remains yours. If you don't like my offer, you can simply say no.
The anarcho-capitalist philosopher Hans-Hermann Hoppe argues that "All conflicts regarding the use of any good can be avoided if only every good is privately owned, i.e., exclusively controlled by some specified individual(s) and it is always clear which thing is owned, and by whom, and which is not."
Without clear property rights, disagreements drag on and on, eventually ending up in the hands of the state, which is, as Hoppe says, "the final arbiter and judge in every case of interpersonal conflict."Hoppe, Democracy: The God That Failed, p. xx.
And, surprise, surprise, when we're arguing not about trees versus firewood but about gas mines versus burial grounds, the state tends to decide such conflicts in favor of whoever has enough money to bribe the bureaucrats.
By Canadian law, the Tahltan do not strictly own the valley. This is because their claim to it predates the existence of the Canadian state — and the government officials who conquered or negotiated treaties with most of the rest of Canada's indigenous people never came into most of what is now British Columbia (BC).
In the late 1800s, it seems, the colonial government believed that BC's "Indians" would simply give up and die out of their own racial inferiority. That didn't happen.
Therefore, in the words of anthropologist Wade Davis, "Not a single First Nation had been defeated in battle, and by legal definition none had settled with the Crown or relinquished title to their lands."Davis, p. 21.
So perhaps it's not surprising that the Tahltan give little credence to the paper laws by which the state has tried to give away the rights to their property.
As Tahltan Erma Bourquin put it, "If there is anything happening in this land, we should be the ones who can tell them where they can and cannot go. That is why we have a voice. The land belongs to us."Davis, p. xiii.
"Accommodation and Consultation"According to Canadian law, resource development on traditional territories requires "accommodation and consultation" with the indigenous inhabitants. This vague requirement has never been clarified by the state courts, and the only thing certain is that it stops short of requiring full consent.
In 2004, many Tahltan leaders had adopted the idea of accepting one mine per generation as a way of maintaining balance between old and new. But, Davis writes, they "struggled to cope with as many as 41 industrial proposals coming at them from all sides."Davis, p. 26. Why did the Tahltan have to struggle? Why couldn't they pick their favorite proposal and then simply say no to the other 40?
The problem is that the Tahltan are treated only as quasi owners of their territory. They do not have the legal right to simply refuse developments they do not like. Instead, to fend off a project, they must wrangle through government environmental reviews, impact assessments, and endless pages of legalese.
The Canadian state and the resource companies usually win out here by setting up a puppet indigenous-band government and then securing the approval of someone in that government by stuffing the puppet full of cash. If anybody objects, the state and its corporate cronies just point to their token indigenous guy, who gives a well-compensated thumbs up, and declare that the band has been consulted and accommodated.
In 2005, the elected Tahltan Central Council (TCC) had in fact agreed to several of the projects that were then blockaded, including one by Shell Oil and one by Fortune Minerals. But the people regarded their government as fraudulent and corrupt — not least because one TCC leader, Jerry Asp, also ran a "development" agency with contracts for supporting the mining companies' camps.
The Tahltan did not believe their elected government had the right to give away their property, so they set up a blockade on the only road into the Klappan Valley. They let in tourists and anybody else they felt would not harm their turf, but they blocked out all mining equipment.
On, September 16, 2005, at the behest of Fortune Minerals, the Mounties rolled in and arrested 15 of the protestors, 9 of whom were elders.
I guess the "accommodations" they'd been looking for were in the back of a paddy wagon.
Banning the BackhoesFaced with the reality of state oppression, the Tahltan have enlisted the help of a public-relations coalition including environmentalist photographers and National Geographic explorer-in-residence Wade Davis. (Davis also owns a cabin in a neighboring valley.)
Davis's book, The Sacred Headwaters, is filled with breathtaking photography of the region's people, rivers, mountains, and wildlife.
The book makes it clear that what Davis and the environmentalists want is a pristine landscape of unspoiled wilderness to gaze on and walk through, saying that "Everyone who has ever lamented the loss of wild lands should rally to this cause," which is "one of the most important environment struggles of our time."Davis, p. 140.
Finally, the book calls on readers to support a "permanent legislative ban on mining in the Sacred Headwaters."Davis, p. 141.
Perhaps the Tahltan do prefer such a ban to the alternative at the other extreme — risking the destruction of their burial grounds, verdant meadows, and salmon rivers. A ban may even be the best political solution they can realistically hope for in the short term. But imagine what the situation might look like if this were your property:
A man is digging in your yard with a backhoe. He arrived against your loud objections (but with the approval of your corrupt town council). At first you blockaded him. But then the cops showed up and arrested you for that. So you got in touch with other interested parties to rally broader support for your rights and force the vandal out.
Like you, your new allies love how your beautiful yard looks right now. Their big idea is to get a law passed that will forbid any backhoe coming on to your property, ever. This helps you out today, but you might wonder, What if I eventually want to sell the mining rights on my own terms? What if my great-grandchildren want to put in a pool?
Privatizing the Sacred HeadwatersDavis's book asks for the state to create new rules to solve the problem. But in the long run, yet another ham-fisted decree from on high will not protect the environment of the Sacred Headwaters; still less will it secure the Tahltan's autonomy.
The politicians and permit clerks who would in the end administer such a ban are temporary monopolists. They do not own the rivers or the salmon or the methane, and so they cannot preserve these resources for their own children or even their personal stock portfolios.
As the legendary libertarian writer Murray Rothbard explains,
government officials, while able to control the resource cannot themselves reap their capital value. Government officials cannot sell the rivers or sell stock in them. Hence, they have no economic incentive to preserve the purity and value of the rivers.
That is why, again and again, lands and waters that are supposed to be protected by government decree end up mined, logged, flooded, and poisoned. Their controllers have no incentive to defend them.
Unlike the bureaucrats and extractive crony capitalists, authentic owners of private property, like the Tahltan, are in it for the long run. They have a powerful incentive to preserve the bounty of their land for the future, because they will pass it on to their children (or, if the government permitted them and if they so desired, sell it off to someone who values the place even more).
So, environmentalists, your best hope for wilderness conservation and pollution prevention actually lies in acknowledging private Tahltan property in the land and water of the Klappan Valley.In his discussion of privatizing commonly owned roads, Hoppe writes that it is essential that "the appropriation of the street does not infringe on the previously established rights — the easements — of private-property owners to use such streets." In the case of the Sacred Headwaters, there might be extensive "easements" held by the numerous salmon-fishing peoples who live downstream of the Sacred Headwaters. Indeed, on the day of the arrests, "delegations of Haida, Gitxsan, and Wet'suwet'en arrived in full regalia and with drums and songs" to support their upstream Tahltan neighbors. See Davis, p. 45. (Given Wade Davis's residency in the region, it's even conceivable he has some applicable easements here too.)
But property means autonomy. If the indigenous people wish to reject all industrial development on spiritual or ecological or economic grounds, that's up to them. And if they wish to accept all industrial development on purely materialistic grounds, that's up to them too.
In all likelihood, they would choose a middle ground. But in any case, there would be no government permits, no greased politicians' palms, no backdoor deals with Shell Oil, and no obscure requirements for "accommodation and consultation." If the Tahltan didn't like your offer, they could simply say no.
Watermelon: "green" on the outside, red on the inside. Rio Earth Summit: "Watermelons of the World Unite!"
This audio Mises Daily is narrated by Harold Fritsche.
[Day 11 of Robert Wenzel's 30-day reading list that will lead you to become a knowledgeable libertarian, this article was originally published on LewRockwell.com, June 9, 2012.]
An environmentalist is a totalitarian socialist whose real objective is to revive socialism and economic central planning under the subterfuge of "saving the planet" from capitalism. He is "green" on the outside, but red on the inside, and is hence appropriately labeled a "watermelon."
A conservationist, by contrast, is someone who is actually interested in solving environmental and ecological problems and protecting wildlife and its habitat. He does not propose having government force a separation of man and nature by nationalizing land and other resources, confiscating private property, prohibiting the raising of certain types of animals, regulating human food intake, etc. He is not a socialist ideologue who is hell-bent on destroying capitalism. He does not publicly wish that a "new virus" will come along and kill millions, as the founder of Earth First once did. More often than not, he seeks ways to use the institutions of capitalism to solve environmental problems. There is even a new name for such a person: enviropreneur. Or he may call himself a "free-market environmentalist" who understands how property rights, common law, and markets can solve many environmental problems, as indeed they have.
In light of the distinction between an environmentalist and a conservationist, "Watermelons of the World Unite!" should be the theme of the upcoming "Earth Summit" in Rio that begins on June 19. The meeting will be devoted to endless conniving about how to go about creating a centrally planned world economy (under the auspices of United Nations bureaucrats) in the name of the latest euphemism for socialist central planning, "sustainable development."
This doesn't mean that the watermelons of the world will be successful — only that they are as numerous as flies on a herd of cattle and will never give up on their pipe dream of a centrally planned socialist world economy, no matter how much of a nightmare socialism has been for millions of people all around the world.
The watermelon strategy was announced and encouraged by one of the gray eminences of academic socialism, the late economist Robert Heilbroner, in a September 10, 1990, essay in the New Yorker entitled "After Communism." Written in the midst of the worldwide collapse of socialism, and the realization that socialist governments during the 20th century had murdered more than 100 million of their own people as part of the "price" of establishing their "socialist paradise," Heilbroner's essay was a huge mea culpa (see Death by Government by Rudolph Rummel). He even wrote the words, "Mises was right," about the inherent failures of socialism, referring to the writings of Ludwig von Mises in the 1920s and 1930s that explained in great detail why socialism could never work as an economic system (see his book Socialism).
After admitting that he had been dead wrong for the previous half century during which he devoted his academic career to promoting socialism in America (the veiled purpose of his The Worldly Philosophers, which made him a millionaire), Heilbroner sadly bemoaned that "I am not very sanguine about the prospect that socialism will continue as an important form of economic organization." While much of the rest of the world was wildly celebrating the demise of this diabolically evil institution, Heilbroner was crying in his soup over it.
Rather than facing the reality of the inherent evil of all forms of socialism, Heilbroner intoned that "the collapse of the planned economies has forced us to rethink the meaning of socialism." (Writing in the New Yorker, Heilbroner naturally assumed that all of "us" readers were socialist ideologues like himself.) After all, he continued, "socialism is a general description of a society in which we would like our grandchildren to live." But "what, then, is left" of "the honorable title of socialism?" asked Heilbroner.
The man was obviously depressed and dejected that history had proven his academic career to have been a complete fraud, but he was not about to admit that fact — or to give up on perpetrating the same fraud that he had perpetrated for at least the previous half century. A new subterfuge must be invented, he said, that will fool or lull the public into acquiescing in adopting socialism. This might take a while, he said, and if "we" are successful, "our great grandchildren or great-great grandchildren may be prepared to acquiesce in social arrangements that our children or grandchildren would not."
[product:55] Heilbroner's suggested subterfuge was explained by him as follows:
There is, however, another way of looking at … socialism. It is to conceive of it … as the society that must emerge if humanity is to cope with … the ecological burden that economic growth is placing on the environment.
"We" socialists must all become watermelons, in other words. If enough members of the public can be hoodwinked with this subterfuge, then "capitalism must be monitored, regulated, and contained to such a degree that it would be difficult to call the final social order capitalism."
That is exactly what will be discussed at the upcoming "Earth Summit" in Rio.
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Day 11 of Robert Wenzel's 30-day reading list that will lead you to become a knowledgeable libertarian, this article was originally published on LewRockwell.com, June 9, 2012.
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Copyright © 2012 by the Ludwig von Mises Institute. Permission to reprint in whole or in part is hereby granted, provided full credit is given.
To the minds of most environmentalists, the ham-hand of government is needed to protect wildlife. Private property be damned — the government must step in, otherwise every species on the planet will be hunted into oblivion, or human development will gobble up all remaining wildlife habitat, leading to the complete extinction of all species.
However, on the African plain it's just the opposite. From the van leaving Hoedspruit airport to the Thornybush Game Preserve, we saw nothing but mile after mile of African savannah, enclosed in electrified fencing (and at one point an ape bounding across the road). Although government-owned Kruger National Park is nearby, the area is dominated by private game reserves, with ecotourism being the primary driver of the local economy.
If not for these private game reserves, a number of species would be extinct. Because people like the four in our party are willing to pay to see the "Big Five" and so much more, the populations of a number of these animals are thriving.
The game-reserve experience, while a good deal dependent on serendipity, is in the hands of human expertise and experience. The Thornybush accommodations, meals, and service are first class. But you go for the game: the experience of a lifetime, seeing animals up close, in the wild, that you've only seen before in picture books or cooped up in zoos.
Arriving in the afternoon, our first safari would begin with refreshments in the late afternoon. As I sipped on lemonade, an unassuming young Afrikaner approached me by name, introducing himself as Werner (pronounced "Verner"). Werner would be our game ranger for our four safaris.
To the uninitiated, the game ranger might appear merely to be the driver of the vehicle, carrying up to ten guests plus a tracker perched precariously on the front of the hood. And that would be impressive enough, negotiating the labyrinth of winding dirt roads that weave through the 11,000-hectare reserve. The roads are narrow, deeply rutted, and in some cases close to nonexistent, as a 36-hour downpour of 17 inches a couple weeks prior to our arrival made many roads next to impassable.
But in addition to his driving skills, Werner offered an encyclopedic knowledge of the Thornybush flora and fauna. Not just names but mating habits, gestation periods, digestion, and who-knows-what-all about the 147 mammals, 114 reptiles, 507 birds, 49 fish, 34 amphibians, 970 grasses, and 336 tree species that inhabit the private reserve.
Werner introduced us to Orlando, our tracker and Werner's partner in making our experience unforgettable. Orlando hails from a nearby village where he returns for two weeks to be with his family after working six straight weeks.
As he loaded a Winchester .375 rifle, Werner warned us that the animals are dangerous, and he cautioned us not to stand up in or extend our arms out of the side of the vehicle.
Werner was in constant communication on his radio with other rangers and at the same time having a running dialogue with Orlando in Fanigalore, a Bantu/English hybrid language used in South Africa's mines, allowing workers from various parts of Africa to communicate.
While sightings of impala and wildebeests are common, the Big Five are more elusive, so the game rangers stay in constant radio contact to tip each other off to a sighting or fresh tracks. Rangers are only allowed to leave the road to track one of the Big Five.
During our first evening, what we encountered most was the golden orb spider, which takes a week to spin an elaborate web from brush to brush across a road. The golden orb, Werner assured us, is harmless, but the prospect of a face full of their sticky web and having the spiders crawling on us in the evening dusk was less than appealing.
After destroying the work of various golden orbs, Orlando's right arm suddenly pointed, and Werner hit the brakes, startling a male black rhino, who, with a female companion, was taking an early evening mud bath (see photo).
We would see both black and white rhinos during our safaris, huge lumbering beasts that sport horns prized in China and Vietnam for medicinal purposes. According to the BBC, "The black market price of rhino horn is now in the region of £35,000 ($55,000) per kg."
South Africa is home to 70 to 80 percent of the global rhino population, and with the rhino-horn trade being a multibillion-dollar-a-year business, last year 450 rhinos were killed by poachers in South Africa.
Private game reserves do all they can to ward off poachers. After all, rhinos, as members of the Big Five, are rare and expensive to replace. But at government-owned Kruger National Park, four park employees were recently arrested for being accomplices in a rhino-poaching operation.
"I am personally saddened to discover that some of our own would so callously abuse the confidence and faith that we have entrusted upon them," says Sanparks head David Mabunda.
Mr. Mabunda may be sad, but as Walter Block makes clear, "Like public servants the world over, these may be well-meaning people, but they have no real monetary incentive to perpetuate the species."Walter Block, "Environmental Problems, Private Property Rights Solutions," Economics and the Environment: A Reconciliation, Fraser Institute (1990).
Professor Block points out that governments are inept at stopping poachers, and low-level government workers are susceptible to bribes and corruption.
The legalization of rhino-horn sales is actually being discussed in South Africa, but environmental groups like the World Wildlife Fund (WWF) are vehemently opposed to the idea. "We understand the need to come up with new ways of combating the rhino horn trade but we are against the notion that legalising it is the answer," said Morne du Plessis, of WWF in South Africa.
"How can we control legal rhino horn trade when we can't even control illegal trade. There are too many unknowns for us to even start thinking in that direction," Mr. du Plessis said.
This is not a new debate. Dr. Block wrote over 20 years ago that countries inhabited by rhinos make it close to impossible for farmers to domesticate rhinos for profit. Instead, there continue to be "only bureaucrats intoning platitudes about the importance of refraining from hunting the beasts."Ibid.
Commercialize the rhino trade, and rhino farms would pop up — and at the same time the rhino supply would flourish. For instance, 60 Minutes reported recently that many African species are thriving on private hunting lodges in Texas.
The game reserve is not a place to sleep in. Everyone receives a 5 a.m. wake-up call, and the game rangers like to start their morning safaris by 5:30. The February morning air had the perfect amount of crispness as we anticipated more Big Five sightings.
Very near Thornybush's main lodge is an airstrip, and first thing, we spotted two lionesses lounging near the pavement enjoying the cool morning air. Werner pulled our vehicle very close to the lions, but they only yawned, showing little concern or interest.
We would actually see the entire Big Five during our two safaris that day: lion, African Cape buffalo, African elephant, rhino, and leopard (the shyest). The phrase refers to the five most difficult animals to hunt on foot.
The big, powerful animals seem tame around the vehicles, but they are still wild and unpredictable. If we forgot this was dangerous country, the eight-foot black mamba slithering across the road snapped us out of it. It's the longest, fastest venomous snake in the world — and aggressive to boot. Also, each night after dinner, a member of the Thornybush staff would walk us to our cabins, as unaccompanied guests at game reserves have fallen prey to leopards.
Werner and Orlando had managed to show us most everything we could expect on a camera safari. Plus, when a member of our party posed astronomical questions as we rolled toward the lodge under a blanket of stars, Werner stopped the vehicle, pulled out a laser pointer and turned into Galileo.
We still had one safari left and hadn't seen a male lion. We told Werner and Orlando that their job was to find the king of the jungle. It didn't happen quickly, and unlike the other three outings we seemed to go in circles. We came upon a couple of lazy white rhinos. Interesting, but not lions. Giraffes. Ho-hum.
Werner and his partner were taking the lion instruction seriously. Our game ranger was clued into a sighting of tracks by another vehicle and Orlando seemed sure a lion was nearby.
Orlando had Werner stop, and he jumped off the vehicle to walk into the bush. Then we heard it — like sitting in the front row at the start of an MGM movie! Orlando wheeled, ran toward the vehicle, and jumped on to his seat. Werner started into the brush toward the roar.
Three lionesses and a male were looking expectantly up a tree. In the tree, a leopard with a fresh baby impala kill (see photo). Leopards and lions may be cats, but they aren't friendly. They're fierce competitors, and the leopard was at a distinct disadvantage.
Werner thought the leopard might wait the lions out. Lions don't climb easily. But the leopard became nervous; whether it was the lions or our vehicle is unsure. The leopard suddenly leaped down from the tree — 15 to 20 feet — and ran for the tree in front of our vehicle, with the lions in hot pursuit. We were stunned. Werner quickly backed up.
Again the leopard jumped down and ran up another tree just escaping the lions. Werner was concerned that we were putting the leopard in danger. He pulled the vehicle around near the tree where the leopard had left the dead impala draped over a branch.
Soon the lionesses came back, and one ventured to climb and retrieve the kill. The 300-pound cat made it up the main trunk, claws gouging the tree's bark. Then things got tricky. The impala was hanging just out of the lion's reach. The cat carefully adjusted its weight, trying to balance on a limb that allowed enough stability to reach up and grab the impala.
Finally, the impala was secure in the lioness's jaws. But now the hard part. While leopards have a locking wrist or anklebone that aids in climbing and descending, lions' ankles slide sideways under their body weight.
Meanwhile, the two other lionesses waited calmly under the tree, hoping to scoop up a falling impala. But the lioness held on, clumsily sliding down the tree trunk. With the kill secure and now on terra firma, the lioness carried the impala into the shade of a bush. The king of the jungle quickly showed up to join her.
It's the prospect of witnessing this kind of drama that tourists pay money to see, and it's the market and private property that make it possible, at the same time providing the incentives to protect and revitalize what were once endangered species. As professor Block makes clear, "there is no intrinsic conflict between the market and the environment."
Government's good intentions have done little to protect endangered wildlife. It is only private property and market pricing that will protect these majestic creatures for future generations to marvel at and enjoy.
[For a New Liberty: The Libertarian Manifesto (1973)]
All right: Even if we concede that full private property in resources and the free market will conserve and create resources, and do it far better than government regulation, what of the problem of pollution? Wouldn't we be suffering aggravated pollution from unchecked "capitalist greed"?
There is, first of all, this stark empirical fact: Government ownership, even socialism, has proved to be no solution to the problem of pollution. Even the most starry-eyed proponents of government planning concede that the poisoning of Lake Baikal in the Soviet Union is a monument to heedless industrial pollution of a valuable natural resource. But there is far more to the problem than that. Note, for example, the two crucial areas in which pollution has become an important problem: the air and the waterways, particularly the rivers. But these are precisely two of the vital areas in society in which private property has not been permitted to function.
First, the rivers. The rivers, and the oceans too, are generally owned by the government; private property, certainly complete private property, has not been permitted in the water. In essence, then, government owns the rivers. But government ownership is not true ownership, because the government officials, while able to control the resource cannot themselves reap their capital value on the market. Government officials cannot sell the rivers or sell stock in them. Hence, they have no economic incentive to preserve the purity and value of the rivers. Rivers are, then, in the economic sense, "unowned"; therefore government officials have permitted their corruption and pollution. Anyone has been able to dump polluting garbage and wastes in the waters. But consider what would happen if private firms were able to own the rivers and the lakes. If a private firm owned Lake Erie, for example, then anyone dumping garbage in the lake would be promptly sued in the courts for their aggression against private property and would be forced by the courts to pay damages and to cease and desist from any further aggression. Thus, only private property rights will insure an end to pollution — invasion of resources. Only because the rivers are unowned is there no owner to rise up and defend his precious resource from attack. If, in contrast, anyone should dump garbage or pollutants into a lake which is privately owned (as are many smaller lakes), he would not be permitted to do so for very long — the owner would come roaring to its defense."Existing "appropriation" law in the Western states already provides the basis for full "homesteading" private property rights in the rivers. For a full discussion, see Jack Hirshleifer, James C. DeHaven, and Jerome W. Milliman, Water Supply; Economics, Technology, and Policy (Chicago: University of Chicago Press, 1960), chapter IX. Professor Dolan writes:
With a General Motors owning the Mississippi River, you can be sure that stiff effluent charges would be assessed on industries and municipalities along its banks, and that the water would be kept clean enough to maximize revenues from leases granted to firms seeking rights to drinking water, recreation, and commercial fishing. Edwin G. Dolan, "Capitalism and the Environment," Individualist (March 1971): 3.
If government as owner has allowed the pollution of the rivers, government has also been the single major active polluter, especially in its role as municipal sewage disposer. There already exist low-cost chemical toilets which can burn off sewage without polluting air, ground, or water; but who will invest in chemical toilets when local governments will dispose of sewage free to their customers?
This example points up a problem similar to the case of the stunting of aquaculture technology by the absence of private property: if governments as owners of the rivers permit pollution of water, then industrial technology will — and has — become a water-polluting technology. If production processes are allowed to pollute the rivers unchecked by their owners, then that is the sort of production technology we will have.
If the problem of water pollution can be cured by private property rights in water, how about air pollution? How can libertarians possibly come up with a solution for this grievous problem? Surely, there can't be private property in the air? But the answer is: yes, there can. We have already seen how radio and TV frequencies can be privately owned. So could channels for airlines. Commercial airline routes, for example, could be privately owned; there is no need for a Civil Aeronautics Board to parcel out — and restrict — routes between various cities. But in the case of air pollution we are dealing not so much with private property in the air as with protecting private property in one's lungs, fields, and orchards. The vital fact about air pollution is that the polluter sends unwanted and unbidden pollutants — from smoke to nuclear radiation to sulfur oxides — through the air and into the lungs of innocent victims, as well as onto their material property. All such emanations which injure person or property constitute aggression against the private property of the victims. Air pollution, after all, is just as much aggression as committing arson against another's property or injuring him physically. Air pollution that injures others is aggression pure and simple. The major function of government — of courts and police — is to stop aggression; instead, the government has failed in this task and has failed grievously to exercise its defense function against air pollution.
It is important to realize that this failure has not been a question purely of ignorance, a simple time lag between recognizing a new technological problem and facing up to it. For if some of the modern pollutants have only recently become known, factory smoke and many of its bad effects have been known ever since the Industrial Revolution, known to the extent that the American courts, during the late — and as far back as the early 19th century made the deliberate decision to allow property rights to be violated by industrial smoke. To do so, the courts had to — and did — systematically change and weaken the defenses of property right embedded in Anglo-Saxon common law. Before the mid and late 19th century, any injurious air pollution was considered a tort, a nuisance against which the victim could sue for damages and against which he could take out an injunction to cease and desist from any further invasion of his property rights. But during the 19th century, the courts systematically altered the law of negligence and the law of nuisance to permit any air pollution which was not unusually greater than any similar manufacturing firm, one that was not more extensive than the customary practice of fellow polluters.
As factories began to arise and emit smoke, blighting the orchards of neighboring farmers, the farmers would take the manufacturers to court, asking for damages and injunctions against further invasion of their property. But the judges said, in effect, "Sorry. We know that industrial smoke (i.e., air pollution) invades and interferes with your property rights. But there is something more important than mere property rights: and that is public policy, the 'common good.' And the common good decrees that industry is a good thing, industrial progress is a good thing, and therefore your mere private property rights must be overridden on behalf of the general welfare." And now all of us are paying the bitter price for this overriding of private property, in the form of lung disease and countless other ailments. And all for the "common good"!See E.F. Roberts, "Plead the Ninth Amendment!" Natural History (August–September 1970): 18ff. For a definitive history and analysis of the change in the legal system toward growth and property rights in the first half of the 19th century, see Morton J. Horwitz, The Transformation of American Law, 1780–1860 (Cambridge, Mass.: Harvard University Press, 1977).
That this principle has guided the courts during the air age as well may be seen by a decision of the Ohio courts in Antonik v. Chamberlain (1947). The residents of a suburban area near Akron sued to enjoin the defendants from operating a privately owned airport. The grounds were invasion of property rights through excessive noise. Refusing the injunction, the court declared:
In our business of judging in this case, while sitting as a court of equity, we must not only weigh the conflict of interests between the airport owner and the nearby landowners, but we must further recognize the public policy of the generation in which we live. We must recognize that the establishment of an airport … is of great concern to the public, and if such an airport is abated, or its establishment prevented, the consequences will be not only a serious injury to the owner of the port property but may be a serious loss of a valuable asset to the entire community.Quoted in Milton Katz, The Function of Tort Liability in Technology Assessment (Cambridge, Mass.: Harvard University Program on Technology and Society, 1969), p. 610.
To cap the crimes of the judges, legislatures, federal and state, moved in to cement the aggression by prohibiting victims of air pollution from engaging in "class action" suits against polluters. Obviously, if a factory pollutes the atmosphere of a city where there are tens of thousands of victims, it is impractical for each victim to sue to collect his particular damages from the polluter (although an injunction could be used effectively by one small victim). The common law, therefore, recognizes the validity of "class action" suits, in which one or a few victims can sue the aggressor not only on their own behalf, but on behalf of the entire class of similar victims. But the legislatures systematically outlawed such class action suits in pollution cases. For this reason, a victim may successfully sue a polluter who injures him individually, in a one-to-one "private nuisance" suit. But he is prohibited by law from acting against a mass polluter who is injuring a large number of people in a given area! As Frank Bubb writes, "It is as if the government were to tell you that it will (attempt to) protect you from a thief who steals only from you, but it will not protect you if the thief also steals from everyone else in the neighborhood."Frank Bubb, "The Cure for Air Pollution," The Libertarian Forum (April 15, 1970): 1. Also see Dolan, TANSTAAFL, pp. 37–39.
Noise, too, is a form of air pollution. Noise is the creation of sound waves which go through the air and then bombard and invade the property and persons of others. Only recently have physicians begun to investigate the damaging effects of noise on the human physiology. Again, a libertarian legal system would permit damage and class action suits and injunctions against excessive and damaging noise: against "noise pollution."
The remedy against air pollution is therefore crystal clear, and it has nothing to do with multibillion-dollar palliative government programs at the expense of the taxpayers which do not even meet the real issue. The remedy is simply for the courts to return to their function of defending person and property rights against invasion, and therefore to enjoin anyone from injecting pollutants into the air. But what of the propollution defenders of industrial progress? And what of the increased costs that would have to be borne by the consumer? And what of our present polluting technology?
The argument that such an injunctive prohibition against pollution would add to the costs of industrial production is as reprehensible as the pre-Civil War argument that the abolition of slavery would add to the costs of growing cotton, and that therefore abolition, however morally correct, was "impractical." For this means that the polluters are able to impose all of the high costs of pollution upon those whose lungs and property rights they have been allowed to invade with impunity.
Furthermore, the cost and technology argument overlooks the vital fact that if air pollution is allowed to proceed with impunity, there continues to be no economic incentive to develop a technology that will not pollute. On the contrary, the incentive would continue to cut, as it has for a century, precisely the other way. Suppose, for example, that in the days when automobiles and trucks were first being used, the courts had ruled as follows:
Ordinarily, we would be opposed to trucks invading people's lawns as an invasion of private property, and we would insist that trucks confine themselves to the roads, regardless of traffic congestion. But trucks are vitally important to the public welfare, and therefore we decree that trucks should be allowed to cross any lawns they wish provided they believe that this would ease their traffic problems.
If the courts had ruled in this way, then we would now have a transportation system in which lawns would be systematically desecrated by trucks. And any attempt to stop this would be decried in the name of modern transportation needs! The point is that this is precisely the way that the courts ruled on air pollution — pollution which is far more damaging to all of us than trampling on lawns. In this way, the government gave the green light, from the very start, to a polluting technology. It is no wonder then that this is precisely the kind of technology we have. The only remedy is to force the polluting invaders to stop their invasion, and thereby to redirect technology into nonpolluting or even antipolluting channels.
Already, even at our necessarily primitive stage in antipollution technology, techniques have been developed to combat air and noise pollution. Mufflers can be installed on noisy machines that emit sound waves precisely contra-cyclical to the waves of the machines, and thereby can cancel out these racking sounds. Air wastes can even now be recaptured as they leave the chimney and be recycled to yield products useful to industry. Thus, sulfur dioxide, a major noxious air pollutant, can be captured and recycled to produce economically valuable sulfuric acid.See Jane Jacobs, The Economy of Cities (New York: Random House, 1969), pp. 109ff. The highly polluting spark ignition engine will either have to be "cured" by new devices or replaced altogether by such nonpolluting engines as diesel, gas turbine, or steam, or by an electric car. And, as libertarian systems engineer Robert Poole, Jr., points out, the costs of installing the non- or antipolluting technology would then "ultimately be borne by the consumers of the firms' products, i.e., by those who choose to associate with the firm, rather than being passed on to innocent third parties in the form of pollution (or as taxes)."Poole, "Reason and Ecology," pp. 251–52.
Robert Poole cogently defines pollution "as the transfer of harmful matter or energy to the person or property of another, without the latter's consent."Ibid., p. 245. The libertarian — and the only complete — solution to the problem of air pollution is to use the courts and the legal structure to combat and prevent such invasion. There are recent signs that the legal system is beginning to change in this direction: new judicial decisions and repeal of laws disallowing class action suits. But this is only a beginning.Thus, see Dolan, TANSTAAFL, p. 39, and Katz, The Function of Tort Liability in Technology Assessment, passim.
Among conservatives — in contrast to libertarians — there are two ultimately similar responses to the problem of air pollution. One response, by Ayn Rand and Robert Moses among others, is to deny that the problem exists, and to attribute the entire agitation to leftists who want to destroy capitalism and technology on behalf of a tribal form of socialism. While part of this charge may be correct, denial of the very existence of the problem is to deny science itself and to give a vital hostage to the leftist charge that defenders of capitalism "place property rights above human rights." Moreover, a defense of air pollution does not even defend property rights; on the contrary, it puts these conservatives' stamp of approval on those industrialists who are trampling upon the property rights of the mass of the citizenry.
A second, and more sophisticated, conservative response is by such free-market economists as Milton Friedman. The Friedmanites concede the existence of air pollution but propose to meet it, not by a defense of property rights, but rather by a supposedly utilitarian "cost-benefit" calculation by government, which will then make and enforce a "social decision" on how much pollution to allow. This decision would then be enforced either by licensing a given amount of pollution (the granting of "pollution rights"), by a graded scale of taxes against it, or by the taxpayers paying firms not to pollute. Not only would these proposals grant an enormous amount of bureaucratic power to government in the name of safeguarding the "free market"; they would continue to override property rights in the name of a collective decision enforced by the State. This is far from any genuine "free market," and reveals that, as in many other economic areas, it is impossible to really defend freedom and the free market without insisting on defending the rights of private property. Friedman's grotesque dictum that those urban inhabitants who don't wish to contract emphysema should move to the country is starkly reminiscent of Marie Antoinette's famous "Let them eat cake" — and reveals a lack of sensitivity to human or property rights. Friedman's statement, in fact, is of a piece with the typically conservative, "If you don't like it here, leave," a statement that implies that the government rightly owns the entire land area of "here," and that anyone who objects to its rule must therefore leave the area. Robert Poole's libertarian critique of the Friedmanite proposals offers a refreshing contrast:
Unfortunately, it is an example of the most serious failing of the conservative economists: nowhere in the proposal is there any mention of rights. This is the same failing that has undercut advocates of capitalism for 200 years. Even today, the term "laissez-faire" is apt to bring forth images of eighteenth century English factory towns engulfed in smoke and grimy with soot. The early capitalists agreed with the courts that smoke and soot were the "price" that must be paid for the benefits of industry.… Yet laissez-faire without rights is a contradiction in terms; the laissez-faire position is based on and derived from man's rights, and can endure only when rights are held inviolable. Now, in an age of increasing awareness of the environment, this old contradiction is coming back to haunt capitalism.
It is true that air is a scarce resource [as the Friedmanites say], but one must then ask why it is scarce. If it is scarce because of a systematic violation of rights, then the solution is not to raise the price of the status quo, thereby sanctioning the rights-violations, but to assert the rights and demand that they be protected.… When a factory discharges a great quantity of sulfur dioxide molecules that enter someone's lungs and cause pulmonary edema, the factory owners have aggressed against him as much as if they had broken his leg. The point must be emphasized because it is vital to the libertarian laissez-faire position. A laissez-faire polluter is a contradiction in terms and must be identified as such. A libertarian society would be a full-liability society, where everyone is fully responsible for his actions and any harmful consequences they might cause.Poole, "Reason and Ecology," pp. 252–53. Friedman's dictum can be found in Peter Maiken, "Hysterics Won't Clean Up Pollution," Human Events (April 25, 1970): 13, 21–23. A fuller presentation of the Friedmanite position may be found in Thomas D. Crocker and A.J. Rogers III, Environmental Economics (Hinsdale, Ill.: Dryden Press, 1971); and similar views may be found in J.H. Dales, iPollution, Property, and Prices (Toronto: University of Toronto Press, 1968), and Larry E. Ruff, "The Economic Common Sense of Pollution," Public Interest (Spring, 1970): 69–85.
In addition to betraying its presumed function of defending private property, government has contributed to air pollution in a more positive sense. It was not so long ago that the Department of Agriculture conducted mass sprayings of DDT by helicopter over large areas, overriding the wishes of individual objecting farmers. It still continues to pour tons of poisonous and carcinogenic insecticides all over the South in an expensive and vain attempt to eradicate the fire ant.Glenn Garvin, "Killing Fire Ants With Carcinogens," Inquiry (February 6, 1978): 7–8. And the Atomic Energy Commission has poured radioactive wastes into the air and into the ground by means of its nuclear power plants, and through atomic testing. Municipal power and water plants, and the plants of licensed monopoly utility companies, mightily pollute the atmosphere. One of the major tasks of the State in this area is therefore to stop its own poisoning of the atmosphere.
Thus, when we peel away the confusions and the unsound philosophy of the modern ecologists, we find an important bedrock case against the existing system; but the case turns out to be not against capitalism, private property, growth, or technology per se. It is a case against the failure of government to allow and to defend the rights of private property against invasion. If property rights were to be defended fully, against private and governmental invasion alike, we would find here, as in other areas of our economy and society, that private enterprise and modern technology would come to mankind not as a curse but as its salvation.
Texas ranchers are doing more for animal conservation than animal-rights groups, because they allow animals to be hunted and killed on private ranches. Charly Seale, executive director of the Exotic Wildlife Association, makes this bold — and likely controversial — point on a recent CBS 60 Minutes report. Although this seems counterintuitive, a small dose of economic thinking will unravel this enigma.
Aristotle said, "What is common to many is least taken care of, for all men have greater regard for what is their own than for what they possess in common with others." This is the famous "tragedy-of-the-commons" concept, which Garrett Hardin wrote about in 1968. He was discussing a pasture without clear property rights and overgrazing by cattle. As Hardin explained, "Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit — in a world that is limited.… Freedom in a commons brings ruin to all."
Plainly stated, the tragedy is that no one has an incentive to take care of something that they do not own. For example, if you had to use a bathroom, and I gave you a choice of a bathroom at a public park, a bathroom at a private park (let's say Disneyland), or bathroom in an individual's home, which would you choose? I am willing to bet your last choice would be the public bathroom at the public park. Disneyland, on the other hand, wants people to enjoy the park experience (clean facilities contribute to that) and come back. If someone does not clean their bathroom, they suffer on a personal level. Thus, they have an incentive to clean their own bathroom. With common or public ownership, however, there is no personal benefit to cleaning or maintaining the bathroom facilities.
Chickens, cows, and pigs are examples of why private ownership is good for animal populations. The fact that we kill these animals every day might bother some people. Yet I have never heard of a chicken, cow, or pig facing extinction. The reason is simple: people breed them. Now, we can either assume people breed these animals because they enjoy watching animals breed (which is a completely different subject!), or we can acknowledge there's a financial incentive to breed.
Of course, this presupposes that people are allowed to own these animals in the first place. A beef rancher's job is to raise cows to put on your BBQ grill or smoker and eventually satisfy your appetite. The rancher has an incentive to kill his cows at a certain rate, and he has an incentive to introduce a bull to a cow or a rooster to a hen and let them "do their thing." This ensures beef or poultry is available to put on your plate.
Property rights — ownership — have also saved the elephant. Countries that allow community-ownership rights are more successful at increasing elephant populations than countries that ban poaching. Terry Anderson and Shawn Regan noted that, in contrast to Kenya, where hunting is illegal, Zimbabwe has implemented a program called the Communal Areas Management Programme for Indigenous Resources (CAMPFIRE). With CAMPFIRE, which allows private management of the animals (including the right to hunt them), elephant populations have increased by 50 percent. In countries that ban hunting, such as Kenya, the elephant population has decreased between 60 and 70 percent.
So, how are Texas ranchers connected to African animals? According to the 60 Minutes report, Texas has more exotic animals than anywhere on earth. Approximately a quarter million endangered animals live in Texas, and 125 different species are represented. The Exotic Wildlife Association, located in Ingram, Texas, represents 5,000 exotic animal ranchers. These ranchers have found it in their financial self-interest to protect the exotic animals that live on their ranches. Ironically, allowing these animals to be hunted on private property has helped them to thrive. In fact, three varieties of antelope have been saved from the brink of extinction. The endangered-animal population in Texas is increasing, while it is falling in the animals' native Africa.
One hunter, Paul, told Lara Logan of 60 Minutes, "The money that I spend to hunt these animals keeps these animals alive on these ranches." Of course, this model is not fortunate for the animal that happens to get killed, but the species as a whole benefits by allowing this private-property system to work. Even an analysis by the US Fish and Wildlife Service that was shown on the 60 Minutes report admits that private ranches work: "Hunting … provides an economic incentive for … ranchers to continue to breed these species.… Hunting … reduces the threat of the species extinction."
Animal-rights groups, such as Friends of Animals and their president, Priscilla Feral, oppose hunting these endangered animals and believe these animals should not be living in Texas. Feral goes so far as to claim that it is immoral: "I don't think you create a life to shoot it," she stated. One of her complaints is that the private ranchers make the hunting too easy. Others contend, though, that this is not true. Hunters are not guaranteed a "trophy." And, even if hunting an animal on private ranches is fairly easy, so what? Like the pig farmer, the ranchers have an incentive to ensure animals are hunted at a certain rate. It would not be in their own self-interest to allow too much hunting in a very short period of time. In fact, no more than 10 percent of a herd is hunted each year.
During the 60 Minutes spot, Logan asked Seale if he considered himself a conservationist. He responded that it is the hunters who are the main conservationists. Logan, perhaps revealing her own beliefs or playing devil's advocate, pointed out that just because people are willing to pay large amounts of money to hunt does not make the practice morally right. This is where economic thinking and understanding private property rights comes into play and sheds bright light on this emotional topic.
Logan also interviewed 83-year-old Texan rancher David Bamberger, a man passionate to save the scimitar-horned oryx. He correctly stated, "I'm wise enough, smart enough to know if there's no incentive, if altruism is the only incentive, you're not going to get a great deal of participation."
My former professor Walter Williams was once featured on a John Stossel special. He talked about how beef arrives at the grocery store (a play on Leonard Read's famous essay "I, Pencil"): "If it all depended on human love and kindness, I doubt whether you'd have one cow in New York." He is right — lest you think that the clothes you wear, the electronic devices you use, or your morning cup of Starbucks are the result of someone else loving you. The people who produce these products love themselves — they want to make money. But tangled up with that self-love, they give the rest of us what we want. This principle of self-interest, guided by the invisible hand in an institutional framework of private property, is the best solution for endangered animals.
Consider the symbol of America, the bald eagle, which was once endangered. According to BaldEagleInfo.com,
On June 28, 2007, the Interior Department took the American bald eagle off the Federal List of Endangered and Threatened Wildlife and Plants. The bald eagle will still be protected by the Migratory Bird Treaty Act and the Bald and Golden Eagle Protection Act. The Bald Eagle Protection Act prohibits the take, transport, sale, barter, trade, import and export, and possession of eagles, making it illegal for anyone to collect eagles and eagle parts, nests, or eggs without a permit.
That is all well and good, but perhaps seeing grilled bald eagle on your local Outback menu would be better for the this emblem of our freedom. Individuals would have more of an incentive to protect and breed eagles if it were tied to making a profit.
I have seen bald eagles twice in my life — once in Lake Tahoe and again at Lake Shasta in California. Indeed, the eagle belongs to all of us; and, if I saw someone trying to shoot an eagle for "fun," I might say something to stop the bird from being shot. But I definitely would not die for that eagle! Now, let's assume owning and breeding eagles is legal and someone goes to Texas and tries to shoot Joe Rancher's eagles. You know what would happen? He would shoot back (we ain't in California anymore!). Is this passion for eagles based on the rancher's animal-loving instincts? Of course not. When you shoot at his eagles, you're shooting at his wallet.
Ownership gives you an incentive to take care of that possession, not only now, but also for the future. This is why each year I drive by a Christmas-tree farm off of Highway 101 near San Jose, and every year they have trees. If you want to make someone "act green," give them an incentive to make green (money)! The same principle applies to chickens, cows, and pigs — and also for three endangered antelope species. Dr. Pat Condy, one of the world's leading conservationists, admitted on 60 Minutes that the ranchers are helping. "It's the numbers that are the bottom line," he stated.
Well, the numbers are clear even if people such as Priscilla Feral want to ignore them. Texas ranchers are saving these animals even if saving them is not their primary motivation. In short, the government should just leave them alone.
Feral, however, believes it is both immoral and unnatural for these African animals to live in Texas. But an animal reserve in Africa is an artificial habitat as well. How is it immoral for animals to be humanely raised or hunted for the ultimate purpose of human consumption? Hunting on private ranches provides not only utility to the hunter and jobs for about 14,000 people in the local economy; it is saving the animals more effectively than any government regulation ever could.
[product:0] Unfortunately, Feral was successful in court and a new rule issued by the Fish and Wildlife Service will make it a crime to hunt three types of antelope without a federal permit. This permit will, of course, be a high barrier to entry. Not surprisingly, the new law has already led to a decline in the value of these animals by more than 50 percent according to Seale. Now that the financial incentive to take care of these animals is gone, their numbers will drop again.
While I'm sure Feral has good intentions and cares about these animals, her ignorance of the economics will lead to the disappearance of the very animals she claims to protect. Dr. Condy summed it up well when he responded to Logan's question, "So who is winning the day here?"
"One thing is for sure: they [the animals] are losing."
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Copyright © 2012 by the Ludwig von Mises Institute. Permission to reprint in whole or in part is hereby granted, provided full credit is given.
We check the main predictions of the climate models against the best and latest data. Fortunately the climate models got all their major predictions wrong. Why? Every serious skeptical scientist has been consistently saying essentially the same thing for over 20 years, yet most people have never heard the message. Here it is, put simply enough for any lay reader willing to pay attention.
What the Government Climate Scientists SayFigure 1: The climate models. If the CO2 level doubles (as it is on course to do by about 2070 to 2100), the climate models estimate the temperature increase due to that extra CO2 will be about 1.1oC x 3 = 3.3oC.More generally, if the CO2 level is x (in parts per million) then the climate models estimate the temperature increase due to the extra CO2 over the pre-industrial level of 280 ppm as 4.33 ln(x / 280). For example, this model attributes a temperature rise of 4.33 ln(392/280) = 1.46°C to the increase from pre-industrial to the current CO2 level of 392 ppm.
The direct effect of CO2 is well-established physics, based on laboratory results, and known for over a century.The direct effect of CO2 is the same for each doubling of the CO2 level (that is, logarithmic). Calculations of the increased surface temperature due to of a doubling of the CO2 level vary from 1.0°C to 1.2°C. In this document we use the midpoint value 1.1°C; which value you use does not affect the arguments made here.
Feedbacks are due to the ways the Earth reacts to the direct warming effect of the CO2. The threefold amplification by feedbacks is based on the assumption, or guess, made around 1980, that more warming due to CO2 will cause more evaporation from the oceans and that this extra water vapor will in turn lead to even more heat trapping because water vapor is the main greenhouse gas. And extra heat will cause even more evaporation, and so on. This amplification is built into all the climate models.The IPCC, in their last Assessment Report in 2007, project a temperature increase for a doubling of CO2 (called the climate sensitivity) in the range 2.0°C to 4.5°C. The central point of their model estimates is 3.3°C, which is 3.0 times the direct CO2 effect of 1.1°C, so we simply say their amplification is threefold. To be more precise, each climate model has a slightly different effective amplification, but they are generally around 3.0. The amount of amplification is estimated by assuming that nearly all the industrial-age warming is due to our CO2.
The government climate scientists and the media often tell us about the direct effect of the CO2, but rarely admit that two-thirds of their projected temperature increases are due to amplification by feedbacks.
What the Skeptics SayFigure 2: The skeptic's view. If the CO2 level doubles, skeptics estimates that the temperature increase due to that extra CO2 will be about 1.1°C × 0.5 ≈ 0.6°C.More generally, if the CO2 level is x (in parts per million) then skeptics estimate the temperature increase due to the extra CO2 over the preindustrial level of 280 ppm as 0.72 ln(x / 280). For example, skeptics attribute a temperature rise of 0.72 ln(392/280) = 0.24°C to the increase from preindustrial to the current CO2 level of 392 ppm.
The serious skeptical scientists have always agreed with the government climate scientists about the direct effect of CO2. The argument is entirely about the feedbacks.
The feedbacks dampen or reduce the direct effect of the extra CO2, cutting it roughly in half. The effect of feedbacks is hard to pin down with empirical evidence because there are more forces affecting the temperature than just changes in CO2 level, but seems to be multiplication by something between 0.25 and 0.9. We have used 0.5 here for simplicity. The main feedbacks involve evaporation, water vapor, and clouds. In particular, water vapor condenses into clouds, so extra water vapor due to the direct warming effect of extra CO2 will cause extra clouds, which reflect sunlight back out to space and cool the earth, thereby reducing the overall warming.
There are literally thousands of feedbacks, each of which either reinforces or opposes the direct-warming effect of the extra CO2. Almost every long-lived system is governed by net feedback that dampens its response to a perturbation. If a system instead reacts to a perturbation by amplifying it, the system is likely to reach a tipping point and become unstable (like the electronic squeal that erupts when a microphone gets too close to its speakers). The earth's climate is long-lived and stable — it has never gone into runaway greenhouse, unlike Venus — which strongly suggests that the feedbacks dampen temperature perturbations such as that from extra CO2.
What the Data SaysThe climate models have been essentially the same for 30 years now, maintaining roughly the same sensitivity to extra CO2 even while they got more detailed with more computer power.
How well have the climate models predicted the temperature?Does the data better support the climate models or the skeptic's view?Air TemperaturesOne of the earliest and most important predictions was presented to the US Congress in 1988 by Dr James Hansen, the "father of global warming":
Figure 3: Hansen's predictions to the US Congress in 1988,Hansen's predictions were made in Hansen et al, Journal of Geophysical Research, vol. 93, no. D8 (August 20, 1988), fig. 3a, p. 9,347: Global climate changes as forecast by Goddard Institute for Space Studies three-dimensional model. In the graph here, Hansen's three scenarios are graphed to start from the same point in mid-1987 — we are only interested in changes (anomalies). compared to the subsequent temperatures as measured by NASA satellites.The earth’s temperature shown here is as measured by the NASA satellites that have been measuring the earth’s temperature since 1979, managed at the University of Alabama Hunstville (UAH). Satellites measure the temperature 24/7 over broad swathes of land and ocean, across the whole world except the poles. While satellites had some initial calibration problems, those have long since been fully fixed to everyone’s satisfaction. Satellites are mankind’s most reliable, extensive, and unbiased method for measuring the earth’s air temperature temperatures since 1979. This is an impeccable source of data, and you can download the data yourself from vortex.nsstc.uah.edu/data/msu/t2lt/uahncdc.lt (save it as .txt file then open it in Microsoft Excel; the numbers in the “Globe” column are the changes in MSU Global Monthly Mean Lower Troposphere Temperatures in °C).
Hansen's climate model clearly exaggerated future temperature rises.
In particular, his climate model predicted that if human CO2 emissions were cut back drastically starting in 1988, such that by year 2000 the CO2 level was not rising at all, we would get his scenario C. But in reality the temperature did not even rise this much, even though our CO2 emissions strongly increased — which suggests that the climate models greatly overestimate the effect of CO2 emissions.
A more considered prediction by the climate models was made in 1990 in the IPCC's First Assessment Report:IPCC First Assessment Report, 1990, page xxii in the Policymakers Summary, Figure 8 and surrounding text, for the business-as-usual scenario (which is what in fact occurred, there being no significant controls or decrease in the rate of increase of emissions to date). “Under the IPCC Business-as-Usual (Scenario A) emissions of greenhouse gases, the average rate of increase of global mean temperature during the next century is estimated to be about 0.3°C per decade (with an uncertainty range of 0.2°C to 0.5°C).”
Figure 4: Predictions of the IPCC's First Assessment Report in 1990, compared to the subsequent temperatures as measured by NASA satellites.
It's 20 years now, and the average rate of increase in reality is below the lowest trend in the range predicted by the IPCC.
Ocean TemperaturesThe oceans hold the vast bulk of the heat in the climate system. We've only been measuring ocean temperature properly since mid-2003, when the Argo system became operational.Marine Weather.,Ocean temperature measurements before Argo are nearly worthless. Before Argo, ocean temperature was measured with buckets or with bathythermographs (XBTs) — which are expendable probes lowered into the water, transmitting temperature and pressure data back along a pair of thin wires. Nearly all measurements were from ships along the main commercial shipping lanes, so geographical coverage of the world’s oceans was poor—for example the huge southern oceans were not monitored. XBTs do not go as deep as Argo floats, and their data is much less precise and much less accurate (for one thing, they move too quickly through the water to come to thermal equilibrium with the water they are trying to measure). In Argo, a buoy duck dives down to a depth of 2,000 meters, measures temperatures as it very slowly ascends, then radios the results back to headquarters via satellite. Over 3,000 Argo buoys constantly patrol all the oceans of the world.
Figure 5: Climate model predictions of ocean temperature,The climate models project ocean heat content increasing at about 0.7 × 10^22 Joules per year. See Hansen et al, 2005: Earth’s energy imbalance: Confirmation and implications. Science, 308, 1431-1435, page 1432, where the increase in ocean heat content per square meter of surface, in the upper 750m, according to typical models, is 6.0 Watt·year/m2 per year, which converts to 0.7 × 10^22 Joules per year for the entire ocean as explained here.. versus the measurements by Argo.The ocean heat content down to 700m as measured by Argo is now available; you can download it from ftp://ftp.nodc.noaa.gov/pub/data.nodc/woa/DATA_ANALYSIS/3M_HEAT_CONTENT/DATA/basin/3month/ohc_levitus_climdash_seasonal.csv. The numbers are the changes in average heat for the three months, in units of 10^22 Joules, seasonally adjusted. The Argo system started in mid-2003, so we started the data at 2003-6. The unit of the vertical axis is 10^22 Joules (about 0.01°C).
The ocean temperature has been basically flat since we started measuring it properly, and not warming as quickly as the climate models predict.
Atmospheric HotspotThe climate models predict a particular pattern of atmospheric warming during periods of global warming; the most prominent change they predict is a warming in the tropics about 10 km up, the "hotspot."
The hotspot is the sign of the amplification in their theory (see figure 1). The theory says the hotspot is caused by extra evaporation, and by extra water vapor pushing the warmer, wetter lower troposphere up into volume previously occupied by cool dry air. The presence of a hotspot would indicate amplification is occurring, and vice versa.
We have been measuring atmospheric temperatures with weather balloons since the 1960s. Millions of weather balloons have built up a good picture of atmospheric temperatures over the last few decades, including the warming period from the late 1970s to the late '90s. This important and pivotal data was not released publicly by the climate establishment until 2006, and then in an obscure place.The weather balloon data showing the atmospheric warming pattern was finally released in 2006, in the US Climate Change Science Program, 2006, part E of Figure 5.7, on page 116 (www.climatescience.gov/Library/sap/sap1-1/finalreport/sap1-1-final-chap5.pdf). There is no other data for this period, and we cannot collect more data on atmospheric warming during global warming until global warming resumes. This is the only data there is. Btw, isn’t this an obscure place to release such important and pivotal data – you don’t suppose they are trying to hide something, do you? Here it is:
Figure 6: On the left is the data collected by millions of weather balloons.See previous endnote. On the right is what the climate models say was happening.Any climate model, for example, IPCC Assessment Report 4, 2007, Chapter 9, page 675 (Figure 9.1 parts c and f). There was little warming 1959 – 1977, so the commonly available 1959 – 1999 simulations work as well. The theory (as per the climate models) is incompatible with the observations. In both diagrams the horizontal axis shows latitude, and the right vertical axis shows height in kilometers.
In reality there was no hotspot, not even a small one. So in reality there is no amplification — the amplification shown in figure 1 does not exist.So the multiplier in the second box in Figures 1 and 2 is at most 1.0.
Outgoing RadiationThe climate models predict that when the surface of the earth warms, less heat is radiated from the earth into space (on a weekly or monthly time scale). This is because, according to the theory, the warmer surface causes more evaporation and thus there is more heat-trapping water vapor. This is the heat-trapping mechanism that is responsible for the assumed amplification in figure 1.
Satellites have been measuring the radiation emitted from the earth for the last two decades. A major study has linked the changes in temperature on the earth's surface with the changes in the outgoing radiation. Here are the results:
Figure 7: Outgoing radiation from earth (vertical axis) against sea-surface temperature (horizontal), as measured by the ERBE satellites (upper-left graph) and as "predicted" by 11 climate models (the other graphs).Lindzen and Choi 2009, Geophysical Research Letters Vol. 36. The paper was corrected after some criticism, coming to essentially the same result again in 2011. Notice that the slopes of the graphs for the climate models are opposite to the slope of the graph for the observed data.
This shows that in reality the earth gives off more heat when its surface is warmer. This is the opposite of what the climate models predict. This shows that the climate models trap heat too aggressively, and that their assumed amplification shown in figure 1 does not exist.
ConclusionsAll the data here is impeccably sourced — satellites, Argo, and weather balloons.In particular, we have not quoted results from land thermometers, or from sparse sampling by buckets and XBT’s at sea. Land thermometers are notoriously susceptible to localized effects – see Is the Western Climate Establishment Corrupt? by the same author: jonova.s3.amazonaws.com/corruption/climate-corruption.pdf.
The air and ocean temperature data shows that the climate models overestimate temperature rises. The climate establishment suggest that cooling due to undetected aerosols might be responsible for the failure of the models to date, but this excuse is wearing thin — it continues not to warm as much as they said it would, or in the way they said it would. On the other hand, the rise in air temperature has been greater than the skeptics say could be due to CO2. The skeptic's excuse is that the rise is mainly due to other forces — and they point out that the world has been in a fairly steady warming trend of 0.5°C per century since 1680 (with alternating ~30 year periods of warming and mild cooling) where as the vast bulk of all human CO2 emissions have been after 1945.
We've checked all the main predictions of the climate models against the best data:
The climate models get them all wrong. The missing hotspot and outgoing radiation data both, independently, prove that the amplification in the climate models is not present. Without the amplification, the climate model temperature predictions would be cut by at least two-thirds, which would explain why they overestimated the recent air and ocean temperature increases. Therefore,
The climate models are fundamentally flawed. Their assumed threefold amplification by feedbacks does not in fact exist.
The climate models overestimate temperature rises due to CO2 by at least a factor of three.
The skeptical view is compatible with the data.
Some Political PointsThe data presented here is impeccably sourced, very relevant, publicly available, and from our best instruments. Yet it never appears in the mainstream media — have you ever seen anything like any of the figures here in the mainstream media? That alone tells you that the "debate" is about politics and power, and not about science or truth.
This is an unusual political issue, because there is a right and a wrong answer, and everyone will know which it is eventually. People are going ahead and emitting CO2 anyway, so we are doing the experiment: either the world heats up by several degrees by 2050 or so, or it doesn't.
Notice that the skeptics agree with the government climate scientists about the direct effect of CO2; they just disagree about the feedbacks. The climate debate is all about the feedbacks; everything else is merely a sideshow. Yet hardly anyone knows that. The government climate scientists and the mainstream media have framed the debate in terms of the direct effect of CO2 and sideshows such as arctic ice, bad weather, or psychology. They almost never mention the feedbacks. Why is that? Who has the power to make that happen?
The Free Market 30, no. 2 (February 2012)To the minds of most environmentalists, the ham-hand of the government is needed to protect wildlife. Private property be damned— the government must step in, otherwise every species on the planet will be hunted into oblivion, or human development will gobble up all remaining wildlife habitat, leading to the complete extinction of all species.
However, on the African plain it’s just the opposite. From the van leaving Hoedspruit airport to the Thornybush Game Preserve, we saw nothing but mile after mile of African savannah, enclosed in electrified fencing. Although government-owned Kruger National Park is nearby, the area is dominated by private game reserves, with ecotourism the primary driver of the local economy.
If not for these private game reserves, a number of species would be extinct. Because people like the four in our party are willing to pay to see the “Big Five” and so much more, the populations of a number of these animals are thriving.
The game-reserve experience, while a good deal dependent on serendipity, is in the hands of human expertise and experience. The Thornybush accommodations, meals, and service are first class. But you go for the game: the experience of a lifetime, seeing animals up close, in the wild, that you’ve only seen before in picture books or cooped up in zoos.
Arriving in the afternoon, our first safari would begin with refreshments in the late afternoon. As I sipped on lemonade, Werner (pronounced “Verner”) our game ranger for our four safaris introduced himself. To the uninitiated, the game ranger might appear merely to be the driver of the vehicle, carrying up to 10 guests plus a tracker perched precariously on the front of the hood. And that would be impressive enough, negotiating the labyrinth of winding dirt roads that weave through the 11,000-hectare reserve. The roads are narrow, deeply rutted, and in some cases close to nonexistent, as a 36-hour downpour of 17 inches a couple weeks prior to our arrival made many roads next to impassable.
But in addition to his driving skills, Werner offered an encyclopedic knowledge of the Thornybush flora and fauna: not just names but mating habits, gestation periods, digestion, and who-knows-what-all about the 147 mammals, 114 reptiles, 507 birds, 49 fish, 34 amphibians, 970 grasses, and 336 tree species that inhabit the private reserve.
Werner introduced us to Orlando, our tracker and Werner’s partner in making our experience unforgettable. As he loaded a Winchester .375 rifle, Werner warned us that the animals are dangerous, and he cautioned us not to stand up in or extend our arms out of the side of the vehicle.
Werner was in constant communication on his radio with other rangers at the same time having a running dialogue with Orlando in Fanigalore, a Bantu/English hybrid language.
While sightings of impala and wildebeests are common, the Big Five are more elusive, so the game rangers stay in constant radio contact to tip each other off to a sighting or fresh tracks. Rangers are only allowed to leave the road to track one of the Big Five.
During our first evening, what we encountered most was the golden orb spider, which takes a week to spin an elaborate web from brush to brush across a road. After destroying the work of various golden orbs, Orlando’s right arm suddenly pointed, and Werner hit the brakes, startling a male black rhino, who, with a female companion, was taking an early evening mud bath.
We would see both black and white rhinos during our safaris, huge lumbering beasts that sport horns prized in China and Vietnam for medicinal purposes. According to the BBC, “The black market price of rhino horn is now in the region of £35,000 ($55,000) per kg.”
South Africa is home to 70 to 80 percent of the global rhino population, and with the rhino-horn trade being a multibillion-dollar-a-year business, last year 450 rhinos were killed by poachers in South Africa.
Private game reserves do all they can to ward off poachers. After all, rhinos, as members of the Big Five, are rare and expensive to replace. But at government-owned Kruger National Park, four park employees were recently arrested for being accomplices in a rhino-poaching operation.
“I am personally saddened to discover that some of our own would so callously abuse the confidence and faith that we have entrusted upon them,” says Sanparks head David Mabunda.
Mr. Mabunda may be sad, but as Walter Block makes clear, “Like public servants the world over, these may be well-meaning people, but they have no real monetary incentive to perpetuate the species.”
Professor Block points out that governments are inept at stopping poachers, and low-level government workers are susceptible to bribes and corruption.
The legalization of rhino-horn sales is actually being discussed in South Africa, but environmental groups like the World Wildlife Fund (WWF) are vehemently opposed to the idea.
This is not a new debate. Dr. Block wrote over 20 years ago that countries inhabited by rhinos make it close to impossible for farmers to domesticate rhinos for profit. Instead, there continue to be “only bureaucrats intoning platitudes about the importance of refraining from hunting the beasts.”
Commercialize the rhino trade, and rhino farms would pop up—and at the same time the rhino supply would flourish. For instance, 60 Minutes reported recently that many African species are thriving on private hunting lodges in Texas.
The game reserve is not a place to sleep in. Everyone receives a 5 a.m. wake-up call, and the game rangers like to start their morning safaris by 5:30. The February morning air had the perfect amount of crispness as we anticipated more Big Five sightings.
Very near Thornybush’s main lodge is an airstrip, and first thing, we spotted two lionesses lounging near the pavement enjoying the cool morning air. Werner pulled our vehicle very close to the lions, but they only yawned, showing little concern or interest.
We would actually see the entire Big Five during our two safaris that day: lion, African cape buffalo, African elephant, rhino, and leopard (the shyest).
The big, powerful animals seem tame around the vehicles, but they are still wild and unpredictable. If we forgot this was dangerous country, the eight-foot black mamba slithering across the road snapped us out of it. It’s the longest, fastest venomous snake in the world. Also, each night after dinner, a member of the Thornybush staff would walk us to our cabins, as unaccompanied guests at game reserves have fallen prey to leopards.
We still had one safari left and we told Werner and Orlando their job was to find the king of the jungle. It didn’t happen quickly, and unlike the other three outings we seemed to go in circles.
Werner and his partner were taking the lion instruction seriously. Our game ranger was clued into a sighting of tracks by another vehicle and Orlando seemed sure a lion was nearby.
Orlando had Werner stop, and he jumped off the vehicle to walk into the bush. Then we heard it—like sitting in the front row at the start of an MGM movie! Orlando wheeled, ran toward the vehicle, and jumped on to his seat. Werner started into the brush toward the roar.
Three lionesses and a male were looking expectantly up a tree. In the tree: a leopard with a fresh baby impala kill. Leopards and lions aren’t friendly, they’re competitors. The leopard was at a distinct disadvantage.
Werner thought the leopard might wait the lions out. Lions don’t climb easily. But the leopard became nervous; whether it was the lions or our vehicle is unsure. The leopard suddenly leaped down from the tree—15 to 20 feet—and ran for the tree in front of our vehicle, with the lions in hot pursuit. We were stunned. Werner quickly backed up.
Again the leopard jumped down and ran up another tree just escaping the lions. Werner was concerned that we were putting the leopard in danger. He pulled the vehicle around near the tree where the leopard had left the dead impala draped over a branch.
Soon the lionesses came back, and one ventured to climb and retrieve the kill. The 300-pound cat made it up the main trunk, claws gouging the tree’s bark. Then things got tricky. The impala was hanging just out of the lion’s reach. The cat carefully adjusted its weight, trying to balance on a limb that allowed enough stability to reach up and grab the impala.
Finally, the impala was secure in the lioness’s jaws. But now the hard part. While leopards have a locking wrist or anklebone that aids in climbing and descending, lions’ ankles slide sideways under their body weight.
Meanwhile, the two other lionesses waited calmly under the tree, hoping to scoop up a falling impala. But the lioness held on, clumsily sliding down the tree trunk. With the kill secure and now on terra firma, the lioness carried the impala into the shade of a bush. The king of the jungle quickly showed up to join her.
It’s the prospect of witnessing this kind of drama that tourists pay money to see, and it’s the market and private property that make it possible, at the same time providing the incentives to protect and revitalize what were once endangered species. As Professor Block makes clear, “there is no intrinsic conflict between the market and the environment.”
Government’s good intentions have done little to protect endangered wildlife. It is only private property and market pricing that will protect these majestic creatures for future generations to marvel at and enjoy.
Because there is no limit to the credulity of left-liberals we now have this — within a few years of the arrival of Christopher Columbus to the New World all of the following happened:
a plague killed 90 million indigenous people of the United States,which in turn led to the reforestation of North America,which in turn sucked a lot of CO2 from the atmosphere,which in turn started the Little Ice Age.Yep, it was Columbus's fault.
The idea that there were about as many people living in North America at the time of the arrival of Columbus as there were at about the turn of the 19th into the 20th century is simply ridiculous.
In 1900, there were several cities with populations of more than a million, and dozens with populations of more than 100,000.
In order to feed those dwelling in these places and for other purposes, highways and railroads crisscrossed the country. To coordinate the economic activities of such a vast population required institutions of commerce and finance, in addition to this physical infrastructure.
Yet there is no archeological evidence of any city of more than 100,000 of the indigenous people of this country or anything like a road network; although, yes, there is archeological evidence of a few scattered large towns and some trails.
Nor was there any folklore of institutions, such as marketplaces and banks, needed by a vast economy, nor any folklore of a mass extinction.
Besides, the Vikings were in contact with the indigenous people of this country well before Christopher Columbus, and probably the Irish and Spanish as well, so that the dread diseases that befell the Europeans during the Dark Ages had already had opportunity to make their way across the Atlantic.
Even among the Europeans, the bubonic plaque is thought to have "only" wiped out one-third of the population, prior to the survivors developing a resistance to the disease, not anything like 90 percent fatalities.
The belief that North America suffered a mass extinction is simply a matter of politically correct multiculturalism. And, now, it has become grafted onto belief in anthropological global warming (AGW).
Of course, the irony of the ridiculous idea that Columbus caused the Little Ice Age is that, until it became utterly crazy for anybody to deny natural variation and to continue to insist upon the hockey-stick theory of climate change (that global temperature had been constant for more than a thousand years but, with the start of the Industrial Revolution, has been trending up), the AGWers were claiming there was no Little Ice Age, that the fall in temperature that was recorded by Europeans at that time was merely a local phenomenon.
The hockey stick, we now know, was constructed by so-called scientists who fudged the numbers. Oh, not that what they did was an ethical violation, said the faculty at Penn State University, as fudging the numbers must be AOK among leftists.
But long before we found out how the hockey stick got made, we were finding out from several dozen other proxies for temperature that temperatures around the world were fluctuating during the thousand years prior to the Industrial Revolution. So even if we never found out exactly how the hockey stick was constructed, we knew something was wrong with it.
The way the so-called scientists discovered that Christopher Columbus caused the Little Ice Age is this: they discovered charcoal remains suggesting that certain indigenous people cleared farm land by burning off trees. Well, duh?
Then (presuming that 90 million people subsisted on farms cleared by this method, and that those people died because of the Columbus plague) an area the size of California became reforested. This would have lowered global temperature by several degrees and resulted in the Little Ice Age.
Thus, the proof that Columbus started the Little Ice Age is based on the belief in the Columbus plague wiping out 90 million people combined with a belief that 90 million people lived on little, self-sufficient farms cleared by burning away trees, worked by stone tools, without the aid of work animals such as horses, and without coordination with others as would require roads, written language, marketplaces, and banking.
Just how totally ignorant of economics are these climatologists anyway?
Among the problems of the new theory that Christopher Columbus started the Little Ice Age is that, considering all the data that have not been held back by uncooperative so-called scientists, the cooling trend of which the Little Ice Age was the nadir started hundreds of years prior to the arrival of Columbus in the Americas, at the end of the Roman warm period. But, who knows, maybe the AGWers will figure out the reforestation of Europe after Rome was sacked by the Goths is what caused the cooling trend that culminated in the Little Ice Age.
On the other hand, perhaps we should simply accept the idea that Columbus caused the Little Ice Age. Then we could construct a few nuclear power plants so as to desalinate ocean water and pipe the desalinated water into the interior of Texas to irrigate desert land that totals in size to California. In this way, we could simply offset our continued use of fossil fuel, sucking the CO2 out of the atmosphere instead of trying not to release any more CO2 into it.
[In April 1993, Murray Rothbard wrote on the Texas water problem, explaining how the government policy was on a disastrous course that could lead to massive drought. That day has finally arrived.]
We all know how the environmentalists, seemingly determined at all costs to save the spotted owl, delivered a crippling blow to the logging industry in the North west. But this slap at the economy may be trivial compared to what might happen to the lovely city of San Antonio, Texas, endangered by the deadly and despotic combination of the environmentalist movement and the federal judiciary.
The sole source of water for the 900,000-resident city, as well as the large surrounding area, is the giant Edwards Aquifer, an underground river or lake (the question is controversial) that spans five counties. Competing for the water, along with San Antonio and the farms and ranches of the area, are two springs, the Comal and the Aquarena on the San Marcos River, which are becoming tourist attractions. In May 1991, the Sierra Club, along with the Guadalupe-Blanco River Authority, which controls the two springs, filed a suit in federal court, invoking the Endangered Species Act. It seems that, in case of a drought, any cessation of water flow to the two springs would endanger four obscure species of vegetables or animals fed by the springs: the Texas blind salamander; Texas wild rice; and two tiny brands of fish: the fountain darter, and the San Marcos gambusia.
On February 1, 1993, federal district judge Lucius Bunton, in Midland, Texas, handed down his ruling in favor of the Sierra Club; in case of drought, no matter the shortage of water hitting San Antonio, there will have to be enough water flowing from the aquifer to the two springs to preserve these four species. Judge Bunton admitted that, in a drought, San Antonio, to obey the ruling, might have to have its water pumped from the aquifer cut by as much as 60 percent. This would clobber both the citizens of San Antonio, and the farmers and ranchers of the area; man would have to suffer, because human beings are always last in line in the environmentalist universe, certainly far below wild rice and the fountain darter.
San Antonio Mayor Nelson Wolff was properly incensed at the judge's ruling. "Think about a world where you are only allowed to take a bath twice a week," exclaimed the mayor. "Think about a world where you have to get a judge's permission to irrigate your crops."
John W. Jones, president of the Texas and Southwestern Cattle Raisers Association, graphically complained that the judge's decision "puts the protection of Texas bugs before Texas babies."
How did the federal courts horn into the act anyway?
Apparently, if the Edwards Aquifer were ruled a "river," then it would come under the jurisdiction of the Texas Water Commission rather than of the federal courts. But last year, a federal judge in Austin ruled that the aquifer is a "lake," bringing it under federal control.
Environmentalists oppose production and use of natural resources. Federal judges seek to expand federal power. And there is another outfit whose interest in the proceedings needs scrutinizing: the governmental Guadalupe-Blanco River Authority. In addition to the tourist income it wishes to sustain, there is another, hidden and more abundant source of revenue that may be animating the Authority.
This point was raised by Cliff Morton, chairman of the San Antonio Water System. Morton said that he believed that the Authority would, during a drought, direct the increased spring flow into a reservoir, and then sell to beleaguered San Antonio at a high price the water the city would have gotten far more cheaply from the aquifer. Is the Authority capable of such Machiavellian maneuvering? Mr. Morton thinks so. "That's what this is all about," he warned bitterly. "It's not about fountain darters."
Wolff, Jones, and other protesters are calling upon Congress to relax the draconian provisions of the Endangered Species Act, but there seems to be little chance of that in a Clinton-Gore administration.
A longer-run solution, of course, is to privatize the entire system of water and water rights in this country. All resources, indeed all goods and services, are scarce, and they are all subject to competition for their use. That's why there is a system of private property and free-market exchange. If all resources are privatized, they will be allocated to the most important uses by means of a free price system, as the bidders able to satisfy the consumer demands in the most efficient ways are able to outcompete less able bidders for these resources.
Since rivers, aquifers, and water in general, have been largely socialized in this country, the result is a tangled and terribly inefficient web of irrational pricing, massive subsidies, overuse in some areas and underuse in others, and widespread controls and rationing. The entire water system is a mess, and only privatization and free markets can cure it.
In the meanwhile, it would be nice to see the Endangered Species Act modified or even — horrors! — repealed. If the Sierra Club or other environmentalists are anxious to preserve critters of various shapes or sizes, vegetable, animal, or mineral, let them use their own funds and those of their bedazzled donors to buy some land or streams and preserve them.
New York City has recently decided to abolish the good old word "zoo" and substitute the politically correct euphemism "wildlife preservation park." Let the Sierra Club and kindred outfits preserve the species in these parks, instead of spending their funds to control the lives of the American people.
This article originally appeared in the Free Market in April 1993. It is collected in Making Economic Sense.
"Economic growth, not legislation, is the key to improvements in environmental quality."People love a clean, healthy, beautiful natural environment. The trouble is, not everyone can afford it. If you are lost in the woods on the brink of starvation, you are less likely to look at a frog and think, "I hope that species of frog survives" than "I wonder how much meat is on that frog."
If you live in grinding third-world poverty, you may want a cleaner stream in the village, but you cannot afford to do anything about it while your children are malnourished. You may want a low-emission heater for your hut, but since you have neither the money nor the electricity, the fire pit will have to do for now. In a world of scarcity, there are tradeoffs. You cannot afford precious time, energy and resources beautifying your landscape and protecting "greenspaces" if you are fighting hunger and disease.
Environmental protection is a consumption good. Not only that, but it is further up on the hierarchy of human needs than goods like food and shelter that ensure your family's survival. If a forest was experiencing a natural, healthy fire and a child was trapped in it, even a passionate environmentalist would not say, "Let it burn; the forest is more important than my daughter's life." Few would disagree that this is a normal and necessary ordering of human preferences.
Like all consumption goods, you cannot purchase more environmental protection until you can afford it, and you cannot afford it without economic growth. Economic growth, not legislation, is the key driver to improvements in environmental quality. There is a great deal of mythology that suggests passing laws is the key to a healthy earth. Similar to the myth that laws ended child labor in the United States, cause and effect have been reversed. Try banning child labor in the third world. Not only will many people die, but enforcement will be nearly impossible because so many people rely on it for survival. Try clamping down on pollution in the third world, and, again, lives are at stake and enforcement is not realistic. Only when a great majority of people can afford such laws and only when they are rich enough to spend time thinking of the welfare of others or the earth do such policy changes occur.
Policies that were tacked on to the tail end of naturally occurring trends typically get the credit for the change. Make no mistake; it is economic growth that has raised the American consciousness about environmental quality, and approval-seeking politicians have jumped on the bandwagon when it was convenient to do so — i.e., when most of their constituents could afford it.
The narrative above might suggest that as long as you're rich enough to afford it, government efforts to protect the environment are OK. This is incorrect for two reasons. The first is that the process of government itself systematically produces special-interest favors, rent seeking, monopoly protections, and all manner of other policies that benefit small interests at the expense of the rest. The information and incentive problems in legislative and bureaucratic bodies make them consistently fail to achieve their own stated ends. (See work by Mark Pennington for excellent analysis on this topic, as well as Richard L. Stroup's book Eco-nomics.)
"Policies that were tacked on to the tail end of naturally occurring trends typically get the credit for the change."The second problem with passing environmental legislation once you can afford to do so is that many people still cannot. Environmental protection measures — taxes on oil, land-use restrictions, emissions standards, ethanol subsidies, etc. — affect more than just the rich people who advocate them. They raise the price of basic survival goods — food, water, land — across the globe. The wealthy can deal with the higher prices; indeed as I've said many of them may be happy to purchase perceived environmental improvement for a few bucks more at the pump. The poor cannot. Many suffer and some die.
Environmentalists want to protect the environment because they have reached a point on their hierarchy of needs where a healthy wood is the next highest good. There are no poor environmentalists. This is all well and good until they attempt to force their preferences on others via legislation. In a market, the rich are free to act upon their preferences and purchase goods others cannot afford. They are also free to try to persuade poorer people that they should value luxury goods more than basic goods. But can you imagine a law that forced every citizen to purchase a luxury car? If those who valued the sight of roads full of beautiful cars lobbied to force everyone to drive luxury cars it would be considered outrageous discrimination against the poor. Why is environmental activism not seen in the same light?
(It bears mentioning that some environmentalists are motivated less by a clean earth for its own sake and more by an obligation to future generations. This does not fundamentally change the reality that environmental protection is a consumption good that can only be addressed after more basic needs are met. Who considers the life of future generations more important than the life of their currently living children? You don't think five generations out until the current generation is secure enough to afford you the luxury.)
Everyone, including environmentalists, has needs more basic than a pristine environment. We don't worry about the earth until our survival is secure. This is a natural ordering of needs. Yet environmentalists, after meeting their own basic needs, want to force the poor to reverse their preferences and put the earth before their own survival. I don't think most environmentalists intend this, but it is the inevitable result of using the force of government to enact protection measures. This is neither desirable nor effective in the long run.
"There are no poor environmentalists."You may be able to do great harm to many of the world's poor in exchange for some government attempt at environmental improvement (more likely to result in special-interest enrichment), but in the long run it is impossible to convince people to subjugate their survival to the perceived needs of their ecosystem. The real promise for environmental improvement is economic growth. Until people are wealthy enough to consider paying the cost of a cleaner environment, the fight to force their choices is inhumane and ultimately ineffective.
Environmentalists should seek the freedom that creates economic growth among the poor so they can afford to care about the earth. They should peacefully persuade those who can afford it to place a higher value on the environment relative to other nonessential goods. Economic growth and persuasion, not legislation, will make a greener world.
President Obama has pulled back on imposing new "air quality" regulations. The regulations would have hobbled many industries and created many spillover effects. The Republicans have estimated costs as high as $90 billion, but they are just saying that to provide a sound bite. They supported such things under Nixon and Bush.
There is no real way to know the costs of such egregious legislation, especially given that the highest costs of regulation are hidden. They consist of the jobs not created, the products that don't come to market, the production that does not take place, the efficiencies not realized, the standards of living not raised. Indeed, it is worse than that: the more the government hobbles the economy, the poorer we become — and there is no real way to document a future we are not permitted even to see.
Do you disagree? Well, fine, but apparently none other than Obama does agree. He said, "I have continued to underscore the importance of reducing regulatory burdens and regulatory uncertainty, particularly as our economy continues to recover."
This is a gigantic intellectual concession. If this is true of some regulations, what about the billion-plus other regulations? The results are the same any time you shackle free enterprise, in whatever way you do it. You cut off options for entrepreneurs. You reduce the value of capital by providing fewer outlets for its use. You divert productive energies from making things for society and force them into complying with regulatory bureaucracies. The costs are always enormous. In fact, we might look at socialism or fascism as nothing other than the extreme end of a highly regulated economy.
Maybe you say that sometimes regulations are worth it. That is your judgment. But let us at least acknowledge the existence of regulatory tradeoffs. When you regulate, you are giving up something, and that something consists of some level of prosperity that we will not see. That is the choice: regulation versus economic growth. You might say that society has had enough economic growth, and we don't really want a world in which the poor grow richer or more jobs are created or more businesses thrive. Again, that is your judgment. But let's acknowledge the tradeoff.
"It's almost like this combination of political and economic disaster has finally awakened the administration to reality."This is precisely what Obama has done, and it represents a yielding to the reality that the Left always seeks to avoid. For more than 100 years, they have claimed otherwise. They say that their regulations will have the effect of increasing efficiency, saving money, creating jobs, and all the rest. In the case of clean air, the idea is that it creates "green jobs," better living spaces so that people can have happier lives, better use of resources, less exploitation of workers, and all the rest. This is why the New New Left has long called government spending "investment," regulations have been tagged "standards," and taxes rechristened as "contributions." The illusion these people have attempted to weave is the idea that government intervention in our economy will actually make us better off. (I might add that, despite its rhetoric, the Right is no better in practice.)
Now, these claims are self-evidently untrue for a variety of reasons: owners know better than bureaucrats, consumers can manage their own affairs, entrepreneurs need a terrain of liberty and opportunity to create, and the pricing system is the ultimate guarantor of efficiency. Government has no resources of its own; it plunders the rest of us to get what it has. Moreover, it has no knowledge of how to manage society that exceeds what the individuals in society themselves possess. Just the reverse. Government is an essentially stupid institution.
But now, with Obama's announcement, we see the proverbial turn on the dime. He and his administration are admitting that their program is a drain, a burden, an unwelcome presence, a hobbler of prosperity. That is the implication, and that is really the only conclusion that one can draw from this announcement. It pretty much upends a major claim of the interventionists.
And why is he doing this? Well, look at the polls. It's a disaster right now for Obama's presidency. And look at the economy. It is not growing; it's shrinking. It's almost like this combination of political and economic disaster has finally awakened the administration to reality.
This whole thing reminds me of an event in Austria following World War I. Otto Bauer was the most influential intellectual and adviser in the entire country, but he was a dedicated and hard-core Marxist. At a time when the direction of Austria was uncertain, and the Bolsheviks were on the rise, Ludwig von Mises met with Bauer and his Marxian wife over several evenings. Otto had been pushing for immediate socialism. Mises explained that such an experiment would collapse in a very short time. Vienna was dependent on imports. Without the means to calculate and pay, the rural food supply would cease, and everyone in Vienna would start starving in about one week. Mises pressed the point as only he could, and finally Bauer relented and admitted that Mises was right.
But here is the punch line. Bauer never forgave Mises for having convinced him to give up his convictions. He waged an all-out academic war on Mises, and never spoke to him again. He was instrumental in denying Mises a paid position at the university. Such is the fate of an economist who tells the truth to politicians who dream of using the state to elevate society. The economist essentially says, With all your power and all your theories, you still do not have the ability to do what you claim. The attempt will lead to disaster.
Someone in the Obama ranks apparently talked to the president in the same way about this potentially catastrophic regulation. Those same people should say the same about all the taxes, antitrust regulations, environmental regulations, wars, welfare, mandates, restrictions, and monetary manipulations. Someone needs to speak even more truth to power. Doing so always comes at a personal cost, as those who believe in government launch vengeful attacks. Still, it must be done.
May the sudden realization that regulations can kill build a consciousness that leads to an unraveling of the entire interventionist state, so that we can all be left alone to build our own prosperity.
"Forcing people to spend time separating garbage turns the division of labor on its head."After battling the teacher's union in Wisconsin, that state's governor, Scott Walker, proposed a state budget that would have eliminated mandatory recycling. The outrage came fast and furious. An editorial at TheJournalTimes.com began with
Recycling has developed into a service too valuable to toss on the scrap heap.
Some officials worry Wisconsin communities will revert to a sort of Wild West dumping ground if Gov. Scott Walker's budget passes as is. Under the plan, subsidies for local recycling programs would end and municipalities would no longer be required to run those programs.
The editorial went on to say recycling is cleaner than garbage, trims energy use, creates jobs, and keeps tons of waste from ending up in landfills.
The governor quickly folded his plan when he failed to get the backing of key Republican lawmakers, who said his plan goes too far. So Wisconsin residents can look forward to sorting and separating their paper, plastic, and cans under the thumb of Wisconsin authorities. It's now radical to believe that people should just throw unwanted items away. To allow people to do this is "going too far."
Forcing people to spend time separating garbage turns the division of labor on its head. Wisconsin residents could hire specialists to come to their homes to separate the garbage, but that would be costly and inefficient. Plus, the government mandate gives no consideration to which materials have value in the scrap market.
As Wisconsin's Governor Scott Walker learned the hard way, it's now radical to believe that people should just throw unwanted items away.So while in certain cities of the United States, people are forced to sort through their own garbage, in a number of places in the world, residents throw away their trash with no worries. The trash will be sorted and removed by the estimated 15 million waste pickers in the world.
Spend any time in Istanbul and you see (mostly) men pulling what look to be large canvas bags strapped to steel frames on two wheels. They are everywhere — residential and commercial areas.
Before the municipal garbage trucks pull up to empty trash bins, these waste pickers comb through the trash, pulling out paper, plastic, glass, or anything else they know they can sell. The typical garbage collectors reportedly earn from 50 to 100 Turkish lira a week.
But there is considerable upside depending upon what a picker may find in the trash.
In the words of one trash picker,
Every garbage can contains a new dream. You go to a garbage bin. You dip your hand inside, and you start dreaming about what you might find. Perhaps it will be something valuable. And if you don't find it in this bin, you go to the next. In this manner, you can walk for seven or eight hours daily.
There are eskicis who have made 17,000 lira in a day. Mevlüt Çavuş is the manager of a Sarıyer junkyard and has been in the trash business for 15 years. He has two sons working for him, and the youngest will also work in the business when he's older.
A priest asked Çavuş to come clean up a church in Yeniköy. The result:
When I returned to the depot I discovered that silver statue weighing 8.5 kilograms and a candleholder in one of the boxes. I sold them for 17 billion lira [equivalent to 17,000 lira today] I went out and bought myself a Citroen car. We come across surprises like this from time to time in our profession.
Waste pickers collect materials for hours and then take them to depots where junk dealers buy and sell the thrown-away goods. Emir Altıngöller deals in recyclables by the kilogram, buying for 40 kuruş and selling for 60 kuruş. On the worst of days he makes 10 lira, while on the best of days it's ten times that. "He is thankful and content with his lot because he says he appreciates being self-employed," writes Fatma Turan for Today's Zaman.
Americans who are forced to recycle receive nothing for separating their glass and plastic and must pay a monthly fee to hand over their recyclables free of charge in the proper bins, on the appointed days, to employees making union wages and working for the local monopoly-protected waste companies. In Sweden all citizens must root through their trash. Per Bylund explains that Swedish recycling
works the way all centrally planned structures work: it increases and centralizes power while the attempted (expected) results do not materialize. In this case, the structure works: people do sort their trash in different bins — they have no choice. Also, government garbage collection companies do not have to do as much work while getting paid more than ever before. People are annoyed, but do not really react. Swedes generally complain a lot (about everything), but they do not resist; they are used to being pushed around by powerful government and have tolerated this fate ever since 1523.
In Istanbul, eskicis bear the risk that all entrepreneurs do. They don't get paid by the hour. What they fish from trash receptacles may or may not be valuable one day to the next, and competition is growing.
Murat Ayduda tells Today's Zaman that business a few years ago was terrible. "People were throwing iron into the trash and so was I. But things started to get better just a few months ago." But as prices have firmed more competitors have entered the market. "Back in the day there was only one junkyard in a city, but nowadays there's a few in every neighborhood."
This is how the market is supposed to work. And there is a market for trash as there is for anything else. There are employment opportunities for everyone, no matter the skill level. However, Americans would likely be horrified to see entrepreneurs pulling carts of other people's trash through the streets and living at junkyards. They needn't worry. Minimum-wage laws, business licensing, OSHA requirements and all the rest will keep some Americans rooting through their own trash to comply with government edicts.
"Private recycling is the world's second oldest, if not the oldest, profession," writes Floy Lilley.
Recyclers were just called scavengers. Everything of value has always been recycled. You will automatically know that something is of value when someone offers to buy it from you, or you see people picking through your waste or diving into dumpsters.
There is no question recycling is valuable, but like anything else, it's best left to the market to coordinate.
We should thank our lucky stars for air conditioning — and hope that that government won't destroy it, writes Mark Thornton.
This audio Mises Daily is narrated by the author.
It happens every spring: as the grass turns green and the songbirds appear, environmentalists celebrate Earth Day to renew their devotion to the planet. In recent years, the eco-activists' theme has morphed from simply respecting the natural environment into making sure that everything we do is "sustainable." So along with "Reduce, Reuse, Recycle" comes a host of new obligations. Prominent among the new rites of the earth-faithful is the idea of "buying local." It's a win-win, they claim: good for the earth, and good for the economy. Or is it?
On the surface, it's obvious: to help local businesses, we should buy more of their stuff. But as for helping "the economy," it's not so obvious. In fact, when people take "buy local" seriously, they are setting the stage for absurd and potentially tragic economic results.
The first difficulty with "buy local" involves the question of what exactly is meant by "the local economy." Is it my city? My county? My state? Any designation will arbitrarily include some and exclude others. By itself, "local" is not an economically relevant category. It's costs and benefits that are economically relevant. The cost of providing a good typically goes up with increased distance from market. But for many goods, people in more distant locations are so much more productive that — even factoring in the cost of transport — we find that trade makes sense.
But what about the money? Buy-local advocates cite studies showing that 68 percent of the money spent at local businesses stays in the "local economy." So I spend $100 at a locally owned store. What happens to the $68 of the original $100 that is then recirculated locally? Well, only 68 percent of it, or $46, stays local. And that $46 becomes $31, then $21, then $14, $10, $6.80, $4.57, $3.10, and so on. It won't be long before there's no money left in this town!
This is obviously not the case, so the studies must be leaving something out. Sure, for any town, much (if not most) of the money leaves to purchase imports. But there are lots of towns! They're also sending money away. So town A may be losing money (by importing goods) to town B, but meanwhile gaining money (by exporting goods) from towns C, D, and E. Looking at only one direction of the money-goods flow is a common fallacy. It crops up frequently in discussions of international trade, but is equally applicable to interlocal trade. Trade is trade, after all!
We could ensure that no money leaves our local community by simply placing our town under an impregnable glass dome like they did in The Simpsons Movie. Surely that would guarantee that all money stayed local! But would it really boost local prosperity, or would it simply condemn us to a lower standard of living by cutting us off from the rest of the world?
The buy-localists aren't so easily dispatched. They have further studies proving that the revenue of local businesses increases whenever folks drum up a buy-local campaign. Well, of course you'll see an increase in local business revenue if you have a bunch of people actively cajoling (or is it guilt-tripping?) their neighbors into shopping local at all costs! But that doesn't mean it's the best possible economic outcome.
If I could convince half of my students to pay $15 each to see me give a karaoke concert, in order to "support our local musicians," would that be a good idea? The answer is no — I'm a terrible singer (just ask my students!). But if I were a great singer, I wouldn't advertise "Buy local," but "Buy excellent!" And I would quickly surpass the local economy — I would "export" myself to bigger and bigger venues, where I could garner larger audiences.
Don't get me wrong — there are times when buying local is also buying excellent. In the Midwest, we get excellent locally grown sweet corn, strawberries, tomatoes, and such in the summer. But again, we're not buying them because they're locally grown, but because they're a good value. And in these cases, do you really need to cajole or campaign for buying local? No — it comes naturally. But there's no rule that says local is always the best value. In many cases, the best values can only be had by trading with faraway people. Prices reveal what the best values are for each person, regardless of distance, and without special coaxing.
$30 $27
Here's a challenge for proponents of "buy local": Tell a small-town family, whose infant child has a rare and deadly disease, to "buy local" for their medical services. Sure, there's a general practitioner physician in their town, but she lacks the specialized training, equipment, and medicines to treat this child. But the highly trained specialists at the Children's Hospital in the big city can save this child's life. In this case, "buy local" is a death sentence. Or tell the Afghani students at my university that they should be "buying local" for their educational services instead of importing their education from the United States. Or tell my small-town students that they should "buy local" for their weekend entertainment — that is, no trips to the movieplex, and no American Idol, because that would mean sending our money away to Hollywood!
If buying local makes sense, there's no need to extol or encourage it. If it doesn't make sense, but people do it anyway in a half-baked attempt at local stimulus or in a vain effort to save the planet, the effects are not "good for the economy," but quite the opposite. So don't let green guilt or quasi economics trick you into paying too much. Simply seek your greatest value, and savor the benefits of the economy, local and global.
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"The notion that 'Mother Earth' would ever have cause to complain of its treatment at the hands of humans is pure mysticism."
I'll bet you forgot to buy a card and gift, didn't you? Boy, is your face red!
Did you even know it's International Mother Earth Day today, citizen? Socialist despot Evo Morales and his buddies at the United Nations sure do. You see, in April 2009, they passed a unanimous resolution to celebrate this important event every year.[1] In the accompanying speech, Morales explained to his colleagues that "Mother Earth was now having her rights recognized" and expressed his hope that the present century will be known as the "century of the rights of Mother Earth." He explained to the UN that its member states "now had the opportunity to begin laying out a Declaration on the Rights of Mother Earth."[2]
And don't worry — you'll be pleased to know that they're making great progress toward this goal. This month, Morales and the Bolivian government will table a draft UN treaty recognizing and enunciating the rights of the Earth — ahem, excuse me, the rights of Mother Earth.[3] The issue will also be considered in an upcoming UN debate entitled "Nature Has Rights," where environmentalists from various activist groups will lend their support to the treaty and tell us why it's time we all recognize that Mother Earth has rights.
The proposed UN treaty will recognize the Earth as a living entity that humans have sought to "dominate and exploit." To prevent this exploitation, the draft treaty will "[grant] the Earth a series of specific rights that include rights to life, water and clear air; the right to repair livelihoods affected by human activities, and the right to be free from pollution."[4] In case it is not clear, let me stress that the treaty will recognize that the Earth has these rights — not you or me, citizen, but that big ball of minerals we are standing on.
The treaty will establish a "Ministry of Mother Earth" to hear the Earth's complaints against those who continue to dominate and exploit it — um, excuse me, dominate and exploit her. But don't worry; the building for the Ministry won't need to be quite as big as you might think. If you're concerned that the Earth will have trouble fitting into the complainant's chair, or the witness box, it's alright. You see, complaints will be voiced, not by the Earth itself, but by its human "representatives," consisting of environmental-activist groups and governments.
But let's not get too far ahead of ourselves in celebration just yet citizen. Before we break out the Mother Earth Day hooch, party poppers, and giant foam-rubber hands, let me just take a moment to explain a few things about this Earth-rights doctrine that has been steadily working its way through the UN. Let's take a moment to consider the relationship between life and rights, the purpose of the present doctrine, and the role of government as "representative" of Mother Earth.
- Living Entities and the Alleged Rights of "Mother Earth" To understand rights, we need to know not only what their content is but also the kinds of entities to which they accrue. To know this, we need to know what the concept of rights is for, and how it is derived. Philosopher Ayn Rand explains that the concept of rights is a part of moral philosophy, its purpose being to provide moral guidance on how to treat others.[5] According to Rand, the notion of "rights" is a moral concept:
the concept that provides a logical transition from the principles guiding an individual's actions to the principles guiding his relationship with others — the concept that preserves and protects individual morality in a social context — the link between ethics and politics.[6]
The purpose of ethics is to provide us with guidance on how to survive and prosper in our lives. Politics is that subset of ethics that deals with the use of force, and that studies the institutions of society with respect to the moral principles pertaining to the use of force. Rights, therefore, are the moral principles that tell us when the use of force is and is not morally right — they are the particular subset of objective moral principles that tell us who may use physical violence against whom, and when.
Since rights are a moral concept, it follows that they can only pertain to things that have some interests and will of their own. In particular, it is clear that moral obligations can only accrue to beings in need of moral guidance and are capable of sufficiently high levels of abstraction to understand and apply moral principles. Such beings must be conscious and must also be capable of sufficiently high levels of abstraction to understand moral principles and obey them — in short, they must be rational, conscious beings. If they are not, then they lack the means to understand and apply moral principles, and it is senseless to ascribe such principles to them.
Though this reasoning applies most clearly to moral obligations, rather than rights, we can actually say more than this. In fact, moral obligations are merely the obverse of rights: if A has a right to do X, and this right is enforceable against B, then it follows that B has a corresponding obligation not to forcibly interfere with A doing X. There can be no rights without corresponding moral obligations, and there can be no such thing as an entity having rights without corresponding moral obligations.[7] Since it is senseless to ascribe moral principles to beings that lack consciousness, it is therefore senseless to ascribe rights to these entities.
Since life is a necessary condition for consciousness, it is also a necessary condition for rights. But it is not a sufficient condition — there are plenty of living things that are either nonconscious, or are conscious but incapable of sufficiently abstract thought to accrue rights and their corresponding moral obligations.
"To suppose that such a thing as a big ball of minerals hurtling through space can be capable of holding rights is to completely misconstrue the nature and purpose of rights."
Since nonconscious living entities like trees and other plants have no awareness of their own existence or anything else around them, they have no need for, or capacity to understand, moral principles. Though a tree is a living thing, it is not conscious.[8] It has no mind, and therefore has no awareness of its own existence — it has no thoughts, no desires, no fears, no feelings, no pain or pleasure. It acts automatically to preserve its own life and flourish, but it has no awareness of this, and no opinion on any matter associated with it.[9] It imposes itself on other entities automatically, with no awareness of either itself or others. When other entities impose themselves on it, it remains unaware of this fact, and has no opinion about their actions. A tree does not need moral guidance to help it grow, nor would it be aware of any moral instruction it was given. It has no use for rights, and as a nonconscious thing, it has no rights or obligations. If a tree is cut up for timber, or poisoned, or torn out of the ground, it has no awareness of this ever happening. It had no awareness of ever being alive, and no awareness of being killed. Nor can a tree ever be said to have violated the rights of others. If the roots of a tree invade my property, or strangle another tree to death, the tree is not violating rights; it is just being a tree.
By the same token, we can see that the Earth also has no rights. The Earth has no mind or awareness of its own existence. It has no awareness of the state it is in and no opinion on this state. It feels no pleasure or pain. It has no views, no desires, and no fears. The notion that "Mother Earth" would ever have cause to complain of its treatment at the hands of humans is pure mysticism — the ascription of feelings and desires to a nonconscious entity. (In fact, it is highly dubious even to classify the Earth as a living thing. It is an entity composed mostly of nonliving material, and covered, relatively sparsely, with living plant and animal life.[10] )
To suppose that such a thing as a big ball of minerals hurtling through space can be capable of holding rights is to completely misconstrue the nature and purpose of rights. Rights are moral prerogatives for conscious beings that are capable of sufficiently abstract thought to require, and comply with, abstract moral principles. Rights cannot be divorced from their corresponding obligations, and hence rights can only apply to beings that are capable of understanding and applying moral principles. Rights allow conscious rational beings to interact with one another in a way that is compatible with their own survival.
(The present essay is focused on the alleged rights of nonconscious entities, which is a simple case. Things get a bit trickier once we look at arguments for animal rights. Animals have minds, feel pleasure and pain, have desires and fears, and are capable of a very small amount of simple abstraction. They are incapable of sufficiently abstract thought to grasp moral principles, and hence they are incapable of complying with moral obligations. Their use of force against other living beings is neither moral nor immoral, and cannot be considered a rights violation.[11])
- The Purpose of the Earth-Rights Doctrine The Earth-rights doctrine has no basis in reason. It is pure mysticism, resting, as it does, on the attempt to ascribe interests and moral prerogatives to a nonconscious entity. Nor is the actual purpose of this doctrine the protection of the environment. Its real purpose is the acquisition of power, not for nature, but for people — or rather, for certain people.
In fact, the Earth-rights doctrine is primarily a doctrine aiming at the total control of man, and the extinguishment of human rights. Its power to accomplish this consists in two simple facts:
that the Earth encompasses all resources that humans deal with, and these resources form a part of the "body" of the Earth; and
that the Earth is incapable of expressing any desires pertaining to its own alleged rights (since it doesn't actually have any desires), and hence it requires some human "representatives" to speak "on its behalf."
Though the Earth-rights doctrine alleges that "Mother Earth" has rights that are the same as, or analogous to, the rights of humans, this cannot actually be the case. Since the Earth is an entity that encompasses all available physical resources as part of its own body this means that humans are always, by necessity, encroaching upon the physical body of the Earth. They encroach upon the body of the Earth merely by being located on some piece of land, and they encroach further in all their actions dealing with things that form part of the body of the Earth. Indeed, every aspect of human survival requires some appropriation of physical resources that are a part of the body of "Mother Earth," and hence the entire process of human survival is an encroachment upon this body.
" A tree does not need moral guidance to help it grow, nor would it be aware of any moral instruction it was given." It is a standard and well-established part of the theory of rights that the right to exclude others from one's own body precedes the right to acquire a proprietary interest in outside resources, and that it is therefore impossible to acquire a proprietary interest in the body of another. A person's own body is their first and primary piece of property, with any further appropriation of outside material resting on this fundamental right of self-ownership. But since all physical resources available to humans form a part of the body of the Earth, it follows that any attempt by humans to use resources (or even exist on Earth) must necessarily impinge on the right of Earth to exclude others from interference with its own physical body. If the Earth has a right of self-ownership, as does man, then we are dancing all over it, figuratively and sometimes literally. Under this doctrine we are quite literally raping the Earth — i.e., intruding into parts of its physical body without its consent.
If the Earth really is a rights-holding entity, on par with a human being, then this implies that humans may not interfere with the body of the Earth without its permission, just as a person cannot interfere with the body of another person without their permission. Since all physical resources required for human survival come from the Earth, and are a part of this "living system," this implies that humans cannot do anything — they cannot even exist on Earth — without the permission of the Earth. And if governments are the representatives of the Earth in exercising its rights, then this logically implies that people cannot do anything without the permission of their government. This is the real purpose of the doctrine. It logically eradicates any possible human rights.
If you are a bit imaginative, you might wonder whether we could escape this tyranny by one day fleeing to another planet, and leaving the Earth alone and unmolested. But this misses the point. If the Earth-rights doctrine is correct, then there is no reason that this doctrine could not be extended to any entity that is composed of living things — a domestic garden, a football field, an ocean, the Earth, our solar system, our galaxy, the universe! All are macroscopic entities composed of living things and are "living systems" in the exact same respect as the Earth. Hence, the entire universe could just as easily be regarded as a rights-holding entity, with governments and environmental groups as its proper representatives. Stop raping the universe, citizen! Don't you know it has rights?
(Incidentally, it is no answer to this objection to say that the present draft treaty does not give the Earth such far-reaching rights against humans as I have stated here, and does not totally eradicate human rights. No evil philosophy can ever be implemented consistently without the complete destruction of its subjects, and this is no exception. Moreover, political power is acquired precisely by the piecemeal application of ideas whose logical consequence is total power and domination — by implementing oppressive principles, while hiding their true meaning and logical implications. The present draft treaty puts forward only a small number of actual "rights" for the Earth, and this is done primarily for political expedience. The fact remains that the principle of Earth rights leads logically to the conclusion that these rights must expand, and expand, to the point that they eradicate human rights.)
- The State-Representation Doctrine It is the notion of representation that is the most obvious clue to the real purpose of the Earth-rights doctrine and the nature of the environmentalist view of rights. Governments seek power to dominate those they rule, and to do so, they seek to "represent" all — to hold out the fiction that acts of government and its officials represent the "will" of the public, the environment, the oceans, the Earth, the universe. The purpose of the Earth-rights doctrine, and the accompanying notion that government may represent the Earth in issues pertaining to its rights, is to acquire power that the government itself denies having of its own accord.
"Every aspect of human survival requires some appropriation of physical resources that are a part of the body of 'Mother Earth,' and hence the entire process of human survival is an encroachment upon this body."
The Earth-rights doctrine propagating through the UN circumvents the liberal idea that rights vest in individual people, and restores the effects of the absolutist notion of the divine right of kings. In mediaeval times, when religion was a more powerful emotive force in politics than it is now, monarchical rulers would claim that they were God's representatives on Earth, and that all property was vested in the Crown as the proper representative of God. Now that "Gaia" has supplanted God among modern mystics, the environmentalists alter the form of the absolutist doctrine to achieve the same effect: government is the representative of Mother Earth, and therefore ownership of all physical property, i.e., all parts of Mother Earth, is vested in government as the representative of the entity from which it came. It is a doctrine of de facto absolutism, analogous in form, and equivalent in consequence to the doctrine of the divine right of kings.
Just as easily, the Earth-rights doctrine could be extended to the universe as a whole, with government as its representative. Hence, the logical consequence of recognizing rights claims of this kind is universal socialism — literally universal, i.e., extending to the entire universe — with the government having de facto property ownership of all physical resources in the universe. This much is tangentially admitted by its advocates when they state that their goal is to end capitalism — i.e., end the prerogative for people to hold private property.[12]
Some would probably argue that the state-representation doctrine is just a practical means of allowing for the Earth to exercise its rights. Since "Mother Earth" is not a conscious being, and cannot express its will (i.e., the will it does not actually have, since it is not a conscious being), as a practical matter, someone needs to speak for it. And what better entity to take on this job than our own "representative," the state? Well, what the hell? This is probably as "practical" a way as any to try to represent the nonexistent will of a giant nonconscious ball of minerals. Once we are through the looking glass, I suppose it is just as "practical" to say that Morales is the representative for talking walruses as to say that I am. Nevertheless, the point remains that any such representation is a fantasy — it is the attempt to represent the interests of an entity that has no interests. And the state-representation doctrine is therefore only "practical" as a means of ensuring that it is our government masters who take on the alleged prerogatives of the Earth, and not someone else.
Though it is gratuitous to point out the compounding absurdities of this kind of doctrine, let me just quickly note one more. Observe that the assertion of state representation of "Mother Earth" runs counter to the normal social-contract argument for government power. This theory (which is itself hopelessly flawed) holds that the state is the representative of "the people" by virtue of their ability to vote in its elections, and from their choice not to leave its jurisdiction. Clearly both of these are impossible for the Earth, and for the plants that live upon it. In the present case, governments are held to represent not only the people, i.e., the exploiters and destroyers of the Earth, but also the entity that is being destroyed! They are the representatives of the plaintiff and the defendants all at the same time! Government is the judge, the jury, and both sets of legal counsel — it is the representative of all.
- Mysticism as the Basis for the Earth-Rights Doctrine If this all sounds a bit mystical, that it because the philosophy of environmentalism is pure mysticism. The essence of the philosophy is that nature has inherent value — not value to any particular conscious beings, but value in and of itself — value divorced from any valuer. It rests on the fantasy that there can exist value without a valuer, will without a mind, desires and interests without consciousness, and representation without consent.
In his inaugural Mother Earth Day speech to the UN, President Morales noted that environmental destruction is "offensive to the many faiths, wisdom traditions and indigenous cultures for whom Mother Earth is sacred." In doing so he explicitly appealed to faith, not reason, as the standard of moral judgment. Those in the UN did not object to this invocation of mysticism as a basis for their resolutions. Rather, they passed his resolution for Mother Earth Day unanimously, setting the stage for the present UN draft treaty.
$17 $14
It is difficult to make satire of something like this, because the supporters of this proposition have already done the job for us. Those who dream up UN treaties to establish a "Ministry for Mother Earth" are the kinds of people who mistakenly thought that Orwell was writing an instruction manual, not a work of dystopian fiction.[13] The notion that governments should "represent" the will and interests of a giant ball of minerals with no mind or desires is the outcome of environmentalist philosophy in action. It is as absurd as a ficus tree running for Congress, or a barrister attempting to take instructions from a blade of grass.
Happy Mother Earth Day, citizen! Now bow down to the almighty state in celebration!
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Notes [1] United Nations, "General Assembly proclaims 22 April 'International Mother Earth Day,'" April 22, 2009. See the UN homepage for Mother Earth Day.
[2] Ibid.
[3] Steven Edwards, "UN Resolution Looks to Give 'Mother Earth' Same Rights as Humans," National Post, April 11, 2011.
[4] Ibid.
[5] Ayn Rand, Capitalism: The Unknown Ideal (New York: Signet, 1967), pp. 320–28.
[6] Ibid, p. 320.
[7] For discussion on this issue, as applied to the question of animal rights, see Tibor R. Machan, "Why Animal Rights Don't Exist" (Strike the Root, 2004). For a contrary position, discussing the argument from marginal cases, see David Graham, "A Libertarian Replies to Tibor Machan's 'Why Animal Rights Don't Exist'" (Strike the Root, 2004). For a rejoinder to this and other arguments, see Shawn E. Klein, "The Problem of Animal Rights" (The Atlas Society, 2004).The issue of moral obligations to conscious nonrational beings (e.g., animals) and rights accruing to those beings is beyond the scope of the present paper and is more involved than we have space for here. What is relevant here is that nonconscious beings cannot accrue rights or moral obligations.
[8] We know this because we know that consciousness is generated by the brain, and we know that trees do not have brains.
[9] The concept of "flourishing" does not require consciousness, and so this does not constitute a stolen concept. The concept of flourishing merely requires objective recognition of the fact that there is a natural continuum of states of a living organism that determine whether it is close to or far away from being dead (ignoring external circumstances). A healthy plant is, in this sense, more alive (i.e., further from death) than a wilting plant, and hence we can correctly say that the former is "flourishing."
[10] It is certainly true that the Earth is composed of things, some of which are living. A thing is "living" if it is engaged in a process of self-generated, self-sustaining action, and this is true of a great many things existing on Earth. Trees grow and develop through their own action, using nutrients that they collect themselves from the soil and rain, as does other plant life. Since the Earth is composed, in part, of living plant life, as well as a great deal of nonliving matter, it can, in some sense, be thought of as a "living system," so long as it is understood that this refers merely to an entity composed, in part, of living things that interact with one another. Though the Earth orbits around the sun and its parts change, with many powerful chemical reactions occurring inside its core, it is not accurate to say that the planet itself is engaged in self-generated, self-sustaining action. Rather, its parts act, and the Earth as a whole is acted upon. Living things on the planet are engaged in self-generated action, but the planet itself it essentially a big ball of nonliving materials (covered relatively sparsely with living things) being hurled around the solar system by the gravitational pull of the Sun. To say that the Earth itself is a living thing is either false, or it is just an imprecise shorthand way of saying that the Earth is an entity composed, in part, of smaller living things.
[11] Whether or not animals have rights rests, in large part, on something called the "argument from marginal cases." This argument grounds animal rights in their alleged analogy to damaged humans (e.g., a severely mentally disabled person who cannot understand abstract ideas). It argues that consistency requires either the acceptance of animal rights or the rejection of rights for certain kinds of "marginal" humans. However, there are good nonarbitrary reasons to distinguish between the two cases. Animals are beings that, even in the normal course of their development, cannot abstract sufficiently to understand moral principles. Disabled humans are beings that, in the normal course of their development would be able to do this, but unfortunately cannot, because they have been damaged in some way. They nonetheless belong to the class of beings that, if they develop normally, can understand moral principles. For discussion see Machan (2004), Graham (2004), and Klein (2004).
[12] At a UN summit in 2008, prior to Evo Morales's successful enactment of Mother Earth Day at the UN, representatives of Morales and the Bolivian government distributed a pamphlet stating their "ten commandments" and setting out the government's plan to save the planet, "beginning with the need 'to end with capitalism.'" See Edwards (2011).
[13] See George Orwell, 1984 (London: Secker and Warburg, 1949). In this book, the collectivist totalitarian society of Oceania operates through bodies such as the Ministry of Truth (responsible for the propagation of lies), the Ministry of Plenty (responsible for rationing goods), the Ministry of Peace (responsible for war), and the Ministry of Love (responsible for brainwashing and torture).
[Who Owns the Sky? The Struggle to Control Airspace from the Wright Brothers On • By Stuart Banner • Cambridge, Mass.: Harvard University Press, 2008 • 192 pages]
Who owns the sky? For most of history, people never actually visited the sky, but the common law nonetheless had an answer: cujus est solum ejus est usque ad coelum — he who owns the soil owns up to the sky. This rule worked well enough for centuries because it only came up when, say, someone built a structure or owned a tree that overhung someone else's land, or when someone provocatively held his arm over his neighbor's fence.
With the dawn of flight, though, the old rule became problematic. Was every aviator a trespasser unless he got permission from everyone whose land he flew over? If the government permitted aviators to fly regardless of this possible trespass, was this a taking requiring compensation? Does sovereignty even extend that far off the ground?
In Who Owns the Sky? The Struggle to Control Airspace from the Wright Brothers On, UCLA law professor Stuart Banner examines how the United States moved from the ad coelum rule to the current regime, under which landowners have no right to the sky above them, anyone (with government permission) can fly most anywhere, and governments assume the right to limit access to the air however they see fit.
One might reasonably expect such a book to entail a tedious slog through case law, and in some scholars' hands it might. But the first and foremost thing to say about Who Owns the Sky? is that it is unusually dynamic, engaging, and accessible. It turns what would seem like a highly academic subject into a fascinating story about people — lawyers, judges, scholars, legislators, and aviators — trying to figure out how to adapt to revolutionary new technology.
The Obsolete Ad Coelum Rule Despite the book's subtitle, its history actually begins long before the Wright Brothers. After the first hot-air balloon flight in 1783, people began to realize that ad coelum could lead to absurd results. Jurists occasionally invoked aerial-balloon trespass as an example of a trivial injury for which the law wouldn't provide redress, and it appears that no one ever sued a balloonist just for flying over. As Banner puts it, even if the balloonists' flights were technically illegal, "the law was out of step with the expectations of the parties, in that neither landowners nor balloonists thought there was anything wrong with overflights" (p. 27).
Although everyone tolerated balloons, the invention of the airplane forced the legal world to seriously rethink the aerial-trespass problem. Most everyone found the old rule undesirable, but people disagreed on how it could be discarded. Adherents of the common-law view that judges "found" the law (in the people's customs or through reason) had to argue either that earlier courts erred in adopting the principle from Roman law (i.e., they argued that this wasn't actually the Romans' rule), or that the earlier rule was narrower in scope than its wording suggested. Legal positivists had an easier argument: if judges just "make" law, then they could now make it one way instead of another. And legal realists could simply predict that judges would modify the law because the facts of cases would persuade them to do so.
Legislation and Constitutional Problems As the ad coelum debate continued well into the 20th century, legislatures also attempted to address the problem. Legislators were concerned, however, that if they passed laws permitting overflights, this would constitute a taking of the landowners' airspace for which the government would owe compensation.
Beginning in the 1920s, many states adopted a "Uniform State Law for Aeronautics," which attempted to solve this problem by declaring a preexisting right of flight. That is, the legislation acknowledged that landowners did own the airspace above them, but also stated that aviators had a right to pass through. Because the aviators' right supposedly predated the legislation, there would be no need for compensation.
The uniform laws did not create uniformity in all aspects of aviation law, however, so aviators and the airline industry began to ask for federal regulation as well, to reduce confusion over different jurisdictions' requirements for such things as pilot licensing, aircraft registration, and air-traffic control, and to overcome the public's safety concerns about air travel.
Today's legislators would probably find it quaint that many in Congress were troubled by the question of whether the Constitution authorized them to pass such legislation. The American Bar Association's Aviation Committee believed that Congress did not possess such authority and advocated a constitutional amendment. Unsurprisingly, though, Congress ultimately decided that it did have the authority to regulate the skies nationwide. The Air Commerce Act of 1926 directed the Department of Commerce to create air traffic rules and a registration and rating system for pilots.
Banner notes in passing (p. 146) that many industries have sought regulation for anticompetitive purposes, but he does not consider whether the aviation industry could have had such motives. The regulations the industry initially sought were not especially burdensome, so perhaps it did not. On the other hand, federal control in these areas socialized costs that the aviation industry might have borne in the absence of government. For example, but for government, aviators would have had to devise their own system of determining rights to air routes, just as pioneers of the "Wild West" had to make their own rules for establishing and enforcing property rights (Anderson and Hill, 2004), or as those involved in maritime travel in earlier centuries had to provide many so-called public goods for themselves (Sechrest, 2004). Also, but for government, the aviation industry would have had to expend its own resources to convince consumers that air travel was safe, as sellers of most other products do.
In fact, of course, the industry's choice was not between private and federal regimes, but between a patchwork of state rules and a single set of federal ones. Given the interstate nature of air travel, federal regulation may seem preferable to minimize compliance costs. And just as the US Constitution is least offensive (to those who favor economic liberty and political decentralization) where it assures freedom of trade and travel between the states, so this type of federal regulation — which arguably serves to "make regular" within the original meaning of the commerce clause (see Barnett, 2001) — may seem relatively benign and preferable to the likely alternative.
But things are not so simple. The federal government's initial, seemingly harmless intervention opened the door to many much greater interventions, including cartelization of the airline industry through federal control of entry, routes, prices, and much more, which enriched a handful of companies at consumers' great expense. Although the 1978 Airline Deregulation Act abolished much of the worst regulation — and, as a result, consumers' choices have increased while prices have plummeted — the Federal Aviation Administration continues to limit competition to the detriment of consumers and would-be competitors in the airline industry.For an overview of history and failures of federal air regulation, see, for example, Smith and Cox (2008), Cleveland and Price (2003), and Poole and Butler (1999). Also, by deciding that it had the authority to regulate aviation, Congress further eroded the ostensible limits on its power under the commerce clause, which it now invokes to justify regulation of practically anything.
Banner does not consider these costs, let alone weigh them against the benefits of federal regulation, but instead apparently assumes that all has worked out for the best. But given the decades of economic harm the federal government caused before deregulation and the ongoing harm it causes today, it is not obvious that we would have been much worse off with state-level regulation (which, incidentally, did not destroy automobile travel).
The End of Ad Coelum Those state and federal laws satisfied the aviation industry, but they upset many landowners who did not want to endure the noise and other damage that low-flying planes could cause. The landowners could not defeat the legislation (for the usual public-choice reasons), but they could and did sue when they suffered individual harm.
The ultimate demise of ad coelum came through one such lawsuit, when the US Supreme Court decided United States v. Causby in 1946. In that case, low-flying military planes caused the plaintiffs' chickens to "jump up against the side of the chicken house and the walls and burst themselves open and die" (p. 229). The plaintiffs sued the government, arguing that they were entitled to compensation under the takings clause of the Fifth Amendment.
The court's decision, authored by Justice William O. Douglas, could have resolved the case on a narrow ground by simply holding that there was a taking of land because the government's flights affected the land. Justice Douglas did reach that conclusion, but then he went much further and opined on what airspace landowners do and do not own. He wrote that "if the landowner is to have full enjoyment of the land, he must have exclusive control of the immediate reaches of the enveloping atmosphere. Otherwise buildings could not be erected, trees could not be planted, and even fences could not be run" (p. 253). Thus, a landowner "owns at least as much of the space above the ground as he can occupy or use in connection with the land," and invasions of that airspace "are in the same category as invasions of the surface" (p. 253).
Interestingly, Banner introduces Causby by contrasting the views of utilitarian Jeremy Bentham and proto-Austrolibertarian Frédéric Bastiat. The Benthamite view is that "[p]roperty and law are born and must die together. Before laws, there was no property: take away the laws, all property ceases" (p. 244). The Bastiat view, in contrast, is that "[p]roperty does not exist because there are laws, but laws exist because there is property" (p. 244).
The Supreme Court effectively embraced the latter view, but not through a rigorous theoretical analysis of natural law or property rights, let alone a citation of Bastiat.An American court has cited Bastiat only once: when an Ohio trial court cited his explanation of subjective valuation in Harmonies of Political Economy to conclude that a dog can be something "of value." State v. Yates (Ohio C.P. 1887). Rather, the famously nonrigorous Douglas simply followed his own ideas about common sense. As Banner notes, "After decades of debate, in which many participants had spent years thinking about the question, it had been resolved by one powerful man … who was likely considering it for the very first time" (p. 260).
Sovereignty Another question early aviation-law thinkers had to resolve was whether governments had jurisdiction over the skies at all.
Among those who argued that governments lacked any right to the skies was French international-law scholar Paul Fauchille, who argued that airspace by its nature could not be owned because there was no way to occupy it. And, he held, even if there were some way to remain stationary in the sky, a person or government could only own the space actually occupied, nothing more. Fauchille argued that, because of this, the air should be open to aviators of all nations, just as the seas are open to ships of all nations.
Today's legislators would probably find it quaint that many in Congress were troubled by the question of whether the Constitution authorized them to pass airspace legislation.Many considered that view to be too "theoretical" and believed that denying governments sovereignty over the skies would be impractical because of "the law of gravity" and because government authority is necessary "to prevent accidents" (p. 57). Banner seems to accept these criticisms, but it is not obvious that the critics are correct. If a plane crashes in a given country, then courts there would have no problem exercising jurisdiction over the pilot. If a plane remains in the air, however, why would a government need to concern itself? Is not the pilot's interest in reserving his own life as likely to keep him from crashing as any laws? Overflights create some challenging issues — for example, what to do about planes that drop bombs or other objects — but extending government sovereignty upward is surely not the only means of addressing them, and may not have been the best means. It appears that Fauchille's work has not been examined by Austrians or libertarians; scholars interested in exploring these issues further may want to do so.
A related concern around the turn of the 20th century was the use of the skies for warfare. Treaties in 1899 and 1907 banned the dropping of weapons from balloons because the very notion of bombing was considered inhuman and unacceptable. As US Army Judge Advocate General George B. Davis put it:
The launching of projectiles from balloons belongs in the same class of undertakings as the proposition to subject coast cities to ransom at the demand of a powerful fleet. That is, both have been proposed, but neither has been seriously considered by a responsible belligerent; indeed, neither practice has any existence in fact, but both have been regarded as constituting a sufficiently serious menace to humanity to warrant an international conference in formulating prohibitory declarations with a view to prevent their occurrence. (p. 45)
That thinking fell out of favor during World War I, when nations began bombing each other and defending their skies. Banner treats this military need as proof that governments must have authority over the skies, including the power to bar foreign aircraft. But he does not consider the possibility of allowing governments or privateers to use the skies to defend the land without actually exercising sovereignty more generally over them. After all, the US military flies over and sails the oceans, yet does not claim sovereignty over them.
Law and Economics Banner concludes his book by invoking Ronald Coase to briefly argue that the history of air law played out as it did because of transaction costs. In the absence of transaction costs, Banner says (p. 291), "giving landowners the right to exclude aircraft would not have affected the quantity of aviation," because pilots would have paid whatever small price landowners would have charged, and the common-law rule would have survived. Because of high transactions costs, however, this did not happen. Assertion of national sovereignty was therefore necessary to achieve a similar result:
If markets could operate costlessly, the new balance of gains and losses brought about by technological change could be accommodated entirely through private transactions. There would be no need for the law ever to change in response to technological change. It is the costliness of transacting that prevents people from purchasing the ability to do what new technology permits, which in turn impels them to seek a change in the law transferring that ability to them. The early aviation writers knew this well, even if they did not express it in precisely this way. (p. 293)
In this discussion, Banner considers the relative gains and losses of landowners and aviators and why the current law creates an optimal result. But this analysis ignores the problem of comparing subjective valuations, and it ignores questions of justice. It also fails to provide much guidance for the future — for example, in outer space, which is the subject of another of the book's chapters. How is a Coasean judge to know what would occur in a no-transaction-costs world, and why should we assume that result to be proper? One way to overcome this problem is through the Austrian understanding of subjective valuation and a Lockean-libertarian theory of property rights — which, incidentally, also leads to rejection of the ad coelum rule (Rothbard, 1982, pp. 84–87). Under such an analysis, future legal scholars would not need to grope blindly for answers to problems of new technology, as thinkers did for decades regarding aviation, nor would they need to be expert central planners trying to mimic an imaginary world without transaction costs.
But we can hardly blame Banner for not getting into any of that; they are matters for Austrian and libertarian scholars to take up when they write in this field. As they do, Banner's book will be an invaluable resource.
This review was first published in the Quarterly Journal of Austrian Economics, vol. 13, Winter 2010, pp. 87–95.
Bernard von NotHaus was convicted last month in federal court on conspiracy and counterfeiting charges for his development of silver "Liberty Dollars." He faces up to 25 years in prison. Earlier this week the feds moved to seize about $7 million of precious metals from the operation as well.Besides the government's dubious legal maneuvers, its broader message here is clear: "Don't try to provide Americans with any alternative to the fiat dollar, or we will come after you." For those who have always wondered why free-market monies haven't supplanted various state's fiat currencies, we have yet another illustration of the answer.
The Legal IssuesWriting in the Wall Street Journal, New York Sun editor Seth Lipsky explained a quirk of the trial and the government's subsequent description of what happened:
The warning [against issuers of private currency] is contained in paragraph 33 of the indictment handed up against Mr. von NotHaus in a courtroom at Statesville, N.C. It said:
Article 1, Section 8, Clause 5 of the United States Constitution delegates to Congress the power to coin money and to regulate the value thereof. This power was delegated to Congress in order to establish a uniform standard of value. Along with the power to coin money, Congress has the concurrent power to restrain the circulation of money not issued under its own authority, in order to protect and preserve the constitutional currency for the benefit of the nation. Thus, it is a violation of law for private coin systems to compete with the official coinage of the United States.
Yet a curious thing happened in the courthouse on the day before the jury went to deliberate. According to Aaron Michel, Mr. von NotHaus's attorney, the judge granted Mr. Michel's request to delete paragraph 33 from the indictment.
"That is a statement of law that, if it were to be put before the jury at all, should have been a matter of discussion between the parties as to the court's instructions to the jury on the law," Mr. Michel quoted the judge, Richard Voorhees, as saying. "In any event, it does not appear to the court to be a factual predicate that is supported by the evidence in the case."The judge then asked one of the federal prosecutors, Jill Westmoreland Rose, whether she had "any comment on that." "No, Your Honor," Ms. Rose replied, according to Mr. Michel. So the copy of the indictment that went to the jury contained white space where paragraph 33 once was.
Yet after Mr. von NotHaus was convicted on March 18, the government issued a press release trumpeting the verdict and repeating the part of the original indictment that the judge had struck out. The release also went further, asserting that Congress's power to coin money under the Constitution was also meant to "insure a singular monetary system for all purchases and debts in the United States, public and private."
It again asserted that it is a violation of federal law for individuals … "to create private coin or currency systems to compete with official coinage and currency of the United States." So much for the judge's view that the paragraph was unsupported by evidence in the case. The U.S. Attorney's office did not respond to a request for comment.
If von NotHaus's attorney's version of events is accurate, it means that the government is falsely describing its court victory as a blow against any issuers of private coin or currency, when in fact that wasn't (apparently) in the actual indictment.
Other specifics of the case involve the similarity between von NotHaus's Liberty Dollars and official US currency:
Even some hard-money enthusiasts concede that the Liberty Dollars (especially the face sides) do bear a superficial similarity to coins issued by the US government, and in that respect von NotHaus made it easier for the government to prosecute him. In particular, the coins featured "$" symbols and the words, "TRUST IN GOD."Having said all that, we should hardly blame the victim. The government went after von NotHaus because he was low-hanging fruit; it was relatively easy to convince a jury that he was engaged in counterfeiting, because his coins share many features with official US coinage.
It would be naïve to conclude that von NotHaus would have been safe had he taken more care to distinguish his coins from those of the US mint. For one thing, the government's case was internally contradictory: On the one hand, von NotHaus is accused of counterfeiting, in other words, trying to pass his coins off as authentic US coins. On the other hand, von NotHaus is accused of undermining the "legitimate" US currency by offering a product to compete with it. Indeed, von NotHaus advertised his Liberty Dollars as inflation-proof substitutes for the "genuine" US currency.
So which is it? Either von NotHaus was trying to pass his coins off as regular quarters and dollars, or he was trying to convince people that his own coins were superior.
Furthermore, it would be rather odd to try to charge people the silver-bullion price (or more) for coins that were intended to be counterfeit US coins. That would be like printing up fake $10 bills and trying to buy $50 worth of merchandise with them.
To remove any doubt that this was a politically motivated process — rather than an honest application of the law — consider the government's description of the verdict:
"A unique form of domestic terrorism" is the way the U.S. Attorney for the Western District of North Carolina, Anne M. Tompkins, is describing attempts "to undermine the legitimate currency of this country." The Justice Department press release quotes her as saying: "While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country."
Besides the absurdity of government officials decrying clear and present dangers to economic stability, there is the chilling fact that these sweeping accusations could be leveled at anyone. For years civil libertarians have been vainly warning Americans against the lawless imprisonment of "War on Terror" suspects, saying that it will not always be radical Muslims with unusual names who are rounded up.
By the same token, if von NotHaus's conviction of a "unique form of domestic terrorism" stands, the precedent will be set for the government to go after any group preaching against the evils of fiat currency.
Keeping Us on the Fiat Dollar: More than Just Legal-Tender LawsAs a college professor and lecturer at the Mises Institute, I have always had some difficulty explaining exactly how the government kept everybody using fiat money. Students would often think that legal-tender laws explained everything, but I would point out that they weren't the whole story.
It's true, legal-tender laws mean that nobody can refuse to accept Treasury notes (and coins) as payments of dollar-denominated debts. But legal-tender laws per se wouldn't prevent merchants and their customers from using precious-metal coins issued by a private mint.
For example, suppose the owner of an electronics store has 50″ 3D plasma screen TVs that he wants to sell for the equivalent of $1,400, but he only wants to accept gold, not paper money. He could get around legal tender laws by posting a sticker price on the TVs saying, "1 oz. of gold, or $10,000." In this way, he would be operating just as merchants near the Mexican-US border, who accept both pesos and dollars while offering exchange rates sometimes far worse than a tourist could obtain at an official currency-exchange booth.
When students would press me, I would give two major reasons that Americans still used the fiat dollar, despite the numerous flaws we had studied. First, everyone is born into this system. It's hard for a few individuals to unilaterally "secede" from the dollar standard, because everyone else is still using it. For example, even if the promoters of a hard-money conference paid me in gold coins for my talk, I would probably have to convert the gold into dollars in order to pay my mortgage or utility bill that month. The gold would only be convenient for me if I had intended on saving at least that much and wanted to do so in the form of gold.
Second, I would argue that if any attempts to circumvent the dollar actually got off the ground, then the government would find some legal pretext to shut it down. So it was pointless to study the legal code and come up with loopholes, because the government wouldn't play by the rules. It would find a way to shut down a genuine threat to its monopoly on money, meaning no entrepreneur would spend the resources and time trying to launch an alternative system.
The fate of Bernard von NotHaus has vindicated my musings.
ConclusionThe conviction and likely asset forfeiture of Bernard von NotHaus shows that our fiat monetary system is not in any way voluntary. People who deride the gold standard as an obsolete relic that "we" abandoned should heed the words of Ludwig von Mises:
The gold standard did not collapse. Governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion, policemen, customs guards, penal courts, prisons, in some countries even executioners, had to be put into action in order to destroy the gold standard. (The Theory of Money and Credit, p. 461).
In a recent article in the Wall Street Journal, Alan Blinder listed numerous alleged benefits of a phased-in carbon tax. Out of his entire column, he devoted a single sentence to the possible downside of his plan when he wrote, "No one likes to pay higher taxes." A more balanced assessment shows that a carbon tax presents very real dangers, even if we rely on the same economic analysis that so enthralled Blinder.
Spurring Innovation through Higher Taxes?Here's Blinder explaining the economic benefits of a carbon tax that starts out low, but will eventually become quite steep:
Once America's entrepreneurs and corporate executives see lucrative opportunities from carbon-saving devices and technologies, they will start investing right away — and in ways that make the most economic sense. I don't know whether all this innovation will lead to 80% of our electricity being generated by clean energy sources in 2035, which is the president's goal. But I can hardly wait to witness the outpouring of ideas it would unleash. The next Steve Jobs, Bill Gates and Mark Zuckerberg are waiting in the wings to make themselves rich by helping the environment.
We should also be clear that Blinder's argument for job creation does not rely on the "negative externalities" of carbon emissions. Earlier in the piece, he made a list of the "few nice side effects" that would result from a carbon tax: "reducing our trade deficit, making our economy more efficient, ameliorating global warming …" Because he puts global warming at third in the list, we see that there is nothing peculiar to greenhouse gases behind his main argument for job creation.
No, Blinder is making the simple observation that if the government imposes artificial costs on the current way businesses operate, then the market will respond to the new handicap and end up generating new products and techniques along the way.
This analysis is true, as far it goes. But the same could be said for any new government policy that made it illegal for businesses to continue operating in the ways that they currently find the most efficient. For example, if the government promised to impose stiff taxes on nails and screws over the next few decades, that would certainly cause entrepreneurs to see "lucrative opportunities" in developing do-it-yourself furniture that used only wooden pegs and glue. But obviously consumers would be worse off because of the less convenient and/or more expensive products.
This is basic economics: you don't make the country richer by taxing it, or by taking options away from industry. If investors pour money into carbon-reducing technologies under the threat of a future carbon tax, there is correspondingly less investment available for other technologies.
Dealing with Negative ExternalitiesOf course, advocates of a carbon tax claim that there is a special reason to penalize carbon emissions, as opposed to nails and screws. They argue that because emissions of carbon dioxide (and other greenhouse gases) may eventually lead to significant damages from climate change, entrepreneurs currently are not taking all of the costs of their actions into account.
Even if we concede this framing of the issue, it still does not follow that economists should favor a new carbon tax. Ironically, we can use the same researcher — William Nordhaus — upon whom Blinder based his own case.
It is true that Nordhaus himself favors a carbon tax. In the 2007 calibration of his "DICE" model of the global economy and climate system, Nordhaus estimated that the theoretically optimal carbon-tax regime would reduce (the present value of) climate damages by about $5 trillion, at the cost of about $2 trillion in lost economic output. This is why Nordhaus favors such a policy — its theoretical benefits exceed the costs by up to $3 trillion.
However, this figure assumes all governments around the world implement the tax. If some governments cheat, then the alleged benefits shrink, as some of the emissions simply migrate from the high-tax to the low-tax areas.
Nordhaus's calculation also assumes that governments implement the economically optimal carbon tax. If the tax is set too high, however, Nordhaus's results demonstrate that the cure can be much worse than the disease. For example, when Nordhaus simulated the impact of limiting atmospheric concentrations of CO2 to 1.5 times their preindustrial level, he found that it would make the world more than $14 trillion poorer than if governments did absolutely nothing to regulate emissions. This is because the simulated $13 trillion in benefits from avoided climate damage were swamped by $27 trillion in reduced economic output.See table 5-1 on page 82 here.
A Carbon Tax Involves Economics, Not Just Natural ScienceThe proponents of a carbon tax (or "cap and trade") continuously point out that there is a "consensus" on the natural science linking human activity to rising global temperatures. But the economic arguments, needed to show that the benefits of a carbon tax outweigh its costs, are far less conclusive.
For example, in the spring of 2009, Richard Tol published a survey of comprehensive studies of the global "welfare impacts" of climate change.Tol's paper is not available for free, but it is summarized by Jerry Taylor here. His list of these impacts included, not just appraisals of direct economic harms, but also attempts to value (in dollar terms) intangibles such as human health and mortality. Of the 13 studies Tol surveyed, the best-guess estimate of global GDP impacts ranged from a loss of 4.8 percent to a gain of 2.5 percent. Most of these impacts were calibrated for temperature increases of 2.5 to 3.0 degrees Celsius, which are not expected to occur until the second half of the 21st century. (Currently the globe is about 0.8 degrees Celsius warmer than the preindustrial benchmark.)
Tol found that, of the 11 studies that had been published since the year 1995, the most grim estimate was a global GDP loss of 1.9 percent. To put that number in context, in a 2009 report the Congressional Budget Office estimated that an 83 percent cut in emissions — the long-run cap proposed under the Kerry-Boxer bill — would reduce US GDP in 2050 from 1.1 to 3.4 percent.See table 1 on page 13.
To repeat, the damages in Tol's survey were calibrated for a particular range of temperature increases, and in reality it's always possible that global warming could be worse by, say, 2085.
But using reasonable projections of what is likely to occur, the economic case for a carbon tax is not nearly the slam dunk that Blinder implied in his article. To reiterate my argument, I am conceding the basic framework of "negative externalities" and peer-reviewed models of the harms from climate change. And still, once we factor in the obvious possibility that governments will not uniformly implement the "optimal" tax, the case for intervention falls apart.
ConclusionAlan Blinder is right that this country could use a burst of entrepreneurship and investment. But there are much more productive policies to stimulate investment than threatening future tax hikes.
Remember when the thinning of the ozone layer was going to cause us all to die of malignant melanoma, just a few years ago? The ozone scare seems to have dropped off the radar entirely.
As you might remember, chlorofluorocarbons (CFCs) were the evil du jour, playing the same role carbon dioxide (CO2) plays today in the global-warming scare. Environmentalists claimed that CFCs would somehow travel 40 miles up above the surface of the earth, despite the fact that CFCs are about five times heavier than air. A common case of floating bricks, no doubt.
By banning CFCs in 1989, the 196 countries who signed the Montreal Protocol on Substances that Deplete the Ozone Layer lost a cheap, safe, nontoxic, chemically inert, noncorrosive, and nonflammable source of refrigerants, propellants, and fire-control-system components.
As with most regulations, the CFC ban hit the poor with a vengeance. Millions of perfectly functioning refrigerators could no longer be recharged with Freon, so everyone was forced to purchase new CFC-free appliances. This, of course, was especially difficult for those with low incomes.
Another group that still suffers greatly are asthma patients. The substitutes for CFC inhalers are the HFA (hydro-fluoroalkane) inhalers, which many doctors report to be of marginal effectiveness compared to the CFC version, which provided faster and longer-lasting relief from the agony of suffocation. Many patients have found that, whereas one puff used to be sufficient to reopen the airways, the new product requires two or even three puffs to work. This raises the cost of the medication due to the increased dosage. And to add insult to injury, because of their recent introduction, HFA inhalers are protected by patent law, whereas CFC inhalers were already generic. Prices per inhaler have increased from the $5–$25 range to the $30–$60 range in the United States.
Needless to say, taxpayers are still funding research into this bogus field, and the CFC ban is still alive and well. As always, regulations and funding are very easily put in place — especially when the public is manipulated with scare tactics — but they are very hard to roll back; in fact, regulations are hardly ever repealed, and the institutions in charge of enforcing them are only occasionally dismantled.
It is important to recognize the behavioral pattern of governments, NGOs, and scientists by looking at similar scares, such as acid rain, Y2K, mad-cow disease, H1N1, and now climate change and terrorism. Fear and guilt are the usual tools used to rob citizens of their liberty and money. These scares foster the centralized masterminding of our choices and allow ever-greater transfers of power and wealth toward the government.
Environmental scares are particularly effective because they combine the fear and the guilt effects. Such "man-against-nature" scenarios will provide endless possibilities for loss of liberty unless power is taken away from governments altogether.
Unless we realize that man and nature are one and the same, there will be no degree of underdevelopment low enough for the ecofanatics: the so-called philosopher poet of the ecological movement, Derrick Jensen, wrote that "civilization is not and can never be sustainable." We should not underestimate this type of statement, especially coming from a man like Jensen, who has a wide audience and has repeatedly defended the use of militant violence to achieve environmental goals. We must be wary, not so much because of the possibility of Jensen's own violent actions, but because of government's talent for harvesting such ideas and using them to its advantage.
Watch for a new scare just as the climate-change myth loses steam and the population grows weary of antiterrorism.
Over the past two weeks, National Public Radio (NPR) has carried stories on the plight of the bluefin tuna and on the conservation campaign designed to save the endangered fish. Restaurants and supermarket chains have pledged to boycott the delectable creature until governments lower fishing quotas. Some vocal fishermen naturally oppose reductions in their quotas, because this would hurt their livelihood.
The whole episode is just another demonstration of the conflict that arises whenever government regulation tries to solve a problem caused by a lack of property rights. If people owned portions of the ocean, then the bluefin tuna would become as ubiquitous as cattle.
The ConflictWe'll quote from an earlier NPR story to summarize the situation before a recently concluded conference that addressed the problem:
Paris: November 24, 2010
Conservation group WWF teamed up with supermarket chains and restaurants Wednesday to press countries to set stricter fishing regulations for Atlantic bluefin tuna during an international conference in Paris.
WWF says the fish, popular in sushi, is on the brink of collapse.
French supermarket groups Carrefour SA and Auchan, French food services giant Sodexo and British restaurant chains Pret A Manger and Moshi Moshi are among the companies that pledged to stop serving Atlantic bluefin tuna until the situation improves, the conservation group said.
The companies joined WWF in pressing the International Commission for the Conservation of Atlantic Tunas, or ICCAT, to take "urgent action" to save the fish, which swims in the Atlantic and Mediterranean. …
WWF and other conservation groups want the 48 member countries of ICCAT to suspend or dramatically reduce the fishing quotas for the species.
Some fishermen, however, say such a move would lead to job losses and hurt their already suffering business.
As it turned out, ICCAT set the total allowable catch at 12,900 metric tons, a level that it claimed would allow "the maximum sustainable yield for bluefin-tuna fishing from now until 2022." According to ICCAT, "A balance between respect for the resource and the economic activity of the fishermen is possible."
Conservation groups were dismayed, calling the meeting a "total failure" for the bluefin tuna. Critics pointed out that even ICCAT's own scientific analysis showed that there was only a 70 percent chance that the new quota was consistent with sustainability of the tuna stock.
Tragedy of the CommonsThe problem of overfishing is genuine. Maybe ICCAT's new quota will "work" and maybe it won't, but in any case there is a definite problem when fishermen can harvest fish at a faster rate than the fish reproduce. Economists call this a "tragedy of the commons," when each individual takes from the common resource without taking account of the impact on everyone else.
Originally, the concept of a tragedy of the commons was used to analyze a hypothetical medieval pasture, where each herder could let as many cattle graze as he wanted. Even if everyone could see that there were more cattle than the land could support, it would be in no one's interest to restrict his own herd, because someone else would simply offset the move by enlarging his own herd.
The tragedy of the commons in pastureland was solved by the enclosure movement, i.e., by assigning property rights to individual parcels of land. Thereafter, a herder needed permission from the owner in order to let his animals graze on a plot. The owner of the land was interested in maximizing the long-run services of his property and so he would restrict the total amount of grazing to below the outcome that occurred when the grass was available on a first-come, first-served basis to all herders.
Privatizing the OceanThe same general logic applies to aquatic resources, including fish. In principle, the problem of overfishing could be easily solved if "chunks" of ocean were transferred into private property. Rather than having a meeting of 48 governments to determine "the" quota, the owner(s) of each chunk of ocean could set an individual policy for that chunk.
To be sure, there would be logistical difficulties in privatizing the oceans. For example, if it turned out to be too costly to sink large nets deep enough into the water at the property lines, then the fish could easily swim from one owner's property into another's. The situation would be analogous to one on land before ranchers developed barbed-wire fencing.
"If people owned portions of the ocean, then the bluefin tuna would become as ubiquitous as cattle."In such a scenario, one solution might be for entrepreneurs to buy many adjacent chunks in order to own an enormous volume of ocean water, so that the owner(s) of any consolidated property could expect to reap most of the benefits from limiting the amount of fishing that could take place on its surface.
Alternatively, it might make more sense to establish property rights in the sea creatures themselves, analogous to branding of cattle. To track their swimming property, the owners might use radio collars (for whales and large fish) or coat the schools of smaller fish with a harmless radioactive substance.
For someone who has never heard such proposals, these suggestions sound farfetched. But there is quite a voluminous literature on the topic, for example here and here.
Government vs. Market StewardshipGovernment-run enterprises suffer from the calculation problem described by Ludwig von Mises (originally in reference to full-blown socialism). Because they earn their revenues through coercive taxation, and because they often prohibit competition, government enterprises have no idea if they are serving their "customers" as efficiently as possible.
But beyond this fundamental calculation problem, there is also the more mundane incentive problem. Specifically, government officials who are in charge of "protecting endangered species" do not take nearly as good care of them as would private owners, who would personally reap the gains from increasing the market value of the resource.
For example, an African government could claim that it is committed to saving the white rhino, but in the grand scheme of things, how much will its officials really care about spending money to intercept poachers? Yet, in the case of white rhinos in southern Africa, when property rights were introduced — so that the animals were no longer contraband but prized possessions — the turnaround in population figures was astounding.
In the case of fishing, government regulations are often the epitome of inefficiency and unintended consequences. In a typical progression, the government might declare that people can fish only during a certain time of the year, but during the "fishing season" anything goes. The obvious result is that commercial fishermen equip themselves with high-capacity vessels that can extract enormous quantities of fish in very little time.
Even at this point, the outcome is wasteful. The expensive, state-of-the-art vessels are only in use for a small portion of the year — during fishing season — and otherwise lie idle.
Over time, as the commercial fishing boats become more sophisticated — and as more fishermen enter the industry — the government realizes that the fish population will not survive, even with the limited season. Thus, the government introduces new measures, designed to hinder the productivity of the fishermen. For example, the government might ban the use of nets bigger than a certain size or it might limit the size of vessel that can be taken onto the body of water.
All this foolishness would largely be eliminated with private ownership. The primary brake on overfishing would be the price that the owner of the chunk of ocean charged the commercial fishermen to "rent" his or her water. The owners of ocean wouldn't have any interest in forcing their customers to use inefficient equipment or techniques, and there wouldn't be arbitrary "seasons" except as they coincided with the natural biological cycles of the fish.
ConclusionWith ill-defined property rights, genuine conflict develops among people. Turning to government regulation will only exacerbate the problem, because government officials do not actually have the interests of "society" at heart. Only through genuine ownership can the problem of overfishing be solved. The bluefin tuna needs more capitalism!
Environmentalism is the doctrine that explains historical changes as produced by the environment in which people are living. There are two varieties of this doctrine: the doctrine of physical or geographical environmentalism and the doctrine of social or cultural environmentalism.
The former doctrine asserts that the essential features of a people's civilization are brought about by geographical factors. The physical, geological, and climatic conditions and the flora and fauna of a region determine the thoughts and the actions of its inhabitants. In the most radical formulation of their thesis, anthropogeographical authors are eager to trace back all differences between races, nations, and civilizations to the operation of man's natural environment.
The inherent misconception of this interpretation is that it looks upon geography as an active and upon human action as a passive factor. However, the geographical environment is only one of the components of the situation in which man is placed by his birth, that makes him feel uneasy and causes him to employ his reason and his bodily forces to get rid of this uneasiness as best he may. Geography (nature) provides on the one hand a provocation to act and on the other hand both means that can be utilized in acting and insurmountable limits imposed upon the human striving for betterment. It provides a stimulus but not the response. Geography sets a task, but man has to solve it. Man lives in a definite geographical environment and is forced to adjust his action to the conditions of this environment. But the way in which he adjusts himself, the methods of his social, technological, and moral adaptation, are not determined by the external physical factors. The North American continent produced neither the civilization of the Indian aborigines nor that of the Americans of European extraction.
Human action is conscious reaction to the stimulus offered by the conditions under which man lives. As some of the components of the situation in which he lives and is called upon to act vary in different parts of the globe, there are also geographical differences in civilization. The wooden shoes of the Dutch fishermen would not be useful to the mountaineers of Switzerland. Fur coats are practical in Canada but less so in Tahiti.
The doctrine of social and cultural environmentalism merely stresses the fact that there is — necessarily — continuity in human civilization. The rising generation does not create a new civilization from the grass roots. It enters into the social and cultural milieu that the preceding generations have created. The individual is born at a definite date in history into a definite situation determined by geography, history, social institutions, mores, and ideologies. He has daily to face the alteration in the structure of this traditional surrounding effected by the actions of his contemporaries. He does not simply live in the world. He lives in a circumscribed spot. He is both furthered and hampered in his acting by all that is peculiar to this spot. But he is not determined by it.
The truth contained in environmentalism is the cognition that every individual lives at a definite epoch in a definite geographical space and acts under the conditions determined by this environment. The environment determines the situation but not the response. To the same situation different modes of reacting are thinkable and feasible. Which one the actors choose depends on their individuality.
This article is excerpted from chapter 15 of Theory and History (1957). An audio version of this article, excerpted from the forthcoming audiobook version, read by John Pruden, is available as a free MP3 download.
The environment determines the situation but not the response. To the same situation different modes of reacting are thinkable and feasible. Which one the actors choose depends on their individuality, writes Ludwig von Mises (1881–1973).
This audio Mises Daily, excerpted from the audiobook version, is narrated by John Pruden.
There is a fundamental fact about the world that has profound implications for the supply of natural resources and for the relationship between production and economic activity on the one side and man's environment on the other. This is the fact that the entire earth consists of solidly packed chemical elements. There is not a single cubic centimeter either on or within the earth that is not some chemical element or other, or some combination of chemical elements. Any scoop of earth, taken from anywhere, reveals itself upon analysis to be nothing but a mix of elements ranging from aluminum to zirconium. Measured from the upper reaches of its atmosphere 4,000 miles straight down to its center, the magnitude of the chemical elements constituting the earth is 260 billion cubic miles.
This enormous quantity of chemical elements is the supply of natural resources provided by nature. It is joined by all of the energy forces within and surrounding the earth, from the sun and the heat supplied by billions of cubic miles of molten iron at the earth's core to the movement of the tectonic plates that form its crust, and the hurricanes and tornadoes that dot its surface.
Of course, in and of itself, this supply of natural resources is largely useless. What is important from the perspective of economic activity and production is the subset of natural resources that human intelligence has identified as possessing properties capable of serving human needs and wants and over which human beings have gained the power actually to direct to the satisfaction of their needs and wants, and to do so without expending inordinate amounts of labor. This is the supply of economically usable natural resources.
The supply of economically usable natural resources is always only a small fraction of the overall supply of natural resources provided by nature. With the exception of natural gas, even now, after more than two centuries of rapid economic progress, the total of the supply of minerals mined by man each year amounts to substantially less than 25 cubic miles. This is a rate that could be sustained for the next 100 million years before it amounted to something approaching 1 percent of the supply represented by the earth. (These estimates follow from such facts as that the total annual global production of oil, iron, coal, and aluminum can be respectively fitted into spaces of 1.15, 0.14, 0.5, and 0.04 cubic miles, based on the number of units produced and the quantity that fits into one cubic meter. Natural gas production amounts to more than 600 cubic miles, but reduces to 1.1 cubic miles when liquefied.) Along the same lines, the entire supply of energy produced by the human race in a year is still far less than that generated by a single hurricane.
In view of such facts, it should not be surprising that the supply of economically usable natural resources is not something that is fixed and given and that man's economic activities deplete. To the contrary, it is not only a very small fraction of the supply of natural resources provided by nature but a fraction that is capable of substantial enlargement for a considerable time to come. Mining operations could be carried on at 100 times their present scale for a million years and still claim less than 1 percent of the earth.
"The notion that production and economic activity are harmful to the environment rests on the abandonment of man and his life as the source of value in the world."The supply of economically usable natural resources expands as man increases his knowledge of nature and his physical power over it. It expands as he advances in science and technology and improves and enlarges his supply of capital equipment.
For example, the supply of iron as an economically usable natural resource was zero for the people of the Stone Ages. It became an economically usable natural resource only after uses were discovered for it and it was realized that iron could contribute to human life and well-being once it was forged into various objects. The supply of economically usable iron was one thing when it could be mined only by means of digging for it with shovels. It became substantially greater when bulldozers and steam shovels replaced hand shovels. It became greater still when methods were found to separate it from compounds containing sulfur. And so it has been, and can continue to be, with every economically usable natural resource. Their supply has increased and can continue to increase for an indefinite time.
The fact that the earth is made of chemical elements that man neither creates nor destroys implies that, from the point of view of physical science, production and economic activity can be understood as constituting merely changes in the locations and combinations of the chemical elements. Thus, for example, the production of automobiles represents a movement of some of the world's iron from such locations as the Mesabi Range in Minnesota to the rest of the country and, in the process, the separation of the iron from elements such as oxygen and sulfur and its recombination with other elements such as chrome and nickel.
The changes in the locations and combinations of the chemical elements that constitute production and economic activity are not at all random but rather are aimed precisely at improving the relationship of the chemical elements to human life and well-being. Iron in automobiles and appliances and in the steel girders that support buildings and bridges stands in a far more useful and valuable relationship to human life and well-being than does iron in the ground. The same is true of oil and coal when brought into a position in which they can be used to heat and light homes and provide power for man's tools and machines. The same is true of the relationship between all chemical elements that have come to constitute the material stuff of products compared with those elements lying in the ground.
Insofar as the essential nature of production and economic activity is to improve the relationship between the chemical elements constituting the earth and man's life and well-being, it is also necessarily to improve man's environment, which is nothing other than those very same chemical elements and their associated energy forces. The notion that production and economic activity are harmful to the environment rests on the abandonment of man and his life as the source of value in the world, and its replacement by a nonhuman standard of value — i.e., the belief that nature is intrinsically valuable.
With man and his life as the standard of value, the environment is improved when it is filled with houses, farms, factories, and roads, all of which serve directly or indirectly to make his life easier. When nature in and of itself is seen as valuable, then the environment is harmed whenever man creates any of these things or does anything whatever that changes the existing state of nature, for he is then destroying alleged intrinsic values.
A final inference that may be drawn is that a leading problem of our time is not environmental pollution but philosophical corruption. It is this that underlies the belief that improvement precisely in the external material conditions of human life is somehow environmentally harmful.
These days, explicit arguments in favor of fascism and the ideology of unlimited state power are, how shall I put this, ineffective at convincing the masses. Though people still adore the fascist ideology of the boundless power of the state and its fusion of public and private business, this is only so long as it is not given its proper name. These days, people prefer their fascism to be cloaked in disingenuous and deceptive language that disguises its true nature. All those old slogans about the supreme state and the suppression of the individual to the collective are so early 20th century! Far better to have your leaders pay lip service to "freedom" and "human rights" as they coercively mold you into a docile little manikin fit for their desired bureaucratic utopia.
Modern authoritarian movements tend to adopt the strategy of avoiding talking about or even hinting at the coercion they will adopt to deal with those opposed to the supreme rule of the all-powerful state apparatus. They deny that they are fascist movements and instead adopt a slew of fanciful euphemisms for the coercive policies they propose to inflict on their brutalized subjects. You silly fool! They are not robbing people — they are just "asking them to pay their fair share." They are not micromanaging people's lives — they are just "looking after their health and welfare." They are not silencing dissent — they are just "ensuring tolerance" and fighting "hate." They are not trespassing against private property — they are just "managing the economy." They are not enslaving people — they are just "encouraging volunteerism." Didn't you realize?
Of course, every so often, a modern fascist movement develops such a degree of hubris that it decides to dispense with all the euphemisms and denials and openly display the coercive means underlying its ambitions. After all, surely the poor rubes in the population must have figured it out anyway! Why not just level with them for a moment and have a little chuckle?
For those of you that haven't already heard, the ecofascist movement is currently having a bit of a heart-to-heart with the population of this kind, and they are letting us have a quick peek at the ol' mailed fist under the velvet glove. You see, having achieved all of this wonderful "consensus," they are now ready to drop the mask a little bit, and have a bit of a giggle about the fact that, well yeah, they really are a pretty violent bunch.
Exhibit A: The "No Pressure" Short FilmThe new ecofascist short film "No Pressure" created by director Richard Curtis for the 10:10 "carbon reduction"Incidentally, it always amuses me that these supposed environmental aficionados, who trumpet their expert scientific knowledge of the natural environment at every turn, cannot even correctly state the compound that they are trying to reduce. It is carbon dioxide that is the subject of the environmental movement's emission reduction aims, not carbon. These are entirely different substances, and it is not difficult to tell the difference: all standard allotropic forms of carbon (e.g., diamond and graphite) are solids at human habitable temperatures, whereas carbon dioxide is a gas. campaign is a beautiful example of the environmentalist movement dropping its pleasant-looking mask and joking about its true authoritarian nature. The film shows several sketches in which supporters of an environmental program to cut carbon-dioxide emissions explode people into a bloody mess when they decline to participate. After telling their hapless targets that there is "no pressure" to take part, the environmental organizers press a magic button, and presto, another dissenter liquidated — literally. The film ends, having murdered eight people (including two children) in four separate sketches, with these ominous words:
cut your carbon by 10%
no pressure
"No Pressure" Short Film (You can also watch this video on YouTube.)The video, which (of course) was funded with money stolen from British taxpayers, has now been removed from its previous home by its creators after some members of the public found the "joke" to be offensive. But the real joke is on the environmentalist movement. The ecofascists are learning the hard way that people do not like to be confronted by the realities of coercion in modern authoritarian ideologies. They want their fascism with nice cuddly slogans, and plenty of euphemisms. Jokes about killing dissenters, it turns out, are only funny when you are not actually touting an authoritarian ideology that uses coercion as its central tool.
Exhibit B: The Greenpeace Skinhead-Thug-in-Training VideoHere is another ecofascist advertisement, this time created by those cuddly loveable fascists at Greenpeace. The video shows an angry and menacing child, dressed up and lighted to look like a young hooded skinhead thug,It is not clear from the footage whether the child actually has a shaved head or not. However, the lighting used is designed to make it look this way; the boy is made to look like a quintessential violent skinhead thug, replete with grey hooded-sweatshirt, a staple item in violent skinhead culture. as he angrily lists a litany of alleged environmental outcomes that will destroy his future, if adults fail to act. After going through the litany of environmentalist propaganda, he tells us, in a menacing tone and with plenty of scowling looks,
[W]e're not just talking about the future. We're talking about my future. But this is no surprise. You adults have known about this for years. And though you could have done something about it, you haven't. You can say "It's not my problem"; you can say "I won't be around in fifty years"; but from now on, you can't say "I didn't know." Starting today, the lines are drawn: you have to choose sides. Either you're for my future, or you're against it. You're a friend, or you're an enemy. I may just be a kid today, but tomorrow will be different. This is the last time I'll be talking to you adults. You had your chance to fix this problem, now we have ours. We won't be cute, we won't be patronized, we will not be denied our future.
Greenpeace Skinhead-Thug-in-Training Video (You can also watch this video on YouTube.)Watching this video, I can't help but think of myself replying in my best talking-to-a-baby voice, saying "What a gorgeous little ecofascist you are! Yes you are! Yes you are!"
But I guess that would be patronizing, and according to the video, this young man will not be patronized. Oh yes, and in case you didn't quite understand the thinly veiled message, he may just be a kid today, but tomorrow, he will be a full-grown ecofascist hoodie-wearing skinhead thug, and you, dear viewer, will be his enemy.In fairness, the boy in the video is too young to have any clear idea of the nature of the ideology he is being prostituted to serve. It is his parents, and to a lesser extent the filmmakers, who should take the blame for his participation and the demeaning way he is portrayed.
Exhibit C: The "Planet Slayer" GameSome more ecofascist propaganda, this time designed directly for young children. The Planet Slayer game features, among other things, a cartoon pig game used to calculate carbon-dioxide emissions. It helpfully informs children when they should die in order to ensure they do not use more than their "fair share" of the planet. Other helpful information for children includes some harsh words against "cultural imperialism" (i.e., the free choice of people in other countries to adopt certain products and practices from Western countries) and this helpful instruction: "Organise and socialise comrades. Together we can save the world!"
Like other pieces of ecofascist propaganda, this one was also funded with taxpayer loot, and is also recommended for primary-school teaching by several government education departments. It has now been taken down from its previous home at the government media provider after some parents found its content, hmmm, how shall we put it, less educational than was intended. Again, jokes about exploding children (even in pig form) are only funny when you are not actually touting an authoritarian ideology.
There are plenty of other examples that could be given, though the three present exhibits are probably the most egregious in recent memory. For some reason, they do not make me feel any more inclined to cut my carbon-dioxide emissions or save the world from loggers and nuclear power plants. Nonetheless, all three of these pieces of ecofascist propaganda have something to recommend themselves: they all accurately represent the true nature of the environmentalist movement and draw attention to its love of violence to achieve its aims, even if sometimes in an allegedly light-hearted manner.
It seems that environmentalists are forgetting the lessons of George Orwell, who tells us,
[P]olitical speech and writing are largely the defense of the indefensible. [Brutal policies] can indeed be defended, but only by arguments which are too brutal for most people to face, and which do not square with the professed aims of the political parties. Thus political language has to consist largely of euphemism, question-begging and sheer cloudy vagueness.George Orwell, "Politics and the English Language" (1946).
Indeed, it is precisely this kind of euphemism and cloudy vagueness that most people adore when they are being presented with state-sponsored schemes to save us from all our ills and perils. It is smiley-face fascism they want, and they find it rather tactless to speak about all that nasty coercion stuff that goes along with it.
So don't be offended by these videos, advertisements, and games. Be thankful — thankful that the environmentalist movement is now ready to show us what it really thinks, stripped of all its pleasant euphemisms and ambiguity. Be thankful that they are ready to have a little joke at their own expense and press their own magic red button. Kaboom!
The term energy encompasses a plethora of technologies, and each attracts the gimlet eye of Big Brother. In recent years environmental groups have been very successful in insinuating themselves into the halls of government so that today there is a revolving door between government and the environmental movement. And it's just like the revolving door between the government and other key industries, such as banking and the military-industrial complex.
Government would have us believe that a new regulation is the result of some great, objective, and careful investigation. But mostly these regulations and spending programs are foisted upon us by the people who only yesterday were nothing more than lobbyists for some fervently held cause. There has been no new data, but yesterday's lobbyists are today carrying the mantle of great authority and prestige because they have become high-level government bureaucrats.
We economists call such lobbying "rent seeking" and those who engage in it are "rent seekers." Rather than seeking the cooperation of other men in the free market, a rent seeker lobbies government to impose some special privilege. The cost of the rent seeker's efforts is greatly reduced because he need convince only a few elected officials or government bureaucrats rather than the entire market. His job is made all the easier by the knowledge that the elected official or government bureaucrat can grant the privilege with no cost to himself.
When a rent seeker gets a job in government itself, well, the fox is in the henhouse. Officials move billions of dollars and coerce millions of people with no responsibility whatsoever. If a program fails to achieve its grand design, no government official suffers the consequences. Furthermore, failed regulations are seldom repealed, because, despite the net burden to the economy, a few new constituents do benefit and lobby mightily to keep them in place.
A Revolving-Door Lobbyist for the All-Electric CarSuch is the case, as recently reported by the Associated Press, of a lobbyist for an all-electric car.
"Leading the Charge" glorifies Mr. David Sandalow, a US Department of Energy assistant secretary and an avid advocate for the all-electric car. Hybrid cars usually recharge their batteries only while operating on their gasoline-powered engines, but Mr. Sandalow has converted his Toyota Prius hybrid into a plug-in hybrid at the cost of $9,000. Now he can recharge his car's battery from his home electrical outlet.
Mr. Sandalow is very proud that his daily five-mile commute (a ten-mile round trip) can be accomplished with a gasoline-refueling stop only "about once every month or two." Nevertheless his car needs to recharge after only 30 miles of travel, so he advocates that the government pursue developing a battery that will allow 100 miles between rechargings.
The government itself estimates the cost of such a battery at around $33,000 per battery. How the government knows this when no such battery yet exists was left unclear.
The article reassures us that government tax credits and stimulus funds will reduce the cost to the consumer to around $10,000 per battery. (But we Austrian economists know that government subsidies do not lower costs; they only change who pays. So it is disingenuous to say that government subsidies will lower the cost of such a battery.) Mr. Sandalow estimates that his electricity cost is equivalent to buying gasoline at 75¢ per gallon.
Recoup Your Investment in Only 132 Years!One does not need to be a Brookings Institute scholar like Mr. Sandalow — specializing in "oil dependence, electric vehicles, and climate change" — to see why no one will willingly purchase an all-electric car, much less the one million that President Obama wants on the nation's highways in five years. (Call me cynical, but this number does not sound as if it were the result of a scientific analysis either.)
First of all, the cost of anything is that which is foregone by the purchase. In other words, when we buy something, we cannot spend this money on other things. That is what our cost is. In the case of Mr. Sandalow, his $9,000 investment cost him 3,000 gallons of gasoline at the current price of roughly $3 per gallon. Assuming Mr. Sandalow's Toyota Prius gets only 20 miles per gallon, he could have driven his car for 60,000 miles. Since his commute is 10 miles per day, Mr. Sandalow's conversion cost is the amount of gasoline he could have purchased to drive to work for 22.7 years.
But that is not the only cost; the cost of electricity, which Mr. Sandalow estimates to be the equivalent of 75¢ per gallon gasoline, has yet to be considered. This expense adds an additional $2,250 to his commute — 60,000 miles divided by 20 miles per gallon times .75 = $2,250. Stated another way, he could have purchased another 750 gallons of gasoline and commuted to work for another 5.7 years, or 28.4 years total.
Now let's move on to the $33,000 battery. Hold onto your hats! At $3 per gallon, Mr. Sandalow could have purchased 11,000 gallons of gasoline and driven his Toyota Prius for 220,000 miles. But, again, he would have had to buy electricity at the equivalence of 75¢ per gallon, which would have cost him another $8,250. With this additional money he could have driven another 55,000 miles, or 275,000 miles total. This would allow our intrepid energy saver to drive to work for 104 years. (Of course, this cost assumes that one $33,000 battery will last for that many miles. If two batteries are required, you can double the cost and the years required to break even.)
So, by converting his car to a plug-in hybrid for $9,000, buying a yet-to-be produced 100-mile range battery for $33,000, and buying electricity for the equivalence of 75¢ per gallon of gasoline, Mr. Sandalow could have purchased enough $3 per gallon gasoline to enable him to drive to work for 132 years!
Trust Only the Free MarketI have looked at the all-electric car calculation only from the point of view of the consumer. I have not touched upon the nation's capacity to generate enough electricity to recharge those one million batteries so desired by President Obama. And one can merely speculate on whether producing this additional amount of electricity will cause more smokestack pollution than the tailpipe pollution it supposedly will prevent. Certainly this is not a debate in which Austrians would engage.
As Ludwig von Mises makes clear in chapter 8 of Human Action, the only basis of economic calculation is money prices via a free market. This does not mean that unlimited pollution from power plants or automobile tailpipes is permissible. Property rights and one's health may not be abridged by another's pollution. But it does mean that a basis already exists for deciding upon the wisdom of an all-electric car — the free market.
Each man strives to improve his own condition by seeking the cooperation of others. Entrepreneurs who believe in the all-electric car are free to invest their own money and lobby investor capitalists for more. But right now the all-electric car appears to be a black hole for wasting more taxpayer money.
We must disabuse ourselves of the propensity to believe that anything can be accomplished as long as government throws enough money at it. We have been down this road before with the fast breeder nuclear reactor that was supposed to produce more fuel than it consumed. Billions were wasted. We seem to be doing the same thing today with wind and solar power, too. There may be an economically rational niche for these energy technologies, but only the free market will give us the answer.
A friend of mine sent me a link to a video labeled "The Most Terrifying Video You'll Ever See." According to YouTube, this video has been viewed over 3.5 million times. Narrator Greg Craven, a high-school science teacher, presents an application of the precautionary principle to the debate over anthropogenic global warming (AGW). Craven claims to have found an argument that does not depend on the resolution of the scientific controversy — a "silver bullet argument," an argument that leads to an "inescapable conclusion," one "that even the most hardened skeptic and the most panicked activist can agree on."
I beg to differ.
Craven starts out with the premise that we can reduce the problem to one of four possible outcomes, which he places on a grid (as shown below). The rows represent the proposition that the worst outcome of AGW (the end of human life on earth) is on its way or is not. The columns represent the choice to do something or do nothing.
Craven then proceeds to examine the implications of ending up in each one of his four quadrants. I have written an abbreviation of his conclusion in the cells of the table:
Do Something
Do Nothing
AGW - true
avert total disaster
total disaster
AGW - false
wasted resources
avoid waste of resources
According to Craven, because we cannot be totally certain about the science, we need to find another way to choose our course of action. And Craven aims to show that this is possible. He states that "we begin by acknowledging that no one can know with absolute certainty what the future will bring." This argument is a variant of Pascal's Wager, which structures the issue of belief in God the same way, with punishment for nonbelievers as the worst case.
Craven's reasoning is that the objective of our decision-making process should be to avoid the top right cell. He observes that we cannot control which row we are in because we don't know for sure the outcome of the science; but we can avoid the top right cell (total disaster) because we can control which column we are in. We should choose to "do something" to ensure that we end up in the right column rather than the left column.
There are many problems with this approach.
The first problem is that this argument proves too much. The premise — that something really, really bad might happen — is undoubtedly true: there is a virtually unlimited supply of hypotheses about things that might go wrong. The less evidence required for any particular catastrophe, the longer the list of bad things we can make. Craven's mode of argument could be used to prove that we should "do something" about any — or all — of them.
Go through the entire video and replace "global warming" with "Saddam Hussein has weapons of mass destruction":
Saddam Hussein might have WMDs, which he could be planning to use against the United States. No one can prove that he does not because, as members of the neocon war party enjoyed pointing out, you can't prove a negative.
Even trying to use reason to figure out whether or not Saddam has WMDs is what Mr. Craven would call "row thinking," while what we need in dark times such as these is "column thinking."
As Craven would undoubtedly agree, we don't know whether Saddam has WMDs or not. In the worst case, Saddam has WMDs and he will use them against the United States. If we "take action" by invading Iraq and deposing Saddam, then we can eliminate the worst case. If we "do nothing" through "inaction" then the worst case might happen anyway.
It is true that we will incur costs by invading Iraq: dollars, some American deaths. Maybe we disrupt the lives of Iraqis a bit. But the cost of the worst case is incalculable.
The conclusion is therefore inescapable to all rational and right-minded people: we must invade Iraq.
Glenn Greenwald, in a recent piece, points out that this exact argument is being used to defend the decision to go to war in Iraq. And now the war party is using the same argument to lie the country into a war with Iran ("we cannot allow a nuclear Iran") even though there is no credible evidence that Iran has a nuclear weapons program — it takes Scott Horton less than seven minutes to debunk the propaganda on this issue.
The second problem I will address is that Craven's argument proves nothing at all. His objective is to show that we should do something to avoid the worst case. But to prove that we must "do something" is to prove nothing. He organizes the problem around a set of abstract choices. But in life, we face only concrete choices, not abstract ones. While deciding to "do something" about an issue in your life that you have been ignoring might be an important psychological step, it is still not an actionable decision. What to do is the real decision and cannot be separated from the decision to "do something."
Another way of saying this is that the grid describing reality has more than two columns. It has infinitely many columns representing the infinite range of choices that exist in the real world. Craven's mode of argument provides no guidance as to how many resources should be expended or in what direction to address the problem.
The aim of Craven's argument is to show that we can avoid the worse case without resolving the science. But this is only true if we choose a concrete plan that has the desired result. We have an infinite range of choices that all involve doing something — and some other choices that involve watching and waiting. Because our resources are finite, we could not adopt all policy proposals. To avoid the worse case, we would have to evaluate whether each proposal might have any benefits at all and whether the benefits outweigh the costs. Should we choose one staggeringly expensive plan that might work? Or ten less expensive plans that each have a chance of working?
If we use up a vast amount of resources on one very small risk, then we will be in a worse position to deal with other problems that do materialize. Maybe the best course is to do nothing right now, relying on economic growth to increase our wealth and therefore our range of choices in the future?
The argument can be used to prove whatever conclusion you want, depending on what you posit as the worst case. For example, try using the argument on the following worst case: we implement restrictive carbon-emission legislation and that causes even worse climate change. Or this: destroy the world's economy fighting a problem that doesn't exist (AGW), and then a very real — and much bigger — crisis emerges (and, as Mr. Craven points out, science cannot prove whether this will or will not happen), but we have no more wealth left to address it. Craven's contention proves that we should do nothing now so that we can address the real worst case that has not yet shown its face.
This brings us to another gross deficiency in Craven's argument: the choice among the many concrete options that we have depends on our understanding the cause and effect of each choice. To "do something" is for us to create some causes that we believe have certain effects. We cannot evaluate the effect of any cause without relying on the science of the issue. The science applied to any concrete proposal is essentially the same controversial science that Craven claims we don't need in order to reach a conclusion about what to do.
As the Social Issues Research Centre (SIRC) explains in their excellent commentary on the precautionary principle,
[t]he precautionary principle is, however, a very useful one for consumer activists precisely because it prevents scientific debate. The burden of evidence and proof is taken away from those who make unjustified and often whimsical claims and placed on the scientific community which, because it proceeds logically and rationally, is often powerless to respond. This is what makes the principle so dangerous. It generates a quasi-religious bigotry which history should have has [sic] taught us to fear. Its inherent irrationality renders it unsustainable.
The deficiency is illustrated this way. If the goal is to avoid the worst possible outcome, then "do something" is not enough. We must do something effective. Some of the actions we might take would not be very costly but would also (probably) not meet Mr. Craven's criteria for effectiveness.
Suppose that we all wore Whip Global Warming Now buttons? Would that help us avoid the worst case? Some might say so, but the strongest objection to that plan would be that there is no scientific basis for the belief that wearing buttons has any impact on global climate change.
Suppose that I agreed with Craven's conclusion and suggested as the solution that we lengthen our commutes to work so we can drive more, and that we increase the use of coal-fired power plants. Oh, but that won't work, he might say, because it would increase carbon emissions. But this is only a constructive response if carbon emissions are really the cause of AGW. Without any science linking cause and effect, how do we know that reducing (not increasing) carbon emissions will help?
Though Craven doesn't present a concrete proposal, clearly he has something in mind — probably Cap and Tax or a similar scheme — because he is able to fill in the lower left quadrant of his grid with various economic costs — depression, lost jobs, lower wages, and the like. Similar legislative proposals would incur the absolutely stupefying cost of reducing carbon emissions to preindustrial levels.
So far I have been focusing on the columns. But there are also a lot more rows than Craven shows. His two rows representing AGW true/false correspond to the cases that either nothing much happens or it's the end of civilization. But there are a lot of points in between — something happens but it is benign, something bad happens but it is manageable, something really bad happens but it is not the end of human life altogether, etc.
Craven claims that the risk of inaction outweighs the risk of action. But as I have shown, an analysis entirely in terms of the abstract categories he uses does not reach any meaningful conclusion. Relative costs can only be understood in terms of the concrete choices and their actual or estimated costs. While it is true that it might be worth taking action to avoid a very small risk with a very high cost, rationality requires an estimation of the risk and the cost.
Think about how you face the risk of extinction in your own life. Your life could end suddenly for many reasons — a car accident, an airplane crash, a predator-drone strike (just kidding), or even a 16-ton weight falling on your head. What is a rational approach to managing these risks? Some of them are, for most of us, too remote to think about, while others justify modest costs to reduce them. You could avoid all risk of car accidents by staying at home all the time, but for most people that cost is too high.
Mr. Craven compares the problem to that of buying a lottery ticket, but a rational approach to even lottery-ticket purchases requires a calculation in terms of the cost of each ticket against the probability of winning and the expected winnings.
The point of Craven's argument is to reach a conclusion that we should support carbon-trading permits or some other incredible central-planning scheme that would fundamentally alter human society and economics without having to win on the science.
AGW promoters have good reason for steering people away from the science. Once you start to tug on that ball of yarn, the entire politically motivated fraud starts to unravel.
With no end in sight, the controversy surrounding the so-called ground-zero mosque continues to bring out the worst in all of us. As the controversy continues, I'm struck by a parallel between this proposed mosque and another American monument established in 1996.
BackgroundAlmost 15 years ago, President Bill Clinton designated a large expanse of land in Utah as the Grand Staircase Escalante National Monument. Seen largely as a political ploy to win favor among voting environmentalists, the designation of this national monument immediately halted business development in the area, including a proposed coal mine, and stifled Utah's ability to make use of lands designated to help pay for the state's school system.
Creation of the monument also sparked a conflict between local county officials and the federal Bureau of Land Management over which authorities have jurisdiction over the dirt roads throughout the monument. This controversy continues to this day and is quite emblematic of the frustration felt by many of us in the more rural western United States over BLM practices and fair use of what we see as "our own land."
Make no mistake: these matters are conflicts of law with no easy solutions. The controversy over Grand Staircase Escalante is very much alive in Utah today, with local ranchers and miners still angry about what they see as federal usurpation of important economic resources, and local environmental activists equally as passionate in their support of the monument. However, we must pause to note that this issue no longer has a place on the national stage.
Our Right to Resolve Local Issues LocallyOne root of the issue is the question of why the use of local land that most Americans will never see in their entire lives was elevated to the national stage. At the time, I recall wondering why people from such places as California, Chicago, New York, and Washington had such strong opinions on land about which they knew nothing and in which they had no stake. Fifteen years later, I still don't know. Nevertheless, President Clinton was able to leverage a national appetite for environmental protection toward the resolution of an entirely local land-use issue.
Many locals rightly felt that their views were trounced by far-away opinions that were completely distanced from the very real local issues Utahns were living every day. Their question rings as true today as it did in 1996: How much weight does "national opinion" carry with regard to local issues, especially when it comes to land use?
I ask this question now because the fundamental issue is very similar in New York City today. Put to a local vote, it seems virtually guaranteed that the majority of New Yorkers would back the mosque's right to exist. As a result, the controversy today — as it was in Utah 15 years ago — is being generated and exploited by a national public with no immediate connection to the particular lands in question. Of what relevance, really, are the opinions of Utahns, Arizonans, Californians, Washingtonians, et al., in matters of private property in New York City? The obvious answer is none, of course.
And yet, as a former resident of Utah, I cannot help but feel that some in New York City are now getting their just desserts for weighing in on far-away private property issues. Herein lies a lesson to be learned by all of us: one day, you are the one determining what some distant group should do with their own land; the next day, they may very well be determining how you use yours!
This is the inherent danger of elevating local matters to the national stage. What right does any New Yorker have to object to a national discourse on this mosque, when they were so quick to weigh in on analogous controversies elsewhere in the country?
Civic Duty and Personal ResponsibilityIf it is not already clear, let us take a moment to be unequivocal: The use of one's own private property is determined by the owner, subject to local zoning laws. What this means is that if a religious group purchases land fair and square with the intention of constructing a religious building, they are well within their rights to do so. On this point, all sides agree. So let that be the end of the question.
There is a confusion about land value at work here. To wit, if what is now known as "Ground Zero" is hallowed ground for our country, then where are all the patriots willing to put their money where their mouths are? Throughout the Amazon rainforest, environmental groups and green-minded individuals have purchased great expanses of land because they, as private individuals, wish to see that land untouched by developers. Rather than coerce the locals through the machinery of government, they simply (and peacefully) purchase what they value so that the land may continue to exist in a way that they prefer. If it is important to some Americans that "Ground Zero" remains free of monuments to Islam, then one may very well ask how much New York City land they have purchased to ensure that it exists as a patriotic monument consistent with their own preferences.
Ironically, this argument was just as easy to apply to environmentalists in 1996, who decided to use the federal government as a tool to determine land use, rather than peacefully purchasing land and using it in accordance with their values.
It is easy to see the discrepancy between what people claim to value and what values they are truly willing to stand behind (e.g., financially). Those who wish to conserve natural landmarks or patriotic hallowed ground are certainly free to exercise their rights, purchase property, and invest themselves in the values they hold dear. Those who elect not to exercise this right have no place criticizing those who do, no matter to what legal use the land is eventually put.
ConclusionIn an ideal world, we could transcend allegedly "polarizing" issues like this and exist in a harmonious, free society. Rather than rushing to condemn a monument to Islam near the former World Trade Center, concerned Americans could financially contribute to the erection of such a monument with the proviso that the eventual landmark properly reflects their values. Those in charge of erecting the landmark would then be eager to create a monument to the peaceful, free, and cooperative society that America has always been.
In the real world, pundits fan the flames. It is tempting to participate in the controversy, lending our own unique take on a multifaceted issue. When left-liberals label their opponents bigots, and conservatives become enemies of private property, it is important for libertarians to adhere to principle. At issue is more than just private property and the freedom to worship, but one of the most attractive and important principles of classical liberalism: civic duty.
Of course all Americans have a right to worship as they please. Of course all Americans have a right to use private property as they see fit. Beyond that cursory glance lie the more important concepts of putting our money where our mouths are if we wish to see land used the way we want it to be, and letting local people sort out their own local issues on the local stage.
[This article first published as "Grand Staircase Escalante and the 'Ground Zero Mosque,'" on Ryan P. Long's blog, Stationary Waves.]
The Deepwater Horizon crisis has sparked the next battle in the never-ending war of ideas between the proponents of government intervention and the defenders of laissez-faire. The tactics in this battle are familiar, the trenches well-established, and the troops well-drilled. The whole scene invokes a sense of déjà vu. The last major battle is still continuing, though it started years ago with the realization that the grand financial edifice built upon years of cheap credit was falling to pieces.
In this continuing tradition, the proponents of government regulation and intervention have put forth many comparisons between the financial collapse and the Deepwater Horizon crisis.[1] The problems they see were identical in each case — large, profit-seeking corporations, in the absence of regulations, made risky decisions that then resulted in harm to others. Their solution is simply to regulate these companies.
To quote novelist, filmmaker, and now economic journalist Gonzalo Lira's recent blog post,
The BP oil spill is part of the same problem as the financial crisis: The BP oil spill and the banking crisis are two examples of the era we are living in, the era of corporate anarchy.
In a nutshell, in this era of corporate anarchy, corporations do not have to abide by any rules — none at all. Legal, moral, ethical, even financial rules are irrelevant. They have all been rescinded in the pursuit of profit — literally nothing else matters.
This is outrageously untrue; corporations have to abide by countless rules and regulations. But this is how the proponents of government intervention think: they see free markets where they don't exist, and blame any problems they perceive on the supposed absence of heavy government intervention in the running of business.[2]
In response, defenders of economic freedom have focused on debunking the persistent myth that the present economic system is an example of a completely unregulated market, devoid of all government intervention. In addition to the government's major contributions to the risk of this type of disaster, including an incredibly generous liability cap and heavy incentives to drill in deeper, riskier waters, there is virtually nothing in the economy outside the sphere of state intervention.[3] As columnist Sheldon Richmond succinctly puts it, the free market "has an airtight alibi. It didn't exist."
Supporters of free markets have gone further by shining light on the failure of regulations to achieve their intended results. "Regulatory capture" is quickly becoming a term familiar to most. Jeffrey Miron, author of Libertarianism from A to Z, has said that "the libertarian skepticism of this kind of regulation is not based on blind faith in markets; it is based on open-eyed recognition of how regulation works (not) in practice."
However, none of this gets to the heart of the issue. The case for laissez-faire never rested on the simplistic idea that all government is corrupt and ineffective while all businessmen are good and interested in the public welfare. Hardly. In this war of ideas, the proponents of regulation are not going to be swayed even if they are forced to admit that certain government policies contributed to the spill. Tactics currently employed by the defenders of free markets are rather ineffective. What is needed is to bring a general defense of the market into the debate.
The Rule of the MarketThere is a subtle contradiction in Mr. Lira's previously quoted statement. He is at once claiming both that corporations had to abide by absolutely no rules and that all of these rules were rescinded in the pursuit of profit. What he's missing is crucial — that the need for businesses and entrepreneurs to seek profit is itself a rule. A business cannot operate in any manner it chooses to and still obtain a profit.
To quote Ludwig von Mises,
The proof of the usefulness of the services rendered is that a sufficient number of citizens is ready to pay the price asked for them. There cannot be any doubt about the fact that the customers consider the services rendered by the bakeries useful. They are ready to pay the price asked for bread. Under this price the production of bread tends to expand until saturation is reached, that is, until a further expansion would withdraw factors of production from branches of industry for whose products the demand of the consumers is more intense. In taking the profit-motive as a guide, free enterprise adjusts its activities to the desires of the public. The profit-motive pushes every entrepreneur to accomplish those services that the consumers deem the most urgent.Ludwig von Mises, Bureaucracy, p. 50.
Not only does the market aim to provide the things that people are most willing to pay for, but it also provides the basis for economic calculation and thus rational
This term does not imply a value judgment on the ends of the economic activity itself. Rather, as T.J.B. Hoff puts it,
economic activity in any society, irrespective of its framework and form, must follow "the economic principle," by which is understood that one seeks to attain the greatest possible result in relation to the expenditure (the least possible sacrifice). Finally, one is on safe (objective) ground in maintaining that survey is indispensable both in order to follow "the economic principle" and in order to judge if the economic policy, which is being followed, is consistent. Accept these principles and you also accept the necessity for economic calculation.
See his Economic Calculation in the Socialist Society, p. 11.
economic activity. The profit-loss mechanism also provides the motive force behind the productive process by incentivizing — for each individual — opportunity-seeking, effective risk management, and contribution to the productive process.Profit and the EnvironmentWhen the environment is concerned, however, one no longer hears about the benefits of markets. Instead, discussions of "externalities" rule. Profit and loss are seen as deficient because any costs imposed on third parties won't be accounted for.
But this is a legal failure, not a market failure. Markets aren't supposed to be devoid of laws. Persons and their property should be protected from the destructive and aggressive actions of others. That is essential. The issue, then, is how we should go about dealing with "externalities," particularly with regard to the environment.
Regulation, as a proposed solution to this issue, limits the scope of actions that can legally be taken by entrepreneurs and businesses. It either gives them regulations that tell them what they must do, or it gives them regulations that tell them what they must not do. The calculating decision-making of entrepreneurs is replaced by the arbitrary direction of bureaucratic regulators. Profit and loss are no longer tools of decision-making. They are circumvented and ignored.
Litigation, through tort law and strict liability, can provide monetary evaluations of the costs of environmental damage. The costs then imposed on environmental offenders are monetary costs, determined by legal standards in a court of law and by the damages to third parties. Governments can also make businesses pay directly for perceived damages.
The crucial difference between regulation and methods that put monetary costs on environmental damages is that monetary costs can fit into the framework of the market. They enable economic calculation in environmental policy. The public's value of the environment is weighed against the public's value of resources in the calculating and information-gathering market process. Simply assuming that the benefits of environmental policy will outweigh the costs is hardly satisfactory.
The idea that market externalities are "economically inefficient" reveals a fundamental error. The very concept of "economic efficiency" relies on using a single scale of values to maximize utility. Yet the market is not characterized by a single scale of values. Because of the subjective nature of value and the impossibility of interpersonal utility comparisons, the social-cost and social-benefit curves used to define the nonideal nature of externalities simply do not exist. We can never determine if the market as a whole is "economically efficient" or not.
What is important is that the function of the market process be unimpeded. Accurate information conveyed through prices about opportunities in the market for mutually beneficial exchanges is important to each individual's own efficiency in achieving their goals. Private property is the foundation of this system.
Indeed, most externality problems occur where different actors on the market have conflicting goals with respect to a particular resource, such as ocean water. This arises when property rights are ambiguous or simply nonexistent.It is quite often claimed that because of transactional costs, a property-rights solution isn't workable to problems like this. However, one must ask why the presence of high transactional costs should simply be ignored when considering policy. This makes about as much sense as arguing that transportation costs shouldn't be reflected in "ideal" prices and that the government should completely subsidize all the costs of transportation. In cases where property rights are clearly defined, then damage to any one's property by any other can be dealt with through tort law, and the externality problem is dealt with.
The Seen and UnseenBut what about voting? Don't people make their values heard through democracy? The government may ultimately make decisions, but can't it be influenced by the ultimate valuations of the people through their actions as voters, similarly to how the market would make decisions as influenced by the valuations of people as consumers?
Aside from the fact that complex regulatory policies are never going to be directly influenced by voters, there is a massive failure in this proposition. No voting member of society is in a position to compare the full costs and benefits of an economic decision as complex as those involving resources and the environment.
Oil, as a factor of production, is not valued directly by consumers. It is valued based on the value given to the products it can be used to produce. Many people looking at the effects of the Deepwater Horizon crisis see the oil-soaked pelicans and the fishermen out of business, but these same people cannot possibly see all of the benefits of the use of oil accruing to everyone in the entire economy!
The information about the value placed on oil is communicated and known only through the market in the form of prices. It does not exist in the minds of voters, of individuals, but only in the market. If it is profitable to drill for oil even when all of the environmental damage is charged to the drillers, then the market signal is clear — people value the products more than they dislike the effects on the environment.
ConclusionGovernment regulation is not an effective or beneficial response to the Deepwater Horizon crisis. A rational calculation of the costs and benefits of any action can only take place in the economy through the monetary calculation of the market. Costs imposed on third parties by any business through actions such as an oil spill should be fully paid by the offender, but this should be the only recourse taken.
There are no "externalities" when environmental damages have to be paid. Nowhere can there be found a rational basis for the cries for regulation. Political pressure by those angry with the response to the spill should be focused on ensuring that BP pays all of its damages, not on trying to secure more unjustified government regulations and interventions.
Notes[1] "The BP Oil Spill's Lessons for Regulation," "Overconfident and Underregulated," "The BP Oil Spill and American Capitalism," "The Regulation Crisis," "Gulf Oil Spill and Wall Street Bankers: Disasters of Self-Regulating Capitalism," "FDR Was Right, Reagan Was Wrong — More Obvious than Ever Now."
[2] "How Soon Until the Free Market Stops the Oil Spill?," "BP Oil Spill: Conservatives Start Fire Then Blame Obama For Not Putting It Out," "Emil Guillermo on the BP Spill: Don't Blame Big Government–Blame the Free Market."
[3] See Robert Higgs's "Nothing Outside the State" and "Nothing Outside the State II."
Covers the problems of government intervention into pollution and natural resource use issues, emphasizing importance of private property and individual liberty in producing desirable outcomes. Recorded at Mises University 2010.
Interviewed by special guest host, Zoe Russell, on the "Free Markets" internet radio program; 17 July 2010. [44:07]
The April 20 explosion and subsequent round-the-clock oil spill from a BP-operated deepwater drilling rig in the Gulf of Mexico 40 miles off the Louisiana coast has generated justifiable anger across the nation. It's also generated calls for strict sanctions against BP, the most drastic of which is confiscation of all company assets.
The front line of this campaign is an ad hoc organization calling itself "Seize BP," which already has organized dozens of rallies across the country.
Its mission mirrors its name: persuade the Obama administration to seize assets of the British-based oil company and use the proceeds for compensating victims and family members for loss of life, health, and property.
Were it only that simple. Surely, heartbreaking accounts of the ecology of the Gulf of Mexico coastal region damaged by oil toxicity and oxygen depletion make such impulses understandable. At least 100 million gallons of crude oil have spewed from the broken well and onto beachfront and other properties. Yet such a move in the long run would set a precedent whose effect would be to chase away private-sector oil drilling from that region. And given the experiences of nationalized oil industries elsewhere, it is not likely to prevent further spills. Market logic, unfortunately, rarely appeals to the impatient.
Apparently, it doesn't appeal to the Obama administration. President Barack Obama, under enormous public pressure to "do something," has already embarked on a course of de facto nationalization. In a private June 16 White House meeting, Obama coaxed BP chief executive Tony Hayward into "donating" $20 billion to a new escrow account earmarked for payment of damage claims — the president called it "a good start." Obama has also ordered a six-month moratorium on granting of deepwater drilling permits (at least 500 feet below sea level) and drilling on 33 exploratory wells in the Gulf of Mexico; US District Judge Martin Feldman a week later invalidated the move as heavy-handed, but the administration vows to appeal. President Obama also has leaned on the Interior Department and other federal agencies to aggressively increase oversight of all Gulf drilling operations.
Then there is the matter of court action. Attorney General Eric Holder announced that the Justice Department is reviewing whether criminal and civil laws were broken. "We will make certain that those responsible clean up the mess they have made and restore or replace the natural resources lost or injured in this tragedy," said Holder. This is separate from inevitable lawsuits by the states of Louisiana, Mississippi, Alabama and Florida (BP already has given them a combined $305 million), plus dozens of private suits already filed. If the company faces criminal charges, its legal bills alone — independent of stratospheric settlements or jury awards — could run into the tens of billions of dollars. Yes, BP is a highly profitable company. But this is exactly why President Obama and his people are going after the company with such ferocity in the first place. Why bother putting the squeeze on a money loser?
Despite all this, a large number of activists want the administration to go much further. They are calling upon the federal government to confiscate all BP assets and place them in a "temporary" trust fund. That's where Seize BP comes in.
A project of a communist organization, Act Now to Stop War and End Racism — better known as ANSWER — Seize BP is circulating an online petition that reads as follows:
The government of the United States must seize BP and freeze its assets, and place those funds in trust to begin providing immediate relief to the working people throughout the Gulf states whose jobs, communities, homes and businesses are being harmed or destroyed by the criminally negligent actions of the CEO, Board of Directors and senior management of BP.
ANSWER justifies its petition in a statement appearing on PSLweb.org ("the Party for Socialism and Liberation"), couched in predictably shrill prose:
We must act now to defend jobs, communities, wildlife and the environment from the combined forces of BP, other Big Oil giants and the federal government that have acted as partners in the reckless and frantic search of corporate super-profits by permitting ultrahazardous deep-water, offshore oil drilling. BP reaped $5.6 billion in pure profits in the first three months of this year alone.…
The U.S. government functions as a servant for the Big Oil capitalists, both at home and abroad. Our jobs, our loved ones, our communities and everyone's environment are sacrificed in the government's effort to serve BP and other Big Oil giants. Hundreds of thousands are killed and wounded for Big Oil. The people of Iraq and Iran, and elsewhere, have been subject to cruel invasions and occupations by the U.S. military and CIA so that BP and others can plunder their natural resources.
Supporters of confiscation argue that the Oil Pollution Act of 1990, which created a federal trust fund to make available up to $1 billion per incident, doesn't adequately address the issue. Abolishing profit apparently will. "This is part of a deeper crisis of extracting resources for profit that we feel, and ANSWER coalition feels, is not the way to extract resources for human use," said Mike Chrisemer, an ANSWER supporter and member of Florida State University's Center for Participant Education. "We feel that the nonprofit way is the best solution to that. Leaving it up to companies that are just trying to make money off it — that doesn't always equate for what's best for the community."
Leaders of Seize BP aren't impressed by Tony Hayward's recent assurances that his company is committed to making good on all claims. "Our demand is very straightforward and very simple: Seize assets of BP sufficient to compensate the people they harm," states Seize BP chief organizer Carl Messineo.
Sources only slightly more reputable than ANSWER/Seize BP are also pushing this envelope. One prominent belongs to Robert Reich, secretary of labor during the first Clinton administration and now a professor of public policy at the University of California at Berkeley. Writing in the May 31 edition of the Huffington Post, Reich argued that because we face a national emergency, the federal government must temporarily seize BP assets. Without such action, full corporate accountability is impossible. The piece is worth quoting from at length:
It's time for the federal government to put BP under temporary receivership, which gives government authority to take over BP's operations in the Gulf of Mexico until the gusher is stopped. This is the only way the public will know what's going on, be confident enough resources are being put to stopping the gusher, ensure BP's strategy is correct, know the government has enough clout to force BP to use a different one if necessary, and be sure the president is ultimately in charge.
If the government can take over giant global insurer AIG and the auto giant General Motors and replace their CEOs in order to keep them financially solvent, it should be able to put BP's North American operations into temporary receivership in order to stop one of the worst environmental disasters in U.S. history.
The Obama administration keeps saying BP is in charge because BP has the equipment and expertise necessary to do what's necessary. But under temporary receivership, BP would continue to have the equipment and expertise. The only difference: the firm would be unambiguously working in the public's interest. As it is now, BP continues to be responsible primarily to its shareholders, not to the American public. As a result, the public continues to worry that a private for-profit corporation is responsible for stopping a public tragedy.
Such statements underscore a growing desire for a clampdown not simply on BP, but on the entire oil industry. Rolling Stone editor, Jann Wenner, writing in that magazine's most recent issue ("The Inadequacy of Hope," July 8–22), opines, "The time has come to put a complete stop to all high-risk offshore drilling and to take away, once and for all, the oil industry's huge tax subsidies."
In light of Reich's favorable view of the federal takeover of AIG and GM, it's fair to say that he (and Wenner) wouldn't be too troubled by a takeover of all major US industry. For such people, the pursuit of profit is all but inimical to the public interest. But the prospect of seizure should be alarming notwithstanding — and for several reasons.
BP is a foreign-owned company and thus by international law is immune to seizure. "Seize BP" activists say a legal precedent exists for receivership because the assets pose a domestic threat. But this principle only applies when there is a real possibility that assets will be transferred out of the country. "Most of BP's assets in the U.S. are not mobile," states Cornell law professor Jeffrey Rachlinski. "They're not exactly a shell corporation. It's not going to be difficult to enforce judgment against them and any judgment is likely to be extensive."
A government takeover would be a foreign-policy blunder of immense proportions. Great Britain has been a trusted ally for more than a century. Seizing one of their largest corporations, and at a time when their own economy is reeling, would sour our partnership quickly. It also would set a dangerous precedent for US relations with other nations. Under a similar pretext, for example, we could seize assets of Japanese-owned Toyota to compensate American victims of that carmaker's malfunctioning accelerator pedals. And we could take over Chinese toy factories to compensate American children and their families injured by design defects, excessive lead paint, and tiny magnets in their merchandise. Putting the shoe on the other foot, foreign governments could expropriate US corporate assets to make whole potential damage claims. Fidel Castro would be proud of such retaliation.
Nationalization doesn't assure safety. A good example is the regime of Venezuela, the world's fifth-largest oil exporter. In 2007 its state-run oil and natural gas company, Petroleos de Venezuela (PDVSA), grabbed a 60-percent stake in four projects that process crude oil extracted from the South American country's Orinoco River basin into synthetic oil. The affected companies were ExxonMobil, Chevron, ConocoPhillips, BP, Total SA (France), and Statoil ASA (Norway). "This is the true nationalization of our natural resources," boasted President Hugo Chavez. "The privatization of oil is over. This is the last space that was left for us to recuperate. Petroleum now belongs to all Venezuelans." Not everyone in the Castroite strongman's country has been celebrating. Just this May PDVSA had a major accident of its own. One of its offshore gas exploration platforms, Aban Pearl, sunk into the sea. The accident didn't generate headlines mainly because all 95 workers aboard were rescued. And it might have been avoided altogether had Chavez not fired half of PDVSA's managers and senior engineers following a 2002 strike. That hasn't been the only calamity. In 2005 an explosion killed five workers at PDVSA's Paraguana Refining Complex. What makes us think that a government takeover of BP will immunize our own country from such disasters?
If BP hasn't yet been able to cap its own well, it's highly unlikely that federal bureaucrats and contractors will do any better. BP has every interest in fixing the problem. Its reputation, indeed existence, is on the line. Already, the spill has cost the company an estimated $2.65 billion in cleanup costs. If BP had the expertise to build the well and drilling technology, then by definition BP has the expertise to plug the rupture.
BP, a publicly traded firm formed through a 1998 merger of British Petroleum and Amoco, has been hammered by the market in which it operates. The company's inability to prevent or control a calamity, in other words, is a good predictor of its potential lack of profitability. That's why investors have been pulling out. BP's stock price, hovering around $60 a share in the days before the April 20 explosion, closed this Monday (June 28) at $27.05, a drop of over 50 percent. All three bond rating firms — Fitch, Moody's, and Standard & Poor's — have downgraded long-term BP debt. The prospect of a financial meltdown and a subsequent takeover by another company is enough incentive for BP to get the problem under control.
"Seize BP" is about building socialism, not providing financial compensation. Since the BP fiasco is the ugly face of capitalism, receivership must be only the first step. That the campaign is controlled by ANSWER is highly significant. Founded only days after the 9/11 terrorist attacks, ANSWER during the last decade organized major antiwar rallies marked by intense opposition to US interests rather than US policy (the latter, a hallmark of patriotic dissent). In beliefs and leadership, the New York City–based group is virtually indistinguishable from the International Action Center (IAC), a front for a Stalinist entity known as the Workers World Party; former US Attorney General Ramsey Clark is closely involved with all three groups. These and allied organizations tightly coordinate operations; many share the same Manhattan address and phone number. "Seize BP" front man Carl Messineo fits right in. He's a cofounder of the Partnership for Civil Justice Legal Defense & Education Fund, a project of the IAC. He also was a member of the legal defense team for the antiwar group Voices in the Wilderness, which eventually was fined $20,000 by the Treasury Department for smuggling supplies to Iraq in violation of UN sanctions against the then-Saddam Hussein regime.
Imposing receivership upon BP, a company with nearly $250 billion in revenues in 2009, will not provide accountability for the Gulf Coast oil spill.
Nobody should ignore the necessity of promoting safety or of compensating aggrieved parties for personal and property damage, to say nothing of the families of the 11 workers who died in the April 20 explosion.
A society that values individual rights should not give liable parties a free pass. But a hostile federal takeover of BP would send a message to every other firm in the oil industry that their assets aren't safe from plunder.
There has been tremendous criticism in the media of late regarding BP's response to the explosion and sinking of the Deepwater Horizon drilling rig and the subsequent spilling of millions of barrels of oil into the Gulf of Mexico.
An ABC news / Washington Post poll shows that 81 percent of those polled stated they thought unfavorably of the response by BP to the spill. The same poll shows that nearly two-thirds of those responding favor criminal charges against BP and other companies involved in the spill.
Although I am not one to condone negligence or malice, I have no intention of adding my voice to the chorus bashing BP. After all, they are one of many companies providing fuel for our cars, generating electricity to power our homes, and enabling so many aspects of our lives today. I could not readily type this short article, and expect to send it to an editor who will read it within a few hours and let me know whether he is interested, without companies like BP.
Instead, I want to illustrate that while BP is being bashed for the company-wide effort to contain its recent spill in the Gulf of Mexico (amidst cries for government to "DO SOMETHING!"), the spill is so difficult to deal with precisely because of government intervention in the marketplace.
Government Intervention: A Major Contributor to the Mess After first hearing about the problem BP as a company currently faces, I became curious about the positions of oil platforms in the Gulf of Mexico. I am no expert, but drilling in over five thousand feet of water sounds hard. So, I searched for something to show me where the platforms are located and found the following map, which I find useful for discussion.
I've seen the total number of platforms estimated at around 4,000, with up to 100 drilling rigs operating at a time. One of the interesting things to me about this map is that it shows no rigs in the eastern part of the Gulf of Mexico. It turns out this is due to a moratorium on drilling first put in place by President Bush in 1990. In 1998, President Clinton extended the moratorium until 2012. So, one government intervention has resulted in a situation in which drilling operations are constrained west of the border between Alabama and Mississippi, with a concentration of drilling off the coast of Louisiana.
Another interesting thing I noticed is that there are many platforms that are a great distance from the shoreline — particularly off the Louisiana coast. Wondering why this is the case, I did some research and found one particularly compelling explanation.
Incentivizing Risk In 1995, President Bill Clinton signed into law the Deepwater Royalty Relief Act (DWRRA), which was "intended to encourage natural-gas and oil development in the Gulf of Mexico in waters at least 200 meters (656 feet) deep by offering royalty relief on qualifying natural gas and oil lease sales." This act has since expired, but there remain continued incentives for drilling in deep water.
For example, a report from the DOE written in 2005 states that after the conditions of the DWRRA expired in 2000
the MMS adopted a program which determines royalty relief on a lease-specific basis. Under the revised method, leases located in the same water depth may have different volumes exempt from royalty charges if the economic conditions vary. For example, if one natural gas field is more expensive to access, then it may potentially receive more royalty relief than a field in the same water depth with lower costs to access.
In other words, the government specifically passed laws that gave the oil companies incentives to drill far offshore — that is, in deeper water where risk is presumably higher. In addition to the higher risk of accidents, the cost of solving any problems are necessarily greater in five thousand feet of water than in, say, 250 feet of water.
How much of an incentive was there to drill in deeper water? The same DOE report contains the following table.
It seems that it would have been downright foolish for a company to spend much effort drilling in shallow, more easily accessible regions nearer to the coastline, when by law there was a five-fold incentive for them to go out into deeper waters. Who could blame a company for trying to achieve a minimum relief volume, which would guarantee billions of dollars in royalty-free sales of petroleum and natural gas?
To see how this affected the amount of oil taken from deep waters, let's examine a second table from the same DOE report.
As is seen from this table, the production of crude oil in deep waters increased dramatically after the passage of the DWRRA in 1995. As of 2003, there was more than a 250 percent increase in the percentage of total oil produced in the deep-water regions of the gulf, with about 70 percent of all drilling taking place there.
It seems the DWRRA law was passed with precisely the intention of encouraging deep-water drilling, and it accomplished this goal. Unfortunately, accomplishing this goal led necessarily to higher risk and unintended consequences.
Unintended Consequences The problems caused by the current spilling of oil into the Gulf of Mexico will certainly have tremendous impact on the residents of the coastal states, on the fishermen, on the beaches and wildlife, and not least of all on BP as a company. There are some who think BP may end up in bankruptcy. In the meantime, it seems the company is doing quite a bit to make good on promises to clean up the problem and to take care of damages.
Stepping back from all this and taking a look from a free-market perspective, it is clear that the incentives put in place by the state — undoubtedly at the behest of lobbyists for oil companies — led to drilling in deep water, leading to increased risk. The incentives encouraged drilling in water that had been previously deemed economically unattractive by those same companies.
Additionally, a liability cap of $75 million for the oil companies was put in place by law. This is an incredible use of the control of the political means to make favorable dealings for oneself in the economy.See Albert Nock, Our Enemy, the State (Auburn: Ludwig von Mises Institute, 2009 [1935]). In fact, it is the very definition of corporatism: First, individuals within a company work to get laws passed to reward companies for taking risks previously deemed unworthy of the time, energy, and capital expenditures. Then, those same individuals within the company work to get other laws passed to limit liability when things go wrong.
This oil spill is something that we in engineering and science refer to as a three-sigma event, in that it is a very low-percentage occurrence. In other words, Congress and big oil companies colluded to reward risky behavior and lost their bet. Comically, we now see Congress — who encouraged the risks — cry "foul!" They are demanding that the previously set damage cap be raised, retroactively, to another arbitrary figure deemed more appropriate for BP's sins: at present, $20 billion, although this may change in the near future.
Conclusion Predictably, in response to the mess, there have been calls for more and tighter regulation on the industry. President Obama recently said he is interested in finding out who deserves punishment for the crime of the oil spill. (Maybe he can blame Congress?) Also predictably, there is scarcely a mention of the role of government intervention in the mess in any of the traditional state media. Instead, there is the standard demonizing of "unfettered capitalism" and the cries about the failure of the free market. Barely a mention is made that safety on drilling platforms has been under the purview of government regulators within the US Minerals Management Service and that the Deepwater Horizon was deemed a model for industry safety just last year.
In a free market, where BP would bear full responsibility for damages caused by its operations, there might not be such a mess to deal with in the gulf. Additionally, private insurers for BP would not have allowed for such a shoddy inspection record on the safety of a very complicated and difficult operation. Drilling far out in the ocean waters would likely have been pursued in some form, but with the companies bearing all the risk — and certainly not being rewarded for taking economically unsound actions — there would have been far less activity in deep waters.
Many people agitate for BP to hold true to its corporate line of moving "Beyond Petroleum" to alternative energy sources. The environmental disaster in the gulf will undoubtedly place further pressure on the company. Yet how can we ever know if that direction is feasible without freedom in the markets? True freedom would put the costs at the level that are truly indicative of risks and rewards involved with each activity.
For now, the vast majority of what we do in our lives is in one way or another dependent upon petroleum. With that in mind, we can only hope that the damage can be cleaned up quickly and that the coastal towns can move on to brighter days.
I am fortunate enough to live on a property with enough trees and garden areas, put in by previous owners, that I accumulate a pile of yard waste in my backyard. About once a year, I have to figure out what to do with it. Where I live, you can burn yard waste, and so, once a year, I do. I don't really have any good way to haul it anywhere, and I put in plants or flowers that can tolerate ashy soil after the burn is complete. In a way, I tap into my inner caveman, using a technology that has been around for a long time — the wonderful technology of fire making.
Of course, in some places, any burning is banned. In others, it is permitted, but discouraged, with a lot of vague regulations so that you can be stopped at any time. Where I live, it is clearly indicated that
Open burning is allowed on Tuesday, Thursday, and Saturday during daylight hours, only. No burning is allowed in a closed container, such as a burning barrel (outdoor grills are acceptable). You may only burn yard waste.
I have tried to contact city officials in the past about ordinance clarification, and I remain curious: why is burning permitted on some days and not others? Why only during daylight hours? What exactly counts as "yard waste"?
From what I can tell (and from what I have experienced myself), burning yard waste releases smoke and particulate matter into the air, and those with asthma or respiratory diseases would be adversely affected by my burning. You can see, however, that according to the city I have every right to release grand plumes of smoke and soot anywhere I want on Tuesday, Thursday, and Saturday during daylight hours. Yet on the other days, and at night, I am completely restricted from doing so, even if no one around me cares.
This is the truly disastrous result of the city inserting itself between me and my fellow property owners — the city has taken over what we should be doing ourselves. In a system of strong private-property rights, I would have to find out whether anyone around me had, for example, children with asthma. Or if they simply did not like the smell of smoke wafting into their home.
What the city has done indicates that negotiating with the city council is more important (and legally binding) than negotiating with my neighbors — the property owners themselves. They have permitted me to burn away, no matter what the consequences.
And what if I didn't have their permission to burn yard waste? Under the current system, someone could complain or call the police, but I clearly have the law on my side — so what are they going to do about it? Three little sentences about the simple burning of yard waste, and yet, it's really so much more.
In theory, if I could burn my yard waste and contain all of the smoke on my property (or at least enough so that no one knew that I was burning anything), shouldn't I be able to do it regardless of what others may think? Some city councils have assumed that this cannot be done — that if they don't know how to do it, then no one must know how. This assumption has led to all-out burning bans. But why should my rights be curtailed in this scenario?
Similarly, what if none of my neighbors care about my burning and smoke? Should the city intrude on my property rights in this case? I think not. The only sensible way to deal with a situation like this is to enforce strong private-property rights. Our arrangement has nothing to do with the city.
Some cities (such as mine) permit burning under some circumstances, but the conditions themselves are arbitrary and can impede on the arrangements peaceful citizens make amongst themselves. For example, perhaps my neighbor with asthmatic kids will be gone all day on Wednesday, and they indicate to me that I should burn then.
Or perhaps one neighbor doesn't want my smoke coming her way at all, ever. I could check the weather reports and plan to burn on a day when the wind is blowing away from her house. Of course, if enough property owners object to my burning, and I can't figure out some way to contain my smoke and particulate matter, I would have to figure out another way to get rid of my yard waste — maybe by hiring someone to haul it away, or by composting.
The law is supposed to maintain rights, but in this case it can easily be used to violate them: if I was having a feud with my neighbor with asthmatic children, I could try to burn as much yard waste as I could, directing the flow of smoke towards them. Currently, where I live, I can do this as long as I follow the city's ordinance on burning. I could even call the police to stop my neighbors from putting out my fire, or redirecting the smoke flow. In essence, I could smoke them out of their home on Tuesday, Thursday, and Saturday during all daylight hours. During that time I could induce asthmatic distress in their children — in their own home — all I want.
What my city has done is similar to what the US, in concert with the States, has done. The Clean Air Act has put limits and restrictions on what certain industries can emit into the air. But, just as in my city, the other levels of government have injected themselves between the private-property owners and permitted some smog and other substances that cause air-quality concerns.
A system of private-property rights over all else would be a better solution. Once your smoke and particulate matter has interfered with my air space against my will (which would be determined on a case-by-case basis, by each property owner), then that would be considered an act of aggression.
Even a "simple" regulation on burning yard waste — a caveman-era technology — has far-reaching implications and potentially disastrous, unintended consequences. In our modern society, a strong reliance on private-property rights would better allow us to deal with simple cases like these, as well as the complexities of advanced technology.
Bob DelGiorno of the "First News" radio program on WWL, New Orleans, interviews Professor Walter Block, 7 June 2010. [7:08]
Judge Andrew Napolitano interviews Professor Walter Block on free-market environmentalism, 27 May 2010. [6:21]
As interviewed by Dan Cofall on the Wall Street Shuffle radio program; CNN Radio; Dallas, Texas, 10 May 2010. [17:15]
It was 21 years ago that the Exxon Valdez leaked oil and unleashed torrents of environmental hysteria. Rothbard got it right in his piece "Why Not Feel Sorry for Exxon?"After the British Petroleum–hired oil rig exploded last week, the environmentalists went nuts yet again, using the occasion to flail a private corporation and wail about the plight of the "ecosystem," which somehow managed to survive and thrive after the Exxon debacle.
The comparison is complicated by how much worse this event is for BP. Eleven people died. BP market shares have been pummeled. So long as the leak persists, the company loses 5,000–10,000 barrels a day.
BP will be responsible for cleanup costs far exceeding the federal limit of $75 million on liability for damages. The public relations nightmare will last for a decade or more. In the end, the costs could reach $100 billion, nearly wrecking the company and many other businesses.
It should be obvious that BP is by far the leading victim, but I've yet to see a single expression of sadness for the company and its losses. Indeed, the words of disgust for BP are beyond belief. The DailyKos sums it up: "BP: Go f*** yourselves." Obama's press secretary, Robert Gibbs, said that the government intended to keep "its boot on BP's neck."
How about reality? The incident is a tragedy for BP and all the subcontractors involved. It will probably wreck the company, a company that has long provided the fuel that runs our cars, runs our industries, and keeps alive the very body of modern life. The idea that BP should be hated and denounced is preposterous; there is every reason to express great sadness for what has happened.
It is not as if BP profits by oil leaks, or that anyone reveled in the chance to dump its precious oil all over the ocean. BP gains nothing from this. Its own CEO has worked for years to try to prevent precisely this kind of accident from occurring, and done so not out of the desire to comply with regulations, but just because it is good business practice.
In contrast to those who are weeping, we might ask who is happy about the disaster:
the environmentalists, with their fear mongering and hatred of modern life, andthe government, which treats every capitalist producer as a bird to be plucked.The environmentalists are thrilled because they get yet another chance to wail and moan about the plight of their beloved marshes and other allegedly sensitive land. The loss of fish and marine life is sad, but it is not as if it will not come back: after the Exxon Valdez disaster, the fishing was better than ever in just one year.
The main advantage to the environmentalists is their propaganda victory in having yet another chance to rail against the evils of oil producers and ocean drilling. If they have their way, oil prices would be double or triple, there would never be another refinery built, and all development of the oceans would stop in the name of "protecting" things that do human beings not one bit of good.
The core economic issue concerning the environment is really about liability. In a world of private property, if you soil someone else's property, you bear the liability. But what about in a world in which government owns vast swaths, and the oceans are considered the commons of everyone? It becomes extremely difficult to assess damages to the environment at all.
"The liability for environmental damage should be 100% at least."There is also a profound problem with federal government limits on liability. That is central planning gone mad. The liability for environmental damage should be 100% at least. Such a system would match a company's policies to the actual risk of doing damage. Lower limits would inspire companies to be less concerned about damage to others than they should be, in the same way that a company with a bailout guarantee faces a moral hazard to be less efficient than it would be in a free market.
But such a liability rule presumes ownership, so that owners themselves are in a position to enter into fair bargaining, and there can be some objective test. There is no objective test when the oceans are collectively owned and where huge amounts of territory are government owned.
And it is precisely the government and the Obama administration that gain from the incident. The regulators get yet another lease on life. They are already sending thousands of people to "save" the region. "Every American affected by this spill should know this: your government will do whatever it takes for as long as it takes to stop this crisis," Obama said.
Are we really supposed to believe that government is better able to deal with this disaster than private industry?
Meanwhile, the Obama administration must be thrilled to have an old-fashioned change of subject, so that we don't have to notice every single day that its economic stimulus has been an incredible flop, with unemployment higher today than a year ago and the depression still persisting.
And why, by the way, when every natural disaster is hailed by the Keynesian media for at least having the stimulative effect of rebuilding, is nothing like this said about the oil spill? At least in this case, losses seem to be recognized as losses.
The abstraction called the "ecosystem" — which never seems to include mankind or civilization — has done far less for us than the oil industry, and the factories, planes, trains, and automobiles it fuels. The greatest tragedy here belongs to BP and its subsidiaries, and the private enterprises affected by the losses that no one intended. If the result is a shutdown of drilling and further regulation of private enterprise, we only end up letting the oil spill win.
The Sundance Channel recently aired Cairo: Garbage, in the series Cities On Speed. The documentary is about the colossal breakdown of garbage collection in Cairo, one of the biggest cities in the world.[1] Though it fails to answer some key questions, the film does, however, document the failure of the mercantilist state to do something as basic as cleaning up the garbage. While the documentary never states this clearly, it appears that the government destroyed a traditional and functioning system of private garbage collection and recycling.
Cairo: Garbage begins by telling us that no one really knows how many people live in Cairo. Eighteen million seems likely, but some think it could be half that. The documentary was made in 2009, and at that time garbage pickup had broken down and trash was accumulating along the streets and alleyways of Cairo's richest and poorest neighborhoods.
The film beautifully documents the attempts to deal with and resolve the breakdown of order. Like in a good drama, each "character" is allowed to speak and their perspectives reveal as much about their mental framework, values, and social roles as about the problem itself.
The different perspectives of the people in the documentary make for fascinating viewing. Characters include a restaurant owner in a fancy neighborhood, a foreign garbage-company executive, a garbage-company manager, a woman running a local environmental group, and a bridegroom in a Christian garbage village. Most people seem faced with new intractable problems they can't easily solve despite their attempts.
At the end, the documentary blames the garbage problem on the great increase in population. It also gives plenty of evidence that a radical change was responsible.
According to the film, communities of Egyptian Coptic Christians traditionally used to gather the trash. For a modest fee they'd come to your house or apartment every day to pick up the trash and take it back to the "garbage-village" neighborhoods where they live. They'd sort and recycle everything they could, using it in their own manufacturing.
The film shows the stages of the production process. Paper was used to make products like fancy paper bags and stationery. Fabric would be turned into things like stuffed animals. Plastic was used to make hangers and the like. The food fed the pigs that were then sold when full-grown. While the conditions were unpleasant, the communities were full-blown economies using garbage from Cairo as a feedstock instead of dumping it all in a landfill.
What happened next is a little hazy in the documentary.
The film claims that the garbage villages couldn't handle all the garbage from all the people — but it doesn't give evidence why this was true.
Cairo brought in foreign companies to collect the garbage. They insisted people use bins and western methods like big garbage trucks and corporations. People had to pay for this via an extra charge on their electric bill.
The problem was that people weren't used to finding garbage bins and then putting their garbage in the bin. The cairenes would either put the garbage on the side of the road or next to the bin. The garbage companies thought Egyptians found it too taxing to actually put the garbage in the bins, and even produced commercials to encourage putting garbage in the bins, not just near them.
The cairenes had been used to people coming to their buildings and collecting the garbage. In the past they hadn't needed to go downstairs to find a bin on the street and then get the garbage up and over the lid of the bin. Worse yet, garbage bins were large and had to be placed in areas where they were accessible to big garbage trucks. It wasn't easy for many people to find bins, and if they knew where one was, it might be quite a walk. (If you've never seen this system, imagine taking your garbage not to your curb but down your street or even around the corner. Now imagine doing that several times a week.) They liked the old system with inexpensive daily pickup at home and understandably didn't see the changes as progressive but as an imposition.
To make matters worse, it appears that the western companies couldn't figure out how to run their businesses in Egypt. Residents would constantly complain that garbage was not picked up regularly — they were used to daily pickup. Attempts to call to get garbage pickup would fail. The owner of a fancy restaurant frequented by ambassadors claimed that garbage men would just dump trash by his restaurant. Apparently people would even harass garbage collectors, but it isn't clear why or if that was really true or if it was just an excuse for them to not collect trash.
To get service people had to pay twice. First, they were assessed an extra charge for garbage collection on their electric bill. However, in order to really get service, they'd have to pay a second time: either they'd tip the government-endorsed garbage men or they'd pay private garbage men to do the job.
The documentary shows there was a functioning system of garbage collection that had co-evolved with the norms of Egyptian society. The government then stepped in to "solve the problem." It forced everyone to pay money to companies using western techniques that hadn't been adapted to the realities of Egyptian society. The companies couldn't cope with the quantity of garbage or managing Egyptian employees. The western-style companies apparently didn't recycle as intensively and couldn't provide low-cost daily garbage pickup like the garbage village system.
The garbage companies and government would also try to persuade people to change their habits to use the bin system that was convenient for companies, but less convenient than the old system. The companies were also unable to figure out how to efficiently collect the garbage that was lying around in easy-to-access piles on the side of the streets.
At the end of the film we learn that the government then killed all the pigs in garbage villages. The pigs were the key component for processing the vast quantities of organic garbage Cairo produces year round. As one would expect, this has vastly increased the amount of rotting garbage on the streets. The situation was so bad that even New York Times articles on the subject are clear that this is an example of government failure.
The first article on this topic is from May 2009.[2] According to the Michael Slackman, the government disliked the 400,000 Christian zabaleen who live in garbage villages. The government was killing pigs to get the zabaleen to live in sanitary conditions.[3] The irony is that everyone else is living a less sanitary life without the zabaleen, plus the zabaleen made a living providing sanitation services that are by their nature relatively unsanitary.
The private companies couldn't handle trash collection on their own. The New York Times states that 6,000 tons daily were processed by zabaleen and 2,000 by private carters. As Slackman writes,
Many here acknowledge that this is a system that is easy to criticize, from the pigs and the unsanitary living conditions to the sight of children hauling trash, their faces smeared and their clothing stained.
But it is how they eat and survive. And it is how they have remained independent of a government they do not trust. They would not object to having the system fixed. They just do not want it wrenched away…
"Maybe the government has noble goals," said Mr. Gindy, whose nonprofit group runs [a school that zabaleen children attend]. "But the way they address the problem is not good. The government always says this is the decision and you will follow."
$12 $10
Slackman's second article was published in September 2009 and talks about the disastrous aftermath of the new program.[4] The zabaleen stopped picking up organic trash once the pigs were slaughtered, and now the problems are worse than ever.
The city-approved garbage men had also gone on strike. (The nice thing about private collectors who are small businessmen is that if one goes on strike, you can hire another one who wants to make some money.)
The garbage situation in Cairo is a classic example of government imposing a supposedly rational and modern solution that fits the needs of the people in charge but doesn't fit the needs of people. The end result is a spectacular failure.
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Notes[1] Check airtimes here. The documentary may also be "on demand." (Cable companies like Time Warner Cable of NYC have a free HD on demand channel with a Sundance section.) The other documentaries in the series are also fascinating looks at city politics and governance.
[2] Michael Slackman, "Cleaning Cairo, but Taking a Livelihood" (New York Times, May 24, 2009).
[3] Swine flu was the excuse the government used at first to kill the pigs, but they also admitted they didn't like the garbage villages. The swine-flu scare also meant the government didn't open schools after summer break till October. (This appears to have been part of a ploy to reorganize schools with children attending only three days a week to cut down on class size.) They also ordered private schools to remain closed.
The health ministry claimed the slaughter of pigs wasn't their decision and that it came from higher-ups at the presidential and governor level.
[4] Michael Slackman, "Belatedly, Egypt Spots Flaws in Wiping Out Pigs" (New York Times September 19, 2009).
"So is everyone feeling sorry for Exxon, as I do?"[Liberty magazine, July 1989]
To say that the oil spill has been blown up to hysterical dimensions is a grave understatement. Hysteria abounds everywhere, and everywhere the term "disaster" is freely used. Even Pat Buchanan, who of all the media commentators I thought would be most resistant to the wiles of environmentalism, used that term. The Idiotic Overstatement Award of the Year goes to Alaska Judge Kenneth Rohl, who opined about the oil spill, "We have a manmade destruction that has not been equaled, probably, since Hiroshima."
Hundreds of thousands of innocent Japanese were massacred at Hiroshima; that's a disaster. Over the last several months, the Ayatollah's government has murdered thousands of political prisoners; a million Iranians and Iraqis were killed in their late monstrous war; the Pol Pot regime, in the mid-1970s, genocidally massacred one-third of the Cambodian population.
Those are disasters. That's "man-made destruction." In the Valdez oil spill, not a single human life was lost. Not a single person was even injured.
Furthermore, those disasters were intentional; the oil spill was, quite obviously, an accident. Who suffered the loss of the oil spill? None other than the Exxon Corporation, which lost ten million gallons of crude oil; in addition to the $5 million this loss represents, Exxon will be forced to pay cleanup costs, as well as compensation to the economic losses incurred by the fishing industry in Alaska. And so the only loser is Exxon, suffering from the negligence of its allegedly drunken sea captain. So is everyone feeling sorry for Exxon, as I do? Hell no; to the contrary, Exxon has been reviled every day by virtually everyone in the media and in public life. Contrary to government when it commits an accident or similar "externality," Exxon, as a private corporation, must pay the costs it inflicts on others.
"We must no longer allow the environmentalists to seize, undisturbed, the moral high ground."So what's the problem? Once in a while, accidents happen. Are we to ban all oil tankers, because once in a long while, a tanker runs aground? Are we to outlaw all shipping because some ships sink? Are we to prohibit all air flight because once in a while a plane crashes?
The problem, of course, is that environmentalists don't give a tinker's dam about paying for external costs. They have their own agenda, scarcely hidden anymore. Look at all their bellyaching about the poor birds, and the sea otters, and the salmon, etc. Look at their whining, too, about the beauty of the pristine blue water now befouled with black or brown oil slicks.
(Well, hell, maybe a coating of black on blue waters provides an interesting new esthetic experience; after all, once you've seen one chunk of blue water, you've seen them all.) The environmentalists are in pursuit of their own perverse and antihuman value scale, in which every creature, animal, fish, or bird — heck even blue water — ranks higher than the wants and needs of human beings. The environmentalists welcome this trumped up "crisis," because they want to shut down the Alaska pipeline, which supplies a large chunk of domestic American oil; they want to reverse the Industrial Revolution, and get back to pristine "nature," with its chronic starvation, rampant disease, and short, ugly, and brutish life span.
Note the difference between the beserker reaction to the Valdez oil spill, and the response to the last great oil spill in 1978, off the French coast, when the Amoco Cadiz let loose no less than 60 million gallons of crude oil into the Atlantic — the worst oil spill in history. There was no hysteria, no screaming headlines, no bellyaching on television. The courts quietly forced Amoco to pay $115 million to compensate for costs of the accident, and that was that. The reactions were different because, in the meantime, the virus of environmentalism has deeply infected our culture. Arguing on the basis of private firms paying the costs of liabilities they impose upon others is all very well, but, as we see in the smears against Exxon, it is not enough.
We must no longer allow the environmentalists to seize, undisturbed, the moral high ground, and arrogate to themselves the good of the cosmos while the rest of us are portrayed as narrow, selfish, short-sighted, and immoral. There is no greater immorality than deep opposition to mankind per se, and environmentalism must be exposed as that kind of immoral and destructive creed. Only then will the party of mankind be able to take back our culture.
This article was originally published in the July 1989 issue of Liberty magazine.
Zoning laws are a violation of property rights. They destroy the sense of community in neighborhoods, increase crime, increase traffic congestion, contribute to urban and suburban air pollution, contribute to poverty, contribute to reliance in government — and, thus, reduce self-reliance — and contribute to the ruin of our schools. Most of our urban and suburban problems arose with zoning and other antiproperty laws, to which welfare programs and public housing projects have contributed. Each of these policies came out of the idea that society could and should be engineered from the top down to give rise to efficiency, community, and prosperity. What in fact resulted was the opposite outcome.
I. Neighborhoods and CommunitiesWith zoning laws, commercial, industrial, and residential areas are separated from each other. The result is blocks of houses, industrial parks, and strips of stores and restaurants. People have to drive miles to go to the store, to work, or even to the park. It is rare to go to the store and see anyone you know.
But imagine a neighborhood without zoning laws. It would then be possible to have, say, a small grocery store on the corner where you could buy fresh fruits and vegetables, bread, and meat. That store would likely be within walking distance, be owned by one of your neighbors, and be designed to serve the neighborhood.
I encountered such a store when I lived in Athens, Greece for a month. It was less than a minute's walk away from where I was living. I could get most of what I needed on any given day, and if I was in the mood for some fresh fruit or vegetables, I could walk right over and buy some. I have little doubt that I ate more fruits and vegetables there than I do here in Richardson, Texas. If I'm in the mood for something — say, some strawberries — then I have to get in my car and drive a mile to the store. More likely than not, I'm just going to decide it's not worth the effort. Thus, a sale is not made, and I'm not eating my strawberries, meaning I'm less happy and less healthy.
The large grocery store a few blocks away from where I lived in Athens provided a wider variety of goods, of course, which is why I would do my weekly shopping there to get paper products, canned good, dry goods, etc. For major shopping trips, the large stores servicing the larger community are best — but the small family-owned store on the corner contributes to the local community. If I go to the small store on the corner in my neighborhood to get one or two things every other day or so, and so does everyone else in the community, we are going to be more likely to recognize each other, then to talk to each other, then to befriend each other.
If everyone is going to the large stores, one goes less often, and one only sees one's neighbors on the rare occasion you are both leaving your houses at the same time to get into your respective cars. You may wave, but you may also not even know their names. If you know your neighbors within a block or two, a stronger neighborhood is created because community is created. Crime will go down because people will be more likely to look out for each other — and one is less likely to commit a crime against someone one knows:
"Your money or your life!"
"Bob? Is that you?"
"Sorry, Charlie. I didn't recognize you in the dark."
That's simply not going to happen.
As people get to know each other, there will be more respect for the neighborhood community. It is one thing to spray graffiti on the front of a grocery store, but it's another thing to spray graffiti on Chuck Johnson's store, where you went growing up and where Johnson used to give you a piece of candy when you were little.
Sure, this sounds like a romantic dream of the 1950s, but that era was more that way precisely because neighborhoods were communities. Zoning laws and other anticommunity government policies were not yet in place to atomize people, making them less dependent on each other and, thus, more dependent on more distant government bureaucrats. It's amazing what you can do by simply preventing someone from opening up a store in a "residential area."
II. Zoning Laws Favor Big Business Over Small BusinessesZoning laws force you to have your business only in certain locations. This drives up the price of property for businesses, making it harder to start a new business. If I wanted to sell cookies (and I do make some good cookies), I would have to either buy some expensive commercial property or rent a place in a shopping center, get the proper permits and licenses (another barrier to entry into the marketplace), buy stoves and mixers, etc.
"But imagine a neighborhood without zoning laws. It would then be possible to have, say, a small grocery store on the corner where you could buy fresh fruits and vegetables, bread, and meat."By the time I did all this, I wouldn't be able to afford the ingredients to make the cookies. I would either have to save up a small fortune or go in debt. But if the local government would leave me alone, I could bake cookies in my home, using the mixer and stove I have, and sell the cookies in front of my house to my neighbors. As I began to make money from selling cookies, I could buy a bigger mixer and a better stove to make more cookies. I could hire a neighbor kid to sell the cookies for me so I could bake more, and I could maybe start selling my cookies to local stores. As I started making more money with higher demand, I could put an addition onto my house for the cookie store, or buy or rent another place and make the cookies there. I could thus start my own business with little initial cost and without going into debt while providing a service to my community and to my neighbors.
And people used to do this. My wife's grandfather sold fruit trees from his yard until the city passed an ordinance prohibiting people from selling anything on residential properties. They made an exception that you could hold two yard sales a year — but only if you got a permit.
The result is that big business is favored over upstarts. Walmart and Home Depot can afford to buy as much commercial land as they need to build a store. And they don't have to worry about a bunch of people selling similar items locally. Most Americans are like me, and we cannot afford to buy property like large corporations can, so we are prohibited from participating in the marketplace as anything other than employees to others.
With as many barriers to starting a new business as there are, it's surprising how many do get started. It's typically done by going into debt. This makes it even more difficult for the poor to get out of their poverty. Barred from starting a business at home by zoning and other prohibitory laws, they also cannot get loans due to their poverty and bad credit. Those who do manage to figure out how to make money spend the money frivolously for fear that if they save or invest the money, the government will punish them with fines and audits. Thus, these laws contribute to poor spending habits among the poor. The government can take away your property, but they can never take away the party you threw and had a good time at.
III. Zoning Laws, Traffic, and PollutionWhen our jobs and stores are several miles away, we have to drive. Americans like their independence, so public transportation is an option only if one cannot afford a car. As a result, traffic in most cities and suburbs is a nightmare between 5 and 7 PM. Not only are people trying to get home from work but once they are home, they need to head right out to go to the store. A fifteen-minute drive becomes an hour or more. All that time driving creates large amounts of air pollution, contributing to lung problems and stress. Thus our physical and mental healths are harmed by heavy traffic, making us less happy and less productive workers.
The way my city is zoned, I can walk to a dentist (whose office is across the back alley from my house), but I have to drive to the grocery store. Typically, I need to go shopping more often than I need to see the dentist. I must drive to go to any store, to go to the coffee house, or even to go to the park. I walk less and drive more, contributing to health problems due to less exercise and to my contribution to air pollution. With local stores integrated into neighborhoods, there would be less traffic on the roads, meaning less traffic congestion and less pollution.
IV. Neighborhoods and SchoolsAmerican schools have gotten worse and neighborhoods have deteriorated and communities have been dissolved. In places where there is still a strong sense of local community, the schools do a much better job of educating students. These places are typically rural and have few if any zoning laws artificially separating peoples' lives into sections unconnected to each other. People who live in strong communities are aware they have a vested interest in the health of that community.
Schools are one of the main centers of any community, and those concerned with their communities are concerned with their schools. When parents are involved in the schools, the schools do a better job of educating students. The schools in turn become more community oriented and work to contribute more to the community.
A good example of this (and its collapse) was the elementary school I went to in rural Kentucky. This school was always holding festivals and events the town could participate in. Parents would contribute food for the school to sell at the festivals. Between that and people paying for various games, our school actually ran a profit, meaning it could do more things for the students.
"Zoning laws and other anticommunity government policies were not yet in place to atomize people, making them less dependent on each other and, thus, more dependent on more distant government bureaucrats."Over time, laws destroyed what our school was doing. First, there was a law passed that prohibited the use of anything canned that was not bought at a store. So people stopped contributing as much, because if you are canning your own green beans, you're not going to buy beans in a can — and few if any would go to the store just to buy a can of beans for the school event. Next came prohibitions on home-baked goods, making for even fewer contributions. This made the events less personal — and less profitable.
But in the end, it didn't matter. My elementary school no longer exists because the county school board decided to ignore all the evidence that indicates that smaller schools educate students better than larger schools: they consolidated it with three other local schools to make one large school that is now five miles away from the town I grew up in. White Plains is still a town, but it is no longer a community. There is also far less local interest in the new school.
V. Zoning Laws Violate Property-Rights ProtectionSo far I have addressed direct psychological, social, and economic aspects of the harm done by zoning laws. But such laws also violate our rights regarding property ownership. Property taxes make local governments see property owners as tenants on property the government is renting to them. If you do not pay your property taxes, the local government will treat you like a renter and throw you out, so the analogy is more than apt: it's precise.
A tenant has to abide by the rules of the property owner, which is why local governments have adopted this attitude toward other people's property. If local government really owns the property, they can tell you what you can and cannot do with it. Without ownership rights, we cannot really express ourselves as we wish, organize with whomever we wish, or prosper as we wish. We always have to get permission first.
Property-rights protection is a necessary element for the creation of prosperity. People need to feel secure to want to take risks. This can be seen in small children: a toddler will giggle if her father throws her in the air, but scream if a stranger does. She has to feel secure to take the risk.
When we live under threat of government taking away our property for failure to pay rent to them, for violating some zoning ordinance, or for not paying off the right government employee, people are less inclined to take the risks necessary to become independent and prosperous. People need to feel like their property is secure and protected from both criminals and government if they are going to take economic risks with it.
VI. Zoning Laws are Unnatural and DisruptiveA community is a complex system. In nature, complex systems self-organize from the bottom up, from less complex elements. Structures develop that affect but do not force the elements that make up the system to do what they are doing naturally. No system in nature is created from the top down.
Let me put it this way. A biological cell is a bottom-up structure; an engine is a top-down structure. Cells are complex, efficient, and generate order; engines are simple, inefficient, and generate disorder. Cells run up; engines run down.
Communities are like cells. They are made up of different elements — people and families — that, working together, create a more complex entity known as a community. Quite large communities can be created by many subcommunities integrating. I can belong to a school community, a church community, a work community, and to various clubs and organizations. We know that humans are most comfortable in groups of 150 people. We can and often do expand the community we live in by being members of many different communities containing 150 members. But that number — 150 — must be maintained if we are to remain psychologically comfortable. Where there is overlap — the same people belonging to the same subcommunities — the larger community is strengthened. Though a Christian, I have become friends with several Muslims because we are all part of the same "Starbucks community."
Communities are not like engines. When we try to engineer communities, the results are disastrous. Forced bussing to integrate schools did nothing to create a community of blacks and whites. Instead, it destroyed the community schools, breaking down the neighborhoods where the schools existed and creating resentment among those who were bussed. It did not improve education for anyone, but instead contributed to the worsening of education for everyone. And the students still self-segregated in the lunchrooms.
The same kind of thing happened when public-housing projects were built. Artificially throwing people together into ugly apartments of bare concrete was dehumanizing and thus destructive for the community as well. This is why all urban-renewal plans have been miserable failures, resulting in increased poverty and worse crime. Community is destroyed by top-down processes precisely because top-down processes are simplifying, unnatural, and create disorder.
ConclusionZoning laws and other laws that restrict what people can do with their property do more harm than good. People argue that "I don't want someone building a factory in my neighborhood," but the fact is that nobody wants to build a factory in your neighborhood. They want to build a factory where it is easy to get supplies in and products out, and where there's plenty of room for employees to park. That's not your neighborhood. And in an increasingly post-industrial economy, that argument is mostly irrelevant.
I am arguing for allowing natural organization of communities and neighborhoods. I am arguing for healthier neighborhoods and communities.
The elimination of such anti-property-rights laws will allow this. It will make people more self-reliant and thus less dependent on government, meaning there will be more people contributing to the economy, to society, and to their neighborhoods and communities. People will also be healthier, happier, and less stressed.
Social engineering only works to destroy communities and make people more reliant on government programs.
[This article is a response to Paul Baer et al., "Greenhouse Development Rights: A Proposal for a Fair Global Climate Treaty," Ethics, Place & Environment, volume 12, issue 3 (2009).]
There are not one but rather two schools of thought on the environment and its challenges. For want of better nomenclature, I shall characterize them as the watermelons and the free-market environmentalists.
The first is far more well-known than the second. Here, the solution to all problems arising from this source is more government intervention into the economy, more (green) central planning, more denigration of private-property rights, new discoveries of "market failures."
Why call them "watermelons"? Because this fruit is green on the outside, but red on the inside. Advocates of this system are busybodies; their "philosophy" consists of do-gooding and ordering other people around: controlling property that does not belong to them, forcing others to cater to the latest political correctness emanating from who knows where. For a while, a long while, these people had hitched their intellectual wagon to the preeminent philosophy of the day, which promoted these goals: communism. But, then, in 1989, with the fall of the Berlin Wall, and in 1991, with the dissolution of the USSR, socialism could no longer suit their purposes. A new vehicle was needed: ecology was chosen.
The second school of thought on these matters is free-market environmentalism (FME).[1] For adherents of the first view, this name is a contradiction in terms. In their view the marketplace is seen as the enemy of the planet and its flora and fauna. I was once in a debate with a professor of biology who espoused watermelonism, and when I mentioned FME, he burst out laughing. Nor was this a debater's trick. He honestly thought it was outrageously funny.
It is the perspective of FME that all environmental problems stem from either lack of private-property rights, or from government regulation of laissez-faire capitalism, or from state control of resources. With economic freedom, all such challenges would either disappear outright, or become far more manageable.
The article by Baer is an example of watermelonism. Let us, then, mention some of its shortcomings.
Most egregious, this article speaks of "anthropogenic climate change" (emphasis added). Why is this objectionable? In the 1970s, the (then prewatermelon) green market critics were charging the capitalist system with creating global cooling. When the evidence did not appear to support this charge, they reversed field, and indicted free enterprise with global warming. But when one too many of their environmental conferences had to be cancelled due to freezing icy conditions, they changed yet once again. Now, it is climate change that is the enemy of all that is good and proper, not either cooling or warming.
Well, what is wrong with that? What is wrong is that the verdict is already in (laissez-faire harms the environment), all the watermelons keep doing is changing the indictment. With the move from either cooling or warming to any change at all, the critics of business and profits double their chances of success. But, implicit in this is that the present temperature of the earth is optimal (why else oppose any and all change?) The only problem, here, is that not only has this not been demonstrated, the dirigisme environmentalists do not even see this as a lacuna in their system.
Let us make a few heroic assumptions. Anthropogenic global warming, due to greenhouse-gas emissions, is a fact. Sunspots, etc., are not responsible. There is an ideal world temperature, such that man's actions will either exceed it, or fall below it, and that this will be harmful on net balance, not beneficial.
On this basis, Baer et al. consider two approaches to addressing this danger: first, "assign obligations to the industrialized countries on the basis of both their ability to pay (wealth) and their responsibility for the majority of prior emissions, or, second, to assign emissions rights on a (possibly modified) equal per capita basis."
But, they ignore a third, which is far more justified than either of those. For, given our assumptions, emitting gas constitutes, in effect, a trespass. And what, pray tell, does "equity" have to say about uninvited border crossings? It is simple: the perpetrators of these property-rights violations, and only the perpetrators, must be brought to the bar of justice. I agree with their emphasis on individuals, not groups, but equity requires that we should ignore ability to pay as a criterion for fines. Rather, the guilty should pay, and not the innocent, just as in the case for ordinary trespass.
Consider real rapes, not the "rape" of Gaia. Would we think it just that people be punished as rapists, equally? Hardly, except for a few rabid feminists who think that anyone with a penis is a rapist. Would we hold people guilty for rape based on their wealth? Again, it would be difficult to posit a greater violation of justice. Thus, we should ignore ability to pay as a criterion for fines, or penalties. Rather, the guilty should pay, and not the innocent, just as in the case for ordinary trespass. Moreover, suppose the poor engaged in rapes (real ones) to a greater extent than the rich. Should "we seek to ensure that [payment for] the emergent climate regime does not worsen the condition of the world's poor majority"?[2] Of course not, for that would again constitute a vast injustice. People should be made responsible for their rights violations, and their wealth, or lack of it, should, strictly speaking, be considered irrelevant.
Another difficulty I have with this article is that it conflates "equity" with "equality," for example, here: "addressing inequality within wealthy countries by allocating climate policy costs overwhelmingly to the highest earners may be essential to getting support for international equity" (emphasis added). This is an often-used, but obnoxious, conceit on the part of our friends on the Left. But there is the world of difference between the two. "Equity" means fairness or justice. "Equality" means that people should be treated equally. The difficulty is that this philosophy leaves no moral room for the Bill Gateses of the world to have more possessions than any drunken bum, despite the vast differences in contributions to our society and civilization made by the two men.[3]
Nozick's "Wilt Chamberlain" example ought to put paid to this moral abomination: if we redistribute money equally, people will still want to see Wilt dunk the basketball. If he is allowed to charge for this, the prior wealth distribution will become unraveled. If not, this demonstrates that "equity" is incompatible with liberty. Of course, we could always adopt the policy of the "handicapper general" (Vonnegut, 1973). This would render Chamberlain incapable of doing much of anything, let alone engaging in sports, but, here, "equity" comes at the cost of a scenario that puts the scenario depicted by Orwell (1961) entirely into the shade.
Another refutation of "equity" as "equality" comes from various reductios: should the blind have a claim on one of the eyes of all normal sighted people? "Equity" would obviously require this, but it amounts to (partial) body snatching. Or, should we force all people into machines, if we had them, that would redistribute IQ points from those who were deemed to have "too much" intelligence, to those deemed to have "too little?" This would appear to be a logical implication of "equity," and yet our sense of justice recoils in horror from any such scenario.
Print:$15 $13
MP3 $20 $15
An Audiobook in MP3 FormatSpace limitations allow only one last difficulty. In the view of FME, the justification for initial property-rights distribution is homesteading. (If the airport gets there first, it homesteads noise rights; otherwise, it must buy them from previous occupants.) But, the same applies to any other kind of pollution, such as dust particles, or, in our present case, "greenhouse gas emissions." There is simply no cognizance in Baer that this sort of activity is justified at least for some. And, not only some. We all contribute to anthropogenic global warming, if only by exhaling carbon dioxide. In the FME this can be justified on homesteading grounds: our ancestors exhaled, and left those rights to us. How the watermelons would wrestle with this question is unclear, to say the least.
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ReferencesNozick, R. Anarchy, State & Utopia. Basic Books, New York (1974).
Orwell, George. 1984. New York: New American Library (1961)
Rawls, John. A Theory of Justice, Cambridge: Harvard University Press (1971).
Rothbard, Murray N. "Law, Property Rights, and Air Pollution," Cato Journal, Vol. 2, No. 1 (1982), Spring; reprinted in Economics and the Environment: A Reconciliation, Walter Block, ed., Vancouver: The Fraser Institute, 1990, pp. 233–279.
Saliba, Michael, Nick Capaldi and Walter Block. "Justice: Plain Old, and Distributive; Rejoinder to Charles Taylor." Human Rights Review, Vol. 8, No. 3 (2007), pp. 229–247, April.
Taylor, Charles. "The Nature and Scope of Distributive Justice," Philosophy and the Social Sciences: Philosophical Papers 2. Cambridge: Cambridge University Press (1985), pp. 289–317.
Vonnegut, Kurt. "Harrison Bergeron," Welcome to the Monkey House, New York: Dell (1973).
Notes[1] The canonical expression of this perspective is Rothbard, 1982.
[2] Material in brackets added by present author.
[3] The egalitarians rely heavily on Rawls, 1971 and Taylor, 1985. For refutations, see Nozick, 1974, Saliba, 2007.
Property is that beautiful foundation from which libertarians approach conflicts. Accepting that the rights to property come through the rights of original homesteading, appropriation, and exchange eliminates the need to question motives or intentions in action. Without defined property rights, the public is left squabbling for some other rubric from which to judge action. The purpose of this article is to demonstrate the foolishness of this squabbling on the topic of whaling.
Only within the sphere of communal property could two vessels manage to collide in the vast openness of the Antarctic Ocean — an ocean of nearly 21 million square kilometers. Only within the sphere of communal property could such a collision leave all parties faultless.
The collision of the two vessels, the Japanese harpoon ship, Yushin Maru No. 2, and the whale-conservation Sea Shepherd ship, Bob Barker, is but another round in the many conflicts between whalers and antiwhaling conservationists. Each party maintains its innocence, and both parties sustain damages.
Whaling can be traced back to as early as 6000 BC. Yet, despite its long heritage, whaling is no longer the primary source of any nation's financial system. Past uses of whale typically revolved around illuminants in lamps and candles. It was industry, not animal ethics, that eventually replaced the whale-based illuminants with kerosene and petroleum (both of which burn longer, more cheaply, and without such a distasteful odor).
Despite this transition, 5 of the 13 great whales are on the endangered species list, and there is some evidence of whale extinction within certain geographical areas. By the late 1930s, more than 50,000 whales were killed annually, enough to alarm conservationists into pushing for a commission to preside over these issues.
Figure 1Population Estimates for Whale SpeciesThe outcome was the International Whaling Commission (IWC). Although its membership is voluntary, the commission soon set forth a wide array of whaling quotas in order to protect whale stocks.
On the one hand, the United States acts as a membership financer to budding nations who are sympathetic to the ICW. On the other, the United States also bullies those unsympathetic to the ICW by threatening to ban their various fish imports. Thus, many countries that have no investment in whale conservation will still side with the United States on this issue.
Indeed, according to a paper by Anthony Matera, "The current moratorium on whaling, instituted by the International Whaling Commission (IWC), continues to restrict the rights of these countries to whale, even though the moratorium's original purpose, a recovery in whale stocks, has been achieved."[1]
It has also been shown that whale domestication and breeding can replenish depleted whale stocks without the use of whaling quotas or other IWC measures. So why is there still a vacancy in this market? Why has no individual or company entered the market to fill the void in whale supply? The reason is clear — regulation. According to the IWC, countries are only permitted
to harvest whales for scientific research and sustenance use for approved communities. Japan and Iceland both maintain scientific research programs.… [Yet] members of the commission have increasingly lobbied for the suspension or reduction of these research programs, maintaining that whale harvesting does not address any critically important research needs.
Therefore, we are left with a void in the market in exchange for a cluster of normative goals. Conservationists would rather regress into infinite dialogue over what "should be" rather than embrace the solution of privatization.
Conservationists are actually gambling with the whales' prospects of survival by concentrating their efforts on a war against whaling, instead of embracing solutions to the problem of supply, such as whale breeding.
Simply limiting the supply of whales only increases the price per unit of whale on the market. Fisherman who would normally seek other ocean inhabitants may actually be enticed to hunt whales, instead of fish, by the new, inflated price. Thus, like our abysmal record in attempting to battle the supply of illegal drugs,[2] our whaling efforts only help solidify the elementary economic knowledge that you cannot wage a war on supply!
Returning to our original story of the recent collision between antiwhaling conservationists and their fishing/science counterparts, we begin to understand why organizations like the US-based Sea Shepherd have done so little to deter whaling off the coast of Antarctica.
The governments of New Zealand and Australia, who have jurisdiction over the waters in which this crash took place, have opted not to rule in favor of either party, instead urging each group to take caution and remain civil.
$30 $28
Remain civil?
Can you imagine such a scenario anywhere else? Can you imagine dog poachers roaming our backyards in search of pets to use for science or industry? Even if we can imagine such a silly scenario, we could never imagine the adjudicator of such a conflict merely urging each party to "remain civil." One of the parties is surely at fault!
It is, therefore, legal consequences that prevent backyard dog poaching, but it is ownership that gives the authority to inflict such consequences. It is the ownership of the dog and the backyard that allow one to judge that a crime has been committed. This silly scenario does not occur for the simple reason that property rights are better defined in backyards; it is only in absence of defined property rights that these vessels could collide in the vast openness of the sea without either being identified as the aggressor.
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Notes[1] Matera, Anthony. "Whale Quotas: A Market-Based Solution to the Whaling Controversy." Georgetown International Environmental Law Review.
[2] Of which we cannot even keep out of our prisons or jails
The Free Market 28, no. 1 (January 2010)Climate-change policy ought to be privatized. All government policy instruments, including taxes, subsidies, regulation, and emissions trading to mitigate climate change ought to be abolished. Instead, property rights to a climate unchanged by human activity should be protected by tort litigation on the basis that strict liability is appropriate.
There is no secure foundation in climate science for the current policy rhetoric; governments simply lack the knowledge to operate climate-change policy effectively. Moreover, policy is based on the neoclassical economics assumption that climate change is a case of market failure. However, it is not markets that have failed but governments in failing to protect property rights.
The earth’s climate has always been susceptible to changes caused by natural factors over which human beings have no control. The Intergovernmental Panel on Climate Change uses its monopoly power in the dissemination of its own politically edited version of climate science to advance the hypothesis that climate change is caused by fossil-fuel use. Even the IPCC’s scenarios of global-average surface-air warming for the next century range from mild temperature increases that would increase world food production to those that would have catastrophic effects on human life. We face radical uncertainty rather than calculable risk.
Privatizing climate-change policy entails the abolition of all existing climatechange legislation. The tax treatment of fossil fuels should be revised to eliminate any tax contribution that had been imposed with the intention of reducing carbon emissions. Regulations aimed at reducing carbon emissions should be rescinded. National or supranational emissions-trading systems should be ended. There simply should not be a public policy toward climate change.
An Austrian Perspective on Climate PolicyAn alternative framework for formulating climate policy, based on an Austrian approach to environmental economics (Roy Cordato [2004] “Toward an Austrian Theory of Environmental Economics,” The Quarterly Journal of Austrian Economics, Vol. 7, No. 1 (Spring), pp. 3–16) and informed by a libertarian political philosophy (Robert Nozick [1974] Anarchy, State, and Utopia, Oxford: Blackwell) sees Anthropogenic Global Warming as an interpersonal conflict rather than a market failure. AGW is a possible example of interpersonal conflict over the use of resources insofar as some individuals use the atmosphere as a carbon sink, changing the climate and thereby making it impossible for other individuals to rely upon an unchanged climate as a resource for growing crops in and even inhabiting particular locations.
It is for the courts to decide, calling on the testimony of expert witnesses, whether CO2 emissions are responsible for harm by causing dangerous AGW. Litigation or the threat of it would persuade firms using carbon-intensive production processes to fund research into climate science, thus challenging the IPCC’s monopoly and stimulating scientific progress.
It would be up to individuals or organizations who believed that climate change was infringing their property rights to seek redress in the courts.
The use of fossil fuels, like any other economic activity, should be subject to constraints designed to avoid the infringement of other people’s property rights. Tort litigation on the basis of strict liability would protect people against others meddling with their climates. The courts would build up a body of common law and establish precedents to guide the actions of the users of fossil fuels—a privatized policy.
There is no need for new assignments of property rights. If A’s use of fossil fuels causes B’s land to be destroyed through inundation or desertification, this is evidently a tort. In general it seems that existing national legislation is adequate, and property rights are simply waiting to be enforced or protected. The assumption that individuals must leave it to governments to tackle the perceived threat of climate change is a product of dependency culture.
The Gains from Privatizing Climate PolicyUnder a privatized climate-change policy, litigation would not impose a further burden of state intervention on industry. First, while some firms would face litigation, all would be free from the impositions of existing climatechange policies. Second, there would be no presumption of guilt. Third, the process of establishing guilt or innocence, probably through a series of court cases, would take time.
Privatizing climate-change policy will delay severe reductions in carbon emissions. This outcome is to be welcomed. If carbon emissions do cause climate change, it is their atmospheric concentration accumulating over a period of time that does so and not the additional carbon emitted in any one year. It is reasonable to exploit this opportunity to add to human knowledge of the possible effects of carbon emissions on the global climate and hence reduce the risk of incurring unnecessary costs through intemperate collective action.
Litigation would improve the public understanding of the science of climate change. Reports of the testimony of a range of expert witnesses would disseminate a more balanced account of climate science than the biased and artificially constructed dogma of the IPCC. Litigation would also further the advancement of climate science itself. It would achieve this worthwhile goal by intensifying competition among scientific hypotheses concerning climate change, so that falsified hypotheses might be discarded and others accepted as provisionally true.
Litigation as a Public GoodThe courts would call expert witnesses. So firms would have an incentive to fund research into the many uncertainties of climate change. This would give a boost to the growing number of climate skeptics and challenge the monopoly position of the IPCC. The advantage of litigation is that it would replicate the process of competition, the friendly and yet hostile cooperation of scientists that Popper championed.
Litigation also holds out the prospect of action on behalf of those without the resources to undertake it themselves. Indeed, litigation is a public good, in that its benefits are both nonexcludable and nonrival. Litigation is nonrival in that A’s seeking to show that B is strictly liable for a given environmental effect does not entail that there is less litigation “left over” for others to use. On the contrary, there may be bandwagon effects.
The possible benefits of litigation concerning putative climate change would be nonexcludable. Climate change, if it is a problem at all, is a problem the world over. If carbon emissions are indeed causing dangerous climate change, it does not matter where they are reduced; wherever the reductions occur, the global atmospheric carbon concentration will eventually be reduced.
Tort litigation on the basis of strict liability would protect the right to a climate free from human intervention if the climate does need protecting, and, in case it does not, would save economic activity across the world from the imposition of unnecessary costs. By providing a public arena for the competitive testing of scientific hypotheses concerning climate change, litigation would also promote the advancement of climate science.
In Guns, Germs, and Steel (1997) and Collapse (2005), Professor Jared Diamond argues that geography and environment are the “ultimate determinants” of the fates of societies
This paper examines Jared Diamond’s success in explaining the broad pattern of history within the context of geographical and environmental considerations.
Volume 22, Number 1 (2010)
It might take a while to sink in, but the global-warming cause is on the skids. Two issues are taking the whole project down: it is getting cooler not warmer (and hence the change of the rhetoric to a vague concern over "climate change"); the email scandal of a few weeks back proved that this really is an opinion cartel with preset views not driven by science.
Oh sure, people are saying that climategate is not really very serious and is only being exploited by Fox News and the like. And it's true that not all measures of global temperature show cooling and that the science can be complex.
On that basis, the New York Times urges us to ignore the outpouring:
It is also important not to let one set of purloined e-mail messages undermine the science and the clear case for action, in Washington and in Copenhagen.
Yes, a clear case. Come on. The whole political agenda of these people is now being seriously questioned. It is no longer a slam-dunk case that we are going to have world central planning in order to control the climate and protect the holy earth from the effects of industrialization. Oh, and tax us good and hard in the process.
But you know what is most tragic to me about this? This whole hysteria led to a fantastic diversion of energy on the left side of the political spectrum. Instead of working against war and the police state, issues on which the Left tends to be pretty good, instincts were diverted to the preposterous cause of creating a statist system for global thermometer management.
The effort to whip everyone up into a frenzy over this began more than ten years ago. Every lefty fundraising letter harped on the issue, and demanded people commit their lives to it, explaining that if mother earth dies then all is lost. It is a more important issue than all the rest, the litmus test to determine whether you are a friend or an enemy.
This made it very difficult for libertarians to cooperate with the Left over the last years. Sure, there are some libertarian ideas for dealing with pollution, but none as compelling as central planning, and there was never any way that we would go along with that idea. The costs associated with dismantling industrial civilization outweigh even the worst-case global-warming scenario.
And methodologically, the whole thing was always nuts. If we can't determine cause and effect now with certainty, how in the heck will we be able to determine it after the world state controls our carbon emissions and impoverishes us in the process? No one will ever be in a position to say whether the policy worked or failed. That is not a good basis for enacting legislation.
The climate issue is for the Left much like the pro-life cause on the Right. If a politician pushes the correct buttons, it doesn't matter what else they say or do.Meanwhile, the Left threw everything it had into this hysteria. Protests, letters, billions in spending, frenzy, moral passion, mania, witch hunts – you name it. You would swear that climate change was the issue of the millennium for these people.
Meanwhile, the police state has made unbelievable advances in the last ten years. We all live today in fear of the state's "security" apparatus. Airports have become living chapters in a dystopian novel. The local police treat us like potential terrorists. Crossing the US border is becoming reminiscent of East Germany. You can't go anywhere without your papers.
And where has the Left been while the whole world was being Nazified? Worrying about my barbecue grill out back.
Then there is the war issue. The scary George Bush started war after war and kept them going to bolster his own power and prestige, creating as many enemies as possible through provocations and making up enemies if he had to. He funded a bubble that wrecked the economy and destroyed country after country in the name of justice and peace.
And what followed Bush? A president who repudiated this ghastly legacy? No, Obama is a supporter of the same wars and continues them — even ramps them up. Does the Left consider him a bad guy? Not really. With a handful of exceptions, his critics on the Left are friendly critics. They are glad to put up with this because he is willing to do their bidding on the climate-change front.
You think Democrat politicians don't exploit this? They surely do. In this sense, the climate issue is much like the pro-life cause on the Right. If a politician pushes the correct buttons, it doesn't matter what else they say or do. They are no longer looked at with a critical eye.
The American Left has long forgotten its roots. As Arthur Ekirch has explained, the Left sold its soul to the state with the New Deal. Whereas it once opposed regimentation and industrial management of society, it turned around to support exactly that. War was the next issue to go. The New Left in the 1960s held out the hope of capturing some of that early love of liberty on the Left, even the anarchist impulse, but the New Left didn't last long. It was eventually swallowed up by machine politics.
The Left today that supports world government to stop climate change bears little resemblance to the Left of 100 years ago, which favored civil liberties and social liberality and was willing to do anything to end war. Now it has diverted its energies to a preposterously unworkable scheme based on pseudoscience. This is a terrible tragedy.
The Left still has much to contribute to American public life. It can oppose the police state and the militarization of society. It can favor human liberty in most every area of life, even if it hasn't made its peace with the free market. Most of all, it can oppose American imperialism. But before it recaptures the spirit of its youth, it has to get rid of the preposterous idea that it should support the total state to manage what every generation has always known is unmanageable.
Ah, the greens. They're not just treehuggers anymore. They've been browbeating us to recycle, eat soy, save energy, drive less, ride the bus, and a thousand other ways to "act local" for many years now, writes Tyler A. Watts.
This audio Mises Daily is narrated by Gennady Stolyarov II.
Ah, the greens. They're not just treehuggers anymore. They've been browbeating us to recycle, eat soy, save energy, drive less, ride the bus, and a thousand other ways to "act local" for many years now. Now they've even got a hip new huckster on the big screen: "No Impact Man," your conductor on a first-class guilt trip to ecoland. Despite the massive popularity of their cause, I don't think they're satisfied. They want to control us. If we don't watch out, these people hell-bent on saving the planet are going to end up micromanaging our daily lives.
The idea of sustainability itself sounds pretty benign — it merely implies that people ought to be forward thinking, prudent, and thrifty in their use of economic resources. And I'm OK with this basic idea — on the surface, it sounds like simple wisdom, in league with similarly bland and benevolent values like responsibility and generosity.
But deep down, there's something unsettling about the basic premise of sustainability. Sustainability advocates — let's call them "sustainists" — are damning in their fervor, poise, and rhetoric. Their ideology is pregnant with an accusation that the way things currently are is somehow unsustainable. There's an alarmism here which essentially claims, "there's a crisis, it's your fault for being ignorant, irrational, and greedy. You must do as we say to fix it, or we'll all die."
This alarmist crusade, which underlies the sustainability movement, should rankle people with an economic understanding of the world. A basic tenet of economics is that markets are self-correcting and orderly; prices indicate resource constraints and guide people in economizing on their use. Prices change as underlying supply and demand conditions change, inducing appropriate adjustments in consumption and production patterns. Prices channel the profit motive — a natural aspect of the human condition — into productive and innovative activities. In short, prices work.
Sustainists are either ignorant or in denial of this basic lesson. Either way, we economists have our work cut out for us.
The Sustainists' LamentThe gist of the problem, as the sustainists see it, is that people are using resources irresponsibly — either using them up too fast, using too much of them, or using them in a way that will have negative long-term ramifications. In brief, sustainists disapprove of other peoples' actions, and are taking steps to correct their wayward brethren.
Because these wasteful others, through either ignorance, laziness, or stubbornness, will not wake up and adopt sustainable practices on their own, sustainists see the need for a self-conscious effort — organized campaigns, eco–guilt trips, and yes, even laws — to correct this misuse of resources. We need to change our patterns of action; we need a motivating force beyond mere "economic self-interest" (i.e., the profit motive). Sustainability, then, has become a full-fledged crusade to "save the planet," and if you're not part of the solution, you're surely part of the problem.
Let's interpret this through the lens of economics. Sustainability arguments fall under one of two broad categories: (1) the nonrenewable resources argument that the supplies of certain important resources are shrinking; by the time people realize this it will be "too late" — resource shortages will strain the capitalist economies to the breaking point; (2) the climate-change argument that there are large, though delayed, negative externalities to current patterns of resource use.[1]
Whatever their type, sustainability arguments invoke market failure. Indeed, the very practices cited as unsustainable arise on the free market. Therefore some outside corrective, whether aggressive moral suasion or economic regulation, is needed to prevent the impending catastrophe of unsustainable resource use.
Are Prices Not Sufficient?I don't want to dwell on the particulars of the sustainability movement. There are dozens of manifestations, from green building to organic farming to mandatory recycling to decarbonization — indeed, the sustainability bandwagon (which of course is painted green and powered by renewable energy) seems infinitely expandable to include every industry and interest group under the sun. Instead, I want to draw out the essential implications of the sustainability movement.
The sustainability movement is an assault on economics. It claims at its core that prices don't operate through time to direct consumption and production decisions in a sustainable way. A lesson in basic economics should suffice to defend against the sustainists' attack.
Prices arise in the market economy as a concomitant of mutually beneficial exchange. People want things that improve their lives — we call this value. Some valuable things are more scarce than others; take the classic case of water and diamonds. In absolute terms, water is more valuable than diamonds: you don't need diamonds to live.
Yet water is, pound for pound, far cheaper. Why? Although it's valuable, it is also relatively abundant; in many parts of the world, it literally does fall from the sky. The price of any good reflects this combination of value and scarcity. We're willing to pay more for valuable things as they become relatively scarce (e.g., oil); and we needn't pay as much for valuable things as they become more abundant (e.g., grain).
Likewise, as scarce things lose their value, people are no longer willing to pay for them (e.g., typewriters), and people must pay more for scarce things that suddenly become sought after (e.g., vintage Michael Jackson records). The awesome thing about prices is that they seamlessly convey this combination of facts about an item's value (demand) and it's scarcity (supply). Prices, of course, are subject to change — prices of certain goods fluctuate every day. But this is a good thing; discernable trends in prices over time indicate relative changes in the "market fundamentals" of supply and demand.
In this sense, prices reliably guide individuals, both consumers and producers, toward a rational use of resources. Savvy consumers listen to the prices; a rising price trend tells them to cut back on that particular item, and a falling price tells them to go ahead and use a little more of it. The same basic logic applies on the production side.
Entrepreneurs, driven by the profit motive, are like bloodhounds sniffing out these price trends in search of profit opportunities — chances to create value through exchange. If the price of a good trends strongly upwards over time (indicating it has become scarcer and/or more valuable), they rush to find cheaper substitutes. The cheaper the substitutes, the higher the profits to be had, especially if you're the first to market. If prices trend downwards over time (indicating that the resource is becoming more abundant relative to its usefulness), entrepreneurs devote their efforts elsewhere.
The general outcome of these economic processes is captured by the statement "prices coordinate."[2] In other words, the price system acts as an "invisible hand,"[3] guiding people — both consumers and producers — in their economic actions. The real beauty of this free-market price system is that it brings about its own kind of sustainability. This is not so much sustainability in the use of particular resources — for particular goods fall in and out of favor according to supply and demand factors — but sustainability of high economic growth and high standards of living in the economically developed, capitalist economies.
Take, as an example, the transition in the market for interior illumination: tallow candles were replaced by whale-oil lamps, which were replaced by kerosene lamps, which were replaced by incandescent bulbs powered by electricity. There was no social or political pressure needed to accomplish this evolution; there was no "peak whale oil" movement, no kerosene conservationists, no sustainability crusade of yore. All it took was a functional price system, combined with the ever-present entrepreneurial drive for profits under a competitive, free-market order.
Likewise, in our time as sustainists and other worrywarts fret about resource depletion, the price system remains functional, quietly yet assuredly guiding individuals to economize on resources, search out profitable substitutes, and anticipate future trends. All this happens without preaching, without crusades, and without activism.
Is the Sustainability Crusade Sustainable?How long will sustainists be able to beat their drum, simultaneously trumpeting their greener-than-thou self-image and attempting, with varying degrees of coercion, to make the rest of us act "sustainable" too? With the global warming scare losing credibility by the day, the likelihood of sustainists being able to claim even a moral victory is fading.[4] Barring the earth melting down from a little bit of smoke, I'm not too worried about sustainists having much of a long-run impact.
Hardcore sustainists are asking for a radically disruptive change from the natural order of the free-market economy. They're asking us to forego wealth and embrace privation in the name of their cause.[5] Although citizens of the Western democracies have seemingly become easy marks for anything green, we will only go so far toward saving the planet, especially when it becomes apparent that sustainability requires a march toward poverty and a deeply regimented and regulated society (and that the planet's not really in peril, after all).
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"A lesson in basic economics should suffice to defend against the sustainists' attack."Also, and perhaps more importantly, people in developing countries will be increasingly turned off by the sustainists' demands for sacrifice. Having just arrived at the high living standards that long-term capitalist development yields, my sense is that they will turn a cold shoulder to the idea of ratcheting down their development.
The current resurgence of the classical-liberal tradition in economics will also reduce the appeal of sustainability. The idea of imposed or centrally planned sustainability will crumble under the realization that the spontaneous order wrought by the invisible hand of the free-market price system is amazingly sustainable in and of itself. Add to the mix the hardships of the current recession, and it won't be long before enough people, even sustainist crusaders come crawling back, box of chocolates in hand, to the free-market economy.
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Notes[1] The "peak oil" movement is a species of the first argument.
[2] This a key theme of the works of F.A. Hayek; see, for instance, the classic essay, "The Use of Knowledge in Society."
[3] For the quote in its original context, see Adam Smith's Wealth of Nations, book IV section 2.9.
[4] To be fair, I should note that, as far as it constitutes an externality-based market failure argument, the idea of man-made global warming is consistent with sound economic theory. The burden of proof in this case, though, rests on those sustainists who genuinely believe that there are disastrous long-term externalities in store from man-made global warming. As my favorite radio host would say, "color me skeptical."
[5] For examples of the economic sacrifices that hardcore sustainists seek to impose, see here, here, and here.
There are three things everybody knows when we talk trash:
We know we're running out of landfill space;we know we're saving resources and protecting the environment by recycling; andwe know no one would recycle if they weren't forced to.Let's look at these three things we think we know. Are they real or are they rubbish?
- Are We Running Out of Landfill Space?Two events created the perfect garbage storm in the late 1980s. One barge and one bureaucrat created this overhyped myth. The garbage barge was the Mobro 4000. The bureaucrat was J. Winston Porter.
The Mobro 4000 gained celebrity status by spending two months and 6,000 miles seeming to scour the Atlantic coastline and the Gulf of Mexico looking for a home for its load, as if no landfills existed. The physical availability of landfill space was not the issue, but you would not have guessed that from the hysteria the media whipped up.
J. Winston Porter became a star that season at the Environmental Protection Agency (EPA) by writing a report entitled The Solid Waste Dilemma: Agenda for Action, in which Porter proclaimed that recycling is absolutely vital because America is running out of landfill space.
What Porter thought he knew was simply not so. The EPA had noticed that the number of landfills was dropping. They failed to notice that the size of landfills was getting much bigger much faster. Total landfill capacity was actually rising. The EPA also underestimated the prospects for creating additional capacity.
Obviously, and as usual, the real landfill problem is not a landfill problem at all but a political problem. "Fears about the effects of landfills on the local environment have led to the rise of the not-in-my-back-yard (NIMBY) syndrome, which has made permitting facilities difficult. Actual landfill capacity is not running out."
Today, 1,654 landfills in 48 states take care of 54 percent of all the solid waste in the country. One-third of them are privately owned. The largest landfill, in Las Vegas, received 3.8 million tons during 2007 at fees within the national range of $24 to $70 per ton. Landfills are no longer a threat to the environment or public health. State-of-the-art landfills, with redundant clay, plastic liners, and leachate collection systems, have now replaced all of our previously unsafe dumps.
"We are not running out of landfill space."More and more landfills are producing pipeline-quality natural gas. Waste Management plans to turn 60 of their waste sites into energy facilities by 2012. The new plants will capture methane gas from decomposing landfill waste, generating more than 700 megawatts of electricity, enough to power 700,000 homes.
Holding all of America's garbage for the next one hundred years would require a space only 255 feet high or deep and 10 miles on a side. Landfills welcome the business. Forty percent of what we recycle ends up there anyway. We are not running out of landfill space.
- Are We Saving Resources and Protecting the Environment by Recycling?What are the costs in energy and material resources to recycling as opposed to landfill disposal, which we've just looked at? Which method of handling solid waste uses the least amount of resources as valued by the market?
As government budgets tighten and the cost of being "green" rubs against the reality of rising taxes, recycling coordinators like Auburn University's Leigh Jacobson will increasingly be under pressure to justify their programs as cost-effective alternatives to waste-disposal methods like landfills.
I don't think she will be able to do it. But it should be easier for Leigh at the university than it will be for her counterpart in the City of Auburn, or in any city that funds curbside recycling. Curbside recycling is substantially more costly — that is, it uses far more resources — than a program in which disposal is combined with a voluntary drop-off/buy-back option.
Overall, curbside recycling's costs run between 35 percent and 55 percent more than other recycling methods, because it uses huge amounts of capital and labor per pound of material recycled. Recycling itself uses three times more resources than does depositing waste in landfills.
The largest US organization dedicated to recycling just found out how difficult this chosen path can be. The final death knell for the National Recycling Coalition (NRC) appeared to ring earlier this year when the organization announced it would be filing for Chapter 7 bankruptcy. The NRC ceased operations and terminated all staff members at the close of business on September 4, shortly after an attempt to merge with Keep America Beautiful failed. NRC is now trying to avoid bankruptcy by reorganization.
Even though they are a half-million dollars in debt, NRC may legally continue to exist if they can raise funds, negotiate with their creditors and develop a business plan. What seems to be their business plan? They are counting on the Kerry-Boxer Bill on clean energy to include recycling language. In other words, they are counting on being bailed out and subsidized. The market knows this is a losing proposition, so these players are trying to get taxpayers to fund their enterprises.
"Wherever private-property rights to forests are well-defined and enforced, forests are either stable or growing."The Solid Waste Association of North America found that, of the six communities involved in a particular study, all but one of the curbside recycling programs, and all the composting operations and waste-to-energy incinerators, increased the cost of waste disposal. Indeed, the price for recycling tends to soar far higher than the combined costs of manufacturing raw materials from virgin sources and dumping rubbish into landfills.
Recycled newspapers must be deinked, often with chemicals, creating sludge. Even if the sludge is harmless, it too must be disposed of. Second, recycling more newspapers will not necessarily preserve trees, because many trees are grown specifically to be made into paper. The amount of new growth that occurs each year in forests exceeds by a factor of 20 the amount of wood and paper that is consumed by the world each year. Wherever private-property rights to forests are well-defined and enforced, forests are either stable or growing.
Glass is made from silica dioxide — that's common beach sand — the most abundant mineral in the crust of the earth. Plastic is derived from petroleum byproducts after fuel is harvested from the raw material. Recycling paper, glass, or plastic is usually not justified compared to the virgin prices of these materials.
The best way to measure the scarcity of natural resources, such as trees, sand, or oil, is to use the market prices of those resources. If the price of a resource is going up over time (and it's not just inflation pushing those prices higher) the resource is getting scarcer. If the price is going down, it is becoming more plentiful. Indeed, since 1845, the average price of raw materials has fallen roughly 80 percent after adjusting for inflation.
This paradox of our having more by using more is explained by the use of the most important resource — man's mind. Human ingenuity makes natural resources increasingly available through prices, innovation, and substitution.
Bureaucrats, however, appear to occupy a place at the opposite end from human ingenuity. Their interferences in markets do damage. Just two examples will illustrate what I mean by that. One is about a light that has a dark side. The other example requires that you either clean your plate or become a composter.
In 2007, Congress banned incandescent bulbs — not exactly a market action. The phasing out of incandescent light is to begin with the 100-watt bulb in 2012 and end with the 40-watt bulb in 2014. By 2020, bulbs must be 70 percent more efficient than they are today. While a standard, 100-watt bulb costs $1.24, the spiral compact fluorescent light (CFL) 100-watt sells for $4.97. Advocates argue, however, that the CFL lasts longer and uses less energy. The packaging claims that after six years I will have saved $74 in energy.
Thereby, in the year 2007 alone, under this edict, some 397 million compact fluorescent light bulbs were placed on the market. Their debut is counted as a success.
"Recycling would seem to be the philosophy that everything is worth saving except your own time and money."However, the recycling of spent household CFLs has been an abject failure. Despite CFL-disposal bans in states like Maine, despite continuing statewide education efforts, and despite a free CFL-recycling program there, households throw the used bulbs into the trash that ends up in the landfills.
What's the problem with that? Landfills, as we've learned, have the space and the appetite for our waste. Well, the problem is the potential public and environmental health effects of the collective release of the small amount of mercury in each discarded CFL. For example, using the mean amount of 5 milligrams per CFL, the total amount of mercury contained in the 2007 shipments of CFLs alone is a large amount.
There is no mention on GE's packaging of the bulb's mercury component or any special precautions you must take when this bulb breaks.
Notice that "mercury free" is already a selling point for the producers of new LED technology Accent bulbs. "Accent" means you can't actually get enough light from them to read by. But, you can tell the packager has obviously experienced how ugly the CFL-produced light is, because the buyer is assured a warm, white light, which is something you do not get with a CFL.
In June of this year, Maine adopted the nation's first law that requires CFL bulb manufacturers to share the costs and responsibility for recycling mercury-containing CFLs through a producer-financed collection and recycling program, which must include an education component. This mandate will drive the CFLs' cost even higher. Additional specialized equipment will have to be created for handling light bulbs that will be seen to be hazardous waste. How can any savings ever result from such a boondoggle?
Then, bringing new depth and meaning to the word "boondoggle," San Francisco's newest mandatory-recycling ordinance took effect last month. All residences, all restaurants and all commercial buildings must participate in the city's recycling and composting programs. A recent study had unearthed the fact that 36 percent of the city's landfilled waste is compostable. That happens to be the ingredient that makes the landfill valuable as an energy source.
Collecting your food scraps, plant trimmings, soiled paper, and other compostables is considered necessary by San Franciscans to fight global warming. Residents get both a green cart and a green report titled "Stop Trashing the Planet." Residents face $100 fines if they fail to separate their food scraps from their papers or cans. Businesses face fines of $500. Really bad actors could be fined $1,000. The stated goal is to get to zero waste, meaning no garbage at all going into landfills, by the year 2020.
Obviously, San Francisco believes we have run out of landfill space. Obviously, they do not have the vision to see the energy plants that landfills can become when waste is actually put in them.
In light of these facts, how can San Franciscans and others think recycling conserves resources? First, many states and local communities subsidize recycling programs, either out of tax receipts or out of fees collected for trash disposal. That's the case with Auburn University's recycling grant. Thus the bookkeeping costs reported for such programs are far less than their true resource costs to society. Also, observers sometimes erroneously compare relatively high-cost, twice a week garbage pickup with relatively low-cost, once or twice a month recycling pickups, which makes recycling appear more attractive.
"Mandated recycling exists mainly because there is plenty of money to be made by labeling products as "green" or "recycled" to get municipal and federal grants."Why do these same people think that recycling is protecting the environment by not polluting? Recycling is a manufacturing process, and therefore it too has environmental impact. The US Office of Technology Assessment says that it is "usually not clear whether secondary manufacturing such as recycling produces less pollution per ton of material processed than primary manufacturing processes."
Increased pollution by recycling is particularly apparent in the case of curbside recycling. Los Angeles has estimated that its fleet of trucks is twice as large as it otherwise would be — 800 versus 400 trucks. This means more iron ore and coal mining, more steel and rubber manufacturing, more petroleum extracted and refined for fuel — and of course all that extra air pollution in the Los Angeles basin as the 400 added trucks cruise the curbs.
Manufacturing paper, glass, and plastic from recycled materials uses appreciably more energy and water, and produces as much or more air pollution, as manufacturing from raw materials does. Resources are not saved and the environment is not protected.
- Do People Recycle Only When They Are Forced To?If all we knew about recycling was what we heard from environmentalist groups, recycling would seem to be the philosophy that everything is worth saving except your own time and money. Costs of recycling are mostly hidden. If we add in the weekly costs of sorting out items, it makes more sense to place everything in landfills.
But private recycling is the world's second oldest, if not the oldest, profession. Recyclers were just called scavengers. Everything of value has always been recycled. You will automatically know that something is of value when someone offers to buy it from you, or you see people picking through your waste or diving into dumpsters.
Aluminum packaging has never been more than a small fraction of solid waste, because metals have value. Ragpickers separating out cloth from waste may not be in season now, but cardboard, wood, and metals have always been in some demand.
Scrapyards recycle iron and steel because making steel from virgin iron and coal is more expensive. Members of the Institute of Scrap Recycling Industries recycle 60 million tons of ferrous metals, 7 million tons of nonferrous metals, and 30 million tons of waste paper, glass, and plastic each year — an amount that dwarfs that of all government (city, county, and state) recycling programs.
Recycling is a long-practiced, productive, indeed essential, element of the market system. Informed, voluntary recycling conserves resources and raises our wealth, enabling us to achieve valued ends that would otherwise be impossible. So yes, people do recycle even when they are not forced to do so.
However, forcing people to recycle makes society worse off. Mandated recycling exists mainly because there is plenty of money to be made by labeling products as "green" or "recycled" to get municipal and federal grants.
Henry Hazlitt and Ludwig von Mises speak to our recycling topic.
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In Economics in One Lesson, Hazlitt teaches us that mandatory recycling considers only-short term benefits to a few groups — politicians, public-relations consultants, environmental organizations, and waste-handling corporations — instead of looking at the longer-term effects of the policy for all groups. The negative consequence will be the squandering of human resources.
In conclusion, Mises also teaches us what to expect. Mises, in his great work Human Action, does not say that recycling is a bad belief. He shows by example that mandatory recycling is an inappropriate means of caring about the environment. Waste is inescapable. Austrian economics leaves it to every person to decide whether his or her belief in recycling is more important than the avoidance of the inevitable consequences of forced recycling policies: wasted natural resources and wasted human resources.
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Hacked or possibly leaked emails appear to indicate that a lot of what passes for climate-change science is propaganda. Data appears to have been filtered, altered, or falsified, in order to deny the obvious: the earth is not continuing to warm up in accordance with climate change models; global temperature has been fluctuating for hundreds of thousands of years due to natural variation; and the earth is no warmer nowadays than it has been at several prior times in history.The black mark earned by alarmists during the 1970s, for predicting continued global cooling, may be replicated for global-warming alarmists. The real tragedy, however, may be that — one day — scientists will cry wolf to a public that has learned to ignore them.By now, anybody who is serious about the possibility of global warming knows that the "hockey-stick" theory promulgated by the UN a few years ago is bunk.
"If we could control global temperature, our focus would be more on avoiding global cooling than it would be on avoiding global warming."This theory held that there was no meaningful variation in global temperature during the past several thousand years until recently, when capitalism began to harness industrial power. That this theory was advanced by a scientist who was a socialist might raise a question about its validity.
"Science" is not, as some people imagine, memorizing a list of facts (such as the names of the planets). Nor is the progress of science determined by laboratory experiments. This is because, at the edge of our knowledge, accepted laboratory experiments don't exist and, in certain fields, laboratory experiments might not even be possible. Rather, the progress of science is determined by free inquiry, open discussion, and transparency among those engaged in a discipline.
There should be no pretense that the UN's Intergovernmental Panel on Climate Change is an unbiased organization. It was formed by the United Nations specifically to study "the risk of human-induced climate change." The guilty party is, thus, pre-identified and all that remains is to collect the evidence. Periodic reports of the IPCC proclaimed, ever more authoritatively, that the trend of global warming that was occurring at the time was due to human activity. The second report, in 1996, said "the balance of evidence suggests a discernible human influence on climate change."
The third, in 2001, presented "new and stronger evidence." This report included the hockey stick and the whacky idea that the trend of rising global temperature over the prior three centuries (or, since the so-called "Little Ice Age") was due to human activity. The fourth, in 2007, which dropped the most embarrassing claims, nevertheless claimed that "most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations."
This all seemed plausible at the time because of the warming trend. But, recently, global temperatures have been moderating and, besides, as the emails show, scientists were altering the evidence all the while.
Now You See ItBelow I have a chart with the history of global temperature as it was known at the time of the 2001 report. As the chart makes clear, global temperature began to recover from the Little Ice Age about three hundred years ago. Juxtaposed against the rising trend are several cycles of 30 to 40 years length, including the one I show in red, which caused a lot of alarmists during the 1970s to say that industrial activity was causing global cooling.
Now You Don'tPublishing the actual history of global temperature would question the hypothesis that human activity was causing it to rise. Or, to quote an email of one of the supposedly esteemed scientists promoting the UN climate change agenda, it would provide "fodder" for the "skeptics." So, here is the chart that they published.
When, following its publication by the UN, the hockey-stick theory was reviewed by the National Academy of Science, it was found to be "not inconsistent" with the data available at the time. This is a fancy way of saying that no more than the usual amount of subjective interpretation was involved. A scientist who is a socialist will of course tend to stop investigating when he has "proved" that capitalism, by enabling a growing population to live at increasingly higher standards of living, is actually a bad thing. Contrariwise, a scientist who is a capitalist will have the opposite tendency.
In spite of these prejudices, there is hope for progress in science because, as long as we have free inquiry, the data will eventually have its turn to speak. This kind of give-and-take goes on all the time in scientific disciplines. But hiding evidence, as we now know was being done, is academic fraud. It should cause the National Academy of Sciences to reconsider its exoneration of the errors in the hockey-stick theory.
So What Do the Data Say?A great deal of data has been gathered since the UN began its "bum rush" on free enterprise. First, we have much more evidence of natural variation from the past, based on a wide variety of proxies for temperature. During the past few thousand years, there were two periods during which global temperature was as high or higher than it now is.
Correlating warm and cool periods with what we know about history, warmer times have been times of human flourishing, expanding economic activity, scientific progress, and cultural expression. And cooler times have been times of starvation, disease, and the collapse of civilization. If we could control global temperature, our focus would be more on avoiding global cooling than it would be on avoiding global warming.
Second, we know that, at least thus far, we really don't know much about the causes of climate change. The computer models that incorporate the greenhouse-gas theory are being massively contradicted by current readings. That is, CO2 is continuing to build up in the atmosphere, and yet global temperature is moderating rather than continuing to rise.
"The computer models that incorporate the greenhouse-gas theory are being massively contradicted by current readings."It might be, as the historical evidence can be interpreted as suggesting, that variation of CO2 in the atmosphere is an effect rather than a cause of global temperature, since CO2 levels appear to lag variation in global temperature. The issue is certainly deserving of continuing study.
Third, we know that the scaremongers associated with the IPCC cannot be trusted. As important as the planet is, we need a community of climatologists that is not precommitted to a theory or — worse yet — to a policy prescription. The UN agenda is obviously driven by the many despotic nations of the world that seek to use climate change to shake down the wealthy nations of the world, in concert with an intellectual elite that favors socialism over capitalism and with special-interest groups seeking massive government subsidies. The Kyoto Treaty, which imposes limits only on certain nations (the wealthier ones), could never work, since it will only shift industrial activity to nations without limits (the poorer ones), with no net reduction in carbon emissions.
Finally, we know that, with regard to all scarce resources, a market approach is to be preferred to a socialist approach, especially a one-world-government socialist approach.
A market approach to environmental policy would not only achieve whatever goals are set efficiently, given the technologies currently available; it will induce the discovery of new technologies, making what seems costly and maybe even impossible today achievable with increasingly higher standards of living tomorrow.
Unlike socialism, capitalism does not rely on fear. Capitalism relies on belief, belief in the inexhaustible creativity of free persons.
The freedom of a person to act according to his will in his property implies by symmetry that aggressions against others are ethically unacceptable. An illegitimate aggression is any sufficiently intense adverse physical interference caused by a person on another's property.
A problematic and possibly important case is the alteration of environmental conditions as in a hypothetical climate change, which could have both positive and negative effects depending on the subjective valuations and particular circumstances of human beings. If climate change is considered a problem, it does not follow automatically that it has to be stopped or minimized at whatever cost it takes: humans are especially good at adaptation, and government does usually more harm than good.
Freedom, Property, and AggressionA normative ethics with universal, symmetric, and functional rules is based upon the fundamental principle of property rights. The ethics of freedom and property rights is the natural law, the system of norms adequate to human nature that permits harmonious and peaceful social coexistence and development by avoiding, minimizing, or solving conflicts as much as humanly possible.
Property is the domain of legitimate decision by the owner, the space in which each person is free to act according to his preferences without violent interference from others, whose valuations in this regard are ethically irrelevant. All peaceful actions by the owner in his property are permitted, and no actions are obligatory (there are no natural positive duties).
The right to property is a negative right of noninterference. Humans do not have natural positive rights that imply that others must do something for them, and there are no natural duties towards others (present or future). Positive rights and duties arise by means of contracts.
Freedom does not mean absolute absence of restrictions: my freedom ends where the freedom of others begins; my property is finite and limited by other people's properties. Freedom and property rights are equivalent to the nonaggression axiom: the initiation of force is not legitimate; force may be used only for defense and justice. Aggression, the invasion of the property of others without their consent, is forbidden. The aggressor must repair the damages and compensate the victim.
Aggression is not only the narrow-sense notion of criminal violence performed by a person against another one and his possessions (murder, assault, injuries, rape, kidnapping, theft). Aggression in an abstract sense is any sufficiently intense adverse or noxious physical interference caused by a person or his possessions on another person's property.
"The more actions are considered illegitimate aggressions, the more use of force is justified."Being the owner of something is not always good: property does not only imply the right to enjoy and use means of action. Property can be bad: the owner is responsible for the damages that his actions and his possessions could cause on others (intended or unintended, known or unknown, foreseen or unforeseen). All actions imply the production of undesired residuals or waste that must be taken care of by the owner so that they do not damage others.
All real things are directly or indirectly interconnected by fundamental forces, so that a change in one entity causes some effect, small or big, on other entities. But ethical rules refer only to changes and effects caused by human action that can damage others and create conflicts.
These interactions can involve matter (solid, liquid, gas; macroscopic or microscopic particles), energy (heat, electromagnetic waves, pressure waves) or alterations of natural environmental conditions (luminosity, pressure, temperature, winds, humidity). Effects can be strong or weak, concentrated or diffuse, direct or indirect, local or global, frequent or infrequent, cumulative or noncumulative, instantaneous or delayed, temporary or permanent.
Due to the limitations of the human mind, reality is often studied in a simplified way as if it were linear and simple; but nature is in fact a complex network of entities and relationships. A cause can have multiple effects over different persons, some positive and some negative.
An effect can have multiple causes, natural or artificial, from one person or from many people doing the same thing (like breathing) or complementary things (like making and driving cars, or like producing and consuming energy). In chaotic nonlinear systems, small causes can have big effects (due to amplifiers, destabilizers, or positive feedback loops), but also big causes can have small effects (due to dampers, stabilizers, or negative feedback loops).
In order to be qualified as aggressions, real events must at least be physically detectable, psychologically perceptible, and relevant for human preferences. Objective real conditions do not automatically constitute problems. It is human valuations which perceive situations as opportunities or threats, benefits or damages, goods or bads. And it is the possible incompatibility of subjective human preferences that originates conflicts: what one likes another may dislike.
The specific contents of the notion of aggression are open and debatable; it is not a concept with sharp boundaries, it is partially fuzzy and arbitrary. It cannot be fully determined by deduction using pure reason, it depends on customs, traditions, conventions (blocking sunlight, high-intensity lights, high-volume sounds, pollutants). Some objective criteria can be used to determine whether an event is more adequately considered an aggression or not: intensity, directness, extension, duration, accumulation.
"There is no natural duty to preserve the environment, which has no intrinsic value because valuations are products of mental activity."A functional ethics of freedom needs to include responsibility principles and rules for legitimate defense. The traditional and sensible principles of justice place the burden of proof of aggression on the accuser, who must prove beyond reasonable doubt the guilt of the accused. It is not the accused who must prove his innocence (if it were so, every person should have proof of innocence for every action and moment in his life, because he could always be accused of something).
Legitimate defense may be invoked by the actual or possible receiver of the effects of an action if there is clear, present and provable danger, and not just if someone cannot fully assure that there is not. Defense becomes illegitimate (it becomes aggression) if it cannot be proved that there is a danger of real damage.
The precautionary principle proposed by many environmentalists demands that the initiator of an activity proves its complete harmlessness and that the government does not need to prove probable harm in order to stop it. Proving that something is absolutely innocuous is impracticable in new domains, where learning is performed by trial and error, and therefore this principle would paralyze innovation. Knowledge acquisition is costly, and full knowledge is impossible.
The notion of aggression is based on the consequences or results of actions (the real effects in the world), and not on the knowledge or intentions of the agents. Instinctive moral feelings tend to excuse or diminish responsibility if there is no intentionality or if the damages are unforeseen, secondary effects: this is so partly because moral feelings evolved as genetic instincts in past times when our human ancestors had little capabilities of action.
But with capital and technological accumulation, it is necessary to demand responsible use of powerful tools, and warn persons that their ignorance or lack of foresight will not excuse them for the damages they might cause. This kind of rule provides incentives for agents to fully consider all possible consequences of their actions, and not only the ones they intend to achieve, because they will be judged according to the real effects of their actions.
Property rights work very well when reality is easily separable, and when the effects of actions are direct, local, concentrated, and falling mainly on the owner and nearby others easy to identify. But elements of reality are often intertwined in messy ways. Solid macroscopic objects tend to stay in their stable positions; but fluids (liquids and especially gases) tend to move, and photons and thermal energy tend to flow; these factors spread and cross legal boundaries unless stopped by some physical barrier.
Externalities are effects of actions of an agent on the property of others; they can be positive (like gifts, not forbidden and not obligatory) or negative. An aggression is a negative externality. Diffuse negative externalities are problematic and difficult to regulate. Many victims could suffer a very small nuisance or loss from the actions of one agent: it might seem ridiculous to consider illegitimate actions that produce such small effects and it would be very costly for each of the victims to demand the agent to stop or to compensate them.
Externalities can become important due to the cumulative and persistent effects of small actions of many agents. In a clear aggression it is possible and relatively easy to determine who is doing what to whom, who must be stopped or who must compensate whom for what. In diffuse externalities it can be very difficult to determine and connect agents, actions, effects and receivers of effects.
Since aggressions imply damage, it might be naively considered that it is better to make it a very inclusive notion, so that many losses are avoided. But accepting that something is an aggression and forbidding it has consequences that might be worse than simply tolerating it. The more actions are considered illegitimate aggressions, the more use of force is justified.
Costs of the system necessary to detect and punish the aggressors and compensate the victims could exceed its benefits (always bearing in mind that it is extremely problematic to perform interpersonal comparisons and additions or subtractions of utility or social cost-benefit analysis). It might be better to learn to live with some changing realities — to adapt to them — than to try to avoid them. Especially because humans are good at adaptation, by means of which they have colonized most of the planet, in very different environmental conditions.
Automatically giving the State the responsibility to deal with diffuse negative externalities can be a huge mistake. The State is the monopoly of jurisdiction and violence, and it is often illegitimate (dictators, or even democratic leaders according to anarchists), very inefficient and possibly corrupt (lack of motivation or incentives and lack of knowledge or impossibility of socialism, public choice theory).
What is often called market failure is often just the result of inadequate determination of property rights. Markets are never perfect because human beings are limited in their abilities; proposing that the State fixes alleged problems that individuals cannot solve freely seems to forget that the State is also made up of humans, and perhaps not the best ones (bureaucrats are not disinterested angels, and the worst might get to the top).
Climate ChangeEthics concerns only human beings: there is no natural duty to preserve the environment, which has no intrinsic value because valuations are products of the mental activity of cognitive emotional agents.
Contamination above certain levels is usually considered an illegitimate aggression because pollutants directly damage human beings and have no beneficial effects. Climate change is related to the environment but it is very different from contamination.
Anthropogenic climate change might occur due to changes in land use and emission of greenhouse gases. Changes in land use can alter the reflectivity or albedo of the surface of the planet, and it seems hard to consider them an illegitimate action.
Carbon dioxide is a greenhouse gas that results from respiration and from burning fossil fuels; labeling it as a contaminant is an abuse of language, since it is necessary for photosynthesis and it is not toxic. Some human activities, like growing trees, take carbon dioxide off the atmosphere. It is extremely difficult to prove specific relationships between human carbon dioxide emissions, local climate changes, and their particular effects.
Climate change, be it global warming or cooling, has multiple possible causes and effects, and the valuation of the effects can be different in different parts of the planet. Cold regions may welcome warming and lament cooling, warm regions may welcome cooling and lament warming. Climate-change alarmists seem to be climate reactionaries accepting no change.
There is no optimal climate, and conflicts for the climate's determination may arise if humans achieve partial control over it. Even if humans are adapted to the present climate, this does not imply that it would be difficult to adapt to different climates if the changes are not excessive.
"There is no optimal climate, and conflicts for the climate's determination may arise if humans achieve partial control over it."Climate change could happen quickly on a geological scale, but it is slow on a human scale, permitting informed adaptation and planning for the future. Climate change mitigation policies have certain, huge costs in the present and would provide uncertain, small benefits in the future. The relatively poor of today would sacrifice to help the relatively rich of tomorrow.
Temperature is not the only phenomenon associated with climate change and it is possibly not the most relevant for human welfare, since humans live in wide ranges of temperature. Sea level, precipitations, and extreme weather events can be much more important.
Sea level can slowly increase due to global warming, but the process is very slow, so that protections can be prepared and capital amortized if necessary; freedom of migration can help relocate people whose lands become inhabitable. Precipitation should in general increase with global warming, although its distribution might change. And the dependence of extreme weather events on temperature is complex and little known.
For almost all human problems associated with global warming, the influence of climate on them is usually small if compared with other more important factors that can be more easily and efficiently dealt with. Climate change alarmists seem to ignore relatively simple solutions for the problems they raise. Humans are proactive, they do not passively submit to natural influences, and the avoidance of climate change is not necessarily the best option.
Fresh water is a problem where there are no property rights, markets and prices for water. Tropical diseases depend strongly on socioeconomic conditions. Undeveloped nations are poor mostly due to inadequate social institutions, not because of environmental conditions.
Heat waves can be dealt with by means of proper air conditioning (and global warming would reduce cold waves and their associated deaths). The extinction of species is mostly due to habitat destruction or invasion by humans (or direct killing, hunting or fishing).
Global warming catastrophists seem to forget other more important and urgent issues which compete for the allocation of the scarce resources demanded for climate-change mitigation. It is preposterous to declare global warming the worst problem for mankind when there is war, hunger, sickness, and poverty.
For some radical environmentalists and many politicians, climate change is the most important problem for human civilization, and they pretend to speak in the name of all mankind. But all problems seem to be extreme for them, because they have no notion of relative opportunity costs. Their moral language imposes duties on citizens who seem to be receiving orders about what they must do and what they must avoid no matter what.
Governments are supposed to be necessary to protect their citizens against aggressions, but they are very incompetent at this task, they often perform their own institutional aggressions by prohibiting perfectly peaceful and voluntary activities; and now with climate change they seem to consider anthropogenic global warming an illegitimate undesirable action.
$25 $18
Some radicals even try to censor and criminalize dissent from skeptics, deniers, or minimizers. But thought and speech, even if wrong or false, are never real crimes. There may be special-interest groups on both sides of the debate fighting for their favorite public policies: not only oil, coal, and nuclear companies, but also heavily subsidized renewables.
While the official mainstream climate science may well be correct, its ignorance regarding economics, political philosophy, and law is huge. The most important entities for a human being are other human beings (for the good and for the bad), and not the environment. Humans can be especially damaging when organized politically and inspired by collectivism.
The possible damages of climate change should be compared to the possible damages of governmental bureaucratic intervention and political oppression. Maybe the whole global-warming scare is an excuse to increase the extension of political power or a distraction from other serious problems. Social institutions matter most, and they are very wrong now: a huge improvement is possible, and freedom is the answer.
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Recycling happens naturally when there is market demand for waste items like plastic, paper, metal or glass, but mandated recycling does more harm than good. When do you know that recycling is worthy? You know when some person or business asks to buy your particular waste from you, not when some authority forces you to recycle.
Thus, metal and kraft cardboard currently do find markets but the other waste items of plastic, paper and glass do not now that the Chinese have stopped buying all our waste.
We are not running out of landfill space. We are not saving resources or protecting the environment by recycling. People would recycle without being forced to when it is economically beneficial to do so.
Presented by Floy Lilley at the "Economics for High School Students" seminar. Recorded at the Mises Institute in Auburn, Alabama; 20 November 2009. Sponsored by Jeremy S. Davis.
"Readers of these pages know that I am no fan of Paul Krugman. But I do want to explain that I understand why he and Romm freaked out about this chapter."One of the ugliest battles in the blogosphere climate wars has involved the newly released Superfreakonomics, sequel to the best-selling Freakonomics. In their new book's final chapter, economist Steven Levitt and journalist Stephen Dubner set out to challenge the view that massively restricting carbon emissions is the only hope for averting planetwide catastrophe. Some of the most outspoken advocates for immediate "carbon legislation," such as Joe Romm and Paul Krugman, were appalled by the chapter.
In this article I will link to some of the major commentary on the book so far, and try to explain to Austrian readers why the interventionists were understandably upset. In particular, I want to caution libertarians not to reflexively side with Levitt and Dubner because "they're on our side." I will remind readers of the admitted errors Levitt made in his battles (stemming from the Freakonomics era) with anti-gun-controller John Lott.
Having done all this, at the end of the article my merciful nature will compel me to defend Levitt and Dubner from UC Berkeley economist Brad DeLong's specific claim that their support of geoengineering is somehow "bad economics."
As we'll see, Levitt and Dubner might be wrong in their views on global warming, but if so they are wrong because of the numbers. Regardless of their other possible sins, Levitt and Dubner should be acquitted of DeLong's accusation that they aren't thinking like economists.
A Summary of the Blog WarsI can't do Levitt and Dubner's presentation justice here; I encourage the interested reader to read the chapter. To summarize very briefly, they argue that if global warming really is a threat, then it does not follow that governments need to enforce draconian cuts in carbon dioxide emissions, which would cost many trillions of dollars over the next few decades.
Instead, a "geoengineering" solution could be adopted to keep the earth cool despite increasing concentrations of greenhouse gases in the atmosphere. Perhaps the most fanciful idea is to suspend a hose using helium balloons, in order to pump sulfur dioxide into the stratosphere. This would reflect some of the incoming sunlight and arrest (or even reverse) global warming, just as occurred after the eruption of Mount Pinatubo in 1991. Best of all, this particular approach would only cost about $250 million total — less than what Al Gore's foundation is spending just to "raise awareness" about climate change.
Naturally, the proponents of massive government interventions into the economy were furious at Levitt and Dubner's claims. Physicist and Clinton administration Department of Energy official Joe Romm got the ball rolling with this fiery post in which he accused the Superfreakonomics writers not merely of being incredibly sloppy in their summary of the climate science but also of consciously distorting the views of the scientists they quoted.
Romm's frequent ally in such matters, Paul Krugman, soon followed suit and claimed that the authors horribly mischaracterized the views of leading climate economists in the chapter. Dubner defended himself and coauthor Levitt against Romm's accusations of intentional distortion in this post, and physicist (and all-around guru) Nathan Myhrvold, one of the primary sources for the chapter, defended himself from Romm's accusations of ignorance here.
Are the Critics Justified?Readers of these pages know that I am no fan of Paul Krugman, especially when it comes to his views on climate change. But I do want to explain that I understand why he and Romm freaked out about this chapter.
The example that most offended Krugman was Levitt and Dubner's discussion of the work of economist Martin Weitzman. In a passage discussing the thorny issues of climate change — that the risks are very uncertain and won't occur for many years, making it hard to know how much action to take in the present — Levitt and Dubner say,
The economist Martin Weitzman analyzed the best available climate models and concluded the future holds a 5 percent chance of a terrible-case scenario — a rise of more than 10 degrees Celsius.
There is of course great uncertainty even in this estimate of uncertainty. So how should we place a value on this relatively small chance of worldwide catastrophe? (Superfreakonomics, p. 169)
This is the only mention of Weitzman in the chapter, and the overall theme of course is that global warming need not alter modern civilization. In context, then, one certainly gets the impression that Martin Weitzman's work weakens the case for immediate restrictions on carbon emissions.
But this is exactly the opposite of what Weitzman has done. The issues are too technical for a full discussion here, but elsewhere I have explained that Weitzman is one of the interventionists' heroes on the issue of climate change.
"I just want to caution Austrian and libertarian readers not to assume that anyone who 'thinks global warming is a big hoax' is automatically a great scholar."Even conceding the natural-science "consensus" on human-caused climate change, standard cost-benefit models show that the "optimal carbon tax" starts out fairly modestly, and only increases gradually over the decades. This is because the serious damages from climate change won't really kick in until the end of the century, and so the present discounted value of the "social cost" of an additional ton of carbon dioxide emissions is fairly low.
Weitzman's work upsets this standard conclusion. He has shown the mathematical conditions under which the usual cost-benefit models break down. Weitzman's approach shows that, rather than making a slight marginal adjustment in the trajectory of emissions to "internalize the externality," it can be optimal to aggressively curtail emissions right away in order to minimize the likelihood of experiencing catastrophic climate events.
So it's not so much that Levitt and Dubner lied about Weitzman's work, but their reference was very misleading. Austrians can appreciate what happened by considering this analogy: Suppose a proponent of government healthcare said, "All these critics keep warning about 'socialized medicine.' But Nobel economist Friedrich Hayek wrote in the socialist-calculation debate that there was no logical problem with central planners optimally allocating resources."
Now the above (hypothetical) quotation would be accurate, strictly speaking, but horribly misleading. If it were embedded in a book chapter pushing for a government health-insurance plan, Austrian economists would understandably freak out. Thus, we should be forgiving when Paul Krugman does the same after reading Superfreakonomics on climate change.
One final point, in case the free-market reader simply cannot bring himself to empathize with Paul Krugman — let's not forget what happened in the argument between Steve Levitt and anti-gun-control economist John Lott. Levitt ultimately had to write a letter to a colleague retracting claims he had made regarding Lott's involvement with an issue of the Journal of Law and Economics. In that letter, Levitt made the following correction:
In those emails [I had sent to you], I did not mean to suggest that Dr. John R. Lott, Jr., or anyone acting on his behalf, engaged in bribery or exercised improper influence on the editorial process with respect to the preparation and publication of the Conference Issue. I acknowledge that the articles that were published in the Conference Issue were reviewed by referees engaged by the editors of the JLE. In fact, I was one of the peer referees.
In case the reader's eyes glazed over, let me emphasize the astounding admission in the above sentences by quoting one cynical blogger: "Look at the size of the lies Levitt was throwing around. 'It wasn't a refereed journal,' Levitt says. Not only was it a refereed journal, Levitt was a referee!"
Of course, just because Levitt may have been sloppy and very unfair in his treatment of the work of John Lott, doesn't prove that Romm and Krugman are right when it comes to Levitt's (and coauthor Dubner's) handling of climate change. I just want to caution Austrian and libertarian readers not to assume that anyone who "thinks global warming is a big hoax" is automatically a great scholar.
Now that I've spent so much time criticizing Levitt, let me end this article by defending him from economist Brad DeLong.
DeLong Forgets that Time Is MoneyIn a series of posts (one, two, and three), DeLong heaps extreme criticism on our authors. Under normal circumstances, DeLong's criticisms would be described as "scathing," yet compared to Romm's treatment, it's kid-glove stuff. For our purposes here, I want to focus on just two of DeLong's (many) complaints. First, DeLong quotes Levitt who said (during an NPR interview),
[I]f you look at the history of modern mankind, I think you will be hard pressed to find any particular problem that was serious that was solved by a behavioral change, as opposed to by a technological solution….
DeLong is astounded by this claim, and responds, "That's just not economics: economics is that incentives change, and as incentives change people's behavior changes."
DeLong is right: what Levitt said is "not economics." Rather, it's a historical claim. Maybe it's right and maybe it's wrong, but DeLong can't trump it by citing a tautology from microeconomics. I am sure that Levitt would concede the narrow point that if governments around the world instituted a massive carbon tax, and enforced it with draconian penalties for evasion, then global emissions would indeed fall quickly.
"I am sure that Levitt would concede the narrow point that if governments around the world instituted a massive carbon tax, and enforced it with draconian penalties for evasion, then global emissions would indeed fall quickly."But one of Levitt's main points is that governments around the world are not going to do this — that it is naive to expect them to sacrifice their own economies when (in Levitt's opinion) the climate science is not nearly certain enough to justify this painful step.
Levitt is making a prediction — based on his interpretation of history — that if manmade global warming really does require drastic measures in the next few decades, the response will involve various forms of geoengineering, which (Levitt predicts) will cost a tiny fraction of what the carbon mitigation proposals would require. To repeat, I'm not saying I necessarily endorse Levitt's glib proclamations on these points, but DeLong is wrong to dismiss them as somehow "not economics."
Finally let's deal with another point on which DeLong completely misses Levitt's valid argument. He first quotes Levitt:
Now, in the long run, perhaps you'll want to deal with the [high] carbon [dioxide] issue [even with geoengineering] because we're going to have acidification of the oceans and the coral reefs will die if we don't do something about the carbon. But if you just buy the time to keep the Earth cool for a while longer, I am certain that if we invest we will come up with technology that will allow us much more effectively in the future to pull carbon out of the air than we currently have….
DeLong points out that whatever mechanism our descendants use to suck CO2 out of the atmosphere, it will require power generation. He then argues,
So now we have (a) our normal power plants to power our civilization, plus (b) our atmosphere carbon-scrubbing industry, which is (c) powered by even more carbon power plants to generate the power to break the carbon-oxygen bonds that our first set of power plants made. But plants (c) put more carbon into the atmosphere than plants (a) did.
I know, says Steve Levitt, we can power our carbon-scrubbing industry (b) by power plants (c) that use nuclear or solar or… But then why not power our original civilization-sustaining power plants (a) by nuclear or solar or whatever?
Now this is frankly silly. Let's be clear, I think Levitt and Dubner made some major goofs in their chapter, and DeLong (as well as Romm and Krugman) nailed them. But here DeLong is making an obvious mistake. He is neglecting the fact that it will be much, much cheaper to engage in carbon-free energy production the longer we wait. Does DeLong really not see this elementary point and how it makes Levitt's argument perfectly sensible?
For an analogy, consider people who contract a terminal illness and then elect to have their bodies cryonically frozen so that they can be resuscitated and cured in the future. Now maybe that's a good idea or maybe it's not, but it wouldn't really make sense for someone to say, "That's just bad economics! Why go to the trouble of having your cancer cured in the future? Just do it now." Yet that is exactly the argument DeLong has deployed against Levitt.
"There is a reason that the energy infrastructure in today's market economies is so heavily based upon fossil fuels…"ConclusionThere is a reason that the energy infrastructure in today's market economies is so heavily based upon fossil fuels: they are by far the cheapest, most reliable forms of energy, given the needs of modern society. Regardless of their (alleged) sloppy scholarship, Levitt and Dubner raise an interesting possibility that deserves careful scrutiny, not ridicule: even if it turns out that unfettered use of fossil fuels will spell unacceptable climate damages to future generations, it does not follow that the only solution is immediate and drastic reductions in carbon emissions.
Another possibility is to buy a few decades' worth of "breathing room" (Myhrvold's phrase in the book) through pumping SO2 into the stratosphere, for example, and then make the transition to carbon-free energy production when it will not be so terribly costly.
It's surprising that some of the people who warn that the fate of the planet itself is it stake are so dismissive of what could be a crucial component of humanity's response to the very dangers of which they're warning.
A shorter version of this article originally appeared on MasterResource.
Driving into work today, I saw garbage bins overflowing and city dumpsters spilling out with trash. It stinks. It's disgusting. It's uncivilized. It's probably dangerous to some extent.
It's a holiday, so of course the government workers charged with picking up this nasty refuse can't work, even though construction workers in private firms are busy bees taking advantage of the extra time.
It's true with house trash too: pickup is once per week — on schedule — and there is nothing you can do to make it more frequent. It's part of the master plan, don't you know, and if you make more trash than the once-per-week pickup can contain, that is your problem, not the city's.
The very fear that people have about private trash collection — that it will pile up and no one will do anything about it — turns out to be a regular feature of government trash collection. But we look the other way. Why?
Before getting to this, let us first establish that garbage is a serious issue. Libertarians were once chided by William F. Buckley, his head full of schemes for threatening populations with nuclear annihilation, for bothering with such petty concerns as trash collection.
"It is only because of the conservatives' disposition to sacrifice in order to withstand the enemy," wrote Buckley in 1961, "that [libertarians] are able to enjoy their monasticism, and pursue their busy little seminars on whether or not to demunicipalize the garbage collectors."
Ah yes, little seminars. Seminars about such things as the avoiding the plague. Humanity has some experience with the results of failing to dispose of trash properly, and that experience is deadly. Plagues swept the ancient world every 50 years or so, spread mainly through a lack of good sanitation. The Black Death in Europe might have been avoided with better sanitation and a decent system for disposing of trash, rather than letting it pile up on the streets.
History's fight with the plague in the developed world came to an end at the time of the rise of capitalism in the late middle ages, and no surprise there. With the accumulation of capital came innovation in trash disposal, since living in sanitary conditions and staying alive turns out to be something of a priority for people. This is why the largest advances in garbage collection came about during the Industrial Revolution.
And yet here we are in 2009, with trash piled up on the streets and stinking to high heaven, bags full of raw animal parts (chickens, pigs, cows, fish), baby diapers stuffed with waste, rotting eggs mixed with sour cream dip from game-day parties, piles that are right now being scavenged by roaches and rats. This is in a town that prides itself on its tidiness.
And we put up with this for the same reason that we put up with lost mail, potholes in roads, dilapidated schools, depreciated money, and a clogged court system: because these services are monopolized by government.
Now you can make all the public-goods arguments you want to about roads and courts, but trash disposal is not rocket science and could be easily handled by the market. Everyone wants trash removed, and the sooner the better.
That means that there is a market demand for the service. There is money to be made. The only way to keep something like this at bay is to make it illegal.
If the market were in charge, pickup would surely be more than once per week. We wouldn't have to drag our trash bins out to the curb. In fact, we would be faced with several or many possible options for trash pickup.
If we made more trash than we "should," we wouldn't get angry notes from the city government. The private pickup companies would be thrilled. We might be paying by frequency of pickup or perhaps by the pound. That would be for the market to decide.
In fact, trash pickup services might actually be characterized by — perish the thought — innovation, just as they were in the early part of the 20th century, when trash collection was mostly private. Our houses might be directly connected to underground trash-transmission services that would whisk it all away in an instant. Our kitchens might have highly effective trash chutes that would zap away trash as we make it.
But because of this ghastly tradition of municipalizing trash pickup (or we might call it Sovietizing), the entire industry is stuck in the past, utterly impervious to improvement and modernization.
We get our news through fiber optics, walk around with tiny wireless phones that can instantly connect with anyone anywhere, and shop digitally with any vendor in the world. But when it comes to trash, we are still relying on once-per-week, strictly scheduled pickups by tax-funded workers driving monstrous, old-model trucks.
In my town, even the trashcans are paid for and owned by the government, as if the private sector has yet to figure out on its own initiative how to make a tub for holding things.
So why does this system persist? I asked a few people about this, and the answer usually came down to some system of graft. Powerful people make the trucks, manage the landfills, and dole out the contracts. Perhaps so, but why do we put up with it?
It seems like a preposterously unobjectionable plan: open this system to private ownership and competition, and thereby innovation.
I don't just mean contracting out. I mean abolishing city trash pickup and letting private enterprise completely take over. There is just no way that the existing muck would persist, for it offends every aesthetic sensibility and it may pose a ghastly health risk.
As for the old conservative claim that libertarians are insufficiently worried about the Soviet threat and too much about garbage collection, note that the Soviet Union is gone and the garbage problem is still with us.
[Gray's Anatomy: Selected Writings • By John Gray • Allen Lane, 2009 • vii + 481 pages]
Readers have much to learn from John Gray, but they must be able to ignore a great deal of nonsense to benefit from his work."This anthology of John Gray's work over the past thirty years enables us to answer a question that has puzzled many people. What went wrong with John Gray?
When I first met him in 1979, he was a forceful and erudite advocate of classical liberalism; Murray Rothbard viewed him fondly, intrigued that an Oxford political theorist sympathized with libertarianism. In the years since then, unfortunately, Gray's peregrinations have taken him to a position that has little use for human beings. What happened?
The present volume makes it clear that Gray has retained much of his classical liberalism. He provides an outstanding account of Hayek, bringing out the essentials of Hayek's criticism of socialism and interventionism. Concerning socialism, Gray writes,
The thesis of the primacy of practice leads Hayek to refine the argument that rational resource-allocation under socialism is impossible.… Hayek sees … that the knowledge which is yielded by market-pricing cannot be collected by a central authority or programmed into a mechanical device, not just because it is too complex … but rather because it is knowledge given to us only in use.… Unhampered markets transmit this knowledge, which is otherwise irretrievable, dispersed in millions of people. (p. 127)
Interventionism fares no better:
The two issues of economic planning and the rule of law are … inseparably connected for Hayek. He sees clearly that the rise of the administrative state, together with the prevalence of grandiose projects for redistribution and social welfare, pose a major threat to the rule of law, and therefore to individual liberty. A government which seeks to regulate prices and incomes is bound to transfer large powers to administrative authorities. In the nature of things these authorities will exercise a terrifying discretion over the lives and fortunes of the citizens. (p. 129)
He does not confine himself to economic and political analysis. He ably shows why the whole Bolshevik project came to grief: it rested on a utopian effort to transform human nature.
In different ways, Nazism and Communism claimed to be based on science but were actually vehicles for apocalyptic myths. Each believed a major rupture in history was imminent that would usher in a new world. (p. 114)
Gray makes very effective use in this connection of Eric Voegelin's work on political religions and Norman Cohn's psychoanalytical interpretation of millenarian movements.
Gray brilliantly extends his criticism of utopian thinking to current American foreign policy. The efforts by the Bush administration to extend an American brand of democracy by force in Iraq and elsewhere, regardless of its suitability to local conditions, parallel the efforts by communist and other revolutionaries to twist and contort the world according to patterns they have fixed in advance.
American neo-conservatives … are convinced that democratic government can be made universal, and in pretty short order.… From one angle, then, the Bush administration's project in Iraq is an exercise in the most radical utopianism. From another, it is pure geopolitics. (pp. 275, 277)
As Gray notes, transformative efforts of this type are frequently accompanied by abandoning ethical restraints. If people refuse to conform to the plan, must they not be forced at any cost to do so? In this connection, Gray presents a satirical defense of Bush's use of torture that is uncomfortably close to reality.
As he has done in earlier work, though, Gray characterizes expansionist ideological foreign policy as "Jacobin": "In de Maistre's day, it was the French Jacobins who believed that democracy could be spread throughout the world by fiat" (p. 275). Have none of his colleagues, at Oxford and the London School of Economics, brought to his attention that the Girondins, not the Jacobins, were the proponents of an aggressive foreign policy?
Gray extends his criticism of utopian thinking too far. He condemns not only overweening efforts to transform human nature, but any claim that universal principles enable us to better our condition. Thus, according to Gray, Mises and Hayek wrongly think the free market is always the most desirable social system. In some historical circumstances, the free market is a good idea, Gray believes; but to offer it as a universal prescription is to fall into utopianism.
Gray's position here rests on a fundamental error. It is very plausible that any attempt to contravene human nature will fail; but advocates of the free market are not guilty of making such an attempt. Quite the contrary, the principles of economics, in the Austrian conception, follow necessarily from the axiom that human beings act — hardly a utopian supposition. Mises argued that, owing to the calculation argument, socialism is impossible, and interventionist measures must fail to achieve the purposes of their own advocates. Only free-market capitalism remains as a viable social system.
If Gray has anything to say against Mises's arguments, he should so inform us; it will not do simply to dismiss them as utopian. Gray's failure to see this is surprising because, as discussed earlier, he himself has given an excellent account of Hayek's very similar arguments.
Behind Gray's dismissal of libertarianism as utopian lies a philosophical doctrine, value pluralism, which he has absorbed from Isaiah Berlin. In this view, there is no unique hierarchy of values: we cannot say, e.g., that the life of a monk is either better or worse than that of a soldier.
More to the present point, Gray would argue that we cannot say that the economic freedom prized by classical liberalism always outranks any other value, such as nationalism or the preservation of tradition. Attempts by Mises and his followers to deny this rest on a false Platonic view that holds that all values can be harmoniously realized. Once we see that the Platonic view is false, it is evident that some values are incommensurable.
I have endeavored on previous occasions to indicate some of the problems with Gray's version of value pluralism.See my review of John Gray, Isaiah Berlin, in The Mises Review Winter 1996; and of Two Faces of Liberalism in The Mises Review Spring 2001. Suffice it to say that Gray wrongly concludes from the undoubted fact that some values cannot be combined in the same life that all values cannot be ranked in a single scale. (This is not to claim that values can be so ranked, merely that Gray's point about disparate lives fails to demonstrate that they cannot be.)
Let us add to the mix a new criticism. As Gray presents his view, it is the epitome of tolerance. Each of the value monists insists that his position is the correct one. But the value pluralist finds a place for all of the conflicting approaches. He can, e.g., recognize that economic freedom is valuable, and at the same time recognize the value of competing alternatives.
Matters are not as they at first seem. Most defenders of a particular system of values think that their system is the correct one. Gray, with his thesis that values cannot be ranked, denies all these claims. He finds a place, true enough, for competing values, but at the price of declaring almost all rival positions false. This is tolerance?
Even if one finds more to value in pluralism than I am able to, Gray's complaint against the universal validity of the free market cannot be sustained. As Mises again and again insisted, his arguments against socialism do not involve appeals to controversial value judgments. It is not a matter of valuing freedom above other things: if Mises is right, there is no rational alternative to the free market.
The difficulties with Gray's criticism of classical liberalism are unfortunately not confined to this rather arcane dispute in value theory. He is willing to countenance drastic interference with liberty, in the name of restricting population growth. He conjures up a frightening picture of an overcrowded planet, dismissing with a bare mention the work of Julian Simon that calls the whole Malthusian picture into question.
Gray finds an illustrious ancestor for his position: he rightly notes that John Stuart Mill's views are consistent with state licenses for prospective parents.
Mill would have had no objection in liberal principle to proposals for the institution of "child licenses" (thought he might well have had doubts about their practicability), and he would have certainly have been sympathetic to those who advocate population control — including even coercive measures — as part of a freedom-preserving policy for an already overcrowded world. (p. 54)
"It is not a matter of valuing freedom above other things: if Mises is right, there is no rational alternative to the free market."Not only does Gray decline to condemn this severe deprivation of personal liberty, he writes with sympathy for Mill's "stationary state," in which economic growth is severely curtailed if not eliminated altogether.
But I am afraid that Gray goes further. He embraces an extreme version of environmentalism, under the guidance of James Lovelock. According to this bizarre view, human beings are in danger of upsetting the Earth, which is viewed not as a mere planet but as a living organism. At times, Gray despairs of human beings altogether and appears a veritable misanthrope.
Lovelock has written that … the earth is suffering from disseminate primatemaia — a plague of people … the advance of Homo rapiens [roughly, "raging man"] has always gone with the destruction of other species and ecological devastation. (p. 401)
Readers have much to learn from John Gray, but they must be able to ignore a great deal of nonsense to benefit from his work.
This review first appeared in the Mises Review, Summer 2009.
Who could possibly claim that buying up drivable used cars at prices far in excess of their market value, for the express purpose of destroying them, will be beneficial for the economy or the planet? You guessed it: a combination of economy-saving politicians and earth-saving green activists are peddling the wonders of a new government program popularly known as "Cash for Clunkers." The Consumer Assistance Recycle and Save Act of 2009 has the two ostensible goals of jump-starting the stalled automobile industry and combating global warming (or climate change, or whatever they're calling it these days) by replacing old, gas-guzzling smog machines with new, more fuel-efficient, cleaner cars.
Here's the gist of how CARS (Car Allowance Rebate System) is supposed to work: owners of older vehicles can bring them to a dealership where they will be offered a refund of up to $4500 — supplied entirely by the government — towards the purchase of a new vehicle. The main catch is that the new vehicle must have a certain miles-per-gallon rating higher than the old vehicle, and the dealer must certifiably crush (yes, destroy) the old vehicle so that it can never pollute again.
Of course, there are many conditions and rules attached to the program, designed to prevent someone like me from buying a beat-up 1960s truck from the neighbor's farm for 100 bucks and installing a fuel pump, spark plugs, or whatever else necessary to get it running for an extra 50 or so, then driving it into town for a cool $4500 rebate on a brand new Dodge diesel. Chiefly, the clunker can't average more than 18 miles per gallon or be more than 25 years old (darn), and the person trading it in must show proof of registration and insurance for at least one year (double darn). The bribe — er, refund — then varies based on the improvement achieved in miles per gallon rating. For a complete rundown of the Byzantine rules, regulations, and restrictions, see the official website's FAQ.
Now, if "Cash for Clunkers" immediately brings to mind the broken-window fallacy, good on ya: you have a solid grasp of one of the most important lessons of economics. How could it possibly help overall material prosperity to overpay for used cars and then pay even more for people to destroy them, all the while also paying bureaucrats to ensure it is all done properly? The answer, of course, is it won't. There will be fewer "clunkers" available (with the really cheap ones disappearing first); there will be distortions in the used car and used car parts markets — it will be more difficult and more expensive to source used parts for the junker you want to work on — and there will be a whole new bureaucracy to manage the program, and so on.
To highlight just one instance of the outrageous economic distortion this silly program is sure to bring, consider the fact that most of the clunkers that qualify for the program are driven by relatively poor folks, people who are not very likely to be in a position to buy a new car even with the help of government refunds. I would venture to guess that these people rely on clunkers to a much greater extent than upper-middle-class suburbanites who can afford more reliable cars and who might own a clunker here or there as a spare, seldom-driven car. Yet these upper-income folks are far more likely to cash in on the artificial government refund value of clunkers, thus withholding their vehicles from the used car market and raising their prices. In the limit, clunker prices will climb as high as the potential refund value minus registration, insurance, and miscellaneous transaction costs, thus making basic transportation more expensive for the poorest elements of society.
As much as the cash-for-clunkers absurdity smacks of the broken-window fallacy, I see its deeper economic relevance as an example of rent-seeking behavior along the lines of the "Bootleggers and Baptists" model. It's no secret that the harsh reality of market forces has upset the auto industry. Yet many in that industry, especially new car dealers, are turning to politics for a quick and easy fix instead of gritting their teeth or throwing in the towel. Under the all-too-common rhetoric of stimulus, they're pleading to the politicians: "Please, concoct a scheme to bribe people into buying new car. Oh, and make sure you extract the bribe funds from someone else!"
Yet even in politics, naked bribery and extortion are frowned upon. What's needed is a cover story. Enter the ubiquitous green lobby with their own plea: "Please, concoct a scheme to bribe people to 'go green' and replace those nasty polluters with earth-friendly eco-wagons." All you need now is an entrepreneurial politician[1] to package the deal, auto-industry and green-activist lobbyists to promote it, and even (gasp) economists, and smash! Another pane of economic — and moral — sense is shattered in the name of green stimulus.
$14 $12
Buy 10 or More, Save $3 Each!To cast this in terms Bastiat might use, it's as if the glazier hired a street urchin to hurl bricks through shop windows by night, in the midst of a social crusade against the dangers of toxic, low-tech glass. The greed of those elements of the auto industry that endorse this plan, combined with the self-righteous conceit of the greens, makes for a politically potent combination. Disappointed car makers and greens alike, not satisfied with the economizing actions of individuals operating under free choice, are attempting to force the rest of us to re-economize along their preferred margins. This is green tyranny at its worst: waste, distortion, and violating liberty in the name of "saving the planet."
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Notes[1] The original versions of the House and Senate bills were primarily sponsored by Representative Sutton (Ohio) and Senator Stabenow (Michigan). See "'Cash for Clunkers' Bill Drives Some Senators Mad," FOXNews.com, June 11, 2009.
[The Economic Naturalist's Field Guide: Commonsense Principles for Troubled Times. By Robert H. Frank. Basic Books, 2009. 234 pages.]
Beware of economics columnists for The New York Times. The days when Mises and Henry Hazlitt wrote for the paper have long since passed. Nowadays, Paul Krugman in his columns seems determined to disguise the undoubted intelligence that won him a Nobel Prize. Robert Frank, also a distinguished theorist, contributes a column to the Times as well and does little better than Krugman. Somehow, in this collection of Frank's columns, the free market is nearly always the object of indictment.Around fifty years ago, John Kenneth Galbraith, in The Affluent Society, complained about the way Americans spent money. We spent too much, he alleged, on useless luxuries such as cars with high tail-fins. As a result, needed public services were starved of funds.
Frank agrees with Galbraith's conclusions but recognizes that there is a problem: Galbraith's arguments were wrong.
[Galbraith's] critics argued … that if consumers were paying high prices for goods of little intrinsic value, there would be "cash on the table," the economist's metaphor for unexploited profit opportunities. Rivals could thus earn easy money by offering slightly cheaper and better products, in the process luring exploited customers away … Galbraith's critics had a point. Indeed, his explanation for society's spending imbalance suffered from the same deficiency that has plagued arguments of social critics on the left since Karl Marx. Because it implied that greedy capitalists were leaving cash on the table, most economists couldn't accept it. (p. 78)
Fortunately, says Frank, he can now come up with better arguments for Galbraith's conclusions: Galbraith was right but for the wrong reasons. So enamored is Frank of Galbraith's anti-market views, though, that he nevertheless thinks that he deserved the Nobel Prize.
Critics of the market want more government programs and support measures to curb inequality. But, defenders of the market claim, interference with the market reduces productivity. We thus face an "equity-efficiency trade-off." Frank's good news is that the trade-off can be avoided. Some types of intervention entail no loss in efficiency and may even promote it.
Traditional economic discourse — as exemplified in the late Arthur Okun's 1975 book Equity and Efficiency: The Big Tradeoff — has conditioned us to think of efficiency and equality as competing goals. Consequently many believe that we must tolerate a certain measure of waste in the name of fairness. But I argue here for the opposite claim — that efficiency is always and everywhere the best way to promote equity. (p. 5)
In brief, Frank's argument is that certain types of consumer spending do not really advance welfare. By imposing taxes on them, we can provide funds for needed public services without a corresponding loss in welfare from those taxed. A net gain to efficiency thus results from these taxes. Frank also worries about the malign effect on efficiency of "winner-take-all" markets.
Before turning to his claims, though, it is worth examining an argument that threatens to derail Frank's reformist project before it starts. Are not people free to spend their money as they wish, regardless of Frank's efficiency schemes? Rush Limbaugh thought so, and told Frank to mind his own business. Frank responds
[y]et consider the absurdity of the claim that we have a right to spend every nickel of our pretax income. If taxes were purely voluntary, our government would not be able to raise revenue to build roads or schools. It could not field an army … perhaps those who oppose compulsory taxation should just move to a country where taxes are voluntary. But there is no such country. Given that reality, our best option is to have an intelligent conversation about what services we want government to provide and who should be taxed to pay for them. (p. 10)
Libertarian anarchists, as well as those minarchists who believe in voluntary taxation, will of course not be so ready to dismiss as absurd the view that people "have a right to spend every nickel" of their income. Let us, though, put this aside for the moment; Frank is here relying on the fact that most people do concede the necessity of a government supported by compulsory taxation. Does it then follow, as Frank thinks, that it is then up to "us," i.e., the voting public, to determine what taxes and government services we want?
I do not think that it does. If one accepts Frank's points that a government is necessary and that it must be supported by compulsory taxation (once more, of course, points I reject), all that follows is that there is a justification for the taxes required to support the minimum functions of government. Frank has not at all established that everyone's entire income is "up for grabs."
Unfortunately, Frank is one of many eminent economists who wrongly think that they are competent political philosophers as well. The notion that people have a natural right to their property apparently baffles him. Thus, he points out that in some situations people have a tendency to consider equal distribution as fair:
Imagine that you and two friends are hiking in the Canadian woods when you spot a sparkling object beneath a bush just off the trail. You pick it up and see that it is a large diamond in the rough. A jeweler you trust offers you $900,000 for it. How should this money be apportioned between you and your friends? Most people say you should share the proceeds equally… In attempting to make sense of this response, psychologists say that most people feel a strong commitment to equality as a moral norm. (p. 163)
Despite this commitment, it would be wrong to impose absolute equality of income because
that would be a recipe for economic disaster … the reason most people think complete equality is an unrealistic goal is that we need to maintain work incentives. Unless individual incomes are linked to work in some clear way, we consign ourselves to lives of abject poverty. (pp. 163–64)
Frank here ignores the fact that other examples evoke quite contrary moral intuitions. Suppose that you are prospecting for gold by yourself and discover some. Several other prospectors approach you. Are you obliged to share your gold with them? Frank's case, to the extent we find his egalitarian conclusion from it plausible, depends on the special assumption that the hiking friends are on a trip together and may be thought to have an implicit agreement to pool lucky finds. Frank wrongly generalizes from his case to a general principle of egalitarian distribution. In thinking that only efficiency considerations tell against the full implementation of equality, he shows himself tone deaf to Lockean claims that individuals can justly acquire title to unowned resources.
However much we disagree with them, the two arguments by Frank just considered are not outright disasters. The same cannot be said of another claim he advances. Seeing what is wrong with the next argument will show us why Frank's proposals would not work, even if his arguments about inefficient consumption were right.
Frank defends an estate tax, and in its support he offers this incredible argument:
Another attraction of the estate tax is that it works like a lawyer's contingency fee. Injured parties who could not otherwise afford access to the legal system can try to collect damages because lawyers are willing to work without pay if their client does not win. Similarly, the estate tax enables us to enjoy valuable public services that we would be happy to pay for if we knew we would end up wealthy, but that we might be reluctant to demand otherwise. With the estate tax, the surcharge kicks in only if we are lucky enough to be one of life's biggest winners. (p. 26)
But the lawyer who works on a contingency fee will do so because he thinks he has a good chance to win the case and earn a substantial reward for his efforts. This situation differs altogether from the situation that Frank envisions, in which people vote to provide themselves with services, knowing that there is little chance they will have to pay for them. Because the estate tax falls only on the very rich and because most people realize that they have little chance of attaining great wealth, they compel others to provide them with benefits by voting for public services paid for by the estate tax .
This brings to light a fundamental error in Frank's entire case, even if he is right that there are egalitarian measures that do not lessen efficiency. Even if there are cases where there is no "equity-efficiency tradeoff," these will be swamped by other cases where egalitarian measures are inefficient. These cases arise from the circumstance just mentioned: people can vote for programs that benefit them while shifting the burden of payment to others.
But what of Frank's main contention, i.e., that cases exist where everyone gains through taxes on inefficient consumption? An example will illustrate Frank's point. Suppose that you want to have a house at least as large as those of your neighbors. If one of the neighbors enlarges his house, you will be tempted to do likewise, in order to keep up with him. This may set off a competitive struggle, in which people enlarge their houses only to keep pace with neighbors. All of them would be better off if a consumption tax made it difficult for them to engage in such an arms races. They would be better off because the additional space does not "really" increase their utility: everyone is perfectly content if no one expands.
I have offered criticisms of this argument in earlier reviews of Frank's books and will not repeat these points here.See my reviews of Luxury Fever and Falling Behind in The Mises Review, for respectively, Spring 2000 and Winter 2007. Rather, let us ask a different question. Assuming that Frank has made an acceptable argument that wasteful rivalrous consumption is possible, does he show that it is an important factor in the American economy?
He fails to do so, and we can use his own words against him. In order to have a case of the kind he wants, he needs to show, for example, that people derive no direct benefit from, for example, a larger house: any gain in utility exists only because of a competitive arms race. Yet as he admits:
Perceptions of quality influence the demand for virtually every good, including even basic goods like food… There are no obvious limits to the escalation of quality standards… By placing the desire to outdo others at the heart of his description of insatiable demands, Keynes relegated such demands to the periphery. But the desire for higher quality has no natural limits. Keynes and others were wrong to imagine a two-hour work-week enabling us to buy everything we want. That hasn't happened and never will. (p. 57)
Henry Hazlitt wrote this book following his stint at the New York Times as an editorialist.Frank does not grasp that he has here refuted his main reason for a consumption tax. By assuming that people want certain goods only because others want them, he ignores the likelihood that people consider the consumption Frank deems wasteful to be genuine quality improvements.
This is not the only instance in which Frank refutes his own arguments. Like most good leftists, Frank dislikes SUVs. People want them because it is an advantage to have a large vehicle in case of an accident. But is this not a case of rivalrous competition of just the sort Frank decries? People would not want large vehicles unless they feared that others would obtain them. Will not a tax on SUVs benefit everyone? But Frank himself says:
Nor can safety concerns explain the success of SUVs … their weight confers some advantages in head-on collisions with smaller vehicles … but their poor handling, high propensity to roll over, and longer stopping distances make them more dangerous, on balance, than cars. (p. 141)
How can Frank fail to see that he has knocked out his earlier claim that any "family that unilaterally bought a smaller vehicle might thus put itself at risk by unilaterally disarming" (p. 122)? A columnist can no doubt forget what he wrote years before; but is it too much to ask that a collection of columns be edited for consistency?
Energy is like a river; it exists in two ways: flows and stores.
When you store energy, you create a dam to capture it.
What environmentalists call "renewable energy" is really just the stored energy of the sun.
In actuality, there's no such thing as "renewable energy": all energy, even the sun, is limited.
Fossil fuels are energy stores as well — specifically, they are stored solar energy, a process that takes millions of years — and they are highly concentrated, ten times more so than, for instance, wood.
In terms of wind and raw solar energy, the flow is exceptionally diluted: solar is ten to fifty times less concentrated than fossil fuel. When you can't concentrate it, then the only way to harvest it is to use more and more land. That's the limiting factor for both sun and wind energy.
T. Boone Pickens's now-infamous plan would require 1,200 square miles for a single power plant.
Compare that to nuclear, which would require only one square mile.
Coal is extraordinarily abundant — we'll never run out — and pound-for-pound contains twice as much energy as wood. Coal is a concentrated storehouse of energy.
Octane molecules in gasoline, however, are even more concentrated. In fact, they're the densest store of carbon energy we've ever discovered. Pound-for-pound, gas possesses four times as much energy as coal. There's a popular misconception today that gasoline is inefficient and wasteful. Nothing could be more inaccurate.
Gas molecules are not only by far the densest form of carbon energy we've ever discovered; they're also easy to transfer because they're fluid. These are two of the greatest reasons we've adopted gasoline.
Nuclear, on the other hand, is something else entirely. The public hasn't even begun to grasp nuclear energy.
These are the facts:
A handful of uranium contains more energy than 100 boxcars full of coal.
Consumption of energy creates more energy, not less.
Despite years of government subsidies (regulators, for instance, have forced utility companies to buy "renewables"), these same renewables generate only about 0.9 percent of our total electricity.
The most efficient solar panels currently in use (on the space station) are costly, and their conversion efficiency is about twenty percent, which is not very much.
Twelve miles of solar reflectors generate about 300 megawatts, a miniscule amount. Furthermore, those reflectors must be kept squeaky clean, maintained to the hilt, or they won't work.
At our current level of technology, no conceivable mix of solar, wind, or wave can meet even half the demand for energy.
If, however, wind, wave, and solar are to become more efficient, it is only science and technology — as opposed to environmentalism's plan of blasting us back into the Dark Ages — that will get them there.
We begin to know about a resource only when we begin to use it. Knowing about that resource includes a cursory calculation of its quantity.
The more we use of it, therefore, the better we become at finding it and calculating its quantity, extracting it and refining it. Thus, the more we use of a resource, the more of it we're able to find.
This may sound counterintuitive, but only at first: then you glimpse its awesome logic. The entire history of resource use and extraction has followed this pattern without deviation.
Boone Pickens is calling for massive subsidization of the wind-power industry.
As with ethanol and recycling and a host of other issues, you must ask yourself again, if these things are so efficient, why do they need to be subsidized? Answer: they're not so efficient.
Energies that require massive subsidization benefit absolutely no one; the only reason they need to be subsidized is that they cannot compete on the open market.
That fact alone tells you everything you need to know about them: they're simply not good enough yet.
When they are, the free market will adopt them naturally.
The reason wind power still won't get us very far is that transmitting this power is such a huge difficulty.
Wind is also unpredictable; it's therefore hard to integrate into an electrical grid, since grids have to maintain a voltage balance, or you'll get brownouts, blackouts, and power surges that destroy equipment by the ton.
The "grid," incidentally, refers to the entire energy infrastructure. It even includes the electrical wires that go into your house.
Grid operators spend their whole lives trying to balance supply and demand on the grid.
Energy demand changes all throughout the day, all throughout the year. In summer, for instance, demand is higher. Late at night, demand is lower.
Grid operators balance all this.
Factor in the wind, which you cannot predict more than, at most, five hours in advance, and try pulling all that wind power into a grid, and you'll begin to see how impossible the task is.
Wind needs constant backup.
"Spinning reserve" on an electrical grid refers to the amount of backup power that is sitting there, waiting to go at a moment's notice in case something goes wrong. In general, twenty percent extra power is the standard spinning reserve on the grid. Wind can indeed supplement a grid with this needed twenty percent spinning reserve, but it cannot come close to replacing fossil fuel.
Here's what you don't see in the fine print: The vast majority of wind energy needs to be transmitted. Thus, you'll need to step up voltage to 745 kilovolts (which is a lot) so that wind doesn't lose all its energy in the transmitting process. That infrastructure alone — forget the actual windfarms — will cost billions.
We'll also have windmills covering the entire great plains. Quoting energy expert William Tucker, "If Boone Pickens's dream is realized, you'll be able to drive from Texas to North Dakota without ever being out of sight of a windmill, just as in Denmark."
That is, except for Boone Pickens's backyard. Said Pickens, "I'm not going to have the windmills on my ranch: they're ugly."
Indeed.
And that, in part, is why people are already objecting. Windmills are taller than the Statue of Liberty, and they're loud; the Audubon Society calls them "condor Cuisinarts."
Wind comes strongest along mountain crests. Thus the Blue Ridge Mountains, the Adirondacks, the Appalachians, and so on would all have their ridges lined with these monstrosities. Yet environmentalists object to the building of one small nuclear plant, which, compared with a windfarm, is tiny.
Uranium generates gigantic amounts of energy in a very small space, which wind and solar combined cannot come close to. Those who say otherwise — those who are antinuclear, in other words — have brought the world 400 million more tons of coal used per year, because for thirty years now, since the Three Mile Island accident in 1979, we've been using more coal.
The meltdown of the uranium core in 1979 at Three Mile Island was so overblown by antinuclear groups that it went virtually unnoticed that the containment vessel at Three Mile Island had done its job and prevented any significant release of radioactivity.
Uranium is abundant, clean, and safe — in technological societies.
The catastrophe at Chernobyl — which, once again, sent greens groups worldwide scurrying to their soapboxes — only happened because that state-run reactor was astonishingly unsafe: in the words of Peter Huber, "You couldn't have operated a toaster oven out of it."
Few scientists disagree that the discovery of energy at the nucleus of the atom is the greatest scientific feat of the 20th century. All this talk about how we need to "discover a new form of energy" therefore misses the point: we've already done so. It's called nuclear energy. And it's amazing.
We discovered that the concentration of energy in the nucleus of the atom is 2 million times as great as energy in the shell of an atom.
There are tiny amounts of uranium residue in coal; those trace residuals have more energy potential than all the coal itself.
Chemical energy, which is everything from wood to crude oil to gasoline to coal, consists of playing with the electrons, changing their energy state. With nuclear, however, the big discovery was that there's far more energy in the nucleus of the atom. Therefore, it produces a far, far smaller "footprint."
In fact, there's really no such thing as "nuclear waste": a nuclear reactor is refueled by its waste. In other words, almost all "waste" can be recycled. Indeed, ninety-five percent of a spent nuclear fuel rod is natural uranium, and so it can be put right back in the ground, just as it was found.
The radioactive part constitutes only about five percent, but of that, half is uranium and plutonium, and so it can be recycled as fuel — specifically mixed-oxide fuel, which is exactly what the French have been doing for twenty-five years now.
After twenty-five years, the French store all their so-called waste in one room, under La Hague, which is about the size of a basketball gymnasium.
Why haven't you heard this? A writer for the New Yorker magazine named John McPhee in 1974 published a highly influential book called The Curve of Binding Energy, which convinced President Jimmy Carter (et al.) that people could steal used plutonium from nuclear plants and makes bombs with it. But this is untrue. Nevertheless, solely on the basis of this detrimental misinformation, our country now has fifty thousand tons of nuclear "waste," because our government won't allow nuclear plants to reuse it.
$25 $15
The stated policy of the Department of Energy (DOE) is "not to reprocess" a perfectly reusable byproduct — and all for absolutely no good reason. That is why Yucca Mountain is unnecessarily, and at great cost, being built in southwestern Nevada to store a nuclear "waste" that could instead be simply and efficiently reused.
Nuclear "waste" is also used for medical isotopes. Over forty percent of medicine now is nuclear medicine. Currently, we must import all our nuclear isotopes because we're not allowed to use any of our own. This is not only profligate; it's a kind of lunacy.
We're the only country in the world that doesn't reuse its nuclear byproducts. Nuclear energy is the cleanest, most efficient energy we have — by light years. Anyone who tells you differently, is flat-out wrong.
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In a previous article, I argued that Paul Krugman's recent articles in support of government efforts to mitigate climate change — and in particular the Waxman-Markey legislation pending in Congress — were typically misleading. Specifically, Krugman's estimate that "serious" efforts to fight climate change would cost only 2 percent of GDP by the year 2050 was much lower than what the IPCC "consensus" itself said about aggressive measures like Waxman-Markey, and in any event these estimates all assumed that politicians worldwide implement the policies in textbook fashion.
In the present article I wish to continue my criticism of Krugman's writings in support of Waxman-Markey. We will see that even on mainstream, neoclassical economic terms, Waxman-Markey fails a cost/benefit test by a huge margin. It's not even close.
Krugman Trick to Downplay Costs Would Also Minimize BenefitsIn a passage intended to show just how cheap even aggressive climate action can be, Krugman writes,
Consumers would end up poorer than they would have been without a climate-change policy.
But how much poorer? Not much, say careful researchers, like those at the Environmental Protection Agency or the Emissions Prediction and Policy Analysis Group at the Massachusetts Institute of Technology. Even with stringent limits, says the M.I.T. group, Americans would consume only 2 percent less in 2050 than they would have in the absence of emission limits. That would still leave room for a large rise in the standard of living, shaving only one-twentieth of a percentage point off the average annual growth rate.
Elsewhere I have written about this neat little trick of translating a fairly large impact into an apparently negligible amount, by switching from the level of the impact into a reduced rate of annual growth. After all, two percent of global output in 2050 is a fantastic amount of income. To give a ballpark, in 2007, using the "purchasing power parity" approach, global GDP was about $66 trillion.
So if we conservatively assume that real global GDP (and yes we're ignoring all of the Austrian critiques about such a concept) grows at 3.5 percent annually, then MIT's estimate of the cost of fighting climate change works out to $5.8 trillion in the year 2050 alone. In other words, we're not talking about a one-shot cost here; we're saying the annual cost in the year 2050 will be $5.8 trillion (in 2007 US dollars). Somehow I think that if Dick Cheney suggested that fighting the global war on terror would "only" cost 2 percent of world output by 2050, Paul Krugman might raise more of a fuss.
In any event, Krugman's column seems rather one-sided, doesn't it? After all, when trying to decide if a particular policy makes economic sense, the standard mainstream thing to do is check whether the costs are lower than the benefits. And yet, the modeled benefits of fighting climate change aren't mentioned anywhere in Krugman's column. It is simply taken for granted that the US government must do something — and quick! As Krugman says in another column (again without pointing to any specific evidence), "It's time to save the planet."
Yet this is rather noneconomist talk, isn't it? It sounds a bit like saying, "Teachers should get a huge pay raise, because education is very important."
Yes, if the planet itself were in jeopardy, then just about any forfeited economic output would be worth it, if it could avert that catastrophe.
But of course "the planet" isn't in danger. What people really mean by such language is that "the desirability of living on earth as judged by our descendants" is at risk. Well then, exactly what are the risks? And let's be scientific and objective about this, folks! No consulting fringe "deniers." I want to draw from the consensus of world experts, as codified in the Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4).
Now things get really interesting, and we see why Krugman and other proponents of Waxman-Markey haven't been talking about the quantitative, net benefits of their plans. As Jim Manzi points out, according to middle-of-the-pack estimates of various dials (such as the level of global emissions without strict government controls, the sensitivity of the climate to these emissions, the vulnerability of future generations to warmer temperatures, etc.), the IPCC reports that the hit to global GDP would be between 1 and 5 percent, for 4 degrees Celsius of (additional) warming that would probably not occur until the 22nd century.
Yikes, up to a 5 percent loss in total global output — an inconvenient truth indeed! Oh wait, Krugman has shown us how to deal with such alarming numbers. If we just shave 0.05 percentage points off of global GDP growth — for example, if the world economy grows at 2.95 percent per year, rather than 3 percent — then, as Krugman has already demonstrated, global GDP in the year 2050 will be 2 percent lower than it otherwise would have been.
Now if we just let the simulation run until the year 2114, the gap between 3 percent growth and 2.95 percent growth will have grown exponentially into a 5-percentage-point difference.
What does all this mean? Quite simple: the differential in growth rates that Krugman considers quite negligible when weighing the costs of fighting climate change works just as well for the differential in growth rates that the IPCC middle-of-the-pack forecasts say the world would suffer under unrestricted emissions.
In other words, by Krugman's own criteria, the best-guess IPCC estimate of the benefits of fighting climate change are just as negligible as Krugman considers the MIT estimate of the costs of fighting climate change.
Mainstream Economic Models Would Never Justify Waxman-MarkeyThe more I have investigated these matters, the more shocked I become. One doesn't even need to rely on Austrian or public-choice arguments to show that Waxman-Markey is crazy.
For example, William Nordhaus is one of the pioneers in the field of climate-change economics, and he is no laissez-faire ideologue; Austrian readers may recognize Nordhaus as Samuelon's coauthor of a textbook that is sympathetic to "market failure," to say the least.
Yet according to Nordhaus's "DICE" model of the global climate and economy, if the whole world were to implement the stringent emissions caps (83% below 2005 levels by the year 2050) contained in Waxman-Markey, the net loss of the policy would be enormous.The above analysis takes the emission cutbacks at face value. However, in practice Waxman-Markey might not be so draconian after all, because the legislation currently contains the possibility of complying with the "cap" by purchasing international "offsets." In other words, a US power plant could continue to emit carbon dioxide into the atmosphere, so long as it (say) paid to have more trees planted in Brazil. It's true, such stringent limits would reduce the amount of climate damage future generations would suffer, but the harms imposed on the economy (because of the emission caps) would more than outweigh these benefits. Indeed, Nordhaus's model says that the present discounted value of these different impacts (i.e., slowing climate change but also slowing economic growth) is somewhere in the range of negative $14 trillion to negative $21 trillion, measured in 2005 US dollars. (I give more details of this derivation here.)
ConclusionPaul Krugman is a very sharp guy, conversant in many different fields. Yet his analysis of the economics of climate change is as wrongheaded as his analysis of depressions. Relying just on the IPCC "consensus" estimates as well as a leading model such as Nordhaus's, it is impossible to justify the draconian emission cuts in Waxman-Markey.
Partisans on both sides of the debate concede that if the United States imposes unilateral emission cuts, there will be a negligible effect on global temperatures. But, ironically, if the whole world were to foolishly follow us down this path, one of the leading mainstream models projects that the globe would be many trillions of dollars poorer for it — and that figure includes the alleged benefits of mitigating harmful climate change.
[An MP3 audio version of this article, read by Dr. Floy Lilley, is available as a free download.]In two of his recent op-eds (here and here) for the New York Times, Nobel laureate Paul Krugman has challenged critics of the government's intentions to regulate carbon dioxide emissions, and he has even specifically endorsed the pending Waxman-Markey bill which includes a "cap-and-trade" program. According to Krugman, the costs of such legislation are no big deal, and in exchange we avert catastrophe. So why all the criticism?
In the present article, I want to show the fragility of Krugman's position. For one thing, the true economic harms of "global-warming" legislation could be much higher than his own cited figures. For another, the benefits of such measures — in terms of averted climate-change damage — are quite negligible, unless other countries follow suit.
Finally, Krugman's strategic position on carbon legislation — "this bill is better than nothing" — is inconsistent with his own views of Obama's "inadequate" stimulus bill and Geithner's plans for revamping the banking sector. In short, if the world really is on the verge of catastrophe — which many alarmists tell us it is, and that's why we need to take immediate action — then why are so many of these same activists supporting legislation that their own models show will do virtually nothing?
The Economic Damages of Reducing Carbon EmissionsWhen politicians propose to penalize carbon dioxide (or more broadly, greenhouse-gas) emissions, the natural question most people ask is, "How much will it cost?" Because we live in a world of scarcity, if the government takes away options from producers (namely, the ability to emit as much CO2 as they want) then the output of goods and services will necessarily be lower than it otherwise would be.
So, if we are going to enjoy a smaller volume of output, in exchange for a lower probability of damages from climate change (according to certain models), then we need to have some idea of the quantitative tradeoffs involved. This is a purely utilitarian approach, to be sure: some people think carbon emissions need to be limited out of moral responsibility (either to the planet or to other humans living on the coasts of poorer countries), while others might think that factory owners have a moral right to emit as much CO2 as they want.
These are important questions, and most Austrian economists would want to answer the issue of ultimate property rights before even considering "costs and benefits." Yet I want to keep this article brief, and I have important points to make even taking Krugman's arguments on his own terms. So let's accept the basic framework of the debate as it will unfold in the media and much of the blogosphere over the coming months.
Here is Krugman talking about the economic damages of carbon legislation, or what is loosely classified as "the costs" of such measures:
A cap-and-trade system would raise the price of anything that, directly or indirectly, leads to the burning of fossil fuels. Electricity, in particular, would become more expensive, since so much generation takes place in coal-fired plants. … Consumers would end up poorer than they would have been without a climate-change policy.
But how much poorer? Not much, say careful researchers, like those at the Environmental Protection Agency or the Emissions Prediction and Policy Analysis Group at the Massachusetts Institute of Technology. Even with stringent limits, says the M.I.T. group, Americans would consume only 2 percent less in 2050 than they would have in the absence of emission limits.
Now hang on a second. What Krugman is doing here is exactly analogous to a "skeptic" or "denier" of manmade global warming pointing to a paper by Richard Lindzen or Roy Spencer, both of whom are very "careful researchers" and don't think greenhouse gas (GHG) emissions are nearly the problem that many other people in their field believe. Now when the "denier" on a blog cites the estimate of temperature sensitivity to GHG emissions from a Lindzen or Spencer, what does the average opponent do? Why, he claims that these guys are outliers, and that "the consensus" as represented by the Intergovernmental Panel on Climate Change (IPCC) shows what the real estimates are.
So in the same spirit, I can challenge Krugman's experts. The latest IPCC report (AR4) says that aggressive action against GHG emissions — and the schedule of cutbacks contained in Waxman-Markey is very aggressive in the range of models studied by the IPCC — could cost up to 5.5 percent of global GDP by the year 2050, relative to the baseline trajectory of GDP if no carbon caps are imposed. Don't take my word — or the Heritage Foundation's — for it, either; big-time activist Joe Romm quotes their figure here.
Now the IPCC's (high-end) estimate is 175 percent above Krugman's reported figure. I have not parsed the particular studies Krugman relies on, and it's possible that their much lower cost estimates are the result of studying much less aggressive legislation than what the IPCC's representative models examined. But my point is, if the alarmists want to beat people over the head with "IPCC consensus," then let's at least be consistent. According to the IPCC, if the whole world followed the aggressive emissions schedule contained in Waxman-Markey, then the economic opportunity costs could be 5.5 percent of GDP by the year 2050.
Before moving on, let's make sure we understand what the economic jargon is saying: If your household would normally take in $100,000, then aggressive carbon legislation could raise the prices of goods and services such that you lose up to $5,500 in purchasing power, by the year 2050. (Because the total cap on emissions shrinks over time, the annual impact on consumption gets worse and worse as time rolls on. In the early years, the hit to income would be lower than $5,500 annually.)
Estimate Relies on Textbook Enforcement and Efficient Use of RevenuesIt gets worse. These MIT and IPCC estimates assume an optimal enforcement of the climate policies, for all major governments and for a century straight. If you move beyond the "Summary for Policymakers" and turn to the actual meat of the IPCC report, you will find the following major caveat:
It is important to note that for the following reported cost estimates, the vast majority of the models assume transparent markets, no transaction costs, and thus perfect implementation of policy measures throughout the 21st century, leading to the universal adoption of cost-effective mitigations measures, such as carbon taxes or universal cap and trade programmes…. Relaxation of these modelling assumptions, alone or in combination (e.g. mitigation-only in Annex I countries, no emissions trading, or CO2-only mitigation), will lead to an appreciable increase in all cost categories. (Working Group III, p. 204, emphasis added)
It gets even worse. Most, and perhaps all, of these studies assume that the government uses the proceeds of the cap and trade (or carbon tax) in an efficient manner. In other words, the calculated "cost" of such measures refers to the economic concept of a "deadweight loss." For example, if the government collects $350 billion from auctioning off carbon permits, that revenue is not part of the "cost" of the program. Rather, what these typical studies call the "cost" — which can rise up to 5.5 percent of GDP by 2050, remember — refers to the forfeited goods and services due to the constraints on production possibilities, since the economy must emit a smaller amount of carbon dioxide.
Yet the government in practice will certainly spend more money than it otherwise would, if it has hundreds of billions in auction revenues at its disposal every year. The implementation of cap and trade will not simply reduce the deficit, or be used to reduce taxes dollar-for-dollar on labor (as many economists propose). Thus the costs in practice will be far higher; the government will end up squandering far more than 5.5 percent of total output in the year 2050, even if we took all of the other modeling assumptions at face value.
Benefits of Waxman-Markey NegligibleWe have seen that the economic harms of legislation such as Waxman-Markey could be quite high. So what will it do to avert climate damage? According to this estimate by climate scientist Chip Knappenberger, Waxman-Markey would lead to a planet that warmed 9/100ths of a degree Fahrenheit less than would otherwise be the case, by the year 2050. In case you think Knappenberger's figure is bogus, look at the reaction by NASA scientists and others at a leading pro-intervention blog. They don't dispute the figure; they instead say that the United States must show leadership by capping its own emissions.
Ah, but this leads to an obvious follow-up question: has any researcher who is for Waxman-Markey done a simulation to show this process, by which other countries like China and India follow suit (after how much delay?) because of US leadership? Tyler Cowen — who is quite worried about climate change — has now twice asked on his own popular blog for advocates to give him such a model. He is aware of the arguments for the United States to take unilateral action (even though Knappenberger shows how little such action will do in and of itself), and Cowen simply wants these arguments to be formalized.
As of this writing, Cowen heard crickets chirping on this question. So far as I know, not a single person has even done a blog post giving a decent model showing the strategic interactions of various world powers, and what the likely net benefits are — including savings to the environment — from the Waxman-Markey bill.
Coming back to Krugman, this is all very interesting. For when the issue was the stimulus bill or bank "reform," Krugman argued that an inadequate measure could be worse than nothing, because it would squander President Obama's political capital. (See the last paragraph in this blog post for a good example.) So if the United States ends up having a huge legislation showdown, with pundits on both sides going nuts and accusing the other of all sorts of devilry, and the result is legislation that does very little to change global temperatures, might that be worse than nothing — especially if we have a very short time frame to act, as some leading alarmists tell us?
ConclusionThe global-warming debate has now been completely politicized, and partisans on both sides have often injected hidden values masquerading as scientific facts. I understand that even some libertarians believe the underlying science proves that "business as usual" will mean a huge form of aggression on the property rights of some of the world's most vulnerable people.
Even so, I think that the real threat to humanity comes from governments growing ever more powerful in the name of fighting climate change. Paul Krugman's recent attempts to justify these bold new measures ignore the IPCC itself, and even its "consensus" figures are based on wishful assumptions about the behavior of governments in the real world.
Whether you are a "denier" or whether you think carbon dioxide emissions need to be sharply reduced very quickly, you should be extremely skeptical of the process now unfolding in Washington. This isn't about saving the planet; it's about money and power.
Today is Earth day, and a week ago we "celebrated" tax day. It is fitting, in a sense, that Earth Day and Tax Day are only one week apart. Those who blame global warming on human activity see taxation as an effective and desirable means of preventing environmental global catastrophe. In a recent publication, former Bush advisor Greg Mankiw has extended an "open invitation to join the Pigou club" by embracing the idea of regulating greenhouse gases with corrective taxes, writes D.W. MacKenzie.
This audio Mises Daily is narrated by Floy Lilley.
[An MP3 audio version of this article, read by Floy Liley, is available as a free download.]
Today is Earth day, and a week ago we "celebrated" tax day. It is fitting, in a sense, that Earth Day and Tax Day are only one week apart. Those who blame global warming on human activity see taxation as an effective and desirable means of preventing environmental global catastrophe. In a recent publication, former Bush advisor Greg Mankiw has extended an "open invitation to join the Pigou club" by embracing the idea of regulating greenhouse gases with corrective taxes.[1]
The idea behind corrective taxes is relatively simple. British economist A.C. Pigou explained how markets need correction: the use of goods we buy in markets generates external costs. The price we pay for goods are internal, but any type of pollution (noise, air or water borne) imposes a real cost on other people outside the transaction. In such instances the amount of goods that consumers buy will be excessive because they do not bear the full costs. Taxes on goods that generate negative externalities internalize costs to consumers, provided that they are set at the right level. Hence taxes can correct markets that oversupply goods, in theory.
Professor Mankiw advocates taxing carbon, which includes taxes on gasoline. Taxes on gasoline would reduce greenhouse gas emissions, while also reducing road congestion and auto accidents. There are several standard economic objections to such proposals for corrective taxation.
First of all, corrective taxation requires knowledge of the magnitude of externalities. Externalities are by definition not priced through any social mechanism or institution. But Mankiw admits to problems with calculating the right level of taxation.
Second, the case for corrective taxation often derives from the nirvana fallacy. Mankiw does mention that markets are efficient according to "the first welfare theorem of economics," which is characterized by the total absence of externalities. The idea that markets are efficient only when externalities are absent suggests that markets should be held to an impossible standard of perfection. Economist Ronald Coase demonstrated that externalities vanish only in the wholly unreal world where people can negotiate and carry out transactions at zero cost. Such a world of zero transaction costs would deliver economic perfection.[2]
"Mankiw has mistaken intellectuals for experts."The fact of the matter is that neither government nor markets deliver us into nirvana. We could then accuse Professor Mankiw of making a false comparison between flawed markets and an idealized government that always corrects market flaws, but he skips this trap. The main problem with our government is supposedly that politicians listen to voters rather than experts. Mankiw borrows a few lines from Bryan Caplan to argue that voters are irrational. Voters block the implementation of good policies, like free trade and corrective carbon taxes, because they disagree with the real experts.
I would agree with the first example that experts (i.e., economists) favor free trade, and the public should pay us heed. The second example is more problematic. Mankiw claims that as an economist he is not qualified to comment on scientific theories of climate change. I agree. Neither of us are experts on these matters. I do not understand the details of various theories of climate change concerning greenhouse gases, volcanic eruptions, ocean currents, and solar activity.
Mankiw further claims that there is a consensus among experts in climate science that global warming is both real and caused by human actions. In this case we need only examine empirical data to see why we should decline invitations to the Pigou club. RSS and UAH data on global temperatures indicate that global warming peaked in 1998 and went flat during the past decade, while CO2 levels continued to rise.[3]
The data indicate that global temperatures in the atmosphere actually fell in 2007 and 2008. Some scientists claim that 90% of global warming takes place in oceans, but a detailed study indicates that ocean temperatures fell from 2003 to 2008.[4]
Mankiw is simply wrong. There is a scientific consensus that global warming ceased ten years ago, and the idea that greenhouse gasses drive global climate change is under dispute. As a Harvard professor, Dr. Mankiw could consult with his colleague, Harvard astrophysicist Dr. Willie Soon, to find out more about how solar activity drives global temperatures.[5] Dr. Soon is far from the only scientist who doubts the theory of man-made global warming. Last summer 31,000 scientists signed a petition asserting that
There is no convincing scientific evidence that human release of … greenhouse gases is causing or will, in the forseeable future, cause catastrophic heating of the Earth's atmosphere and disruption of the Earth's climate … there is substantial scientific evidence that increases in atmospheric carbon dioxide produce many beneficial effects upon the natural plant and animal environments.[6]
Furthermore, there is a growing number of scientists who predict global cooling over the next twenty or thirty years.[7] Meteorologists Henrik Svensmark and Eigil Friis-Christensen have found evidence that solar activity affects global temperatures.[8] Scientific projections of solar activity predict a solar minimum over the next two decades.[9] Of course, there are scientists with different opinions of climate change, but the point here is that scientific opinion is divided on the causes of climate change. Moreover, the actual evidence on recent climate change does not support the case for carbon taxes.
Mankiw has mistaken intellectuals for experts. F.A. Hayek characterized intellectuals as people who convey the ideas of experts to the general public through the mass media.[10] A large part of print and broadcast media does promote the idea of anthropogenic global warming. However, these intellectuals are well behind the curve of expert opinion. There was a consensus on the existence of global warming ten years ago (though the causes of this trend were still debated). It is now clear that global warming has ceased, and we may have entered a period of global cooling.
"Once again, the market proves wiser than economists."– Murray N. RothbardMankiw has twisted Bryan Caplan's idea that voters hold irrational beliefs to argue that experts should devise corrective carbon taxes. Gasoline taxes supposedly make sense because of externalities, and voters reject these taxes supposedly because they are foolish. The idea that gas prices are too low and must be raised with corrective taxes derives from a false notion of reason. The idea that experts can do a better job of directing the use of resources, including gasoline, than can markets and market prices derives from the faulty assumption that experts know more than the whole of society.
The price of gasoline is formed out of competition for labor and capital by various industries. The industries that garner the most revenue from consumers gain the capital and labor needed to expand production towards efficient levels. Market prices therefore reflect marginal consumer demands for products. Market prices do not reflect perfect knowledge, but there is no better source of data on the efficient use of resources. Self-described experts claim to possess superior knowledge of consumer desires, but they are engaged in empty speculation. The effects of externalities on consumers are unobserved by definition, and in this case the existence of the source of externality in question is in serious doubt.
The good news is that Mankiw is not personally capable of implementing so-called smart taxes. The bad news is that the Obama administration has been taken in by proponents of the anthropogenic-global-warming theory. On Friday, the EPA announced that carbon emissions "endanger the health and welfare of current and future generations." Officials at the EPA have concluded that increasing concentrations of C02 are a pollutant. The EPA gained authority in this matter through a Supreme Court decision that defined C02 as a pollutant under the Clean Air Act. This move by the EPA indicates higher taxes and regulation — targeting industrial and auto emissions — in the coming decade. Unfortunately, this is not just a matter of ivory-tower discussions at Harvard. Public officials are poised to move on this issue, and their policies could impose heavy costs on American consumers.
"Join the Hayek Club"and get a free Hayek T-shirtGiven the flaws in Professor Mankiw's arguments, I will have to decline his invitation to join the Pigou club. Members of the Pigou Club may think experts are smart enough to improve upon the results of market competition, but this is an unproven proposition. Market prices reflect the collective knowledge of all members of society who buy and sell in markets, and there is no better source of data on how to best satisfy consumer demands. Prices are certainly imperfect representations of economic reality. But the limits of individual human reason make efforts by experts to outguess markets futile.
Since the case for "smart taxes" is unfounded, I will reply to Professor Mankiw by extending an invitation for him to join the "Hayek Club" by acknowledging that market prices are the only practicable means of directing global production towards the satisfaction of the most urgent consumer demands.
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Notes[1] See Greg Mankiw, "Smart Taxes: An Open Invitation to Join the Pigou Club," The Eastern Economic Journal (2009).
[2] This proposition also assumes perfect information, perfect competition, and perfect property rights.
[3] See "Global Warming On Hold?" by Michael Reilly, Discovery News.
[4] See "The Mystery of Global Warming's Missing Heat" by Richard Harris, NPR.org.
[5] The blog Trade And Taxes discusses how Dr. Soon lost his federal funding for challenging the pollution theory of global warming. Dr. Soon himself can be heard in this YouTube video.
[6] See "Scientists sign petition denying man-made global warming" by Graham Tibbets, Telegraph.co.uk.
[7] See "Not Putting their money where their mouths are," by Alex Tabbarok, Marginal Revolution, "Russian Scientist says Earth could face new ice age," FreeRepublic.com, and " Global cooling gains momentum among scientists" by Elton Robinson, DeltaFarmPress.com.
[8] See "The sun moves climate change," Canada.com.
[9] See "Long Range Solar Forecast: Solar Cycle 25 peaking around 2022 could be one of the weakest in centuries," NASA.gov.
[10] See F.A. Hayek, The Intellectuals and Socialism. University of Chicago Press, 1948.
President Obama has proposed combining stimuli to promote employment with the fight against alleged man-made global warming, which allegedly results mainly from the burning of fossil fuels. Hundreds of thousands if not millions of new jobs will supposedly be created by replacing power from fossil fuels with power from windmills and solar panels. They will be created in the construction of the windmills and in the production and installation of the solar panels, and also in the construction of a new power grid to carry all the electricity that is supposed to result.
A rather serious problem, which seems largely to have been ignored by those urging a race to build windmills and solar panels, is the fact that the wind does not always blow, nor does the sun always shine. And as yet there is no large-scale economical method of storing electricity for later use. This would seem to imply a need to retain the present system of power production alongside the new system that is to be based on wind and sun, or else to grow accustomed to protracted periods without power.
Or is it the case perhaps that this problem is to be taken as an opportunity for even greater gains in employment in connection with wind and solar power? These might be achieved if, in all those times when the wind does not blow or the sun does not shine, human beings were employed in rotating copper-clad generator shafts, in a manner similar to that of rotating a grindstone in a gristmill, only in the presence of surrounding magnets, so that electricity could be produced by the rotation. (I don't know how much, if any, electricity might actually be produced in this way. But it would provide at least the appearance of employment in the attempt, which is all that many other "stimulus" programs accomplish.)
Indeed, advancing the goals of environmentalism is capable of creating a virtually limitless number of jobs. Big-rig trucks and their "polluting" emissions might be done away with by replacing them with human porters who would carry freight on their backs. Ocean-going ships and their emissions might be done away with by replacing their "dirty engines" with the clean labor of banks of oarsmen. (Sails would be a substitute too, but they are no match for oarsmen when it comes to the number of workers needed.) Automobiles and their emissions might be replaced by sedan chairs and teams of litter bearers.
And if all that is not enough, then think of the jobs that might be created in making coal in the ground absolutely safe. At present there are outcries over the release of trace amounts of mercury, arsenic, and other heavy metals from above-ground accumulations of coal sludge. Yet these metals are found in nature-given, below-ground deposits of coal as well, and could not appear in coal sludge if it they had not first been present in below-ground coal. While perhaps a smaller threat to human health so long as they are locked in below-ground coal, they must undoubtedly represent some threat, if only at the level of parts per billion or parts per trillion.
Since one can never be too safe, it follows that if job creation is the goal, an environmentalist case can be made for extracting all known coal deposits and then, instead of using any of that coal for such environmentally "destructive" purposes as producing electricity or heating homes, simply reburying it. But this time in repositories lined so as to prevent any possible leakage of heavy metals into the surrounding environment.
And finally, think of all of the jobs that a program of environmental "stewardship" might make available. Thus each patch of desert, each rock formation, each clump of grass, and each tree stump, might have assigned to it one or more "stewards" whose job would be to watch over it, protect it, and "preserve it for future generations." To carry out this valuable work, there could be a whole corps of "stewards." They could be dressed in special uniforms displaying various ranks and medals, all gained in "service to the environment" and the defense of nature and its resources from the humans.
Indeed, once we put our minds to it, nothing is easier than to think of things that would require the performance of virtually unlimited labor in order to accomplish virtually zero result. Such is the nature of all job-creation programs. Such is the nature of environmentalism. Such is thought to be the path to economic recovery by most of today's intellectual establishment.
PostscriptI want to note that my book Capitalism: A Treatise on Economics provides further, in-depth treatment of the substantive material discussed in this article and of practically all related aspects of economics. Of special note here is the fact that Chapter 3 of the book is a thorough-going critique of environmentalism. The critique is coupled with a positive demonstration of the fact that under capitalism and its economic freedom the supply of economically useable, accessible natural resources is capable of continuing further increase as man expands his knowledge of and physical power over nature. It is also joined by a demonstration that such increase in man's knowledge and power at the same time serves progressively to improve his environment, understood as his external physical surroundings, deriving its value from its contribution to human life and well-being. In addition, Chapter 13 of Capitalism provides a critique of all variants of the notion that a problem of economic life is the creation of work rather than wealth.
Last year, on the last Saturday in March, Google's white background turned black, as a symbolic gesture for 2008's "Earth Hour."
They accompanied this gesture with a puzzling rationale:
As to why we don't do this permanently — it saves no energy; modern displays use the same amount of power regardless of what they display.
Such a gesture, done with an almost Faustian acceptance that such a gesture will make no meaningful impact on anything, demonstrates everything that is wrong with Earth Hour in its prizing of style over substance. Whether or not one believes the earth is heating, and whether or not one believes humans are the source, and whether or not one believes this is a monotonically bad thing, and whether or not we believe there is a viable political "solution" to this problem, it should be clear that the consequences of Earth Hour will provide a Pyrrhic celebration and will execute the opposite effect of what was intended — turning off light bulbs will almost certainly both increase energy usage and spend more money in the process.
Earth Hour provides a ready valediction for any environmentalist attempting to further it and a critical lesson for any student in economics. To understand this we need to consider one of the most critical laws of economics: the law of unintended consequences.
The law of unintended consequences is behind some of the greatest legal failures of any age: whether it be British attempts to provide high potato prices causing the Irish Potato Famine, red light cameras actually creating more dangerous driving conditions, or rent control creating shortages of available housing for the people who need it, the law of unintended consequences is a reminder that human beings don't make choices in a vacuum; we make them with our next-best alternative always in mind.
Earth Hour asks people to turn off their lights on Saturday, March 28th, between 8:30 and 9:30 pm. The goal is to spread darkness around the world as a symbol of humanity's desire to affect climate change. Its website has an impressive catalog of contributors; 84 countries have pledged to assist in the cause. Let's consider Earth Hour for what it is: a myopic gesture that is a clear example of the Law of Unintended Consequences, the effects of which will be more damaging to the planet.
Let's first consider what a family is saving by turning their "nonessential" lights off. To do this we'll do some very simple math: being generous, one 100-watt light bulb costs around a penny per hour to operate and generates around 1 tenth of a pound of carbon. If one therefore ran 10 light bulbs, then, a little over 1 pound of carbon would not be emitted and a dime would be saved by Earth Hour.
The question all individuals should ask themselves is, since this decision doesn't occur in a vacuum, what alternatives are present to sitting in a dark, lightless house. What is this family going to do in the dark? They might burn candles — and if they're paraffin, they are based in fossil fuels and will provide a dubious savings in either carbon or monetary cost. If they were to use flashlights instead of light bulbs the result would be an increase in carbon because candles and light bulbs are less energy efficient.
What if that family drove for 15 minutes, went and watched the stars, and drove back home? That trip would cost whatever a half-hour's worth of driving costs. If this trip took a gallon of gas, that would create around 20 pounds of carbon dioxide and would cost over $2 … for a dramatically increased cost in cash and carbon.
One can wonder further about the ramifications on safety and efficiency of turning off "nonessential" lights and conclude that no meaningful savings can be had. Because households are responsible for only 25% of the total electric lighting, we must also consider the commercial and industrial sectors. Instead of being at home, in darkness, will shopkeepers have to return to their stores to guard them for an hour? Will adults turn on lights in dark rooms when they need to move around the house? Will candles generate more fires? Obviously none of these unforeseen circumstances — all of which seem plausible — will improve our carbon footprint.
All of these are alternatives that follow the letter of the law — to turn off essential light — but demonstrate the short-sightedness of Earth Hour. Even the data that are used to demonstrate Earth Hour's effectiveness can be easily turned upside down: while individual cities reported varying decreases in electricity usage from past Earth Hour celebrations, many — including the Australian progenitor city Sydney — saw such a small decrease in power (in Sydney's case, 2.1% in 2007) as to be statistically indistinguishable from zero.
Even if a dramatic decrease in the use of electricity were to be seen, however, this would not tell the complete story of power usage or of the carbon footprint left by the society. As an example, if Sydney decreased its electricity usage by 2.1% by turning off light bulbs, what other less easily quantified and less efficient forms of electricity were used in its wake? It would be far more difficult to determine if more batteries and candles were sold in the weeks and months before and after Earth Hour and just as difficult to determine the most meaningful statistic — whether or not the carbon footprint was affected.
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The absolute inability to provide documentable objective success must be self-evident to the sponsoring organization, the World Wildlife Fund. In 2008 Leslie Aun, spokesperson for the WWF was forced to clarify that actually saving energy was not, in fact, the true goal of Earth Hour: "The purpose of the event was not to save money or power. It's a symbolic event."
Unlike previous years, this Earth Hour will not come with an estimation on energy savings because, in the words of Aun, "We think the value of Earth Hour is the lights going off … not the energy savings."
Ultimately, then, the effects of Earth Hour boil down to dim rhetoric. Maybe as much attention should be placed on humanity's hot air footprint as its carbon one.
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New president Barack Obama's $3.55 trillion budget serves notice that if you thought government couldn't get any bigger or more intrusive, think again. The budget "represents real and dramatic change," according to the President. But really the Obama plan is just more of the same, with the federal government expanding its role in education, foreign policy, energy policy, health care, and environmental policy."The eyes of all people in all nations are once again upon us — watching to see what we do with this moment; waiting for us to lead," Obama told the assembled and adoring senators and congressmen. "Those of us gathered here tonight have been called to govern in extraordinary times." The new president believes government can fix the economy and anything else it sets its collective mind to, after all, "we aren't quitters," repeated the president.
But as Paul Cleveland explains, what Obama believes is a lie — a sacred lie. "The first, and biggest lie, is the notion that the institution of government is capable of successfully and adequately addressing all human problems," Cleveland writes in his book Unmasking the Sacred Lies. "The truth is that such collectivism hampers human progress because it opens the door for many flagrant abuses of people and their property rights."
So while in Obama's view a big government is needed for a healthy society, Cleveland thinks all that's needed is a tiny state government. In his view, the family and other voluntary associations like churches and schools provide all the governance we need.
Using insights from the Austrian School and public-choice theory, the Birmingham-Southern College economics professor takes a historical look at America's economic policies, providing a clearly written analysis of how America has digressed from the "land of the free and home of the brave" to the "land of the slaves and home of lawlessness." Because the nanny state seemingly takes care of everyone, nobody cares that the "average person is made a slave of the political elites," Cleveland explains.
In his opening chapter, Cleveland uses the work of Robert Higgs to make the point "that government authorities have used opportune occasions to consolidate power and control." Proving the point, Obama's chief of staff Rahm Emanuel famously said in late 2008, "You never want to let a serious crisis go to waste," signaling that the new administration will use the current economic (or any other) crisis to expand the size and scope of government.
Cleveland then focuses on fiscal policy and rightly casts the blame for government's expansion on the widely accepted policies of the current economist hero, John Maynard Keynes. Going hand-in-hand with Keynesian policy is central banking, and in his next chapter the author considers monetary policy, providing the history of banking in America, drawing from the likes of Murray Rothbard, Clarence Carson, George Selgin, and Tom DiLorenzo. Of course, a new history of government involvement in banking is being written daily with the government bailout of that entire industry.
The middle of Unmasking the Sacred Lies provides the history of policies that the current administration has its sights set on changing — and not for the better. Although Obama says he wants to cut subsidies to big farmers, after reading Cleveland's chapter on agricultural policy, you'll be skeptical that any cuts can be made to the Department of Agriculture bureaucracy, or that price subsidies can be quashed or trimmed. As the author points out, the politicians and lobbyists have too much to gain, and the American public is clueless.
More money and federal government control is slated for education, while government has no business being involved. In fact, government isn't really interested in education. "Like [Horace] Mann, [John] Dewey embraced the common school movement as a means of socializing people into a common pool," Cleveland explains.
Union leaders are licking their chops thinking about the further help the government will provide them during an Obama administration. But American labor laws have been tilted against freedom of association and contract since the 1930s, resulting in "distorted labor markets, increased unemployment especially among the least skilled members of society, and prejudicial hiring practices."
The environment is big on the Obama agenda and Cleveland's chapter on environmental policy shows why green is the perfect issue to expand governmental power. A generally prosperous people cares about the environment, so it votes for green candidates. Since the issue attracts votes, it attracts money, and ultimately "if carbon dioxide is classified as a pollutant, then every breath we take can be regulated by government." That sums it up perfectly.
All of these laws put on the books to further policies for political ends, Cleveland explains, really amount to lawlessness. And lawlessness ultimately leads to a decline in civilization. The author would like to turn this trend around and have America return to a "nation founded upon the belief in natural law," with people having rights — to life, to the freedom to act, and to property.
The real trouble, as professor Cleveland points out, is that the vast majority of people have accepted big government as the solver of all problems, thus Obama's overwhelming election victory. Education is what is needed to fix this problem. It won't happen overnight, but if more young people read sound, well-written books like professor Cleveland's, the nation will ultimately return to its roots.
This audio version of the Mises.org Daily Article was read by Dr. Floy Lilley.
David Gordon covers new books in economics, politics, philosophy, and law for 'The Mises Review', the quarterly review of literature in the social sciences, published since 1995 by the Mises Institute.
On February 7, 2009, and in the week that followed, bushfires ignited across Victoria, in Australia.[1] The fires raged through many towns, destroying at least 1,834 homes,[2] and killing at least 209 people,[3] more fatalities than any bushfire in Australian history.[4]
Let's compare: in the 1983 "Ash Wednesday" bushfires, seventy-five people died; in the 1939 "Black Friday" bushfires, seventy-one died; in all previous bushfires in Australia, back to data on bushfires in the 17th century, there were a total of 642 fatalities.[5] In short, Australia has just experienced what is far and away the most devastating bushfire in its history.
While the immediate causes of the various bushfires are thought to include arson, discarded cigarette butts, faulty power lines, or lightning strikes, these initial fires transformed into huge infernos and spread uncontrollably across Victoria only because of extremely high fuel loads throughout the state's bushland. The reason? For years, local governments have neglected to manage fire hazards on their land in order to be faithful to the principles of environmentalism — a philosophy that contends that nature has intrinsic value that must be preserved, regardless of any use it has to man.[6] The result has been that people have sacrificed their prosperity and even survival in an attempt to preserve the unspoiled sanctity of nature.
In the case of land management, environmentalists have invoked the alleged intrinsic value of nature to oppose the controlled burning of bushland, the clearing of vegetation and the prevention of excessive fire hazards in government-controlled land and adjacent private property. They have lobbied governments to prohibit the clearing of trees and shrubs and have been eternally hostile to all attempts to reduce the "bounty of nature" that has stoked the deadly fires that have spread across Victoria.
How Environmentalism Contributed to the BushfiresUnder the influence of the philosophy of environmentalism, as well as political pressure from environmentalist groups and an "environmentally conscious" electorate, local councils have refused for years to clear the vegetation that has now served as fuel for lethal infernos. The modus operandi of these bureaucrats and their ecosupporters has been to insist on "rigorous" environmental assessments, which in envirospeak means, assessments that continue until reasons have been found to prevent any interference with the natural state of public land. In addition to perpetually stalling any clearing of trees or vegetation, government councils have also prohibited people from clearing trees and vegetation from their own property, aggressively pursuing those who break environmental-protection laws that place the "welfare" of trees above the property rights and safety of people.
In 2002, Liam Sheahan, a resident of Reedy Creek in Victoria, was prosecuted for disregarding local laws and bulldozing approximately 250 trees on his own property to make a fire break next to his home.[7] Council laws prohibited Mr. Sheahan from clearing trees further than six meters away from his house, but he went ahead with his decision to create a 100 meter fire break. During the resulting prosecution, bushfire expert Dr. Kevin Tolhurst testified on Mr. Sheahan's behalf, telling the court that the clearing had reduced the fire risk to Mr. Sheahan's home from extreme to moderate. According to Mr. Sheahan, "The council stood up in court and made us to look like the worst, wanton environmental vandals on the earth. We've got thousands of trees on our property. We cleared about 247." Mr. Sheahan's prosecution cost him $100,000 in fines and legal fees, but when the bushfires swept through his town in February 2009, his actions were vindicated — his home was the only property left standing in a two-kilometer area, while neighboring properties were destroyed. His disregard for environmental laws saved his home and the lives of his family.
Warwick Spooner was not so lucky. His mother and brother were killed as the bushfires consumed their home in Strathewen in Victoria.[8] He was in no doubt as to why the tragedy had occurred, telling the Nillumbik council, "We've lost two people in my family because you [epithet] won't cut trees down.… We wanted trees cut down on the side of the road, … and you can't even cut the grass for God's sake."[9] He was not the only one to express such frustrations, with another resident complaining to the council that her repeated requests to reduce vegetation growth on public land had been ignored.
In 2003, bushfire experts Rod Incoll and David Packham argued against planning regulations proposed to the council by environmentalist groups. These regulations, which were passed by the council, included restrictions against the removal of vegetation "and worse still, the requirement for planting vegetation around and almost over houses, as part of any planning permit to build a house in the shire of Nillumbik, so it gave the appearance from the outside of being a forest."[10]
Two weeks before the bushfires, Mr. Packham alerted Victorian residents to the critical fire conditions in the Victorian bush, warning them that bushfires could destroy between 1,000 and 2,000 homes and kill 100 people.[11] This frightening prediction may have sounded alarmist until hundreds were burned to death weeks later. During the fires, Mr. Packham followed up his predictions with an explanation of the carnage. He explained that fuel levels in public land had been allowed to reach dangerous levels due to environmentalist hostility to vegetation removal and controlled burning.
It has been a difficult lesson for me to accept that despite the severe damage to our forests and even a fatal fire in our nation's capital [the Canberra bushfires in 2003], the political decision has been to do nothing that will change the extreme threat to which our forests and rural lands are exposed.… It is hard for me to see this perversion of public policy and to accept that the folk of the bush have lost their battle to live a safe life in a cared-for rural and forest environment, all because of the environmental fantasies of outraged extremists and latte conservationists.[12]
Mr. Packham later branded environmentalists as "eco-terrorists waging a jihad" against prescribed burning, explaining that "[t]he green movement is directly responsible for the severity of these fires through their opposition to prescribed burning."[13]
As these incidents make clear, the negligent and authoritarian actions of local councils have contributed substantially to the severity of the Victorian bushfires. But they are the predictable consequence of a political atmosphere saturated with environmentalist philosophy, environmentalist lobby groups, and an electorate that views the Greens party (Australia's third-largest political party) as a benign protest vote, ideal for showing their disaffection with the major political parties. Under such pressure, local councils are faithfully implementing the philosophy of environmentalism, which requires them to reduce humanity's "footprint" on nature, and tells them that the inherent value of nonconscious entities like trees and shrubs is more important than the desires of those rapacious human beings who plunder nature for their own selfish gain.
Response to The Bushfires by Government and Environmentalist GroupsHaving failed to achieve damage control in the bushfires through proper land management, the response from government officials has been a predictable game of public-relations damage control. Councils have responded to fierce criticism of their aversion to land clearance and controlled burning with promises that they will reassess their planning and environmental policies. Such promises would sound more genuine if not for the fact that problems of insufficient fuel reduction and controlled burning on public land have been well known for decades. These problems having been highlighted extensively in previous bushfire inquiries, which are a recurring event in a country as prone to bushfires as Australia.[14] For Warwick Spooner, this latest promise of review was little comfort. He told Nillumbik Mayor Bo Bendtsen, "It's too late now mate. We've lost families, we've lost people."[15]
Any attempts to increase land clearing and controlled burning to prevent bushfire damage may also face greater constraints from federal environmental laws in the near future. The Department of Environment confirmed that they have received a public submission calling for controlled burning to be listed under federal law as a "key threatening process,"[16] defined as a process that "threatens, or may threaten, the survival, abundance or evolutionary development of a native species or ecological community."[17] Listing would require the minister to consider a threat-abatement plan for controlled burning, to find the most "feasible, effective and efficient way to abate the process."[18] Already listed as a key threatening process is land clearance, including "clearance of native vegetation for crops, improved, [sic] pasture, plantations, gardens, houses, mines, buildings and roads."[19]
Meanwhile, there is no sign of any self-examination by environmentalist groups. Rather than reconsider their cherished environmental-preservation laws, which have helped fuel the fires, environmentalists have taken the bushfires as an opportunity to selectively find evidence of human-induced global warming.[20]
Proponents of this theory have been eagerly pointing out that the bushfires occurred during a heat wave across southeast Australia that has caused record-high temperatures during the summer.
Referring to Australia's especially hot weather in the last twelve years, Climate Change Minister Penny Wong assured the public that "[a]ll of this is consistent with climate change, and all of this is consistent with what scientists told us would happen."[21] For obvious reasons, she did not comment on whether the simultaneous record low temperatures in other parts of the world — such as the United States,[22],[23] Canada,[24] England,[25] France, Italy, Germany,[26] and India[27] — are also "what scientists told us would happen."
Rather than simply removing coercive restrictions that have prevented private landowners from clearing trees on their own property, the government is set to respond to the bushfires by imposing new coercive restrictions. This time, private landowners will be prevented from having trees too close to their property.[28] Thus, having already seized sole power to remove trees and vegetation on private property (on the assumption that property owners are too evil or stupid to be trusted with these decisions) and having thereby forced Victorian residents into a disastrous inferno through their previous regulations, the government is convinced that it is the proper decision-making body to decide when property owners can plant trees.
While this kind of thinking demonstrates the government's boundless arrogance and insatiable desire for control, the danger posed to human life from public-land mismanagement runs much deeper than the specific environmental laws and policies currently in place, or even the laws to come. The root of the problem is the philosophy of environmentalism, which permeates all land-management decisions, guaranteeing hostility to any attempts to interfere with "the balance of nature." Despite having the legal power to undertake controlled burning on its land, the Yarra Ranges Shire in Victoria refused to do this for years before it was hit by the bushfires, instead calling for "rigorous" environmental assessments to determine the breeding seasons of local flora and fauna and the effect on endangered Leadbeater's possums.[29] So long as such considerations remain above concern for human life and liberty, there is little prospect of reducing the impact of natural disasters.
How Private Land Ownership Would Reduce Bushfire RiskBecause private ownership entails the right to control one's own property, and because some people may not wish to sacrifice their lives to prevent interference with local possums, environmentalists seek to achieve their goals through government ownership of land — land socialism. In this endeavor, they have been very successful. State forests, national parks, and other Crown land in Victoria make up approximately one third of the state but contributed four-fifths of the February 2009 bushfires.[30] And as with all examples of land socialism, the situation in Victoria has created an incentive structure that has destroyed accountability, thereby exacerbating the disaster.
As mere caretakers of public land, bureaucrats and local politicians are not liable for any loss caused by their mismanagement. Nor do they have any personal stake in its capital value. When property is destroyed due to their ineptitude and their enslavement to the philosophy of environmentalism, their savings are not in danger. If anyone is required to pay for compensation, it is taxpayers who have had nothing to do with the whole mess. For the local councilor or the state or federal politician, what matters is getting the green vote, showing how "environmentally conscious" they are, and placating all those green lobby groups and media darlings that might say nasty things about them if they don't toe the line.
Had the bushland areas in Victoria been private property, the owner of the land would be subject to a duty of care to his neighbors under tort laws and would be liable for any damage caused to his neighbors' properties by his own negligence. He certainly would not be able to claim as a defense the fact that his own environmental policies make it difficult for him clear vegetation or conduct controlled burning. And as a result, he would have a strong incentive to ensure that the land is properly managed, neither plundered of vegetation to the point that it loses its capital value, nor allowed to overgrow into a dangerous fire hazard.
Had these bushland areas been regarded as unowned land, ripe for homesteading, then adjacent property owners would have been able to clear fire breaks to their hearts' content, homesteading as much land as necessary for a safe buffer between themselves and the bushlands beyond.
Had the areas of private property adjacent to these bushlands been treated as genuine private property — unconstrained by coercive regulation — then adjacent property owners would have been able to clear trees and vegetation on their own land, and build facilities to cope with bushfires, without groveling for permission from their political masters. They would not have been inhibited by mountains of regulations and armies of bureaucrats who frustrated their attempts at safety. They certainly would not have been prohibited from clearing vegetation before the fire has burned them out and then prohibited from planting trees after the damage had already been done.
The danger of bushfires and other natural disasters is ever present, but it is not a danger that we must accept passively as an immutable act of nature. It is a danger that can be managed or exacerbated. And it is a danger that is currently exacerbated by the philosophy of environmentalism and the land socialism that is used to implement this philosophy. In describing the California bushfires in 2003, Lew Rockwell diagnoses the problem:
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"In these wretched infernos that consume civilization, we see the truth about nature. It is beautiful when it is controlled and owned and put to our use." –Lew RockwellWhat went wrong? The problem is in the theory of environmentalism. Under it, ownership is the enemy. Nature is an end in itself. So it must be owned publicly, that is, by the state. The state, in its management of this land, must not do anything to it. There must not be controlled burning, brush clearing, clear cutting, or even tourism. We can admire it from afar, but the work of human hands must never intervene.
Then the brush begins to gather. It piles higher and higher. Old growth rots. Uncontrolled growing leads to crowding. When the weather gets hot the stuff combusts. Then the winds blow and the fires spread. It's been the same story for several decades now, ever since the loony theory that nature should be left alone took hold.[31]
So long as governments remain under the sway of environmentalist philosophy and arrogate massive tracts of land to their own inept control, no amount of legal tinkering will prevent the next bushfire. How many more will die then?
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Notes[1] The temperature in Melbourne reached 46.4°C (115.5°F), the highest temperature since records began 150 years ago. Other cities across Victoria also reached record temperatures. See Townsend, H. "City swelters, records tumble in heat," The Age, February 7, 2009.
[2] "Fair trial for accused arsonist," SBS World News Australia, February 14, 2009.
[3] "Victoria bushfire toll rises to 209," The Australian, February 20, 2009.
[4] Huxley, J. "Horrific, but not the worst we've suffered," Sydney Morning Herald, February 11, 2009.
[5] Ibid, Huxley (2009)
[6] See Berliner, M.S. (2007) "Against Environmentalism," Ayn Rand Institute.
[7] Baker, R. and McKensie, M. "Fined for illegal clearing, family now feel vindicated," The Age, February 12, 2009.
[8] Petrie, A. "Angry survivors blame council 'green' policy," The Age, February 11, 2009.
[9] Ibid, Petrie (2009). [Editor's note: deleting the expletive is Mises.org policy, not the author's.]
[10] "Council ignored warning over trees before Victoria bushfires," The Australian, February 11, 2009
[11] Packham, D. "Victoria bushfires stoked by green vote," The Australian, February 10, 2009.
[12] Ibid, Packham (2009).
[13] Ibid, Ryan (2009).
[14] Less than six years prior to the Victoria bushfires, the McLeod Inquiry, which investigated the 2003 bushfires in Canberra, Australia, found that management of fuel loads in public forests was lacking. This finding was echoed in the subsequent coroner's report on the fires in 2006, which found that the ACT government had failed to follow recommendations for a rigorous back-burning process, and this resulted in heavy fuel loads, which fueled the fires. See Doogan, M. The Canberra Firestorm. ACT Coroner's Report, December 19, 2006, pp. 65–70.
[15] Ibid, Petrie (2009).
[16] Ryan, S. "Burnoffs following Victoria bushfires a 'threat to biodiversity'," The Australian, February 12, 2009.
[17] Environment Protection and Biodiversity Conservation Act 1999 (Cth), s 188(3).
[18] Department of Environment, Water, Heritage and the Arts.
[19] Department of Environment, Water, Heritage and the Arts.
[20] This is a familiar pattern. For discussion of global-warming claims during the 2007 California fires, see Anderson, W. "Fires of the Feds: How the Government has Destroyed Forests," Mises Daily, October 25, 2007.
[21] "Heatwave a sign of climate change: Wong," ABC News, January 29, 2009.
[22] Gunter, L. "Forget global warming: Welcome to the new Ice Age," National Post, February 25, 2008.
[23] Evans, C. "Baby, it's cold outside," Daily Camera, January 6, 2009.
[24] Cold weather records shattered in 6 Manitoba towns. CBC News, January 13, 2009.
[25] Record cold weather payouts triggered as temperature hits -11C. Times Online, January 6, 2009.
[26] Donahue, P. and Viscusi, G. "Central Europe, France, U.K., Italy Hit by Cold Air," Bloomberg, January 6, 2009.
[27] "Poor burn books to stay warm in chilly India, 55 dead," Reuters India, January 5, 2009.
[28] Rolfe, P. "Building standards to be lifted," The Herald Sun, February 15, 2009.
[29] Ibid, Ryan (2009).
[30] Ibid, Ryan (2009).
[31] Rockwell Jr, L.H. "Land Socialism: Playing with Fire," Mises Daily, October 24, 2007.
What started last year as something of a joke from the "tongue & check" department at Business Week, and a supposedly outlandish column by Michelle Malkin, has now become a reality: the state of Connecticut is seriously considering a rescue package for The Bristol Press. Can the nation's premier junk-bond newspaper, The New York Times, or The Chicago Tribune—already in bankruptcy court—be far behind?With a private property-based economy, each person is ultimately the judge of the truth. Particular newspapers and other information services, particular schools and universities, and even particular artists and entertainers are supported or not supported depending on their ability to secure an audience. To be sure, one's "audience" need not constitute a majority and might only be a few. As John Stuart Mill taught, consideration of alternative ideas should neither be limited by the tyranny of the government nor by the tyranny of an overly orthodox social majority.
The intellectual elite have always hated the marketplace of ideas and have desired government support for the arts, entertainment, and news media. Because they are dissatisfied with the size of the audience that their chosen media gain in the marketplace, they have sought the official sanction of the government, its imprimatur. With the silly notion that the expression "freedom of the press" refers only to newspapers and not to other media, they have gradually chipped away at the separation of information and state through such organizations as the NEA, NEH, PBS, and NPR.
Of course, the real assault on freedom of thought — and its counter parts freedom of speech and freedom of the press — began with public schools and state universities. Initially, it was thought that local control would be a sufficient safeguard against the use of public schools for political indoctrination, and that "academic freedom" would likewise undergird state universities. But, with the increasing centralization of education, we are seeing those protections erode.
The assault on freedom of thought is seen in environmental politics. Those who oppose the enactment of the "command and control" of the economy in order to save the earth are described as "deniers," even though there is no consensus within the emerging field of climatology that human activity contributes to harmful global warming. The equivalent retort would be to describe the advocates of carbon-regulation as "alarmists;" yet, it is antithetical to freedom of thought to describe either side in such pejorative terms.
This assault is also seen in redistributionist politics, where, e.g., opposition to national health insurance is viewed as immoral, and we are told that we who are productive "owe" this, among other things, to others. It is seen in interest-group politics, where, e.g., you are called a racist, anti-Muslim, a sexist and/or a homophobe unless you follow the left-wing agenda on whatever issue is at hand.
Government support of newspapers — even more so than government support of industries — undermines political freedom because it means that there is little independent information available to people with which to form opinions. Without freedom of the press, along with the panoply of other civil liberties, democratic government loses its legitimacy.
It is almost inevitable that once the government starts picking out which industries to support, it will start picking which newspapers to support. One thing follows the other: Hayek called this the road to serfdom. Promising ethanol subsidies in Iowa and bailing-out the heavily unionized automobile industry of Michigan, almost every Congressman and Senator is scurrying about to secure pork-barrel spending for their district. Whole cities, and soon entire states will be kept afloat only because of various federal programs. All of these things remove the force of the marketplace to direct human action to the service of others, and replace it with the coercive power of the state. All of these things deny the true desires of people — as revealed in market prices — and substitute the opinions of the elite and politically-powerful for the true desires of people.
[Red Hot Lies: How Global Warming Alarmists Use Threats, Fraud, and Deception to Keep You Misinformed. By Christopher C. Horner. Regnery, 2008. Viii + 407 pages. An audio version of this review, read by Dr. Floy Lilley, is available as a free MP3 download.]
Those of us who refuse to accept calls from proponents of global warming for drastic restrictions on production often confront objections like this:
You skeptics, blinded by fanatical devotion to the free market, ignore evidence. True enough, you can trot out a few scientists who agree with you. But the overwhelming majority of climate scientists view man-made global warming as a great threat to the world. The course of inaction you urge on us threatens the earth with disaster.
Christopher Horner's excellent book provides a convincing response to this all-too-frequent complaint.
But how can it do so? Will not an "anti-global-warming" book of necessity consist of an account of scientists who dissent from the consensus? If so, will it not fall victim to the difficulty raised in our imagined objection? The book will pick a few favored experts to back up a preconceived political agenda.
Horner strikes at the root of this objection: it rests on a false premise. Contrary to what our objection assumes, there is in fact no consensus of scientists behind global-warming alarmism:
Professor Dennis Bray of Germany and Hans von Storch polled climate scientists to rate the statement, "To what extent do you agree or disagree that climate change is mostly the result of anthropogenic causes?" … They received responses from 530 climate scientists in 27 countries, of whom 44 percent were either neutral or disagreed with the statement… Science magazine helpfully refused to publish the findings, by the way. (p. 157)
But do not the most prestigious bodies of scientists, such as the National Academy of Science and the Intergovernmental Panel on Climate Change, claim that man-made global warming is indeed a danger? Horner shows that matters are not what they appear. Environmentalists insinuated their way into the National Academy through "a special Temporary Nominating Committee for the Global Environment, bypassing normal election procedures" (p. 91). Once ensconced, these partisan figures used their position to elect more of their ilk and to block skeptics. The environmentalist members include Paul Ehrlich, who predicted in The Population Bomb (1968) that by the 1970s and '80s hundreds of millions of people would die from starvation. His manifest failure as a prognosticator has not deterred him from touting new and improved ways to cripple capitalism.
Appeal to the Intergovernmental Panel (IPCC) is likewise dubious. Far from expressing a consensus of the world's leading climate experts, the reports of IPCC alter the opinions of the contributors to reflect climate alarmism. Horner quotes to great effect several protests by IPCC experts over the distortion of their views.
Dr. Frederick Seitz … revealed that although the IPCC report carries heft due to having been the topic of review and discussion by many scientists, "the report is not what it appears to be — it is not the version that was approved by the contributing scientists listed on the title page." (p. 300)
Activists in charge of the report's summary exaggerated what the scientists had said to promote the global-warming agenda.
The drive against dissenters from global warming extends much further. Patrick Michaels, a leading critic, reports that an editor told him skeptical papers must face much stricter scrutiny to win acceptance. The "newly elected Democratic Governor of Virginia, Tim Kaine, … soon after taking office ratcheted up the effort to get Michaels removed" from his post of state climatologist (p. 113). In one case, when a skeptical paper evaded the landmines and secured publication, the global-warming enthusiasts demanded that an immediate rebuttal appear.
"Skeptical papers must face much stricter scrutiny to win acceptance."It gets much worse. Bjørn Lomborg affirms global warming, but he angered the alarmists because he thinks programs to reduce carbon emissions should not have a high priority. When he expressed this view in The Skeptical Environmentalist, the alarmists launched against him a campaign of contumely. A Danish Star Chamber court of inquiry, the Danish Committees on Scientific Dishonesty, found him guilty of misrepresentation, even though it lacked evidence on which to base this charge. Instead, it took over and adopted as its own a bill of previously published charges.
The Committees ruled in January 2003, stating that "Objectively speaking, the publication of the work under consideration is deemed to fall within the concept of scientific dishonesty." This opinion, such as it was, offered as evidence not analysis, but a list of those who had criticized Lomborg. (p. 122, emphasis and footnote number removed)
After more inquiry, the Danish government quashed the proceedings, and Lomborg emerged vindicated.
Some globalists go even further. Greenpeace has called Horner a "climate criminal"; and an environmentalist group even rummaged through his trash, apparently hoping to find evidence of an antiglobalist conspiracy. Environmentalist stalwarts have urged that skeptics be imprisoned: by endeavoring to undermine our battle against the global-warming menace, are not skeptics guilty of criminal conduct? In Australia, global-warming advocates want to strip deniers of their citizenship.
Why do the proponents of global warming try to stamp out dissent? As Horner makes clear, billions of dollars are at stake.
The University of California system, for example, is preparing to spend $500 million [in taxpayer dollars] to create a think tank to analyze global warming and the Public Utilities Commission has adopted a decision which will spend $600 million more for a separate think tank to study the issue. (p. 223)
Research grants to "prove" global warming can readily be obtained. Nor is the gravy train confined to scientists; journalists, environmentalist organizations, and television and movie producers benefit from the campaign to save the earth. Al Gore, among other politicians, has used global-warming propaganda to enhance his fame and fortune. As Horner shows in a chapter that makes painful reading, "educational" materials to enlist children into the crusade provide yet another source of profit. If the global-warming hypothesis were overthrown, all of this money would be at risk; hence the imperative necessity to silence the critics.
But here I must face an objection. Even if heavy funding supports global-warming research, this does not suffice to show that the results of this work lack validity. Even if someone is "in it for the money," his results may be right. Must not motives and results be kept strictly separate?
Indeed so; but I have not argued that heavy financial backing undermines the conclusions of this sort of research. Rather, the financial interests explain why globalists suppress dissent. That said, the backing behind global-warming research should induce those of us who are not experts to hesitate before accepting in full the claims of the alarmists. The claim is not the fallacious "because you are an interested party, your results cannot stand"; it is the entirely defensible "because you an interested party, I will exercise caution before I accept what you say." Richard Posner, himself an alarmist, recognizes the point:
Fair enough; it would be a mistake to suppose scientists to be completely disinterested, and when the science is inexact or unsettled the normal self-interested motivations that scientists share with the rest of us have elbow room for influencing scientific opinion. To this it can be added that the climatic and other environmental effects of burning fossil fuels are red flags to the Greens… (Richard A. Posner, Catastrophe: Risk and Response (Oxford, 2004), p. 54)
But, as Posner goes on to note, does not this point also tell against the skeptics? Businesses have supported some of their research. This should certainly be acknowledged. As Horner notes, though, the notion that global-warming skeptics are tools of oil companies and other big businesses has little to be said for it. Quite the contrary, many businesses avidly support global-warming alarmism. If legislation imposes restrictions on oil and coal, e.g., alternative energy sources stand to profit.
But does not the objection I posed at the outset now recur in modified form? Even if no scientific consensus endorses global warming, what justifies us in inclining to the skeptical position? Are we not choosing our experts to harmonize with our political opinions?
Here we cannot escape. We must evaluate the evidence as best we can and this does entail choosing which experts to believe. It does not follow, though, that we must adopt agreement with a political position as our criterion for choice.
Horner offers a number of facts that lend strong backing to those who question the global-warming dogma. (The main focus of the book, though, lies not in scientific theory but in a depiction of the techniques and tactics of Horner's opponents.[1]) For one thing, a number of the thermometers used to measure global warming have been placed in situations likely to produce an upward bias, e.g., next to incinerators or in cities rather than less warm rural locations.
Horner does not deny that some increase in temperature has occurred since the panic about global cooling in the '70s. But the increase by no means pushes the earth's temperature higher than ever in recorded history, let alone prehistoric times. Temperatures in the Medieval Warming Period ranged at least as high as those now current. Further, the projected increase in temperature owing to human emissions of carbon dioxide, the basis for all the panic, amounts to very little. If temperature does increase somewhat, this may turn out to have largely good effects, such as greater growth in vegetation.
Subsequent research [to Michael Mann's discredited "hockey-stick graph"] has ratified the old, outdated thinking drawn from agricultural records, diaries, cultural artifacts, and the like that the Medieval Warming was warmer than today and the [following] Little Ice Age cooler, globally and not regionally. (pp. 108–9)
But what of claims that temperature increase may melt the polar icecaps, with dire consequences? Horner notes that the area near the North Pole has been warmer in the past than it is now; further, Antarctica, much larger than the Arctic Circle, now is colder than earlier in the 20th century. Alarms about flooding rest on highly disputable computer models.
Even if the skeptics have a good case, why need we adopt it? I do not mean that we should judge in favor of the alarmists and set to one side the arguments of their critics. Rather, why need we take sides in a scientific controversy, any more than, say, we need to adopt a particular interpretation of quantum mechanics?
Unfortunately, we cannot remain neutral while the experts battle. The global-warming advocates support drastic measures that would seriously affect production. Some of them go further and call for curbs on human population. In this connection, it is more than a little disturbing that John Holdren, chosen by Barack Obama as his science advisor since the publication of Horner's book, is a close associate of Paul Ehrlich. Holdren was among those elected to the National Academy of Science "from the temporary nominating group" earlier mentioned (p. 93). To decline to take a stand is to surrender to environmentalist extremists.
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A nagging doubt remains. What if, however unlikely, the alarmists turn out to be right? Horner deploys in this connection what Herbert Hoover would have called a "powerful statistic": there is little that we can do to lower world temperatures. If all nations fully adhered to the guidelines of the Kyoto Protocol, this would have but a minute effect.
As Pat Michaels' World Climate blog summed it up: "…the amount of future global warming that would be 'saved' would amount to about 0.07°C by the year 2050 and 0.15°C by 2100." That amount of warming delayed for a few years at such tremendous cost is actually too small for scientists to distinguish from the "noise" of inter-annual temperature variability. (p. 249)
Measures to curb global warming cannot succeed, but they can do much harm. It is Horner's great merit to have called our attention to a real danger — not global warming, but the measures that global-warming alarmists wish to inflict on us.
David Gordon covers new books in economics, politics, philosophy, and law for The Mises Review, the quarterly review of literature in the social sciences, published since 1995 by the Mises Institute. He is author of The Essential Rothbard, available in the Mises Store. Comment on the blog.
This review originally appeared in The Mises Review, Winter 2009.
Notes[1] Two books that I have found helpful on the scientific background are Horner's earlier The Politically Incorrect Guide to Global Warming and Environmentalism (Regnery, 2007) and Roy Spencer, Climate Confusion (Encounter Books, 2008).
An audio version of this article, read by Dr. Floy Lilley, is available as a free MP3 download.
Unfortunately, we cannot remain neutral while the experts battle. The global-warming advocates support drastic measures that would seriously affect production. Some of them go further and call for curbs on human population. In this connection, it is more than a little disturbing that John Holdren, chosen by Barack Obama as his science advisor since the publication of Horner's book, is a close associate of Paul Ehrlich, writes David Gordon.
This audio Mises Daily is narrated by Floy Lilley.
If environmental stewardship obligates us to be mindful of future generations in making our day-to-day decisions, what should we do? Should we be recycling paper and preventing people from building parking lots to save trees? Or should we acknowledge that the planet will be destroyed sooner or later and try to find ways to build something like Battlestar Galactica so the species will be preserved?
Careful economic reasoning is indispensable to a correct framing of the issue. One of the most important principles of economics is the principle of the time value of money — the idea that a dollar today is worth more than a dollar a year from now.
Basically, we know that people prefer present consumption to future consumption, all other things remaining equal, so the rate at which we discount the future is of paramount importance to questions about environmental policy. In this article, I will explore two criticisms of environmentalist claims that we must do all we can to "conserve." First, the profit-and-loss system provides us with the information we need in order to make rational decisions about use and allocation. Second, if one denies that we should discount the future, we are led to radical conclusions about environmental policy.
Debates about environmental issues are debates about the rate at which we should discount the future. Questions about "the world we are leaving for our children" and complaints about the alleged short-sightedness of present generations are ultimately claims that we are discounting the future inappropriately.
In his book The Armchair Economist, Steven Landsburg made an important point about the claim that we should conserve land for future generations. He asks how we are to know whether our children or our children's children will prefer a forest to the income that would be generated by, say, a parking lot or a strip mall. We cannot make interpersonal comparisons of utility, but we can use the principle of the time value of money to inform our decision.
The profit-and-loss system provides valuable feedback about whether assets are being used wisely or not. At any point in time, the price of an asset consists of the discounted present value of all future income accruing to that asset. If a firm expects the income from a patch of land to be higher if it is used to build a strip mall than if it remains a forest, then it should be converted into a strip mall.
To the extent that this calculation is incorrect, it is incorrect because some aspects of the decision aren't priced. The reason some aspects of the decision aren't priced is because private-property rights to valuable attributes of the goods and services being transacted have not been defined. When this occurs, a price can be established.
Some object that we should not discount the future, or if we do, we should discount it only very, very slightly. They argue that future generations should be considered equally in environmental calculations. If this is the case, however, then questions about protecting the Earth for its own sake are rendered moot by an uncomfortable fact that economist Walter Block has pointed out: at some point, the sun will die out and the planet we are so concerned about protecting will someday be no more, all else equal.
If we are concerned about the preservation of the species, then this suggests a radically different set of ideas and a radically different way of thinking about the environment. Someday, the key environmental problem facing the human race won't be to refrain from polluting land and sea but to either evacuate or move the planet, two tasks that are both well beyond the boundaries of current technological capabilities but which can be solved, at least in principle.
A solution requires additions to the ultimate resource, which is to say that it requires additional human ingenuity and a finer division of labor so that people can focus on the problems that interplanetary travel would raise. This means that we need more people, and we need to make them richer, faster to release the resources that would be needed to solve some of these problems. While this runs precisely counter to conventional environmental dialogue, the thesis that we should not discount the future implies that all other concerns should take a backseat to the problem of preventing human extinction when the sun dies.
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"A solution requires additions to the ultimate resource…"At first glance, the goal of recycling more and conserving more seems appropriate, even desirable. As Landsburg's example shows, however, advocates of conservation do not have the information they need to make the right decision if property rights aren't clearly defined. Further, as Block's example shows, if we really are to care about future generations and sacrifice on their behalf by not discounting the future, the inevitable destruction of the Earth when the sun dies out suggests a radically different approach. If we are really as concerned about our multi-great grandchildren who will presumably inhabit the earth in several billion years, we shouldn't be worried about recycling paper. We should be worried about building Battlestar Galactica.
Art Carden is assistant professor of economics and business at Rhodes College and an adjunct fellow of the Independent Institute. He has been a visiting research fellow at the American Institute for Economic Research, and a summer research fellow at the Ludwig von Mises Institute. Comment on the blog.
Mises Review 14, No. 4 (Winter 2008)RED HOT LIES: HOW GLOBAL WARMING ALARMISTS USE THREATS, FRAUD, AND DECEPTION TO KEEP YOU MISINFORMEDChristopher C. HornerRegnery, 2008, viii + 407 pgs.
Those of us who refuse to accept calls from proponents of global warming for drastic restrictions on production often confront objections like this:
You skeptics, blinded by fanatical devotion to the free market, ignore evidence. True enough, you can trot out a few scientists who agree with you. But the overwhelming majority of climate scientists view man-made global warming as a great threat to the world. The course of inaction you urge on us threatens the earth with disaster.
Christopher Horner's excellent book provides a convincing response to this all-too-frequent complaint.
But how can it do so? Will not an "anti-global-warming" book of necessity consist of an account of scientists who dissent from the consensus? If so, will it not fall victim to the difficulty raised in our imagined objection? The book will pick a few favored experts to back up a preconceived political agenda.
Horner strikes at the root of this objection. It rests on a false premise. Contrary to what our objection assumes, there is in fact no consensus of scientists behind global-warming alarmism:
Professor Dennis Bray of Germany and Hans von Storch polled climate scientists to rate the statement, "To what extent do you agree or disagree that climate change is mostly the result of anthropogenic causes?" … They received responses from 530 climate scientists in 27 countries, of whom 44 percent were either neutral or disagreed with the statement… Science magazine helpfully refused to publish the findings, by the way. (p. 157)
But do not the most prestigious bodies of scientists, such as the National Academy of Science and the Intergovernmental Panel on Climate Change, claim that man-made global warming is indeed a danger? Horner shows that matters are not what they appear. Environmentalists insinuated their way into the National Academy through "a special Temporary Nominating Committee for the Global Environment, bypassing normal election procedures" (p. 91). Once ensconced, these partisan figures used their position to elect more of their ilk and to block skeptics. The environmentalist members include Paul Ehrlich, who predicted in The Population Bomb (1968) that by the 1970s and '80s hundreds of millions of people would die from starvation. His manifest failure as a prognosticator has not deterred him from touting new and improved ways to cripple capitalism.
Appeal to the Intergovernmental Panel (IPCC) is likewise dubious. Far from expressing a consensus of the world's leading climate experts, the reports of IPCC alter the opinions of the contributors to reflect climate alarmism. Horner quotes to great effect several protests by IPCC experts over the distortion of their views.
Dr. Frederick Seitz … revealed that although the IPCC report carries heft due to having been the topic of review and discussion by many scientists, "the report is not what it appears to be — it is not the version that was approved by the contributing scientists listed on the title page." (p. 300)
Activists in charge of the report's summary exaggerated what the scientists had said to promote the global-warming agenda.
The drive against dissenters from global warming extends much further. Patrick Michaels, a leading critic, reports that an editor told him skeptical papers must face much stricter scrutiny to win acceptance. The "newly elected Democratic Governor of Virginia, Tim Kaine, … soon after taking office ratcheted up the effort to get Michaels removed" from his post of state climatologist (p. 113). In one case, when a skeptical paper evaded the landmines and secured publication, the global-warming enthusiasts demanded that an immediate rebuttal appear.
"Skeptical papers must face much stricter scrutiny to win acceptance."It gets much worse. Bjørn Lomborg affirms global warming, but he angered the alarmists because he thinks programs to reduce carbon emissions should not have a high priority. When he expressed this view in The Skeptical Environmentalist, the alarmists launched against him a campaign of contumely. A Danish Star Chamber court of inquiry, the Danish Committees on Scientific Dishonesty, found him guilty of misrepresentation, even though it lacked evidence on which to base this charge. Instead, it took over and adopted as its own a bill of previously published charges.
The Committees ruled in January 2003, stating that "Objectively speaking, the publication of the work under consideration is deemed to fall within the concept of scientific dishonesty." This opinion, such as it was, offered as evidence not analysis, but a list of those who had criticized Lomborg. (p. 122, emphasis and footnote number removed)
After more inquiry, the Danish government quashed the proceedings, and Lomborg emerged vindicated.
Some globalists go even further. Greenpeace has called Horner a "climate criminal"; and an environmentalist group rummaged through his trash, apparently hoping to find evidence of an antiglobalist conspiracy. Environmentalist stalwarts have urged that skeptics be imprisoned: by endeavoring to undermine our battle against the global-warming menace, are not skeptics guilty of criminal conduct? In Australia, global-warming advocates want to strip deniers of their citizenship.
Why do the proponents of global warming try to stamp out dissent? As Horner makes clear, billions of dollars are at stake.
The University of California system, for example, is preparing to spend $500 million [in taxpayer dollars] to create a think tank to analyze global warming and the Public Utilities Commission has adopted a decision which will spend $600 million more for a separate think tank to study the issue. (p. 223)
Research grants to "prove" global warming can readily be obtained. Nor is the gravy train confined to scientists; journalists, environmentalist organizations, and television and movie producers benefit from the campaign to save the earth. Al Gore, among other politicians, has used global-warming propaganda to enhance his fame and fortune. As Horner shows in a chapter that makes painful reading, "educational" materials to enlist children into the crusade provide yet another source of profit. If the global-warming hypothesis were overthrown, all of this money would be at risk; hence the imperative necessity to silence the critics.
But here I must face an objection. Even if heavy funding supports global-warming research, this does not suffice to show that the results of this work lack validity. Even if someone is "in it for the money," his results may be right. Must not motives and results be kept strictly separate?
Indeed so; but I have not argued that heavy financial backing undermines the conclusions of this sort of research. Rather, the financial interests explain why globalists suppress dissent. That said, the backing behind global-warming research should induce those of us who are not experts to hesitate before accepting in full the claims of the alarmists. The claim is not the fallacious "because you are an interested party, your results cannot stand"; it is the entirely defensible "because you an interested party, I will exercise caution before I accept what you say." Richard Posner, himself an alarmist, recognizes the point:
Fair enough; it would be a mistake to suppose scientists to be completely disinterested, and when the science is inexact or unsettled the normal self-interested motivations that scientists share with the rest of us have elbow room for influencing scientific opinion. To this it can be added that the climatic and other environmental effects of burning fossil fuels are red flags to the Greens… (Richard A. Posner, Catastrophe: Risk and Response (Oxford, 2004), p. 54)
But, as Posner goes on to note, does not this point also tell against the skeptics? Businesses have supported some of their research. This should certainly be acknowledged. As Horner notes, though, the notion that global-warming skeptics are tools of oil companies and other big businesses has little to be said for it. Quite the contrary, many businesses avidly support global-warming alarmism. If legislation imposes restrictions on oil and coal, e.g., alternative energy sources stand to profit.
But does not the objection I posed at the outset now recur in modified form? Even if no scientific consensus endorses global warming, what justifies us in inclining to the skeptical position? Are we not choosing our experts to harmonize with our political opinions?
Here we cannot escape. We must evaluate the evidence as best we can and this does entail that we choose which experts to believe. It does not follow, though, that we must adopt agreement with a political position as our criterion for choice.
Horner offers a number of facts that lend strong backing to those who question the global-warming dogma. (The main focus of the book, though, lies not in scientific theory but in a depiction of the techniques and tactics of his opponents.[1]) For one thing, a number of the thermometers used to measure global warming have been placed in situations likely to produce an upward bias, e.g., next to incinerators or in cities rather than less warm rural locations.
Horner does not deny that some increase in temperature has occurred since the panic about global cooling in the '70s. But the increase by no means pushes the earth's temperature higher than ever in recorded history, let alone prehistoric times. Temperatures in the Medieval Warming Period ranged at least as high as those now current. Further, the projected increase in temperature owing to human emissions of carbon dioxide, the basis for all the panic, amounts to very little. If temperature does increase somewhat, this may turn out to have largely good effects, such as greater growth in vegetation.
Subsequent research [to Michael Mann's discredited "hockey-stick graph"] has ratified the old, outdated thinking drawn from agricultural records, diaries, cultural artifacts, and the like that the Medieval Warming was warmer than today and the [following] Little Ice Age cooler, globally and not regionally. (pp. 108–9)
But what of claims that temperature increase may melt the polar icecaps, with dire consequences? Horner notes that the area near the North Pole has been warmer in the past than it is now; further, Antarctica, much larger than the Arctic Circle, now is colder than earlier in the 20th century. Alarms about flooding rest on highly disputable computer models.
Even if the skeptics have a good case, why need we adopt it? I do not mean that we should judge in favor of the alarmists and set to one side the arguments of their critics. Rather, why need we take sides in a scientific controversy, any more than, say, we need to adopt a particular interpretation of quantum mechanics?
Unfortunately, we cannot remain neutral while the experts battle. The global-warming advocates support drastic measures that would seriously affect production. Some of them go further and call for curbs on human population. In this connection, it is more than a little disturbing that John Holdren, whom Barack Obama has since Horner's book has been published chosen as his science advisor, is a close associate of Paul Ehrlich. Holdren was among those elected to the National Academy of Science "from the temporary nominating group" earlier mentioned (p. 93). To decline to take a stand is to surrender to environmentalist extremists.
My son is almost three months old, so suffice it to say that my wife and I have spent a lot of time thinking about, purchasing, changing, and disposing of diapers. I was reassured when I read that, according to a British government study, the carbon footprint attributable to disposable diapers is markedly lower than the carbon footprint attributable to reusable diapers.
This is not new information, but I was glad to see that there is now even more evidence that disposable diapers are more environmentally friendly than cloth diapers. It is yet another example of bad outcomes when good intentions are substituted for careful analysis. However, this still fails to consider the most important resource saved by disposable diapers: our time and energy.
No amount of innovation, no new technology, and no new medical advances will change the fact that there are only 24 hours in a day. Thus, every second is precious. Technology cannot give us longer days, but it can allow us to accomplish more in that span. Changing a diaper is a simple process: remove, discard, replace. We don't have to worry about messing with a stinking heap of diapers that have to be washed, dried, and reused. An even more pleasant byproduct of changing baby technology is that our "Diaper Champ" guards us from the offensive smells that would emanate from a more traditional diaper pail. Disposable diapers make our lives better by economizing on our time and energy, and innovations in diaper-disposal technology make our house a more pleasant place than it would otherwise be.
In one of my favorite passages in Ayn Rand's classic Atlas Shrugged, oil tycoon Ellis Wyatt talks about how the time we save with capital and technology make it as if we have defied death, if only for a few hours at a time. While it is appointed unto man once to die, technology makes our steady march to the grave much more pleasant and fulfilling. Among numerous other innovations, disposable diapers allow me to spend my time doing other things — writing articles about the economics of disposable diapers, for example — instead of washing excrement out of cloth diapers.
The time we save because of disposable diapers may seem trivial, but disposable diapers are both a cause and an effect of what economist Julian Simon called The Ultimate Resource. According to Simon, the ultimate resource is the human mind, which is utterly boundless in its creativity. Automation and innovation free the mind from mundane tasks and allow us to apply our mental energies to more stimulating problems. In this sense time and labor-saving innovations are a cause of further innovation. They are also an effect.
Disposable diapers did not appear out of nowhere, nor were they given to man by beneficent Prometheus; they are the product of human intelligence applied to objective reality as we best know it. Someone, somewhere had to discover that when certain chemicals are combined in a certain way, when certain machines are arranged in a given fashion, and when a certain series of actions are undertaken in a particular order, a disposable diaper is produced. Mundane? Perhaps. Miraculous? Almost certainly.
This brings me to a final point about what we're to do with the mountains of disposable diapers that will supposedly clog landfills for the next ten or twenty generations. In an interesting and entertaining EconTalk Podcast, Michael Munger — one of my co-bloggers at Division of Labour — hypothesizes that someday, people will be strip-mining old landfills for petroleum products that they can convert into fuel. Disposable diapers would certainly fit the bill. For someone who is truly concerned about the future of the planet, exploring ways to convert potential energy (existing garbage, for example) into kinetic energy would probably be a better investment than trying to convince the neighbors to use cloth diapers.
For the environmentally conscious, it appears that disposable diapers are not the enemy. If anything, they are better for the environment than the reusable diapers that have been trumpeted as the diapers of choice for the progressive and the enlightened. And once again, analysis trumps intentions. So go green: put down the cloth diapers and buy that extra-large package of disposables.
According to one slogan, we should think globally, but act locally.[1] Such thinking obviously has significant appeal, but it is highly misleading. Typically, this slogan pertains to environmental issues. However, it represents a particular worldview that is hostile to free markets and friendly towards governmental intervention.
The appeal of this slogan and the ideas it represents derives from legitimate issues. The persons who promote governmental control of the economy and environment do so because they see great potential for conflict in a free society based on the pursuit of self-interest. After all, how can individuals pursue their interests without coming into conflict with each other?
The simplest and most-obvious answer to this question is we cannot avoid conflict in a society of free individuals. It might therefore seem to be the case that the interests of individuals can only be reconciled through coercion. However this dismal conclusion is not true. Reconciliation of divergences of interests between individuals comes through social cooperation within the market system. To see this point we must understand how the pursuit of individual interests leads to conflict, and what markets do to harmonize individual interests.
The most obvious reasons for conflicts between individuals are the fact of scarcity and the idea of rational self-interest. If we each pursue our selfish use of scarce resources aggressively, conflict might seem inevitable. There are a few dreamers who speak of a postscarcity society. While the idea of abundance has a certain emotional appeal there are obvious reasons to reject such an idea, such as human mortality and the finite nature of natural resources. Others reject the idea of self-interest. After all, some people do undertake seemingly selfless actions, such as charity and occasionally martyrdom. And some believe that though there is no natural harmony of interest, we can instead harmonize social life by making human nature altruistic.
Altruism alone does not harmonize social interaction. On the contrary, a world of altruistic people could easily be more rancorous than the world we know. It is not enough for people to want to promote the interests of others. We must also comprehend the interests of others, and this is impossible. One of the great insights of 20th-century economics was the "knowledge problem" examined by F.A. Hayek. The modern global economy is shaped by the individual interests and local circumstances of billions of people, each of whom is unique. We each have our own scale of values concerning the end uses of scarce resources, and these values are personal and subjective. Moreover, we each develop our values through time, through experience. We also each have unique skills or talents in producing the things of value to ourselves or others.
Adam Smith illustrated the productivity advantages of specialized and divided labor. The ability to divide productive tasks among individuals enables groups to improve productivity and raise living standards far beyond what is possible under autarky. Finally, modern means of production use advanced technology arranged in complicated chains of production. Capital goods exist in enormous variety, and are arranged in very complicated ways. The unique nature of wants combines with the advantages of global division of labor and modern technology to pose a problem. How can anyone comprehend such complexity? How can we harmonize so many different actions in the pursuit of self-interest?
It should be fairly obvious that nobody can "think globally," but this is not the only problem with the aforementioned slogan. It might seem inevitable that we must "act locally," but this is not true either. Our inability to think globally poses a problem. How can a global economy work if nobody comprehends its working? The knowledge problem renders the idea of an altruistic solution impossible. Of course, self-interested people will want to achieve global order, if such an order delivers higher living standards for them.
In any case, seemingly selfless acts usually have a hidden payoff. People who perform volunteer work or donate to charities often speak of how much they enjoy these acts. Also, leaders and martyrs can secure prestige and a place in history for themselves when they commit seemingly selfless acts. Consequently, there is no reason to believe that altruism exists or will ever exist, and there is no need for it anyway. The real problem of attaining social cooperation lies not in the nature of human intentions, but in the limits of human cognition.
Since we can only think locally, global coordination of production requires some means by which we can "extend our span of the use of resources beyond the span of conscious control of any one mind" (Hayek 1948, p. 88). Markets solve the knowledge problem of mutual coordination of the use of scarce resources in the face of the knowledge problem. Prices in markets reach out across the world as signals to coordinate production.
Increased demand for oil in Asia has sent a signal to the West to conserve this resource. Americans recently cut their consumption of oil by 800,000 barrels a day, not because of any altruistic sentiments regarding Asians. We have economized on our use of oil because we are thinking locally, in terms of our own budgets, our own interests. Yet without intending to, we have acted globally to coordinate with others in the use of this and all other scarce resources. The price system enables us to "think locally and act globally" through markets. This is how we solve the knowledge problem, to arrive at some degree of global harmonization of many selfish interests.
"The price system enables us to 'think locally and act globally' through markets."The market system itself was not designed for the purpose of achieving social harmony. Markets emerged initially out of self-interested trade based on double coincidence of wants. When two people each have what the other wants and want what the other has, they can trade provided that they recognize this situation and have the means to carry out this trade (Menger 1871). Institutions like money and property emerge to facilitate commerce.[2] The whole system of capitalism can therefore be seen as Adam Smith put it: "a system of natural liberty". The formation of market prices in money makes the coordination of global production possible.[3]
There is a moral dimension to the idea of social coordination through trade in markets. As Henry Hazlitt has argued, there is no conflict between personal interests and ethical behavior. Ethical conduct derives from the subordination of immediate gains to longer-term gains. People achieve the most for themselves through social cooperation in markets rather than through coercive transfers. This reasoning of Hazlitt's implies that markets harmonize ethical conduct and personal gain. Yet some still fail to see how a system of natural liberty enables us to achieve prosperity and justice. Some people still see planning or "global thinking" and coercion through government as the means of attaining a better and more just world.
The debate between those who see the benefits of a free society and those who insist that economic progress and social justice require deliberate planning and coercion is long standing. In 1767, Adam Ferguson described an evolutionary process where an unplanned social order emerges out of purposeful acts in the face of a complex and uncertain world. Since then, scholars like Adam Smith, Carl Menger, and F.A. Hayek have developed this evolutionary view of institutions. Yet some people claim that the market system could only have resulted from deliberate action to establish social order. Even though nobody could have designed the modern global economy in all its details, there must have been a more general plan for social order, especially where the protection and enforcement of individual rights are concerned.
Private institutional arrangements can emerge and develop mechanisms for the enforcement of rights that are, however, often less formal and coercive than is commonly thought. Individuals tend to coordinate activity between themselves by abiding by unwritten, unspoken, or implicit agreements. As Robert Axelrod has demonstrated, it is in the interests of individuals to cooperate with others so long as others cooperate with them. Of course, the need for self-defense exists in great variety, but the satisfaction of such needs does not require a central planner who can "think globally." On the contrary, protection industries require exchange and competition on a mass scale, if they are to function properly.[4]
We each achieve much more through social cooperation than we can alone. The past few centuries have proven Adam Smith right about the great benefits of a global division of labor. Furthermore, experience with the market system has proven its worth as a coordinating mechanism for global production. Yet many people not only deny the merits of global capitalism, they decry its results and call for greater governmental control. Politicians still win elections by promoting "economic plans."
"How can individuals pursue their interests without coming into conflict with each other?"While the debate in question is lengthy, and the sum of all the ideas within this debate is considerable, it can all be reduced to a simple form: The idea that we can think globally is absurd, not only when it comes to environmental issues, but perhaps even more so when it comes to economics. The idea that we should act locally is timid and small minded. The market system globalizes human action in a way that makes global thinking unnecessary, if not pernicious. The idea that we should think globally and act locally has superficial appeal, but careful examination of this proposition reveals that it derives from thinking that is both utopian and mediocre or unimaginative. The idea that we should think locally or selfishly and act globally might seem counterintuitive — in some sense small minded and greedy and in another sense absurd. However, competition in the market system does result in the unintended consequence of promoting general interests through individual actions, whether they appear greedy or altruistic.
To put it simply, those who truly want social progress should promote the idea that we should all think locally as individuals and act globally through the capitalist system. This is the creed of the true progressive.
NotesI thank Don Lavoie, Pete Boettke, Anila Xhunga, and Scot Kjar for commenting on drafts of this paper. The usual disclaimer applies.
[1] This slogan has been attributed to David Brower, Rene Dubos, and Jacques Ellul. In its original usage it applied to environmental issues. However, the idea behind this slogan underlies much of the thinking of socialists and social democrats.
[2] Menger has an excellent discussion of the emergence of money in his "Principles". Mises refined this concept in his regression theorem (1912, 1949).
[3] Von Mises argued this point forcefully in his "Socialism" (1922).
[4] Donald Wittman (1995) and Theodore Breton (1989) have shown that if government is to achieve economic efficiency, it can do so only by replicating the workings of the market system.
SourcesAxelrod, Robert An Evolutionary Approach to Norms
Breton, Theodore (1989) "The Growth of Competitive Governments." The Canadian Journal of Economics. 22, 717Ð750.
Ferguson, Adam. Essay on the History of Civil Society (1767)
Hayek, F.A. Individualism and Economic Order (1948)
—— "The 'Non Sequitur' of the Dependence Effect," (1962)
—— The Constitution of Liberty (1960)
Hazlitt, Henry. The Foundation of Morality (1964)
Menger, Carl. Principles of Economics (1871)
Mises, Ludwig von. Human Action (1949)
——The Theory of Money and Credit (1912)
—— Socialism (1922)
Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations (1776)
Wittman, Donald. The Myth of Democratic Failure (1995)
In a recent post on the popular blog Marginal Revolution, a reader asked GMU professor Tyler Cowen whether his experience with economic models shed any insight on the promise or pitfalls of climate models. I think the question is brilliant, and (in my immodest opinion) far more interesting than the answer Cowen gave. In the present article I'll attempt to give the question the fuller treatment I believe it deserves.
The "rigorous," peer-reviewed Keynesian economic models reached the zenith of their professional success in the 1950s and 1960s, and yet, in retrospect, many economists would now admit that they were fundamentally flawed and provided horrible policy recommendations. Despite the obvious differences between the disciplines, this sorry episode from the field of economics should counsel caution before we hand over even more power to the politicians due to the results of mainstream climate models.
What Went Wrong in EconomicsProfessional climatologists are aware of the analogy between economic and climate models, and they (correctly) point out that the social sciences are far less susceptible to mathematical description and computer simulation than are the natural sciences. Even though there are some loose joints in climate models, they are still built up from the laws of physics. In contrast, there is nothing analogous in a macroeconomic model, especially a "hydraulic" Keynesian one from the 1950s. Even the tautologies from microeconomics — such as the fact/postulate that a consumer maximizes his utility subject to his income — weren't in the earlier macro models. To put it in other words, macroeconomists had (and continue to have) a lot more leeway or degrees of freedom when constructing their models, compared to the climatologists.
Having conceded that there is more of an "idiot check" on climate models, we should still remind ourselves of what went wrong in the economics profession. Climatologists shouldn't comfort themselves by saying, "Well gee whiz, our PhDs don't do anything that sloppy!" What happened in economics was that pioneers such as Paul Samuelson and Kenneth Arrow showed how elegant economic models could be. Sure, some of the wisdom of the old school "verbal" economists was lost in the translation, but oh, how rigorous and precise was the new approach! Although government funding certainly had something to do with the transformation, I think some Austrian economists underestimate the seductive power of formal modeling, and how a rising generation of the brightest (and mathematically adept) economists were drawn to the work of Samuelson, et al.
Of course, in retrospect these whiz kids at MIT and Harvard were giving the government horrible policy recommendations (and, in general, they still are). Even on its own terms — i.e., not just within the whiny circles of Austrians — mainstream macroeconomics was very crude in those early decades. Macro theorists now understand the importance of putting "micro" foundations (i.e., maximizing agents) into the model; Milton Friedman and others showed the dangers of relying on short-term correlations, especially the Phillips Curve; and Robert Lucas showed the contradictions in assuming people in the economy don't react when government policies change. Today's macroeconomists understand that it was poor central banking and fiscal policies that led to the stagflation of the 1970s. And yet, the government's awful decisions weren't due to its flip dismissal of the economists. The government's actions, though certainly influenced by petty politics, were still consistent with "expert" macroeconomic thinking. Nobel Laureate Samuelson and the other top academics weren't warning of stagflation when Nixon took the United States off the gold standard.
To be sure, there were some Keynesian skeptics, some who denied the entire legitimacy of the macro models with their focus on boosting aggregate demand to ensure full employment. But if a Murray Rothbard blamed recessions on unsustainable investments in higher order goods, or an Israel Kirzner stressed the importance of entrepreneurship, someone like Samuelson could quite correctly say, "Look, you can write up your cute little verbal critiques of our models all you want; we never claimed they were perfect. Maybe it's true — though I doubt it — that all of us Nobel laureates are totally wrong about this stuff. So if you want to take the latest Solow model and incorporate a Hayekian triangle, you are free to do so — though Hayek himself found the task so formidable that he switched to writing about the human mind. And as far as entrepreneurship, go ahead and write up a model that is both interesting and rigorous, which shows agents discovering their ignorance over time. Once you write that up with Greek letters and get it published in a top journal, we'll talk. Now if you'll excuse me, I have to tell Tricky Dick how much to boost aggregate investment this quarter."
What May Have Gone Wrong in ClimatologyNaturally I have framed the fanciful description above in order to parallel the arguments in climate science. You have a few big guns such as Richard Lindzen and Roy Spencer who really do publish peer-reviewed papers critical of the "consensus"; Lindzen is even a professor of meteorology at MIT. Yet they are considered smart but ideologically driven, just as Milton Friedman was undeniably a sharp guy cranking out papers from the University of Chicago, and Hayek even won a Nobel Prize. Despite their credentials, Friedman and Hayek were no serious challenge to the Keynesian orthodoxy since, after all, they wrote for the layperson who opposed macro fine-tuning on ideological grounds.
My current job requires me to at least familiarize myself with the typical climate scientists' case for anthropogenic (a fancy term for "manmade") global warming. The deeper I get into the literature — especially when reading their responses to skeptics — the more analogous I think the situation is to the episode in economics sketched above. Richard Lindzen, for example, thinks that the cutting-edge models do not correctly model certain processes in the atmosphere at the "micro" level. Orthodox climatologists concede the point, but then challenge Lindzen to tweak their models in order to come up with a better simulated fit with historical observations (on temperatures, rainfall, etc.). Thus far Lindzen has been unable to do this, because the fastest computers would not be able to run a simulation of the entire world, at a scale small enough to capture the effects Lindzen points to, and obey all the laws of physics.I am grateful to Robert Bradley for this point. An excellent illustration of this contrast between micro and macro in climate models is a new regional study predicting an increase in Middle East rainfall of 50%, in contrast to the global models which only a month earlier had predicted severe water shortages in the region. What has happened (it seems to me) is that even the latest generation of climate models necessarily make some heroic simplifying assumptions, in order to render the model tractable. Lindzen isn't accusing the modelers of being lazy. Even so, he maintains that their models are still crude and give very misleading results. The connection between the work of Paul Samuelson and, say, Israel Kirzner should be obvious.
What is particularly worrisome to me is that the case for anthropogenic global warming runs basically like this (and see the Intergovernmental Panel on Climate Change Fourth Assessment Report [IPCC AR4] section here [pdf] in their own words, especially Frequently Asked Question 9.2 on page 702): When the modelers simulate the 20th century, they achieve a closer fit to the historical trends if they assume large, positive feedback effects from human greenhouse gas emissions. If the modelers adjust the dials (so to speak) and turn down the possible influence of human emissions, then, so long as we insist the models obey the laws of physics, the fit between the simulated temperatures and observed temperatures gets worse.
To an economist, at first this sounds as if they are simply running regressions, and they get a higher R2 by bumping up the coefficient on the greenhouse gas term. But the climate models are more sophisticated than a naïve regression. They really are simulations, trying to boil down the entire earth (including a crude version of the oceans) into a form that a computer can handle. Even so, there are still several components with uncertain effects (such as whether aerosols released into the atmosphere by human activity on net caused the globe to be warmer or cooler in the 1970s), and thus the climate modelers have some freedom in their approaches; they are not completely constrained by the laws of physics, since they have to cut some corners in order for the computer to be able to process the model.
Indeed, this is why there is such a wide range of plausible estimates for how much global temperatures will increase in the long run, due to a doubling of carbon dioxide concentrations in the atmosphere. The scientists are agreed that if these concentrations double (relative to preindustrial times, with a benchmark year of 1750), global mean surface temperatures will rise around 1.2°C just from the direct operation of the enhanced greenhouse effect. Yet the IPCC AR4 assessment says that a doubling will lead to an "equilibrium" (i.e., long run) temperature increase that is "likely" in the range of 2 to 4.5°C, with a best guess of 3°C. The range of estimates is significantly higher than the direct effect, because it is assumed that temperature rises themselves will set into motion further warming. For example, as the earth warms due to greenhouse gas emissions, the atmosphere will hold more water vapor, which in turn will enhance the greenhouse effect.
All of the truly nightmarish scenarios obviously involve high estimates for "climate sensitivity," i.e., how much the globe warms not only because of the direct effect of greenhouse gases, but also because of the "positive feedbacks" this warming itself induces. It is because of these scenarios that Joseph Romm warned in a recent Cato debate that unless immediate action is taken to stabilize CO2 concentrations at 450 ppm, we invite the destruction of modern civilization. (Really, he said that; see Jim Manzi's more sober view.)
Now even though the skeptics cannot give a model of the entire world’s climate system of their own that performs the simulations in the IPCC’s models better than the ones favored by the IPCC, it is entirely appropriate to question how accurate the current batch of models really are. From the preindustrial benchmark date until 2005, atmospheric CO2 concentrations increased some 35 percent (from about 280 ppm to 379 ppm), while temperatures only increased around 0.7°C. If this were the end of the story — i.e., if the increase in CO2 were the only relevant change, and if global temperatures stopped increasing after this 0.7 degree increase — then the actual climate sensitivity would be below the lower end of the IPCC's range.
Now in fairness to the IPCC modelers, the above observation by itself is irrelevant. Other things happened between 1750 and 2005 besides human emissions of CO2, and even if we stopped emitting greenhouse gases tomorrow, it is possible that the world would continue warming, demonstrating a higher positive feedback. Still, even on its own terms, almost half of the "consensus" view of the earth's sensitivity to greenhouse gases has yet to be observed. The IPCC AR4 reports a best guess of +1.6 Watts per square meter as the total radiative forcing (which is what drives the climate) from all changes, both anthropogenic and natural (solar activity and aerosols from volcanic eruptions), from preindustrial times through the year 2005. Again, this estimated total forcing went hand in hand with an observed temperature increase of 0.7°C. Now a hypothetical doubling of CO2, holding all other forcing mechanisms constant at preindustrial values, would yield a forcing of +3.7 Watts per square meter. Because the relationship between radiative forcing and temperature increases is considered linear, these numbers mean that the observed "transient" (medium run) climate sensitivity thus far is 1.6°C, a little over half of the official best guess of 3°C.
Let me be clear: I am not saying that the climate models are demonstrably wrong. I have found no reason to doubt that the IPCC models really are the state of the art, or that the official ranges really are the "best guess" of the globe's sensitivity — if you are going to calculate those numbers using the methods currently in vogue. To go back to economics, it is not as if Paul Samuelson made a mistake in his arithmetic and that's why the United States experienced stagflation. If you had to calibrate a Keynesian macro model, to find out just how much output would increase from a given injection of government spending, you couldn't do better than picking Paul Samuelson to run those regressions. But if you suspected that perhaps the very approach of the model was flawed, you wouldn't expect Paul Samuelson — the very person responsible for the mainstream approach — to engineer a paradigm shift.
To return to the climate models: If you want to use a computer to simulate the globe's climate over hundreds of years, and you want it to incorporate all of the factors that other models currently incorporate, you will be hard put to show that humans have had a negligible effect on the climate. However, using this very approach, you will end up concluding that there are large positive feedback effects from human greenhouse gas emissions that so far have not been observed. It's true: the models are consistent with the historical data. They assume that the large positive feedbacks have been partially masked thus far by offsetting factors (such as aerosols in the 1970s reflecting sunlight back into space), and that not enough time has passed for the positive feedbacks to fully kick in.
What I want to stress is that the alarmist scenarios are not even just naïve extrapolations of existing trends; on the contrary, they rely on large amplifications of existing trends. If global temperatures respond to human emissions in the 21st century the way they (apparently) did in the 20th, there will be no cause for alarm. It is only by assuming that there is disaster "in the pipeline" that has not yet manifested itself, that one can make a case for massive restrictions on carbon use.
ConclusionI hoped to show in this article the similarity between the cutting edge macroeconomic models of the 1950s and 1960s, and the climate models touted by the IPCC. In both cases, really smart guys (and now gals too) built impressive models that were quite rigorous in some respects, yet woefully deficient in others. In the case of economics, this hubris led to horrible government policies. We can only hope the same doesn't happen because of the climate models. It is true that science must start somewhere, and a bad model is better than no model. But this truism does not mean governments should expand their powers whenever the "best guess" says it would be a good idea.Even if the IPCC consensus were true, it still wouldn't follow that governments would "fix things." But that is a different story. A wise student of history should also be able to say, "We really don't understand this very well yet."
Here are inconvenient truths that counter the fallacies of Al Gore's documentary film - An Inconvenient Truth. Man is not causing catastrophic global warming. Carbon Dioxide is the stuff of life, not a pollutant.
Presented to homeschool parents and students at the Mises Institute, 23 September 2008.
The local Swiss press carried a summary of a report compiled by a panel of so-called "experts" of the Swiss Academy of Engineering Science (SATW) under the startling rubric that motor gasoline "should" henceforth be priced, by fiat, at no less than four francs per liter — roughly double the current market price and representing what, to an American, must seem like the eye-watering equivalent of around $14 a gallon.
The reason given by these cloistered killjoys for recommending such a brutal curtailment of people's material well-being? Nothing less than the incredibly convoluted one that since — in their lofty estimation — Swiss demand for petrol will inevitably outstrip the available supply sometime in the next two decades, it is better to anticipate the resultant economic stress by "discouraging" consumption now, rather than to allow such a painful (if utterly hypothetical) disappointment to be postponed until later.
Presumably, on this basis, in order to lessen the chance he might run over a cliff during the next mass migration, we should prevail upon the prudent lemming to fling himself out of a skyscraper window today.
Nor is this the only instance of such right-on rhetoric to emanate from a Swiss officialdom clearly at odds with the solid, Bürgerlich level-headedness which typifies a nation whose engineering talents and entrepreneurial skills have long allowed them to flourish in a tiny land, hemmed in by sterile, icy peaks and endowed with all too few natural resources to support them in any sort of comfort.
No, far from regarding the achievement of their fellow citizens as a matter for well-merited praise, the governmental authors in Bern sourly condemn it as an act of despoliation and robbery. Certainly, one can put no other construction on the following, highly patronizing passage, taken straight from the pages of the official statistical yearbook for 2008:
Switzerland's ecological footprint is three times as great as its biocapacity… The ecological footprint expresses consumption in terms of how much surface area (in global hectares) is required to sustain this consumption. It shows whether and to what extent our use of natural resources exceeds the regenerative capacities of the biosphere…
When consumption exceeds our biocapacity, natural resources at home become depleted or have to be imported from other countries. In such cases, we end up living at the expense of other regions of the planet or of future generations.
Several pages of argument could be spent dispelling the woeful economic ignorance being expressed here about such basic matters as supply, demand, opportunity costs, and price signaling, but let us limit ourselves to one simple observation that seems to have escaped our earnestly-PC engineers and bureaucrats: though we all routinely suffer wants that far exceed our means to satisfy them, most of us have reluctantly come to accept that it is our earthly lot to have to forego some delights in order to sample a range of others — an epiphany we reached somewhere between becoming fully toilet trained and realizing that Santa Claus was only a figment of a toy salesman's fertile imagination.
Even if there is any validity to the "Peak Oil" scare (a rather large hypothetical, in this author's estimation), the Swiss — just as all other peoples — will adapt much more readily through allowing what we call the I²E²S² process (Innovation, Economization and Substitution, leading to Investment guided by Entrepreneurialism and fueled with Savings) to percolate through the free market than by means of anything policy wonks and political wastrels may dream up, respectively, in their ivory towers and smoke-filled rooms.
It is critically important, moreover, to recognize such an instance of "fatal conceit" as being all too characteristic of those who pander to the modern day danse macabre of exhaustionism and collectivist penury which so infuses both the anti-humanist Greens and the rent-grubbing business types who hypocritically seek to line their pockets by pandering to these latter-day Savonarolas.
For example, far across the Atlantic, a truly sinister cabal seems to have been hatched between the Republican "Swift Boat," corporate raider-turned-windmill wannabe, T. Boone Pickens; the Democrat serial fantasist and climate alarmist, Al Gore; and the One World–elitist media mogul, Ted Turner — this unholy trinity setting aside their supposed ideological differences for no higher purpose than to be better able to shear the flock of credulous sheep they have frightened with their intertwined tales of killer storms, melting ice sheets, and maniacal terrorist oil sheikhs.
One is tempted to ask whether old man Noah also managed to cow an ill-informed citizenry into subsidizing his little floating zoo, or whether the Ark — which would deliver the fruits of the Earth to him and his seed alone — was already disporting the misleadingly cute-panda motif of the genocidally aspirant theme park owners of the WWF at its masthead.
But though all this seems so frightfully contemporary and in tune with the suburban Gaian's zeitgeist, the despairing tyranny of inefficient ersatz, the drive to autarky, and the quest for Lebensraum that lies beneath it possess a very dark precedent, indeed.
To see this, we must first recognize that the serpent tongue of propaganda employs a different semiotics today.
Thus, "ersatz" is dressed up in the clothes of "alternative energy" and "sustainable technology" while "autarky" translates into such concepts as low "food miles" and reduced "carbon footprints." In turn, the same old Malthusian fears that there are not enough natural resources to go round have been inverted from justifying an outward drive to win precious living space through armed conquest to the promotion of population control measures aimed at reducing the "cancerous" impact of man, the "pest species" on our "fevered" mother planet instead.
Already, our use of the older phrases may have alerted the reader to their provenance, but, to show that more than a pat generalization is involved, let us quote a few specifics from Adam Tooze's magisterial study of Nazi economics, The Wages of Destruction, by way of corroboration.
Though undoubtedly a genius of industrial chemistry, as Tooze relates, it was Carl Bosch's ineffably modern fixation that the world was on the brink of "Peak Oil" no less than eighty years ago which led directly to the devil's bargain sealed between his sprawling conglomerate, IG Farben, and the incoming Hitler regime:
[I]n 1928, at its Leuna facility … IG Farben embarked on the construction of the world's first facility for coal hydrogenation, the alchemical process through which coal was transformed into petrol… The RM330 million investment … would pay off when the oil wells ran dry and fuel prices rocketed.
Sadly for Bosch, that same prospect of an imminent shortage inspired a wave of entrepreneurialism which resulted in major new oilfield developments in Venezuela, California, Oklahoma, and the Permian Basin of Texas, culminating in the discovery of the famous "Black Giant," late in 1930 — and hence to a glutted world market.
For Carl Bosch this was clearly a severe setback, but IG could certainly have retreated from hydrogenation. Losses of a few hundred million would not have broken the company. Such a retreat would, however, have run completely counter to Carl Bosch's vision of the firm, which now depended on the willingness of the German government to impose high taxes on imported oil.
One cannot fail to be struck by the similarities not just with Pickens and his cynically populist campaign for wind energy, or with Gore and his multibillion-dollar "eco" hedge fund, but also with today's avid subsidy grubbers among the advocates of solar power and the members of the vast biofuel lobby who have found a novel way of penalizing plain, hard-working consumers of cereals, and oilseeds in order to feather the luxurious nests of the Midwestern agribarons.
Nor do the parallels end there, because, in the 1930s, having once started down this route, both parties became hopelessly wedded to the need to keep fuel prices artificially elevated at what were, by a neat coincidence with the SATW's latest ideas, roughly double world prices.
This imperative — which provided corporate welfare to Bosch while raising revenues for the Reich — forged a tangled chain of unintended consequences, as all such "initiatives" de haut en bas tend to do. Not least was that it was later to have a disastrous impact on Hitler's ambition to emulate the accomplishments of "Fordism" by providing an affordable car for every German household.
A triumph of enduring engineering design Ferdinand Porsche's Volkswagen "Beetle" may well have been, but because petrol was so unnecessarily expensive, ways had to be found to reduce the capital cost of the car itself, so that the total running cost could fit within the meager budget of the average family. The resonance with current proposals to offer a range of tax breaks and state subsidies for the production of hybrid cars is just too striking to ignore.
Finding the talismanic ceiling of 1,000 Reichsmarks per car impossible to achieve in a purely commercial setting (Porsche's brainchild was, in fact, no less pricey than Opel's cheapest existing model), production of the vehicle was soon entrusted to a plant to be specially built using the captive funds that had originally been donated to the now-proscribed trade-union movement and supplemented by an ongoing compulsory levy on all German manual workers.
Plagued by the cost overruns that are inevitable in a closed society, over-reliant on home-produced goods and already straining to afford its mountainous rearmament program, the responsible entity, the Deutsche Arbeitsfront, further tried to finance itself by offering its members an installment savings plan, backed up with a sizeable, mandatory subscription to a two-year insurance policy on the vehicle, payable by its would-be owners.
Although some 340,000 trusting souls eventually signed up to the scheme, the schedule slipped further and further into arrears and the hidden losses continued to mount.
Ultimately, despite all the podium posturing and hysterical flag-waving, not one single VW was ever delivered to a member of the German public. The half-finished factory was eventually converted to military use and the 275 million Reichsmarks in savings so arduously scraped together fell victim to the horrendous postwar inflation.
All this should warn us to be on our guard when we hear the honeyed words of today's politicians and the blandishments of their corporatist allies when they twist the commendable desire to avoid the wanton destruction of our environment into an instrument of imperial expansion, state control, and undue self-enrichment.
Nor should we allow ourselves to be browbeaten by the IPCC carbophobes when they use dubious science and worse economics to make us believe that the entire planet is in imminent danger of a cataclysmic collapse unless we ordinary folk (though, naturally, not the cosseted members of the Green Sanhedrin itself) give up all hope of a better standard of living.
More emphatically, we should reject all suggestions that, in the Canute-like arrogance that they can somehow prevent this faux millennium, the central planners will offer a route not only to earthly salvation, but also to faster economic growth and greater material prosperity as we forcibly struggle to overcome the handicaps they seek to impose upon us. If every adult male has his right leg amputated by order of the state, the fact that more artificial limbs will then come to be sold is not exactly a mark of progress.
To fortify our resolve to resist such insidious schemes, we might also do well to think upon the sorry fate of a previous people who, having lost their faith in free exchange and the international division of labor amid a tempest of monetary insanity, became converted instead to a messianic vision of impending scarcity and unavoidable strife — and brought the wrath of heaven down upon their heads as a result.
I have received a lot of interesting and useful comments on my recent article about local foods, and I would like to take this opportunity to clarify a few things and continue the conversation. If locally grown produce tastes better, and if one prefers to know where one's food is produced, then eating locally is a great idea. If one's goal is to have a smaller carbon footprint — to say nothing of whether having a smaller carbon footprint is desirable per se — I'm not convinced that eating locally is the way to go.
In my last article I mentioned our experience and experiments with home-grown tomatoes. Our tomato harvest has been more bountiful this year in part because we planted in a sunnier part of the yard, but it is also clear that homegrown or locally grown tomatoes are much tastier than conventional store-bought tomatoes. This is in part a regulatory problem, though, and not a product of the unfettered private marketplace. The case of the UglyRipe tomato in Florida several years ago demonstrates this. As Gary Galles noted at the time, Florida tomato grower Joe Procacci came up with a tomato that tasted great and could be produced economically. After intervention by the Florida Tomato Commission, however, Procacci was barred from selling his tomatoes to willing buyers.
Government regulations and subsidies, not the free market, give us lousy tomatoes. Allowing freer trade (and therefore, lower prices) for tomatoes would free up time and resources for other pursuits. I wonder: are we missing out on the next Einstein, the next Rembrandt, or the next Mozart because they are too busy scratching the ground to produce decent-tasting tomatoes? This is hardly a trivial consideration because our time is valuable. In his review of Michael Pollan's The Omnivore's Dilemma, Tyler Cowen notes correctly that "[t]here are plenty of 'cheap' ways to procure food if we do not measure our time and trouble as relevant costs."[1]
Shipping food from one coast to the other does generate negative externalities, which are costs associated with transactions that will not be reflected in the final price. However, the existence of an externality does not necessarily justify government action. Nor, for that matter, is it sufficient to know the size of the externality. In an article forthcoming in Regulation magazine, John V.C. Nye (who was my advisor in graduate school) argues that the relevant question with respect to fuel taxes and carbon policies concerns whether there are conditions under which people can bargain toward the efficient outcome.[2] The local food movement is part of this bargaining process, but it is important to note that existing policies and taxes also mitigate the externalities associated with long-range food shipping. Nye cites studies that suggest that the maximum externality associated with gas consumption was $1.00 per gallon, including the sixty cents or so per gallon in taxes people were already paying. What is more, the studies Nye cites were conducted when gas prices were about half of what they are today. Furthermore, Nye also notes that the interaction between different markets means that the optimal externality-internalizing tax in general equilibrium is lower than it would be in partial equilibrium. At the end of the day, further interventions to reduce carbon emissions are likely to be welfare reducing.
Even in the absence of the considerations discussed by Nye, recent research suggests that the contributions to atmospheric carbon dioxide from transporting food are very small relative to the carbon dioxide produced by cultivating meat. Last month, I posted the abstract for a paper by Christopher L. Weber and H. Scott Matthews on www.divisionoflabour.com; here is the abstract in its entirety:
Despite significant recent public concern and media attention to the environmental impacts of food, few studies in the United States have systematically compared the life-cycle greenhouse gas (GHG) emissions associated with food production against long-distance distribution, aka "food-miles." We find that although food is transported long distances in general (1640 km delivery and 6760 km life-cycle supply chain on average) the GHG emissions associated with food are dominated by the production phase, contributing 83% of the average U.S. household's 8.1 t CO2e/yr footprint for food consumption. Transportation as a whole represents only 11% of life-cycle GHG emissions, and final delivery from producer to retail contributes only 4%. Different food groups exhibit a large range in GHG-intensity; on average, red meat is around 150% more GHG-intensive than chicken or fish. Thus, we suggest that dietary shift can be a more effective means of lowering an average household's food-related climate footprint than "buying local." Shifting less than one day per week's worth of calories from red meat and dairy products to chicken, fish, eggs, or a vegetable-based diet achieves more GHG reduction than buying all locally sourced food.
For purposes of reducing greenhouse gas emissions, reducing "food miles" is relatively ineffective whereas eating less meat (particularly less red meat) and more vegetables would be more effective. In general, the environmental benefits of substituting plants for meat are considerable while the environmental benefits of substituting local vegetables for global vegetables are likely to be negligible. The concerned activist may also wish to look for another libertarian/capitalist solution to these environmental problems by examining government land-use policies in some places, particularly in South America, which contribute to deforestation and implicitly subsidize the production of greenhouse-gas emitting cattle.[3] The low price of greenhouse-gas producing meats here is a consequence of bad agricultural policies.
One commenter suggested that information is a good reason to buy local. Indeed, he is correct that this is a valuable consideration. It isn't clear to me a priori that local farmers will be that much better at economizing on information than their larger counterparts, but at the very least you know who to talk to (and who to sue) if you get salmonella from locally produced tomatoes.
There are some good reasons to buy local (quality, information, etc.), but I'm not convinced that buying local meaningfully reduces one's carbon footprint.[4] It's true that transporting foods pollutes the air and spills toxins in some places, but a focus on transportation-related pollution only does part of the accounting. If we're going to grow oranges locally, this will require more tools, labor, and land than it would take to grow the oranges in California and ship them to Memphis. Thus, we're saving the environmental damage from transportation but we're making up for it in several ways. First, we're using more land.
Second, we might need more equipment (tractors, shovels, whatever you need to grow oranges) the production of which uses fossil fuels and creates pollution. These are also going to have to be produced and shipped. Third, we'll probably have to use more fertilizer, which requires energy to produce and which is likely to create more agricultural runoff. Finally, it isn't immediately clear that farmers using pickup trucks to bring their wares from the countryside to an urban farmers' market would be less energy-intensive than trucking the same quantity of produce from California to Memphis. It doesn't have to be oranges; you could just as easily say "food" and the analysis would still apply. It is true that buying locally might reduce the amount of fertilizer, etc. used per acre, but it could also lead to bringing more acres under cultivation. Even in an agricultural marketplace that is distorted by government intervention, intensive farming that economizes on land use is a benefit, not a cost.
Economists define a "normal good" as anything we consume more of as our incomes increase. Food quality is a normal good like environmental quality. As people get richer, we demand more of it. Early this decade, the Atkins diet created a craze for "low-carb" foods; today, people are doing a new kind of carb counting. Instead of counting carbohydrates, however, we are counting carbon dioxide emissions. I wholeheartedly agree that there are a lot of complex environmental problems out there, and food policy in the developed world is a complex mess of interventions, regulations, subsidies, and distortions, so much so that I've heard Americans referred to as "walking corn chips" because of the ways government policy distorts the food supply chain in favor of corn and corn derivatives.
While there are many compelling reasons to buy local, I remain unconvinced that buying local is as environmentally friendly as it is alleged to be.
Notes[1] Incidentally, here's an interesting talk by Pollan at TED.com.
[2] I expect that Walter Block might disagree with me on this; if so, I look forward to his comments and criticisms.
[3] Food writer Mark Bittman offers a fascinating and informative talk about some of these issues at TED.com.
[4] This paragraph is taken from email correspondence with someone who commented on my last article.
The Disney-Pixar film WALL-E has been adoringly received by the majority of the theatergoing public. This adoration is unjustified. The film blatantly conveys environmentalist, anticapitalist, and antitechnological propaganda — and aims it at an audience of children, who still lack the critical faculties and intellectual sophistication to evaluate all relevant aspects of the issues presented.
But I will not focus here on how egregiously unrealistic the film's scenario of humans completely trashing Earth is. A simple look around you will suffice to refute this possibility. Garbage is not piling up around us, and landfills are in fact remarkably effective at storing it safely and even using it to generate useful natural gases.
I will, rather, concentrate on a much more egregious error made by the creators of WALL-E — an error made in ignorance of basic economics and of commonsense insights regarding the nature of human behaviors and the incentives facing individual economic actors.
This error pervades the film's depiction of life aboard the Axiom, a starship made by Buy'n Large (BNL) corporation — a cross between Wal-Mart and the George W. Bush administration — to house the human refugees from Earth for 700 years after the Earth becomes too littered to remain habitable. First, the film makes the Marxian assumption that it would be possible for a single corporation to take advantage of ever-increasing returns to scale and thereby subsume the entire world — and still remain profitable and continually patronized by everyone. But as Ludwig von Mises showed as far back as 1920 in Economic Calculation in the Socialist Commonwealth, without the presence of multiple providers of goods in the economy, the single dominant firm is in the same position as a socialist central planner. In the real world, BNL would have no market price signals to help it discern consumer demand for and the relative scarcity of resources. It would not be able to engage in rational economic calculation and would make decisions arbitrarily. Surely, this state would not please many consumers, and the BNL monopoly would be short lived at most.
The startling aspect of life aboard the Axiom is its total homogeneity. Everyone is morbidly obese; everyone drinks fatty meal-replacement shakes; everyone rides around in automated carts instead of walking; no one engages in direct personal communication; no one exercises; everyone follows the BNL corporation's fashion advice (when the announcements tell the people that "blue is the new red," all Axiom inhabitants switch their suit color from red to blue at the press of a button). Not only does this homogeneity mark one instant in time; it has been present all throughout the Axiom's seven centuries of travel through space. During that time, there has been no technological progress, no cultural innovation, and no noncosmetic changes in the aesthetic, philosophical, and political arrangements aboard the ship. Imagine in 2008 if nothing had changed in human affairs since the year 1308.
The humans in WALL-E are not portrayed as evil; they are polite and well intentioned, but ignorant and torpid. Strangely enough, the ship has an extensive information database about life and conditions on Earth, and nobody bothered to examine this easily accessible information for seven centuries, until the Captain suddenly has a burst of interest. Are we to assume that curiosity and elementary initiative are such rarities that they are exercised only once in 700 years?
WALL-E is egregiously wrong in assuming that technological conveniences such as easily accessible food, transportation, entertainment, and communication render all people lazy, indulgent, and devoid of initiative. Some people, to be sure, respond in this way. In the real world, however, this response tends to be temporary. In the more economically advanced countries, it tends to affect lower-income individuals who have just begun accessing historically luxurious standards of living and have not yet developed cultural habits for managing their newfound wealth and opportunities responsibly. These habits will come with time — as they always have among groups of people that have lived prosperously for generations.
Already in the United States, the big fast-food chains are racing to offer health foods — salads, fruit, and other low-calorie snacks — to keep the patronage of those who would have been satisfied with Big Macs and Whoppers in the past. Meanwhile, a wide variety of health foods and diet foods — some genuinely effective and others of dubious merit — are being consumed more broadly than ever before.
In the meantime, of course, millions of people have never neglected healthful habits, even though they have for decades been surrounded by consumer goods that — in the anticapitalists' eyes — would lead them to ruin. Just as the ready availability of guns does not automatically turn peaceful people into rampaging maniacs, neither does the ready availability of all sorts of foods turn responsible, educated, self-respecting individuals into rage-of-the-moment hedonists.
With some kinds of wants met — such as food, shelter, and transportation — people virtually always tend to develop new wants or to focus on existing lower-priority wants not yet addressed. As Ludwig von Mises showed, people will act so long as they are faced with uncertainty and believe themselves capable of somehow affecting the uncertain future. These conditions will never stop existing — no matter how comfortable and prosperous people become. Thus, humans will always act and will always strive to improve their lives. A wholly static, apathetic, sated, and torpid society is inconceivable in reality.
The economy aboard the Axiom does however seem to be the dream economy of popular "static equilibrium" models, where nothing ever changes — not production, consumption, preferences, or expectations of the future. Yet, as Austrian economics informs us, such conditions have never existed nor can they exist. At best, they are merely useful theoretical constructs — certainly not accurate depictions of any realistic economy.
In the real world, there exist immense changes of preferences, widely dispersed information, tremendous uncertainty about the future, and numerous entrepreneurs who alert themselves to possible opportunities for satisfying people's wants in a better way than they are currently being satisfied. That there is not one entrepreneur aboard the Axiom prior to the Captain's paradigm-shifting discovery of information that was easily accessible to everybody for the last seven centuries is testimony to the filmmakers' ignorance of what makes economic change possible and ubiquitous.
The humans' return to Earth and attempt to "rebuild" their lives is ludicrous from any sound economic perspective. After having had a sustainable automatic food production system aboard the Axiom — which had apparently worked without fail for seven centuries — humans all of a sudden decide to resort to traditional agriculture. The one thing they have machine capital to do for them, they decide to do manually instead. Rather than devoting the precious time bought by the ready availability of food to, say, create art, repair all those broken skyscrapers, or design even better robots, the humans decide to manually dig holes in the ground and grow their food through backbreaking toil that led millions throughout history to die premature deaths. Oh, by the way, the film left that part out. Virtually no one today who romanticizes the "good old days" of traditional agriculture recognizes how nasty, brutish, and short life under such conditions had been for millennia. Once the first industrial factories opened — with their long hours, dangerous equipment, and meager pay — people flocked to them in droves, because the factory conditions (including the sanitation provided and wages paid) were greatly preferable to those of toiling virtually all day on the traditional farm.
The creators of WALL-E, sitting in their comfortable Hollywood studios, did a tremendous disservice to the civilization that made their work and high standards of living possible. They glorified a lifestyle that would likely have killed them — and countless others — had it actually been revived. I for one have seen a semblance of these "good old days," having spent summers as a child with my maternal grandparents in a remote Belarusian village — where little had changed since the 1917 socialist revolution. Those extolling the virtues of traditional farm life never mention the perpetual manual labor, lack of sanitation, lack of health care, and widespread inclinations toward alcoholism. I have spent my life to date moving increasingly further away from that, and I will resist vigorously the efforts of those who seek to drag our entire civilization back into miserable, decrepit premodernity.
WALL-E is an assault on modern civilization, borne of deep economic and historical ignorance. The film shamefully betrays the efforts of countless heroic individuals who have raised humanity out of the muck of barbarism. Its antitechnological, anticapitalist message needs to be exposed and countered by all thinking individuals.
University campuses receive a great deal of attention due to the political and cultural indoctrination and activism that some academics try to pass off as education.[1] However, government education bureaucrats are eager to ensure that their prescribed views are etched on the slate of the human mind at a much earlier age. For this reason, the most shameless political and cultural activism is often directed, under the guise of environmental and social education, at young children attending government primary schools.
In Australia, governments have adopted environmental education programs that teach children that human intrusion into nature is to be condemned and that man's life must be subordinated to the preservation of nature, by government force if necessary. Under this view, nature is not to be preserved for the benefit of man, but rather, it is to be preserved for its own sake against the encroachments of man. This is the philosophy of environmentalism, and the standard viewpoint of environmentalists, according to philosopher Michael Berliner:
Nature, they insist, has "intrinsic value," to be revered for its own sake, irrespective of any benefit to man. As a consequence, man is to be prohibited from using nature for his own ends. Since nature supposedly has value and goodness in itself, any human action which changes the environment is necessarily branded as immoral. Environmentalists invoke this argument from intrinsic value not against lions that eat gazelles or beavers that fell trees; they invoke it only against man, only when man wants something. The environmentalists' concept of intrinsic value is nothing but the desire to destroy human values.[2]
Since explicit philosophical argument about the alleged intrinsic value of nature and the subordination of human values is too complicated for young children — and since explicit argument would demonstrate the environmentalist paradigm to be irrational — education bureaucrats instead adopt these principles implicitly as the normative basis for their environmental curriculum. This curriculum is not designed simply to teach facts about the environment — it is designed to alter behavior in ways that are acceptable to environmentalists and government bureaucrats. For example, according to a newsletter from the Cessnock City Council's Sustainability Programs Officer,
Changing any behaviour is difficult, which is why we try to instil the proper behaviours in our children from the very beginning. When it comes to the environment, knowledge on its own can be very disempowering. There has been lots of recent research on how to address the issue of "ecophobia" and in the school environmental education area you can't go past the work of David Sobel and B.B. Jensen… Sobel's work focuses on engaging the heart — learning to love the environment first then to protect it.[3]
Thus, rather than engaging the intellect of children to teach them basic facts about nature, education bureaucrats instead seek to "engage their hearts" — a process which is entirely antithetic to genuine education.
Planet Slayer — Government Funded and Approved
To get a taste of the approved "environmental education" activities of government bureaucrats, we can do little better than looking at a games website called "Planet Slayer," recommended for children under the Australian Sustainable Schools Initiative adopted by various Australian governments.[4] This games website, hosted by the Australian Broadcasting Corporation and created with the assistance of Film Victoria (both government bodies), introduces itself as follows:
Get the dirt on greenhouse without the guilt trips. No lectures. No multinational-bashing (well, maybe a little … ). Just fun and games and the answers to all your enviro-dilemas [sic].[5]
To assist in their "fun and games" and answer all their alleged enviro-dilemmas, children are guided by the protagonist cartoon character, "Greena, the Worrier Princess." Greena is of course the archetypal image of bohemian environmentalist virtue — a spunky green-eyed red head with funky glasses and a nose ring, a khaki T-Shirt with a peace sign, green pants with eclectic colored patches, and sandals.
Greena invites children to use the website's Greenhouse Calculator[6] to "find out what age you should die at so you don't use more than your fair share of Earth's resources." This calculator helps children to determine how much of a "greenhouse pig" a person is by answering questions about how much the person spends and consumes. On the basis of these answers the calculator determines the person's CO2 consumption, which is depicted by making the cartoon "greenhouse pig" look bigger, fatter, dirtier and angrier. When the child has answered the questions they are instructed to click on a skull and cross-bones symbol to find out when the person should die, depicted by having the pig explode in a bloody cartoon mess leaving only a pool of blood and a curly tail. For example, according to the calculator, the consumption of an "average Aussie pig" is 24.6 tonnes of CO2 per year. At this level, the calculator states:
Based on the emissions from your greenhouse usage, you used up your share of the planet by the time you were 9.3 years old! … You should die at age 9.3.
Some trial-and-error calculations quickly show that most of the questions affect the outcome very little. However, the most significant factor affecting the calculation is the amount of money spent in the past year, with people who spend large amounts of money being condemned to an early death. Thankfully there is salvation for these high spenders, since the calculator allows a longer life to those who invest in "businesses or organisations that make environmentally responsible products."[7]
Aside from learning when they should die, children can also share in Greena's adventures as she battles against all sorts of politically incorrect villains. In Episode 10, which bears the subtitle "Meat Is Murder … But Who Is that Dodgy-Looking Sheep?" Greena sees a dim-witted skinhead eating lamb and drinking beer in a restaurant.[8] She consults her "Activist Tactical Field Guide," which tells her:
REMEMBER: Most meat eaters are total hypocrites. Try confronting them with a live version of their favourite meat.
Lumberjacks and skinhead meat eaters aside, Greena's real arch nemesis and the central villain of the website is a young woman called X-on (presumably a play on Exxon).[9] This insidious character is of course the exemplar of the materialistic bourgeoisie — a blue-eyed blonde in a pink shirt, short pink skirt, pink sunglasses and high heels, with a French poodle and a pink handbag.
In the "This is your Lifestyle" section children answer questions on what items they would choose to buy or consume. When asked whether they would buy their drinks in a plastic bottle, a glass bottle or an aluminum can, our hero Greena shouts "Forget the packaging, it's all cultural imperialism!" Forget the packaging? This statement is particularly revealing, since it demonstrates that the lesson that the website is designed to impart is not primarily environmental, but political.
In the "Planet Slayer" game, children can choose to help Greena save the planet by opposing logging, nuclear waste, war, consumerism, and other evils, and supporting such good things as composting, clean transport, solar power, and protesting. Whereas Greena is again depicted as the virtuous savior of the planet, her nemesis, the bourgeoisie X-on, tries to destroy the planet by supporting the various bad things mentioned in the website — she not only supports consumerism, as is obvious from her clothing and accessories, but apparently also supports nuclear waste and war! Of course, since war is not primarily an environmental issue, this is presumably included to show that hippy types like our protagonist Greena desire peace, whereas materialistic bourgeoisie types like X-on apparently enjoy war.
For those who suspect me of exaggeration in these explanations, I welcome them to have a look for themselves. You really can't make this stuff up (well, not unless you're being funded by the Australian government anyway).
What this tells us about government education bureaucrats
While the "Planet Slayer" website is a particularly galling piece of environmentalist propaganda, the dry rot of government education for young children goes far deeper than a single website. Rather, "Planet Slayer" is reflective of the standards and inclinations of the education bureaucrats who design educational policies and curricula for children.
Far more unsettling than the actual contents of the website is the fact that, in order to appear as a recommended website for children in multiple government documents for various government schools across Australia, several education bureaucrats must have seen the website and approved of it. The fact that the above examples registered no sufficient reason to withhold recommendation of the website for young children is indicative of the goals of government educators. Moreover, since this particular website is both funded and hosted by government agencies, some other bureaucrats must have been intimately involved in its initial creation.
The environmental educational programs of government primary schools reflect the incentives of government bureaucrats and the philosophy of environmentalism, which supports wide government powers. It is a philosophy that advocates the sacrifice of man to nature, with the government taking ever more power over human lifestyle choices and industry, allegedly in order to protect the environment. The logical conclusion of this philosophy is spelled out by environmentalist philosopher Paul Taylor:
Given the total, absolute, and final disappearance of Homo Sapiens, not only would the Earth's community of life continue to exist, but in all probability, its well-being would be enhanced. Our presence, in short, is not needed. And if we were to take the standpoint of that Life Community and give voice to its true interests, the ending of the human epoch on Earth would most likely be greeted with a hearty "Good riddance!"[10]
For some adults, a greenhouse calculator which tells you when you "should" die may be a useful tool for making lifestyle decisions. For others, watching a "greenhouse pig" explode may just be a harmless bit of fun. For radical environmentalists it is a device echoing their desire to end the scourge of mankind. And for environmental education bureaucrats whose jobs rest on the philosophy of environmentalism, it is a means to "engage the hearts" of young children and inculcate them with the "proper" behaviors — namely, those which support wide government powers and the philosophy on which they rest.
Fortunately, there is hope. Vigilance from parents may be sufficient to ensure that young children are not propagandized during school hours. But this requires attention and diligence and, above all, asking children what they learned in school today.
Notes[1] For a litany of examples see the archives of the Foundation for Individual Rights in Education (FIRE).
[2] Berliner, M.S. Against Environmentalism (Ayn Rand Institute, 2007).
[3] See the Schools Environment Newsletter: Educating for Pro-environment Behaviour. Emphasis added.
[4] The "Planet Slayer" games website is recommended in many government documents including:
http://www.sustainableschools.act.gov.au/climate_changehttp://www.sustainableschools.nsw.edu.au/Default.aspx?tabid=198&&TID=42http://www.energy-toolbox.vic.gov.au/index2.php?option=com_content&do_pdf=1&id=411http://www.ltag.education.tas.gov.au/planning/units7_10/Science/Climatechange/resources.htm[5] http://www.abc.net.au/science/planetslayer/ Emphasis in original.
[6] See Figure 1 in the Appendix.
[7] For discussion, see Bolt, A. "Calculating ABC spin."
[8] See Figure 2 in the Appendix.
[9] See Figure 3 in Appendix.
[10] Taylor, P.W. Respect for Nature: A Theory of Environmental Ethics (1986) 115.
Appendix: Pictures from the Planet Slayer WebsiteFigure 1:Greenhouse calculator helps kids learn when they should die.Figure 2:Greena confronts an insidious meat eater in one of her adventures.Figure 3:Greena and her arch nemesis X-on in the "This Is Your Lifestyle" section."Forget the packaging; it's all cultural imperialism," shouts Greena.Figure 4:Good stuff and bad stuff in the "Planet Slayer" game.
It seems that we may never rid ourselves of the broken-window fallacy, writes Mark Thornton.
This audio Mises Daily is narrated by the author.
Boom, bust and dust: That was the story of what my parents always referred to as the "dirty thirties," or the Dust Bowl. The Great American Dust Bowl steeled the resolve of a generation of Midwesterners. The hard-earned lessons they learned have been passed on to their baby-boomer prodigy but have been forgotten. Unlike the New Orleans floods, there was no FEMA to house the victims in trailer cities: only days on end of coating ones nostrils with Vaseline to filter the dust and try to breathe.
John Steinbeck's The Grapes of Wrath famously told the story of those who fled the Dust Bowl. Pulitzer Prize-winning author Timothy Egan tells the individual stories of a handful of families that stayed and endured America's worst environmental catastrophe in his masterful book, The Worst Hard Time.
Anyone who has made the drive through western Kansas, eastern Colorado and the panhandles of Oklahoma and Texas knows the eerie blankness of the land. Miles can be driven without seeing a tree. The occasional town encountered seems to be in a time warp.
This land was made for buffalo grazing and little else, with its 20-inch annual rainfall. But with the buffalo and Indian long gone by the turn of the century, immigrant families flocked to what Egan calls No Man's Land to homestead their share of the American dream. In 1914, 53,000 families staked their claims in the Great Plains, living in sod huts, often infested with centipedes and snakes. The government even provided free train rides to pilgrims who wished to settle on the harsh land.
The First World War then set off a series of events that would lead to disaster. The dry-land farmers had enjoyed prosperity, working the land and growing wheat with the benefit of new machinery that made them wondrously productive. Then the Turkish navy kept Russian wheat from making its way to Europe and the federal government told farmers to produce more wheat to win the war. And produce they did; from 1917 to 1919, the number of acres put into wheat production increased 70 percent. And why not: the government guaranteed a price of $2 per bushel.
But when the war ended, the price collapsed and there was no one to buy the mountains of grain left rotting in the sun. The debts incurred to buy equipment and property still had to be paid, so farmers continued to plow up the grassland in hopes that the price of wheat would rebound. By 1931, 33 million acres in the Great Plains had been plowed. But farmers could only sell the wheat for half what it cost to produce the golden grain, if they could find buyers at all. And then the winds came.
The black blizzards began in earnest in 1932 and would continue through the end of the decade. These storms would carry enough static electricity that people would avoid shaking hands because the shock would flatten a person. With no rain and temperatures exceeding more than 110 degrees for days on end, more and more bugs appeared. Grasshoppers swarmed over fields; centipedes by the bucketful infested houses, along with Black Widow spiders and Tarantulas. Rabbits multiplied while the people choked from the dust.
Egan's story of despair reaches a crescendo with the chapter chronicling Black Sunday April 14, 1935, a day that started out unusually calm and clear, but would turn into a nightmare that no horror movie could match. The author has accounts of this duster to end all dusters from cities all over the Great Plains: from Bismarck, North Dakota to Amarillo, Texas.
When the storm passed through Kansas, it was 200 miles wide with winds like a tornado. Daytime turned to night as the wall of dust blocked the sun.
A March 28th article in USA Today provides a reminder of Egan's book and the potential for another Dust Bowl. The War on Terror has set the Federal Reserve's money printing press on overdrive. The flood of dollars, combined with increased food demand from China and India, has led to soaring grain prices. "Wheat was $4 or $5 a bushel a couple years ago," South Dakota farmer-rancher Kevin Baloun told USA Today, "and now it's up to $10 or $12 a bushel." So, Baloun has plowed up virgin grassland to plant crops.
However, "Judged as a businessman, the typical farmer would make a good veterinarian," Bill Bonner wrote on LRC a year ago. "Over and over, he walks into the same trap. When prices go up, he borrows in order to expand his holdings. He buys more equipment. He leases more land. And he plants more crops to take advantage of the high prices."
And of course the big Ag boondoggle is ethanol. Just as when the federal government told farmers during WWI to grow wheat to win the war, a year ago Congress voted to double production of corn-based ethanol and so a "third of the U.S. corn crop could be dedicated to making fuel," the USA Today reports. "There are over 140 ethanol production plants throughout 22 states across the country," crows the National Corn-to-Ethanol Research Center website and another 61 plants are on the drawing board. No wonder the price of corn has soared from less than $2 per bushel in January 2005 to over $6 today.
To Bill Bonner's point: some of these plants may not get built. "Now, with corn prices well over $5 a bushel, corn ethanol economics have gone out the window," Michael Jackson, president and chairman of Vancouver-based ethanol maker Syntec Biofuel, told the Associated Press last week.
However, most of the decline in farmland has come from urban development, Doug Casey pointed out during the Casey Research's Crisis & Opportunity Summit recently. And native grasslands in America declined by 24 million acres in the two decades between 1982 and 2002 according to USA Today, not including the acres converted to new home subdivisions during the easy money Fed-induced housing boom from 2002 to 2007. All of America's cities have been built and are expanding on the nation's best farmland and grassland.
So government polices are crashing headlong into each other in the nation's heartland: High grain prices, spurred by ethanol production mandates, create the incentive for farmers to leave the Conservation Reserve Program (costing taxpayers $2 billion a year) that pays farmers not to farm.
Sue Kirchhoff and Jeff Martin, writing for the nation's daily newspaper, worry that there "would be about 1.8 million fewer sedge wrens, grasshopper sparrows, dickcissels, bobolinks and western meadowlarks," if more fallow acres are plowed up to grow food and fuel for humans. But politicians are hearing the farmers sing, not the birds. The former vote, the later do not.
"Soybeans will pack a bigger punch than sub-prime," Casey Research economist Bud Conrad told the Casey Summit crowd in Scottsdale. "Agriculture has been left in the dust, but it won't stay there."
After the farmers have their day, the dust will come again.
[An MP3 audio file of this article, read by Dr. Floy Lilley, is available for download, or you can listen to it within this page.]
The emerging discipline of climatology is an interesting one. It has no laboratory. Instead, various measurements are put into computer models to see the extent to which they are consistent with the hypothesis that human activity has contributed to the trend of global warming. Unable to conduct experiments, all climatologists can do is examine statistical correlations.
In my field of economics, we have generally dismissed inferences based on mere correlations. Such things as interest rates, inflation, the unemployment rate, and real GDP growth are highly trended. Almost necessarily, they are highly correlated over discrete periods of time. This correlation doesn't prove anything regarding cause and effect, and the still short history of econometrics is littered with theories such as the Phillips Curve that once enjoyed a consensus among economists, that are now understood to be little more than statistical illusions.
Today, the econometric standard for testing theories involves determining if changes in one variable tend to be followed by changes in another variable. Thus, the sequence of fluctuations in variables is seen as a key to discerning cause and effect. This new standard has been humbling in revealing just how complex are macroeconomic phenomena.
Turning to the matter of climate change, it is pretty well established that the earth is a bit warmer today than it was two hundred years ago. Beyond this fact, there is little agreement. On the one hand, there are those who argue that human activity has been a significant contributor to this warming trend; and, on the other, there are those who argue that human activity is not a significant contributor, and that the warming trend has been due to natural variation.
Joining in the debate, a United Nations commission on climate change published a chart showing global temperature to have been relatively constant for hundreds of years and then shooting up during the past two hundred years. This chart has been described as "the hockey stick," with the long end flat and the short end pointed up, and as the ultimate proof that human activity is the cause of the recent warming trend.
In fact, the history of global temperature represented by the hockey stick is contradicted by a variety of information. For example, the hockey stick does not reflect the so-celled "little ice age" from the 13th to the 17th centuries. I should point out that, until just a few hundred years ago, we do not have reliable, direct measurements of temperature, and have to rely on inferring temperature from things such as the widths of tree rings and readings taken from polar ice cores. The hockey stick says that the "little ice age" was simply local variation in climate not part of changes in global temperature.
Recently, reconsideration of the history of global climate taking a wide variety of readings from all over the world has restored the former view, of natural variation prior to the 19th century. The new chart includes, among other things, the little ice age, and tends to support the argument that natural variation explains climate change. To be sure, human activity can still play a significant role in climate, adding to, or possibly even mitigating natural variation.
The theory that connects human activity to climate change involves the so-called greenhouse effect, and involves gases such as carbon dioxide and methane. According to this theory, as more of these gases are in the atmosphere, more solar energy will be captured, which will result in global warming and climate change.
Indeed, there is a high correlation between carbon dioxide in the atmosphere and temperature, both during the relatively short period of time during which we have direct measures of the two things, and during the much longer period of time during which we can only infer them. In this greenhouse view, the correlation of global temperature and the amount of carbon dioxide in the atmosphere is explained by carbon dioxide being the cause and global temperature being the effect. Therefore, if we want to stop or even reverse the trend of global warming, we should cut back on the release of carbon dioxide, methane and other greenhouse gases — whether by us or by nature — or pull some of these gases out of the atmosphere.
The contrary view of the correlation between global temperature and the amount of carbon dioxide in the atmosphere is that natural variation of global temperature is the cause, and the amount of carbon dioxide in the atmosphere is the effect. In this contrary view, natural variation in global warming affects the rate at which carbon dioxide dissolves into the oceans of the world.
Since nobody argues that humans had anything to do with climate change prior to 200 years ago, it is useful to consider possible cause and effect relationships in climate change prior to 1800. In the greenhouse view (that carbon dioxide is the cause) would be the following scenario (among others): that volcanic activity periodically releases more carbon dioxide into the atmosphere than can be quickly absorbed by the oceans of the world and otherwise, which results in a period of global warming via the greenhouse effect, to be followed eventually by a period of global cooling as the oceans gradually absorb the excess carbon dioxide in the atmosphere.
In the view that carbon dioxide is the effect of global warming, not the cause, would be the following scenario (among others): that variations in solar activity, perhaps manifested in sun spot activity, effects global temperature on the Earth. Thus, when the Sun radiates more energy, the Earth is warmer, the oceans are less able to absorb carbon dioxide, and there is more carbon dioxide in the atmosphere. Conversely, when the Sun radiates less energy, the Earth is cooler, the oceans are more able to absorb carbon dioxide, and there is less carbon dioxide in the atmosphere.
Accordingly, two plausible (and, in a sense, opposing) hypotheses are able to explain the correlation between global temperature and the amount of carbon dioxide in the atmosphere. In one of these hypotheses, carbon dioxide in the atmosphere is the cause of global warming, and in the other, global warming is the cause of carbon dioxide in the atmosphere.
The view that solar activity is the cause of climate change was, in fact, one of the first mathematical theories of the business cycle. During the late 19th century, the economist William Stanley Jevons proposed the so-called sunspot theory of the business cycle. He said that variations in solar activity, manifested in sunspots, affected the productivity of agriculture. His one datum for this hypothesis was that sunspot activity has about an eleven-year cycle, and the business cycle appeared, to Jevons, to also have an eleven-year cycle. Unfortunately for Jevons's theory, there is no simple regularity to the business cycle.
Jevons, who crossed over to economics from mathematics and physical science, was full of half-baked ideas that combined things that scientists "know" with economics. In 1863, he predicted there would be a serious fall in the value of gold. There followed a serious fall in the value of silver. In 1865, he said England was going to run out of coal. Yet today we have more years of proven reserves of coal than we had back in his day (that is, new discoveries of energy sources and advances in the efficiency in the use of energy have outpaced consumption). Jevons's alarmist writings about coal gained him a large popular following, as it has always been obvious to many people that we are running out of natural resources.
Jevons tapped into the allure of combining pattern recognition and conjecture about causal relationships together with fatalistic pessimism. The minds of advanced animals are wonderfully able to infer patterns from data, to interpolate within the data where it is missing, and to project out of the data. This enables members of the animal kingdom to make order out of the mass of data encountered by our senses, as when, e.g., a frog catches a fly by zapping out its tongue, upon seeing motion in its target area.
The human mind is furthermore disposed to reasonable arguments as to what "explains" the patterns it sees in data. This ability gives us our unique characteristic of being volitional or moral creatures. Thus, Ludwig von Mises differentiates the study of human action from other scientific disciplines. Water does not choose to flow downhill. And the observation that water flows downhill does not reveal that water has any preference in the matter. But human action involves choosing and must necessarily involve some theory of cause and effect. Furthermore, human action often changes in ways that are surprising to those who fatalistically and pessimistically extrapolate whatever trends they observe to the conclusion that we are all doomed. This is because almost all people choose life.
Thus, long before the current global warming scare, Mises wrote,
Some philosophies … look upon life as an absolute evil full of pain, suffering, and anguish, and apodictically deny that any purposeful human effort can render it tolerable. Happiness can be attained only by complete extinction of consciousness, volition, and life. The only way toward bliss and salvation is to become perfectly passive, indifferent, and inert like the plants.
It is one thing to be concerned about the possible impact of the sum of many tiny human actions on the climate of the planet on which we find ourselves, for this is entirely consistent with choosing life. It is quite another thing to presume that we are doomed unless, whatever we are doing, we stop doing it right now.
It is one thing to be concerned about the possible impact of the sum of many tiny human actions on the climate of the planet on which we find ourselves, for this is entirely consistent with choosing life. It is quite another thing to presume that we are doomed unless, whatever we are doing, we stop doing it right now, writes Clifford F.
This. This audio Mises Daily is narrated by Floy Lilley.
Once again, for the umpteenth time this month, I arrive at work soaking wet. Just getting from the car to the front door of the Mises Institute is like going through the rinse cycle — and umbrellas just aren't my thing. What's striking is how this weather pattern follows a year of dire warnings from government officials about the deadly drought that is destroying the region, as you can easily see from the government's own US Drought Assessment maps.
Actually, these are interesting maps. They give the impression that the whole of the nation is a parched land that vacillates between persistent drought and improving droughts. Nowhere is listed as "soaked" or "just the right amount of rain." And if you reflect on government announcements of these things, all places seem to fall into one of three categories: catastrophic flooding, catastrophic drought, or forgettable.
Some years ago, the head of the local bureaucracy in charge of the distribution of water was quoted in the newspaper along these lines: "If these conditions persist, rationing will certainly become necessary." If these conditions persist? That's quite the assumption. We could say during the next rainfall: "If these conditions persist, it will become necessary for everyone to build an ark." Conditions never persist. They change. Bureaucrats really hate that.
One suspects that these same people love droughts. Droughts give them power, not just over the aggregate use of water. They enjoy pressing people on the smallest details of life. They get to tell you that you must take short showers. They tell you that you must flush less. They impose a profound sense of guilt on your for watering the basil growing in your window box.
Droughts can turn the most innocent public employee into the moral equivalent of a Gestapo agent, issuing dictates and imposing fines, ferreting out the water thieves, all in the name of the public interest.
Droughts turn neighbor against neighbor, and force the whole of everyone into the criminal class, reduced to sneaking around at night to water tomato plants. Droughts make everyone feel dependent on the state. We must read their rules, such as, "Even-numbered houses may water their lawns from 4am to 6am, Monday, Thursday, and Sunday."
So rain, rain, go away. That's their theme.
Bureaucrat International has a common feature: loathing of "consumerism." Whereas people want to have choice over how they spend their money, bureaucrats want us to suffer constantly, and be intensely aware of what we use, trusting not the price system to determine our consumption patterns but rather obey regulations and strictures.
Note that no drought ever officially ends. The papers are packed with warnings of impending doom during the worst of it. But when the torrents of rain come — and they invariably do, eventually — there is no press release that says something along the lines of: "Praise Be to God, the drought is over. Use as much water as you are willing to pay for!"
Never, never, never. They never say this. They would rather that we carry with us some sense that the drought is never really over, since, after all, it could come again.
The core of the problem here has nothing to do with rain and changing weather patterns. The weather has in fact been changing since the dawn of time. What creates the problem is public ownership of the means of production and the utterly irrational system under which the price doesn't change regardless of availability. There is no real profitability here. Nor are there losses. So there is no economic calculation going on. Prices are determined by extra-market indicators.
Think of the difference with the market system. Every day we are enticed to consume every product you can imagine: cars, celery, computers, anything. There is constant calibrating of supply and demand. If anyone attempts to overprice a product and make profits, another entrepreneur sweeps in to offer the same for less and draw profits away. Innovation is everywhere, so that supplies are required to adopt the latest thing in order to stay afloat. No profits are permanent. They are always and everywhere threatened. These days, this happens almost overnight.
Now think of the difference with public water markets, in which the theme is always: you are using too much. Interesting isn't it? Why is this? It's because the market is not being allowed to work. This has nothing to do with the product in question. If you doubt it, make a visit to your local grocery and the bottled water section in particular. There are vast numbers of choices, with each supplier begging you to consume. But in public water markets, they demand that you conserve. State ownership and management of the means of production are the key reason. Privatize — completely privatize — the supply of water and a change would emerge overnight.
People immediately respond that this is a crazy idea. Streams, lakes, reservoirs, and water towers can't be owned privately! But is that really so? There are many cases of partial privatization on record, though as this entry suggest, the mandates are extreme. No doubt that there are efficiency gains that come with contracting out and privatized but regulated markets. The best solution is the same one that applies to all of the areas of life that are considered public goods, from trash collection and disposal to schools and defense: the government should get out of the business entirely.
Talk about opposition. Labor unions go bonkers when presented with the idea. Bureaucrats do too. Even religious groups have gotten in on the act. See, for example, the growing movement of Nuns Against Bottled Water. Presbyterians for Restoring Creation are circulating pledges for people to sign that foreswear drinking bottled water. These people claim that we shouldn't have to pay for what should be a free gift from God. But, oddly, these same people don't seem to have a problem with people's paying of the government's water bill.
Look, it's not complicated: drought is another name for shortage. Government is capable of creating a shortage in any good through bureaucratic management. Prices do not respond to supply and demand, and a lack of innovation characterizes production. We see this in schooling, mails, defense, courts, and every other area in which government enjoys a monopoly. It shouldn't surprise us that the same is true in water provision. Instead of blaming Mother Nature and the consumer, the water commissioners should look closer to home to see why everyone is required to live in fear and is reduced to doing rain dances to keep the water gods happy.
As a Swede I get to hear a lot of the myths of how wonderful a country Sweden supposedly is — the "prosperous socialism" it stands for, a role model for the rest of the world. For instance, quite a few friends from around the world have commended me on Swedish recycling polices and the Swedish government's take on coercive environmentalism.
The way it has been presented to me, Sweden has succeeded with what most other governments at best dream about: creating an efficient and profitable national system for saving the environment through large-scale recycling. And the people are all in on it! Everybody's recycling.
The latter is actually true: everybody is recycling. But that is the result of government force, not a voluntary choice. The state's monopolist garbage-collection "service" no longer accepts garbage: they will only collect leftovers and other biodegradables. Any other kind of garbage that accidentally finds its way to your garbage bin can result in a nice little fine (it really isn't that little) and the whole neighborhood could face increased garbage collection rates (i.e., even larger increases than usual — they tend to increase annually or biannually anyway).
So what do you do with your waste? Most homes have a number of trash bins for different kinds of trash: batteries in one; biodegradables in one; wood in one; colored glass in one, other glass in another; aluminum in one, other metals in another; newspapers in one, hard paper in another, and paper that doesn't fit these two categories in a third; and plastic of all sorts in another collection of bins. The materials generally have to be cleaned before thrown away — milk cartons with milk in them cannot be recycled just as metal cans cannot have too much of the paper labels left.
The people of Sweden are thus forced to clean their trash before carefully separating different kinds of materials. This is the future, they say, and it is supposedly good for the environment. (What about the economy?)
But it doesn't end with the extra work at home and the extra space in each and every kitchen occupied by a variety of trash bins. What do you do with the trash that isn't collected? The garbage collection service (which nowadays doesn't offer collection too often, usually biweekly or monthly, even though the rates mysteriously seem to be much higher than before) only accepts certain types of garbage, generally only biodegradable food leftovers. But do not worry; it is all taken care of.
The authorities have established trash collection centers in most neighborhoods where you get to throw away your trash. These "centers" offer numerous containers where you can throw away your trash — there is one container dedicated for each and every kind of trash and they are all neatly color-coded to help you find the right one. But this means you better have separated your aluminum from your other metals and your newspapers from your soft and hard papers before you get here. You wouldn't want to throw away dirty milk cartons or unsorted paper, would you?
But it seems people do just that: they cheat if they believe they are better off doing so. So the authorities have responded by making it more difficult to cheat. Their first measure was to redesign all containers so that it is more difficult throwing the "wrong" trash in them. For instance, containers for glass have only small, round holes where you put your bottles, and containers for hard paper and carton materials have only letter-slit shaped holes (you need to flatten all boxes before recycling — that's the law).
Well, that didn't do the trick. People kept on cheating. And the more difficult the authorities made it to cheat, the more difficult it was to get rid of the trash even if you intended to put it in the right place. So people went to these centers and simply put everything next to the containers instead — why bother? The authorities responded by appointing salaried "trash collection center spies" (!) to document who was cheating so that they could be brought to justice. (There have actually been a few court cases where people have been tried for not following recycling laws.) Need I say the attempt to appoint spies didn't work either? After a rather hot-spirited debate in the media, all spying at trash collection centers was abolished.
But the real question here is not to what degree the authorities are ignorant of what spurs human action. We already have numerous examples of this ignorance being quite huge. The question is: does this recycling structure work? The answer is that, from a government point of view, while it can probably be thought of as working, from an environmental point of view, the answer is definitely "no."
The structure works the way all centrally planned structures work: it increases and centralizes power while the attempted (expected) results do not materialize. In this case, the structure works: people do sort their trash in different bins — they have no choice. Also, government garbage collection companies do not have to do as much work while getting paid more than ever before. People are annoyed, but do not really react. Swedes generally complain a lot (about everything), but they do not resist; they are used to being pushed around by powerful government and have tolerated this fate ever since 1523.
This coercive recycling structure is set up in layers, where the consumer ("producer" of waste) gets to do most of the work of sorting, cleaning, and transporting the trash to collection centers. Government-appointed companies then empty the containers and transport the materials to regional centers where the trash is prepared for recycling. And then everything is transported to centralized recycling plants where the materials are prepared for reuse or burning. Finally what is left of the materials is sold to companies and individuals at subsidized prices so that they can make "environmentally friendly" choices.
What is interesting about this Soviet-style planned recycling is that it is officially profitable. It is supposed to be resource efficient, since recycling of the materials is less energy-consuming than, for instance, mining or the production of paper from wood. It is also economically profitable, since the government actually generates revenues from selling recycled materials and products made in the recycling process. The final recycling process costs less than is earned from selling the recycled products.
However, this is common government logic: it is "energy saving" simply because government does not count the time and energy used by nine million people cleaning and sorting their trash. Government authorities and researchers have reached the conclusion that the cost of (a) the water and electricity used for cleaning household trash, (b) transportation from trash collection centers, and (c) the final recycling process is actually less than would be necessary to produce these materials from scratch. Of course, they don't count the literally millions of times people drive to the recycling centers to empty their trash bins; neither do they count, for instance, energy and costs for the extra housing space required for a dozen extra trash bins in every home.
Economically, Swedish recycling is a disaster. Imagine a whole population spending time and money cleaning their garbage and driving it around the neighborhood rather than working or investing in a productive market! According to the government's books, more money flows in than flows out; therefore recycling is profitable. But this ignores the costs of coercion.
The government bookkeepers also take advantage of the cost cuts they have been able to realize through centralizing the garbage collection system. These "cuts," however, are mostly cuts in service, whereas rates for consumers have been increased. A recent problem with the garbage-collection centers is that the containers aren't emptied very often (a typical example of government "savings") and thus remain full, which means that people's garbage piles up next to the overflowing containers while the government contractors sit idle: they are only paid to empty the containers on schedule, not to pick up the trash sitting next to these containers. The result? Disease and rats. Newspapers have been reporting on a "rat invasion" in Stockholm and in other Swedish cities in recent years.
If we consider the costs in monetary terms, in terms of wasted time, and in terms of increased emissions from automobiles, this is hardly environmentally friendly. Adding the annoyance and the increased risk for disease, Swedish recycling is at least as disastrous as any other government scheme.
This should be expected, since the system is so authoritarian in style, structure, and management. It might be more "high-tech" and advanced than the Soviet systems ever were, but it is still a system founded on command rather than voluntary choice based on interest or incentive. Interestingly enough, the system is too socialist even for Sweden's number one socialist newspaper, Aftonbladet. In an op-ed on January 4, 2002, Lena Askling wrote on the public garbage collection system:
We [consumers] are supposed to sort, compost, parcel, store, and transport the trash. We are supposed to keep on with this cockamamie of storing compost garbage in small containers in apartments and villas and then transport the stinking, leaking trash to dedicated bins or collection centers, which seem to always be brim-full.
Why in the name of the Lord cannot the government introduce "market incentives" to stimulate industry and producers to develop rational packaging and garbage disposal systems enabling recycling, energy production and future import revenue? And perhaps a consumer friendly and hygienically acceptable system instead of the current trash and filth chaos?
While I'm waiting, mice are scurrying around in my garbage compartment.
Even Askling, who writes socialist propaganda for a living, knows the Swedish recycling scheme doesn't work; and she concludes it is in need of more market.
Please enlighten me, wherein lies the so-often-acclaimed success of this system?
The natural science of climatology and the social science of economics find themselves bound up with each other in the debate on global warming.
There are many economic issues to discuss concerning the government's ability to control the future of weather patterns through regulation and the like.
But so far, the debate has focused on the natural-science question of whether global warming is actually occurring, and, if so, what its cause is. Here is where the popular understanding is very much in need of correction.
A paper I wrote, "I Was On the Global Warming Gravy Train," briefly describes the history of why we used to believe that carbon emissions caused global warming, and how we got to where we are now in the debate.
Ice Core Data Reverses — 2003First crucial point, 2003: We've all seen Al Gore's movie. It was the early, low resolution ice core data first gathered in 1985 that convinced the world that CO2 was the culprit: CO2 levels and temperature rose and fell in lockstep over the last half a million years, to the resolution of the old ice core data (results from 1985–2000, data points over a thousand years apart). It was assumed (bad assumption #1) that CO2 levels controlled the world's temperature.
After further research, new high-resolution ice core results (data points only a few hundred years apart) in 2000–2003 allowed us to distinguish which came first, the temperature rises or the CO2 rises. We found that temperature changes preceded CO2 changes by an average of 800 years. So temperature caused the CO2 levels, and not the other way around as previously assumed. The world should have started backpedaling away from blaming carbon emissions in 2003.
Greenhouse Signature Missing — 2007Second crucial point, August 2007: There are several possible causes of global warming, and they each warm the atmosphere at different latitudes and altitudes — that is, each cause will produce a distinct pattern of hot spots in the atmosphere, or "signature." The greenhouse signature is very distinct from the others: warming due to greenhouse would cause most warming in the tropics at about 10 km up in the atmosphere:
Theoretical Greenhouse Signature (UN climate models)As of August 2007, we've measured where the warming is occurring in a fair bit of detail, using satellites and balloons. The observed signature is nothing like the greenhouse signature. The distinct greenhouse signature is entirely missing:
Observed Warming (Hadley Centre radiosonde observations 2006, confirmed by more measurements published in 2007)There is no hotspot in the tropics at 10 km up, so now we know that greenhouse warming is not the (main) cause of global warming — so we know that carbon emissions are not the (main) cause of global warming.
Of course these observations need to be repeated by other researchers before we can be completely sure, but they are made by top-notch researchers and reported in top-of-the-line, peer-reviewed journals; so at this stage they look solid. This article from August 2007 is a hard read, but the results are new, it is the most accessible on the web so far, and is much easier to understand than the raw scientific papers:
"Greenhouse warming? What greenhouse warming?"
Where the IPCC Models Went Wrong — 2007So why did we go wrong? Another set of recent observations show why the UN climate models got it wrong.
Doubling atmospheric CO2 from the pre-industrial level of 280ppm up to 560ppm (which is roughly where the IPCC says we will be in 2100) is calculated to raise the world's air temperature by 1.2C in the absence of feedbacks such as convection and clouds. This is what you would get if the air was in a flask in a laboratory. Everyone roughly agrees with that calculated result.
But the modelers assumed (bad assumption #2) that increased warming would cause more rainfall, which would cause more clouds high up in the atmosphere — and since high clouds have a net warming effect, this would cause more warming and thus more rainfall and so on. It is this positive feedback that causes the UN climate models to predict a temperature rise due to a rise in CO2 to 560ppm to be 2.5C - 4.7C (of which we have already experienced 0.7C).
But in September 2007, Spencer, who spent a few years observing the temperatures, clouds, and rainfall, reported that warming is actually associated with fewer high clouds. So the observed feedback is actually negative, so we won't even get the full 1.2C of greenhouse warming even if carbon levels double!
As Spencer says with such understatement,
Global warming theory says warming will generally be accompanied by more rainfall. Everyone just assumed that more rainfall means more high altitude clouds. That would be your first guess and, since we didn't have any data to suggest otherwise….
Science is about observational evidence trumping theoretical calculations, which is exactly what is happening here:
"Cirrus disappearance: Warming might thin heat-trapping clouds" (8/9/2007)
Warming Already WaningThe only temperature data we can trust are satellite measurements, and they only go back to 1979. They show no warming in the southern hemisphere, and the warming trend in the northern hemisphere appears to have waned since 2001:
Global Satellite temperatures (1979 – late 2007) (Gratuitous advice for those whose jobs depend on the idea that carbon emissions cause global warming: Find another job to pay your mortgage and feed your kids!)
Three Stages of Knowledge and the IPCCOur scientific understanding of global warming has gone through three stages:
1985–2003Old ice core data led us to strongly suspect that CO2 causes global warming.2003–2007New ice core data eliminated previous reason for suspecting CO2. No evidence to suspect or exonerate CO2.From Aug 2007Know for sure that greenhouse is not causing global warming. CO2 no longer a suspect.The IPCC 2007 report (the latest and greatest from the IPCC) is based on all scientific literature up to mid 2006. The Bali Conference is the bureaucratic response to that report. Too bad that the data has changed since then!
Environmentalism, it’s been said, is the ideological luxury of city dwellers in modern life, for anyone who lives just outside an urban or suburban environment knows the truth: nature is vicious and cruel and work relentlessly to make the life of man a living Hell.
I was reminded of this when looking at the horrible, bloody gashes on my brother’s domesticated cat, a sweet animal that lives in harmony with his superiors, the human family that owns and cares for him. The violence had been inflicted by another cat, a wild animal that is much bigger and lacks the mirage of conscience that we infuse in our pets.
The wild animal arrives at the back porch of this house nestled in the country on the edge of the West Texas desert. When no one is looking, the wild animal terrorizes the domestic cat, stealing food, slashing at his fur and skin, and generally try to rid the world of its competition for survival.
One would think it would be easy enough to kill it, but it is cunning beyond all expectation. I wandered through the mesquite and wild grass looking for him with a rifle in hand, but he knew where I was going and hid magnificently. Once I gave up he would appear again as if to taunt me. I would go out with the gun again, and it would start all over.
As my brother and I waited in silence by the reservoir, I noted a skull sitting by the water. Where did this come from? Wild dogs, came the answer. They have been prowling for three months. They target the goats. Three months ago, there were 16 goats, domesticated and happy. Then one day the dogs arrived. At night, they hop the fence, and kill them and drag them away. Sometimes they ravaged them to the bone right on the spot, and leave the remains to bake in the sun.
Man’s best friend!
The goat herd was down to three. One missing goat made everyone particularly sad. It was undersized, born early, white with brown spots. It was brought close to the house and reared in safety. After several months, it was big enough to care for itself and it was allowed to roam with the others. It only took a day, however. It was the first one targeted in season’s opening massacre. The baby goat was dinner for dogs.
Such problems as this dominate country life. When it’s not dogs and coyotes and wild cats, it’s other varmints such as raccoons and wild pigs, not to mention snakes and scorpions. Flesh-eating birds devour the fish in the pond. Turtles compete for food. Then there is the plant life itself, which is far from innocent to the well being of people. Poison plants and thorny bushes dare us to walk outside areas we have tilled. They choked out new plantings. Then there is the weather itself, which seems to be constantly conspiring to make our lives miserable and foil our plans.
Generally the picture you gain from living in this environment for more than a few days is the very opposite of the “preservationist” outlook you get from environmental propaganda. If we are to survive in this cruel world, the only option is to tame it or kill it. It’s them or us. We hear about the precious and delicate balance of nature, how species help each to thrive in a mystical cycle of being, but all we witness is a “natural” kill-or-be-killed practice that is so awful you can hardly watch.
The cruel competition for survival is not limited to animals. It extends to plants, to all things. And it could easily characterize the actions of people absent the civilizing institution of exchange, ownership, and the marketplace – the scene of peace in which man uses his reason to create and develop, cooperate and flourish.
And what is war but the very opposite of this impulse, a reversal of reason and an attempt at practicing authentic “environmentalism” in which the choice is to kill or be killed?
As I thought of the lessons here, going through my head were the words of a speech delivered by Absalom Weaver in Garet Garrett’s novel Satan’s Bushel, a book of agricultural life with a speech by Weaver that has profound economic and political significance. For in this speech, he compares what is the same and what is different between man and nature. In so doing, he draws attention to aspects of nature that are completely forgotten amid the propaganda.
The setting is a gather of farmers, who are being lectured by a government bureaucrat at the turn of the 20th century. They are being told to join the federal effort to coordinate wheat sales among themselves, as a means of driving up prices. The problem, as they see it, is that farmers were fighting for their livelihoods in an age of rising industrialization. How can they survive? The bureaucrat offered one way. Weaver offered another:
"This natural elm," he began, with an admiring look at the tree, "was once a tiny thing. A sheep might have eaten it at one bite. Every living thing around it was hostile and injurious. And it survived. It grew. It took its profit. It became tall and powerful beyond the reach of enemies. What preserved it—cooperative marketing? What gave it power—a law from Congress? What gave it fullness—the Golden Rule? On what was its strength founded—a fraternal spirit? You know better. Your instincts tell you no. It saved itself. It found its own greatness. How? By fighting.
"Did you know that plants fight? If only you could see the deadly, ceaseless warfare among plants this lovely landscape would terrify you. It would make you think man's struggles tame. I will show you some glimpses of it.
"I hold up this leaf from the elm. The reason it is flat and thin is that the peaceable work of its life is to gather nourishment for the tree from the air. Therefore it must have as much surface as possible to touch the air with. But it has another work to do. A grisly work. A natural work all the same. It must fight.
"For that use it is pointed at the end as you see and has teeth around the edge—these. The first thing the elm plant does is to grow straight up out of the ground with a spear thrust, its leaves rolled tightly together. Its enemies do not notice it. Then suddenly each leaf spreads itself out and with its teeth attacks other plants; it overturns them, holds them out of the sunlight, drowns them. And this is the tree! Do you wonder why the elm plant does not overrun the earth? Because other plants fight back, each in its own way.
"I show you a blade of grass. It has no teeth. How can it fight? Perhaps it lives by love and sweetness. It does not. It grows very fast by stealth, taking up so little room that nothing else minds, until all at once it is tall and strong enough to throw out blades in every direction and fall upon other plants. It smothers them to death. Then the bramble. I care not for the bramble. Not because it fights. For another reason. Here is its weapon. Besides the spear point and the teeth the bramble leaf you see is in five parts, like one's hand. It is a hand in fact, and one very hard to cast off. When it cannot overthrow and kill an enemy as the elm does, it climbs up his back to light and air, and in fact prefers that opportunity, gaining its profit not in natural combat but in shrewd advantage, like the middleman.
"Another plant I would like to show you. There is one near by. Unfortunately it would be inconvenient to exhibit him in these circumstances. His familiar name is honeysuckle. He is sleek, suave, brilliantly arrayed, and you would not suspect his nature, which is that of the preying speculator. Once you are in his toils it is hopeless. If you have not drowned or smothered him at first he will get you. The way of this plant is to twist itself round and round another and strangle it.
"This awful strife is universal in plant life. There are no exemptions. Among animals it is not so fierce. They can run from one another. Plants must fight it out where they stand. They must live or die on the spot. Among plants of one kind there is rivalry. The weak fall out and die; the better survive. That is the principle of natural selection. But all plants of one kind fight alike against plants of all other kinds. That is the law of their strength. None is helped but who first helps himself. A race of plants that had wasted its time waiting for Congress to give it light and air, or for a state bureau with hired agents to organize it by the Golden Rule, or had been persuaded that its interests were in common with those of the consumer, would have disappeared from the earth."
Garrett provides this speech as a warning to producers tied to the land: they must be fighters or die. The warning to all of us is that we must understand that nature is only provisionally tamed. In truth, we live in the wild, and we are only a step away from being devoured by it.
As the wildfires in California and elsewhere burn forests, homes, and businesses, and as a Katrina-sized evacuation continues, environmentalists and the media are making new claims: these disasters are the results of global warming.
According to a recent "60 Minutes" broadcast and new claims on CNN, global warming is causing these newest disasters, and if we wish to have fewer fires in the future, we need to "change our lifestyles" now.
Declares one environmentalist publication:
The wildfires consuming Southern California are extraordinary: Extraordinary because they have claimed so many homes. [E]xtraordinary because they started so quickly and have burned so intensely. Extraordinary because they are exhausting the formidable firefighting resources in a region used to wildfire.
But in the years to come, they may become ordinary.
Scientists have already tied increased frequency and intensity of wildfires to the changing climate, and scientists are confident that the conditions that will be brought on by global warming will only make conditions more ripe for wildfire.
Says Anderson Cooper of CNN, in plugging CNN's "Planet in Peril":
At the top of the next hour … the big picture. These fires are really a piece of it. Fire, drought, global warming, climate change, deforestation, it is all connected, tonight, 9:00 p.m. Eastern… "Planet in Peril" starts in just 30 minutes.
There are even scientists providing the "fig leaf" for this new theory of forest fires, like this recent article from Science:
Western United States forest wildfire activity is widely thought to have increased in recent decades, yet neither the extent of recent changes nor the degree to which climate may be driving regional changes in wildfire has been systematically documented. Much of the public and scientific discussion of changes in western United States wildfire has focused instead on the effects of 19th- and 20th-century land-use history. We compiled a comprehensive database of large wildfires in western United States forests since 1970 and compared it with hydroclimatic and land-surface data. Here, we show that large wildfire activity increased suddenly and markedly in the mid-1980s, with higher large-wildfire frequency, longer wildfire durations, and longer wildfire seasons. The greatest increases occurred in mid-elevation, Northern Rockies forests, where land-use histories have relatively little effect on fire risks and are strongly associated with increased spring and summer temperatures and an earlier spring snowmelt.
The translation is this: government forest management has been just fine; global warming is the cause of the modern forest fires that are consuming huge acreage in the American West. Perhaps it is convenient that government-paid scientists tell us that the real problem is private enterprise producing all that carbon dioxide that is supposedly killing us all.
There is this little problem, however, of government management of western forests for more than a century that has given us a situation that has inevitably led to what we are now seeing. A recent paper by Alison Berry of the Property and Environment Research Center points to a much different — but familiar — culprit, the federal government.
Writes Berry:
For most of the 20th century, U.S. federal fire policy focused on suppressing all fires on national forests. The goal was to protect timber resources and rural communities, but this policy ignored the ecological importance of fire. North American forests have evolved with fire for thousands of years. Fire returns nutrients to soils, encourages growth of older fire-resistant trees, and promotes establishment of seedlings.
Decades of fire exclusion have produced uncharacteristically dense forests in many areas. Some forests, which previously burned lightly every 15-30 years, are now choked with vegetation. If ignited, these forests erupt into conflagrations of much higher intensity than historic levels. Grasses, shrubs, and saplings in the understory now form a fuel ladder, through which flames can climb to the forest canopy, killing entire forest stands.
The fire problem is exacerbated by decreasing federal timber harvests since the late 1980s. In the absence of fire, and with reduced timber harvests and thinning, numerous small diameter trees have proliferated. Stressed trees compete for scarce water, sunlight, and growing space.
To understand how we came to this place, we have to remember that we are dealing with old political legacies. First, the Louisiana Purchase of 1803 placed all new western lands in the hands of the federal government. Even today, the government owns more than half of all western lands.
Second, the presidency of Theodore Roosevelt gave us more than just belligerence and anti-business rhetoric; it also gave us socialistic government land policies. Roosevelt was strongly influenced by Gifford Pinchot, a Progressive who held to the view that the state would be a better manager of lands than private enterprise. According to Wikipedia:
Pinchot sought to turn public land policy from one that dispersed resources to private holdings to one that maintained federal ownership and management of public land. He was a Progressive who strongly believed in the Efficiency Movement. The most economically efficient use of natural resources was his goal; waste was his great enemy. His successes, in part, were grounded in the personal networks that he started developing as a student at Yale and continuing through his career. His personal involvement in the recruitment process led to high esprit de corps in the Forest Service and allowed him to avoid partisan political patronage. Pinchot capitalized on his professional expertise to gain adherents in an age when professionalism and science were greatly valued. He made it a high priority to professionalize the Forest Service; to that end he helped found the Yale School of Forestry as a source of highly trained men.
At the time, loggers were clear cutting large expanses of private forests, and some conservationists expressed alarm, fearing that all US forests could disappear soon. (Like so many other dire predictions, this one had no basis in fact, but was nonetheless a useful rhetorical tool to spread fear among the public, and to empower the state.)
In establishing the US Forest Service, the Roosevelt Administration sought to run a course between outright preservationism as advocated by John Muir, and the movement to sell government lands to private owners, including timber companies. Instead, the government emphasized its own "expertise" against the "short-term" interests of the private interests, and that meant establishing its own policies. Writes Berry:
The Forest Service was created in 1905 to manage the nation's forest reserves, and soon thereafter the agency adopted a nation-wide policy of fire suppression. Fire historian Stephen Pyne notes that in the early years, the Forest Service needed to prove its qualifications. Many foresters at the time recognized the value of "light burning" to clear out understory vegetation, but the Forest Service wanted to set itself apart from this common practice of rural farmers and Native Americans. The Forest Service had insisted that it should manage the forest reserves precisely because it offered something different from frontier practices….
Also, the Forest Service needed an uncomplicated message with respect to fire in the woods. It would not serve the agency to attempt to educate the public on the differences between appropriate and inappropriate uses of fire; "propaganda does not thrive on close distinctions"…. Thus, the Forest Service adopted an unequivocal anti-fire position. Later, Smokey Bear's anti-fire message — "only you can prevent forest fire" — would become one of the most effective advertising campaigns in history.
This form of management was consistent with the "Efficiency Movement," in which, according to Wikipedia,
Adherents argued that all aspects of the economy, society and government were riddled with waste and inefficiency. Everything would be better if experts identified the problems and fixed them. The result was strong support for building research universities and schools of business and engineering, municipal research agencies, as well as reform of hospitals and medical schools. Perhaps the best known leader was engineer Frederick Winslow Taylor, who proclaimed there was always "one best way" to fix a problem.
Simply put, the state knew best. During much of the 20th century, government forests were "managed" mostly to serve timber interests, and often engaged in outright policies of subsidizing logging firms. While the lumber industry thrived under those conditions, there were two problems. First, there was the issue of economic calculation in which the value of things depended as much on the political whims of Congress and the executive branch as the value that such resources would have in a free market.
Second, and more important to the present-day situation, the politics of forest management and fire suppression underwent important changes. While the Forest Service temporarily suspended its "Smokey the Bear" policy, a spate of huge wildfires in 1988, including the conflagration at Yellowstone National Park in which a "let it burn" policy was in effect, led to a huge public (or more specifically, political) outcry, so the policy was abandoned and Congress once again demanded fire suppression.
During the late 1980s, and especially during the Bush I and Clinton administrations, the government began to aggressively push the Endangered Species Act as a way to "preserve" western forests. Doing an about-face from its policies of permitting lumber firms from logging western forests, the policies were changed to "leave the forests absolutely alone," a policy that changed the character of the forests.
For one thing, no logging meant that trees would grow more closely together, making forests so dense that it became inevitable that once-routine fires would turn into conflagrations. While these policies were popular with environmentalists, they were disastrous for people who once depended on logging for a livelihood. (Let me also point out that many of the anti-logging and anti-mining directives of the Clinton Administration had the effect of impoverishing those counties that had the effrontery of voting for Clinton's political opponents in presidential elections. Whether this was by coincidence or by design is left up to the reader to decide.)
But while the loggers moved out, the millionaires moved in. Wealthy people who wanted to get away from the crowded West Coast cities built new homes in areas adjacent to national forests. However, environmentalist-dominated governments refused permission to these homeowners to clear land near their homes, which meant that if the nearby forests caught on fire, their homes would almost certainly burn down. Application of the Endangered Species Act to prevent homeowners from removing nearby natural fire hazards also helped to ensure that new homes would be vulnerable to fires.
This is especially true in the coastal mountains of Southern California, where the latest spate of fires have occurred. People have built their "dream homes" in the cooler and more scenic higher elevations, hoping that the danger of fire would remain only a danger and not reality. State and federal policies, citing the Endangered Species Act, have specifically prohibited individual landowners from protecting their own homes and property by changing the nearby landscape to lesson fire dangers.
Fires are natural in that they have always occurred on earth, and will continue to occur. The real problem with the current fires, however, is government. Governments — in the name of "scientific" and "ecological" management — have grossly mismanaged the natural environment. Environmental policy has operated on the assumption — as so eloquently stated by Lew Rockwell — that "private ownership is the enemy." He writes that environmentalists believe:
Nature is an end in itself. So it must be owned publicly, that is, by the state. The state, in its management of this land, must not do anything to it. There must not be controlled burning, brush clearing, clear cutting, or even tourism. We can admire it from afar, but the work of human hands must never intervene.
Indeed, we see the handiwork of such policies: utter destruction of human and animal habitat.
Those endangered species that the law was supposed to protect are swallowed up along with the million-dollar houses that environmentalists hate. So much for the state that "protects" nature. In fact, government has dealt with the natural environment in much the same way that the US Armed Forces dealt with Vietnam: they have destroyed it in order to "save" it.
How fashionable it is to love nature.
Down with industry, development, internal-combustion engines, clear cutting, strip malls, and private ownership. Capitalists do nothing but ravage the beauty of mother earth. The hand of man only strangles and kills.
If you agree with the above, you will love the fires that have driven half a million people from their homes in California, and destroyed 1,200 houses. President Bush is dumping your money in the form of aid on these suffering souls, and the flames rage on.
In these wretched infernos that consume civilization, we see the truth about nature. It is beautiful when it is controlled and owned and put to our use. When it is left to its own devices, it is mean, dangerous, cruel, and often thoroughly evil. It is, as Albert Jay Nock said, the enemy.
The fires force us to choose. We thrive and rule nature, or nature rules and eats us alive. The tendency nowadays is to believe we can have it both ways. We can build great cities and gorgeous suburbs, amass glorious wealth, live in comfort, and meanwhile let the surrounding areas take their natural course. This allows us to sit in the safety of our homes with a pious sense that we have done right by Mother Nature and she will bless us.
In fact, she has not blessed Southern California. She has been unleashed, and she is gorging herself on civilization itself.
What went wrong? The problem is in the theory of environmentalism. Under it, ownership is the enemy. Nature is an end in itself. So it must be owned publicly, that is, by the state. The state, in its management of this land, must not do anything to it. There must not be controlled burning, brush clearing, clear cutting, or even tourism. We can admire it from afar, but the work of human hands must never intervene.
Then the brush begins to gather. It piles higher and higher. Old growth rots. Uncontrolled growing leads to crowding. When the weather gets hot the stuff combusts. Then the winds blow and the fires spread. It's been the same story for several decades now, ever since the loony theory that nature should be left alone took hold. (For a nice history of how these fires came to be, see Roger Sedjo's "The Fires This Time" from 2002.)
Next we come to the government's response, which amounts to "run for your life, or we arrest you." They say that evacuations are the best way to protect people. But this defies good sense because you are essentially abandoning everything you have worked hard to build so that nature can take its course. You just know that crazed environmentalists secretly love this approach, and think: "that's what you get for building those stinkin' houses in places where animals and plants should rule."
Next we turn to the government's glorious fire fighting units. As with all government bureaucracies, they resist new technology. They don't plan for and assess risks. They run around spraying water and chemicals on everything regardless of effectiveness or cost. But meanwhile, they crowd out private fire control efforts. They tell us to flee and then put an antique government bureaucracy in charge and expect us to be happy about it. Finally, when the disaster ends, the federal government dumps billions in aid as a way of placating us. This is an insane approach, or, rather, it is only a sane approach if the goal is to see civilization wiped out and meanwhile expand the state.
Oh: there is one more action that government takes: officials express profound sadness and regret that it is all happening. And we all just sit back and say, well, heck, I guess there is nothing that can be done about it.
Ridiculous! Are we under the impression that private markets can't handle risk management? Private markets specialize in protection of property, particularly against natural risks. If the land were privately owned, it would be protected against burning through better management. If it had to be burned, the burning would be controlled. Unexpected events like droughts and winds would be calculated into management decisions.
What's more, there would be serious liability issues. Any owner of property who let fires rage would be directly responsible for imposing fires on others. This is the way markets work. If my bathtub overflows, floods my house, and then the waters flood my neighbor's house, I am responsible via my insurance policy. So, yes, there would be a price to pay for fires on your land that harm others' property.
What do we have today? We have fires that are no one's responsibility. Oddly, and by some strange practice that dates back to, hmmm, the beginning of time, rulers are not to be held responsible for actions that take place on their watch. So the government is not liable. It should be but it isn't. So putting government in charge is always a perfect storm for disaster without responsibility.
Your job is to flee, pay, and obey. It gives new meaning to the famous quote from George Washington: "Government is not reason; it is not eloquence; it is force. Like fire, it is a dangerous servant and a fearful master."
It is fitting that the Mises Institute is releasing the Bastiat Collection on the two-year anniversary of Hurricane Katrina. Though hundreds of years have passed since Frédéric Bastiat, the beauty of sound economic reasoning is that it does not change over time. In particular, his essay, "That Which is Seen, and That Which is Not Seen," is especially insightful in analyzing the rebuilding of the Gulf Coast. In first expounding his lesson and then applying it to the conflict between the private and public sectors, this article seeks to attack the fallacies of government spending and vindicate the free market.
The Lesson
Bastiat's lesson is essentially a vitiation of the "broken window" justification for government spending.
The story goes that a young hooligan throws a rock and breaks the cobbler's window. When the crowd gathers, everyone scolds the boy except the economist, who instead points out that the boy has put the glazier into business. His destruction should be applauded.
The flaw here comes from that which is unseen. Though everyone sees the money spent by the cobbler to hire the glazier and then the wages that the glazier spends, what we do not see is what could have been produced otherwise. We do not see the shoes that could have been manufactured, the people whom the cobbler could have hired for more productive uses, or the resources misallocated into the repair industry. As Henry Hazlitt points out:
The glazier will be no more unhappy to learn of the incident than an undertaker to learn of a death. But the shopkeeper will be out $250 that he was planning to spend for a new suit. Because he has had to replace a window, he will have to go without the suit (or some equivalent need or luxury). Instead of having a window and $250 he now has merely a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window and no suit. If we think of him as a part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.
The glazier's gain of business, in short, is merely the tailor's loss of business. No new "employment" has been added. The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forgot him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never see the extra suit, precisely because it will never be made. They see only what is immediately visible to the eye.
Thus, as government spending necessarily comes from the private industry through taxation, it must divert production from the more useful means that the market demands. As the profit-and-loss mechanism directs production to the most economic ends, the market has a natural tendency to satisfy consumer demand.
Now, think of Katrina as the destructive hooligan.
What Is Seen
No one questions the need for rebuilding after Katrina, and few would go so far as the imbecilic economist to praise the hurricane, but there is still the question of who is to do the rebuilding.
With a virtually unlimited purse, the government's approach to reconstruction is necessarily wasteful, bureaucratic, and inefficient. As Ludwig von Mises noted, the problem with bureaucracy is that consumer demand is subservient to meaningless rules, edicts, and red tape. Through this lens, it is not difficult to understand the reason behind the inefficiencies of local, state, and federal government agencies.
As USA Today notes, "The pace of rebuilding depends on who's paying. As government work plods along, New Orleans residents are getting things done."
The government is quick to complete some projects, like a fourteen billion dollar flood-protection system, while neglecting others, like helping to restore 20,000 of the poorest, displaced residents. How do we know that spending fourteen billion dollars was more wise than giving people shelter? Why not spend only thirteen billion? The answer is that in the absence of free-market prices, this cannot be known.
So we see the billions that the Army Corps of Engineers is spending, but what about the unseen?
What Is Unseen
Because we don't live in a completely socialized system, we can still see glimmers of hope from the private sector. This hope is best embodied in people like Denise Thornton. Thornton, a resident of New Orleans, has used her own personal savings to rebuild her house and neighborhood, Lakewood. In stark contrast to the boarded-up firehouse of Engine 18, less than two miles away, the USA Today article reports that "[n]early 80% of the homes in affluent Lakewood have been rebuilt or reoccupied, a remarkable return rate for an area just down the road from one of the biggest levee breaches."
Some may merely see this as the rich being better off than the poor, but that doesn't take into account two important facts: First, who rebuilt those houses? Obviously the money spent by Thornton and others spurred employment and gave poorer people jobs. Second, Thornton is a philanthropist who founded Beacon of Hope, a non-profit charity that takes the place of the government when it comes to providing services and reconstruction to the citizens of New Orleans.
As Thornton herself says, "If disaster strikes another city, the best thing they could do is realize that the government will not do anything for you. We are in this for ourselves."
But not only will the government not do anything to help; it will continue to tax people and thus impede recovery. This is what is unseen.
If New Orleans (or better yet, the entire country) were declared a tax-free zone, then money tied up in inefficient government spending would be allowed to flow where it is needed.
We would see the things that now remain unseen. We would see more Denise Thorntons. We would see entrepreneurs seeking profit by providing the poorest people of New Orleans with affordable housing. We would see economical levees built.
And best of all, we wouldn't see FEMA.
The traditional story is familiar to American schoolchildren: the American Indians possessed a profound spiritual kinship with nature, and were unusually solicitous of environmental welfare.
According to a popular book published by the Smithsonian Institution in 1991, "Pre-Columbian America was still the First Eden, a pristine natural kingdom. The native people were transparent in the landscape, living as natural elements of the ecosphere. Their world, the New World of Columbus, was a world of barely perceptible human disturbance."
If we are to avert environmental catastrophe, the not-so-subtle lesson goes, we need to recapture this lost Indian wisdom.
As usual, the real story is more complicated, less cartoonish, and a lot more interesting.
In his 1992 book Earth in the Balance, then-Senator Al Gore cited a nineteenth-century speech from Chief Seattle, patriarch of the Duwamish and Suquamish Indians of Puget Sound, as evidence of the Indians' concern for nature. This speech, which speaks of absolutely everything in the natural world, including every last insect and pine needle, as being sacred to Seattle and his people, has been made to bear an unusually heavy share of the burden in depicting the American Indians as the first environmentalists.
The trouble for Gore is that the version of the speech he cites is a fabrication, drawn up in the early 1970s by screenwriter Ted Perry. (Perry, to his credit, has tried without success to let people know that he made up the speech.) Still, it was influential enough to become the basis for Brother Eagle, Sister Sky, a children's book that reached number five on the New York Times bestseller list in 1992.
Earlier versions of the speech, also cited by environmentalists, are suspect for reasons of their own. But experts say that the intention of Chief Seattle is clear enough, and that it wasn't to say that every created thing, sentient and non-sentient, was "holy" to his people, or that all land everywhere had an equal claim upon their affection. "Seattle's speech was made as part of an argument for the right of the Suquamish and Duamish peoples to continue to visit their traditional burial grounds following the sale of that land to white settlers," explains Muhlenburg College's William Abruzzi. "This specific land was sacred to Seattle and his people because his ancestors were buried there, not because land as an abstract concept was sacred to all Indians." Writing in the American Indian Quarterly, Denise Low likewise explains that "the lavish descriptions of nature are secondary" to the purpose of Chief Seattle's argument, and that he was saying only that "land is sacred because of religious ties to ancestors."
Environmentalists who have cultivated the myth of the environmental Indian who left his surroundings in exquisitely pristine condition out of a deeply spiritual devotion to the natural world have done so not out of any particular interest in American Indians, the variations between them, or their real record of interaction with the environment. Instead, the intent is to showcase the environmentalist Indian for propaganda purposes and to use him as a foil against industrial society.
The Indians' real record on the environment was actually mixed, and I give the details in my new book, 33 Questions About American History You're Not Supposed to Ask. Among other things, they engaged in slash-and-burn agriculture, destroyed forests and grasslands, and wiped out entire animal populations (on the assumption that animals felled in a hunt would be reanimated in even larger numbers).
On the other hand, the Indians often succeeded in being good stewards of the environment — but not in the way people generally suppose.
Although we often hear that the Indians knew nothing of private property, their actual views of property varied across time, place, and tribe. When land and game were plentiful, it is not surprising that people exerted little effort in defining and enforcing property rights. But as those things became more scarce, Indians appreciated the value of assigning property rights in (for example) hunting and fishing.
In other words, the American Indians were human beings who responded to the incentives they faced, not cardboard cutouts to be exploited on behalf of environmentalism or any other political program.
In some tribes, family- and clan-based groups were assigned exclusive areas for hunting, which meant they had a vested interest in not overhunting, and in making sure enough animals remained to reproduce for future years. They likewise had an incentive not to allow people from other families and clans to hunt on their land. In the Pacific Northwest, Indians assigned exclusive fishing rights that yielded a similar kind of stewardship: instead of catching all the salmon, some were left behind with an eye to the future. Whites who later established control over salmon resources unfortunately neglected this important Indian lesson.
Indians have not always recalled that lesson themselves. Consider the Arapahoes and Shoshones on Wyoming's Wind River Reservation, who in recent years (and with the help of all-terrain vehicles and high-powered rifles) have all but wiped out entire animal populations. Whatever happened to their spiritual kinship with nature?
In fact, this is the predictable result when wildlife is said to belong to everyone. There is no incentive to preserve any stocks for the future, since anything you might leave behind will simply be killed by someone else. Without property rights in hunting, there is no way (and no incentive) for anyone to prevent such short-term, predatory behavior. That's why Indian tribes assigned these exclusive rights — it was the best way to preserve animal species and provide for the future.
Say, doesn't this lost Indian wisdom bear repeating?
[A version of tihs article was previously blogged on Mises.org here, and inspired a spirited debate. The author reworked the piece for the Mises.org front page. The blog item remains the same.]
I devoted six years to carbon accounting, building models for the Australian government to estimate carbon emissions from land use change and forestry. When I started that job in 1999 the evidence that carbon emissions caused global warming seemed pretty conclusive, but since then new evidence has weakened that case. I am now skeptical.
In the late 1990s, this was the evidence suggesting that carbon emissions caused global warming:
Carbon dioxide is a greenhouse gas, proved in a laboratory a century ago.
Global warming has been occurring for a century and concentrations of atmospheric carbon have been rising for a century. Correlation is not causation, but in a rough sense it looked like a fit.
Ice core data, starting with the first cores from Vostok in 1985, allowed us to measure temperature and atmospheric carbon going back hundreds of thousands of years, through several dramatic global warming and cooling events. To the temporal resolution then available (data points more than a thousand years apart), atmospheric carbon and temperature moved in lockstep: they rose and fell together. Talk about a smoking gun!
There were no other credible causes of global warming.
This evidence was not conclusive, but why wait until we are absolutely certain when we apparently need to act now? So the idea that carbon emissions were causing global warming passed from the scientific community into the political realm. Research increased, bureaucracies were formed, international committees met, and eventually the Kyoto protocol was signed in 1997 to curb carbon emissions.
The political realm in turn fed money back into the scientific community. By the late 1990s, lots of jobs depended on the idea that carbon emissions caused global warming. Many of them were bureaucratic, but there were a lot of science jobs created too.
I was on that gravy train, making a high wage in a science job that would not have existed if we didn't believe carbon emissions caused global warming. And so were lots of people around me; there were international conferences full of such people. We had political support, the ear of government, big budgets. We felt fairly important and useful (I did anyway). It was great. We were working to save the planet!
But starting in about 2000, the last three of the four pieces of evidence above fell away. Using the same point numbers as above:
Better data shows that from 1940 to 1975 the earth cooled while atmospheric carbon increased. That 35 year non-correlation might eventually be explained by global dimming, only discovered in about 2003.The temporal resolution of the ice core data improved. By 2004 we knew that in past warming events, the temperature increases generally started about 800 years before the rises in atmospheric carbon. Causality does not run in the direction I had assumed in 1999 — it runs the opposite way!
It took several hundred years of warming for the oceans to give off more of their carbon. This proves that there is a cause of global warming other than atmospheric carbon. And while it is possible that rising atmospheric carbon in these past warmings then went on to cause more warming ("amplification" of the initial warming), the ice core data neither proves nor disproves this hypothesis.
There is now a credible alternative suspect. In October 2006 Henrik Svensmark showed experimentally that cosmic rays cause cloud formation. Clouds have a net cooling effect, but for the last three decades there have been fewer clouds than normal because the sun's magnetic field, which shields us from cosmic rays, has been stronger than usual. So the earth heated up. It's too early to judge what fraction of global warming is caused by cosmic rays.There is now no observational evidence that global warming is caused by carbon emissions. You would think that in over 20 years of intense investigation we would have found something. For example, greenhouse warming due to carbon emissions should warm the upper atmosphere faster than the lower atmosphere — but until 2006 the data showed the opposite, and thus that the greenhouse effect was not occurring! In 2006 better data allowed that the effect might be occurring, except in the tropics.
The only current "evidence" for blaming carbon emissions are scientific models (and the fact that there are few contradictory observations). Historically, science has not progressed by calculations and models, but by repeatable observations. Some theories held by science authorities have turned out to be spectacularly wrong: heavier-than-air flight is impossible, the sun orbits the earth, etc. For excellent reasons, we have much more confidence in observations by several independent parties than in models produced by a small set of related parties!
Let's return to the interaction between science and politics. By 2000 the political system had responded to the strong scientific case that carbon emissions caused global warming by creating thousands of bureaucratic and science jobs aimed at more research and at curbing carbon emissions.
But after 2000 the case against carbon emissions gradually got weaker. Future evidence might strengthen or further weaken it. At what stage of the weakening should the science community alert the political system that carbon emissions might not be the main cause of global warming?
None of the new evidence actually says that carbon emissions are definitely not the cause of global warming, there are lots of good science jobs potentially at stake, and if the scientific message wavers then it might be difficult to later recapture the attention of the political system. What has happened is that most research efforts since 1990 have assumed that carbon emissions were the cause, and the alternatives get much less research or political attention.
Unfortunately politics and science have become even more entangled. Climate change has become a partisan political issue, so positions become more entrenched. Politicians and the public prefer simple and less-nuanced messages. At the moment the political climate strongly blames carbon emissions, to the point of silencing critics.
The integrity of the scientific community will win out in the end, following the evidence wherever it leads. But in the meantime, the effect of the political climate is that most people are overestimating the evidence that carbon emissions are the main cause of global warming.
I recently bet $6,000 that the rate of global warming would slow in the next two decades. Carbon emissions might be the dominant cause of global warming, but I reckon that probability to be 20% rather than the 90% the IPCC estimates.
I worry that politics could seriously distort the science. Suppose that carbon taxes are widely enacted, but that the rate of global warming increase starts to decline by 2015. The political system might pressure scientists to provide justifications for the taxes.
Imagine the following scenario. Carbon emissions cause some warming, maybe 0.05C/decade. But the current warming rate of 0.20C/decade is mainly due to some natural cause, which in 15 years has run its course and reverses. So by 2025 global temperatures start dropping. In the meantime, on the basis of models from a small group of climate scientists but with no observational evidence (because the small warming due to carbon emissions is masked by the larger natural warming), the world has dutifully paid an enormous cost to curb carbon emissions.
Politicians, expressing the anger and apparent futility of all the unnecessary poverty and effort, lead the lynching of the high priests with their opaque models. Ironically, because carbon emissions are raising the temperature baseline around which natural variability occurs, carbon emissions might need curbing after all. Maybe. The current situation is characterized by a lack of observational evidence, so no one knows yet.
Some people take strong rhetorical positions on global warming. But the cause of global warming is not just another political issue, subject to endless debate and distortions. The cause of global warming is an issue that falls into the realm of science, because it is falsifiable. No amount of human posturing will affect what the cause is. It just physically is there, and after sufficient research and time we will know what it is.
A major demand of the environmental movement, put forward as essential to combating global warming, is the imposition of a massive rollback in global emissions of carbon dioxide accompanied by a freeze on such emissions at the sharply reduced level imposed.
In this spirit, Britain's Stern Review, published in the fall of 2006, seeks a reduction of 25 percent by the year 2050. Going considerably further, the United Nations' Intergovernmental Panel on Climate Change has urged a 60 percent reduction.
Such pronouncements can be made openly and repeatedly only because the immense majority of people do not take the trouble to understand their implications. They do not because what is required to do so is a combination of making connections between various facts and performing calculations. These are activities that are widely perceived as onerous. Nevertheless, this level of thinking is essential if people are to understand the implications of environmentalism's demands.
In purely verbal terms, those implications are that environmentalism seeks the destruction of the energy base of the modern world, along with the elimination or radical reduction in the supply of all goods and services that depend on that energy base. It seeks this on the grounds that these goods and the energy on which they depend entail the emission of carbon dioxide into the atmosphere. The goods and services in question are air conditioners, automobiles, airplane travel, housing, food, clothing, refrigerators, freezers, television sets, telephones, washers, dryers, books, computers—everything that depends on the production and use of oil, coal, or natural gas, which all release carbon dioxide into the atmosphere in being burned. The destruction of the energy base and the production of goods and services is implied by the fact that in order to rollback the emission of carbon dioxide, it is necessary to rollback the production and use of energy in these forms. But rolling back the production and use of energy reduces the production of goods and services.
Turning now to the arithmetic of environmentalist destruction, I will proceed to calculate the extent of the reduction in carbon dioxide emissions per person that is entailed in the environmentalist demands. This will serve as a guide to the extent of the reduction in the production and use of energy per person and thus as a guide to the reduction in the production of goods and services per person. Proceeding in this way, it will be very easy to prove that environmentalism seeks the destruction of the energy base of the modern world, along with the elimination or radical reduction in the supply of all goods and services that depend on it.
Let me start with the 25 percent reduction in global carbon dioxide emissions urged by the Stern Review. Its application across the world would imply a 25 percent reduction in carbon dioxide emissions here in the United States by that year. Yet the population of the United States in 2050 is projected to be approximately 400 million people. Since the US population is currently 300 million people, this means that four-thirds of the present population of the US would be expected to generate only three-fourths of present carbon dioxide emissions. Three-fourths divided by four-thirds is nine-sixteenths, or 56.25 percent. That would be the projected per capita level of carbon dioxide emissions in the United States in 2050, i.e., a reduction of 43.75 percent from today's level.
If the reduction in global carbon dioxide emissions is to be 60 percent rather than 25 percent, then, with the same increase in population, the reduction in per capita emissions in the United States would be to a level found by dividing 40 percent (the emissions remaining after the 60 percent reduction) by four-thirds. Since division by four-thirds is always multiplication by three-fourths, the per capita reduction would be to a level of 30 percent of today's emissions instead of 56.25 percent. The per capital reduction in emissions in the United States would be 70 percent rather than 43.75 percent.
But there is yet a further major reduction in US per capita carbon dioxide emissions to contend with. And that is that while global emissions will be reduced by 25 percent, or by 60 percent, emissions in China, India, and the rest of the so-called third world will be allowed to go on increasing, presumably until there is equality in per capita emissions across the world.
At present, even though it has only 5 percent of the world's population, the US consumes 25 percent of the world's supply of energy and is responsible for approximately 25 percent of the world's carbon dioxide emissions. Assuming the US population to remain at 5 percent of the world's population, the achievement of global equality in per capita carbon dioxide emissions would require a reduction in US energy consumption from its present 25 percent to 5 percent, corresponding to the size of its population. This implies a further reduction of 80 percent in per capita emissions in the US. This is because 5 percent divided by 25 percent is 20 percent; a fall to 20 percent of the initial percentage is a decline of 80 percent from the initial percentage.
This further decline of 80 percent in per capita carbon dioxide emissions would apply to the already very substantial percentage declines calculated above. Thus, with a rollback of 25 percent in global emissions, the decline in the US would be to 20 percent of 56.25 percent, i.e. to 11.25 percent. This, of course, would be an 88.75 percent reduction in per capita US carbon dioxide emissions. With a rollback of 60 percent in global emissions, the decline in the US would be to 20 percent of 30 percent, i.e. to 6 percent. This would be a 94 percent reduction in per capita US carbon dioxide emissions.
Whether the per capita reduction in carbon dioxide emissions is to 6 percent or to 11.25 percent, whether or not a few percentage points of reduction can be avoided by virtue of obtaining additional power from windmills and solar panels (the environmentalists will not allow atomic power, which they regard as the death ray and oppose even more than carbon dioxide emissions, nor will they allow hydro-power insofar as it interferes with the migratory patterns of fish), the clear implication is economic devastation. It is devastation in the production and use of energy and devastation in the production of everything that depends on energy.
The implications of imposing environmentalism's demands include those that I have discussed in previous articles on the subject. In terms of the life of individuals, they are precisely of the kind described in the newspaper articles I quote in "After the Hideous Light Bulbs." They also include such paradoxes as attempting to fight global warming by means of destroying air conditioners, refrigerators, and freezers. (I presented this particular paradox in "Environmentalist Zen." That it is present in environmentalism is something that should be glaringly obvious from the present article.)
It follows that inasmuch as anything may serve as an opening wedge in getting people to accept environmentalism's agenda of destruction and impoverishment, it needs to be opposed as strongly as possible. Such is the case with the organized campaign now underway to get people to accept the use of compact fluorescent light bulbs in place of customary, incandescent bulbs. As a prelude to their imposition by law, the sale of these bulbs is currently being highly subsidized by business firms seeking to curry favor with environmentalists, in order to mitigate the harm that they expect would otherwise be done to them. It should be obvious that it is necessary to fight acceptance of these bulbs, as I argue in "Say No to the Hideous Light Bulbs."
There is tremendous public pressure today to join the environmentalist cause. Business firms that had long opposed it are now rushing to join it. Opposition is evaporating. Where there are still pockets of serious resistance, environmentalist smears serve to undercut their effectiveness. This has been the case, for example, with respect to the British television documentary "The Great Global Warming Swindle," which presents the views of numerous scientific experts on climate and the causes of climate change who are opposed to the environmentalists' claim that global warming is caused by carbon dioxide emissions.
The public embrace of a movement as dreadfully destructive as environmentalism brings to mind the rush to embrace Hitler and the Nazi Party in the Germany of 1932 and 1933, once their victory at the polls seemed to become inevitable, and then once they actually came to power. However the views of serious people, who hold their views first-hand, based on their own, independent judgment, do not change merely because the views of others have changed.
Nazism was a catastrophe. Environmentalism has the potential to be an even greater catastrophe—a far greater catastrophe than Nazism: one that will result in the deaths of billions rather than millions. This is because it is the diametric opposite of economic liberalism on a global scale. In contrast to liberalism and its doctrine of the harmony of the rightly understood self-interests of all men, environmentalism alleges the most profound conflict of interests among people. It implies that there is a major economic benefit to be obtained through the death of billions of fellow human beings, that, indeed, the well-being and prosperity of the survivors depends on the extermination of those billions.
Thus, for example, from the depraved perspective of environmentalism, if global carbon dioxide emissions equal to 25 percent of present emissions were to disappear, because those responsible for them ceased to exist, there would be no need for the global cutback in emissions urged by the Stern Review, and thus no need for any diminution in economic well-being on the part of the survivors (provided, of course, their number did not increase). If still more emissions could be eliminated by the elimination of still more people, there would be room for actual economic improvement among the survivors, according to environmentalism. Obviously, the magnitude of mass murder that is invited is the greater, the greater is the alleged need to curb carbon dioxide emissions.
Those who recognize the astoundingly evil nature of environmentalism must never cease opposing it.
Nature magazines are delightful to read. The photos that grace conservation publications are often magnificent. Yet it is hard to ignore the economic illiteracy or the socialist propaganda that is espoused in many of their thoughtless articles, and it is even harder to ignore the strength with which statists call for government expropriation of resources in order to achieve their goals. I will examine why this is ethically incorrect and economically inefficient.
First things first: I am not against nature or the preservation thereof. What I am against is the use of the state — the agent of institutionalized aggression — to advance the agenda of the conservation movement. It is imperative that the distinction be made between freedom and statism. While freedom involves property, prosperity, and free exchange, statism involves theft, plunder, and poverty.
The opinions of legislators, upon becoming codified and written in certain "official" documents, become law. These laws are funded by theft and are usually enforced by threats of fines, jail time and, ultimately, death. So when we speak about voluntary options, we are definitely not talking about government decrees.
Government Intervention Whenever there is an exchange of goods, those who are engaging in it are ex ante better off than they would have been had they not traded; they expect to benefit from the exchange or they would not be doing it. If A is buying apples from B for $1, then A must necessarily value the apples more then he values the dollar. A similar thing happens with B, who thinks that the value of the dollar is greater than the value of the apples. Free exchange is therefore a double inequality.
Under government intervention, however, the relationship between those exchanging goods is no longer as it is described above. Instead of two parties freely deciding to exchange goods based on their needs and calculating through prices, the government is the one that gets to set the terms, unilaterally. It allocates resources according to the political climate, neglecting the needs of everyone by proposing and establishing one-size-fits-all schemes. Instead of both parties being better off, one (usually the politician or lobbyist) becomes better off at the expense of the other.
What does any of this have to do with nature? Quite a lot. We are living under partial nature socialism. The government has arrogated to itself the responsibility to take care of some areas of land that it has declared important. By simply saying that it is so (through the issuance of law), groups of politicians claim to be the rightful owners of either previously unowned land or of land that already has an owner. Let's look at each one of these scenarios.
In the first case, the government claims to have appropriated resources where no one held a previous claim. At this point most would say that this is legitimate. That is, since there is no previous owner, and, thus, nothing to complain about, then the government can claim ownership of the land in question. While it is not the purpose of this article to go into the deeper question of whether or not the government can be treated as a potentially legitimate owner in the first place, suffice it to say that in many (and perhaps most) cases, the state has simply declared that it owns land by decree. There was no homesteading or any link between the government agents and the land claimed.
The second case is much easier. If there is a legitimate owner of property — land in this case — and the state decides it has a better claim ("eminent domain"), then it is simply theft. It invalidates previous (and better) claims to property and takes over. Under this hostile takeover the owner is either ejected or his ownership rights (the right to control) are diminished.
In either case, the formation of state and national parks must, at some point, use aggression. This would be true even if a formerly privately owned preserve were to be voluntarily given to the state; from that point on its maintenance and management would require victimization through further taxation. State-controlled property must be returned to the rightful owner at once.
States cannot legitimately own land (or any property at all). It does not matter whether such property came under state control by purchase, decree, conquest, eminent domain, or by "homesteading" — all these methods involve the violation of rights when they are done by or on behalf of the state.
Nature Under Socialism National parks are socialist parks. The same economic analysis used to determine the consequences of socialism can be applied to national parks, namely, that without a market there is simply no way to determine if the resources dedicated to the park system are being allocated efficiently. As Mises showed, economic calculation is impossible under socialism.
How much should people be charged to enter the park? Should they be charged at all? How many families or cars should be allowed per season? Or should they be allowed at all? These are all critical questions that end up being answered politically. Sure, there are many private and public agencies that perform studies and suggest courses of action, but, ultimately, their recommendations can be ignored by the tyrants in office. And even if they did follow them, would this fix anything? The answer to this requires a bit of economic understanding.
A natural park is a higher order good that could have alternate uses such as a residential development. And this is determined by the price that people would be willing to pay for that park or for similarly priced parks. The private owner knows if offers can be made on that park and he can accept such offers by comparing the benefits that he receives today (fees plus the psychological satisfaction of owning and running the park) against those he would receive by selling it.
Insofar as the state owns and does not sell these assets, no one can become aware of potential alternate uses, and even if these uses were known, the state, by holding those properties (not selling them), perpetuates senseless productive structures. And by supporting the parks by taxation, it is amortizing a capital good that might otherwise be profitable.
A common problem today in national parks is that they are becoming continually more crowded. Notice that this problem is not as extreme or as common wherever there are private property and markets. Usually, grocery stores open lanes when there are long lines. If it experiences high demand, it might open another location. The same happens with every good or service offered by competing entrepreneurs. It is very rare to find extremely inefficient businesses. They simply do not survive if customers do not care for the quality of service being offered there. Further, even if a business were to somehow remain inefficient (perhaps surviving by spending capital) compared to its competitors, there's no obligation to patronize them; one can simply refuse to participate. Not so with state-controlled parks where taxation is almost inevitable and avoidance is risky.
Here are just some ideas of how a market could deal with the issue of large crowds. Perhaps it could ban families and allow only qualified explorers. Or maybe property owners would establish waiting lists or priority queues. It's not difficult to imagine that they would charge different rates depending on the activities that the patrons want to pursue while visiting, or the number of days that they stay. For more fragile areas, perhaps the price would be higher than what we're used to. Or maybe access could be free so long as certain rules were followed. Private incentives like land trusts and long-term contracts could be used to establish guidelines for the caretakers as well as visitors. Many of these proposals would be political suicide under government control because there is the expectation of openness. This might be true for the private park or preserve as well, but it would be balanced not by political fiat but by the expectation of a loss of value, both psychological and marketable. If the owner sets destructive policies then the damage caused could reduce the value of his land.
We must also emphasize that monetary value is not the only factor in the entrepreneurial analysis. Dedication, prestige, and exclusivity would come into play. If it is known that an owner is not being careful with his property the value of his land will decrease and all the effort and money that were invested would be lost. A good reputation would go a long way toward establishing oneself as a professional environmentalist.
Desocialization of Nature There are several common objections that are raised whenever the subject of privatization is raised.
(A) If we allow privatization of national parks, how can we guarantee that they will still exist or that they will be available to all?
There is no such thing as a guarantee under the market (or, for that matter, under government). In a market economy there is a tendency towards matching supply with demand. Entrepreneurs discover unmet needs and profit from this discrepancy. The only "guarantee" that there will be apples in the long run is that people will still demand them. As needs change, entrepreneurs see other opportunities to satisfy these new needs.
To those who say that the market can't guarantee anything, the same applies to the state. There are no guarantees there either. At least in the free market we know that if people value parks enough, the search for profit by owners and entrepreneurs will be directed towards that goal. How can this be "guaranteed" by the state? By hoping that ecologists will be in power? If so, then for there to be chairs, we would have to have carpenters and furniture experts in power also. And for us to have computers, then programmers would have to take over the state. This line of thought is nonsensical.
Further, one must never fall prey to the socialist challenge of "how will X work under a free market?" It's tempting to try to answer that question. And part of the problem is that if there is no market, no one has been able to really try. Further, absent socialism, there would be competition in the satisfaction of unmet needs. A multitude of people would exist to solve problems. It would cease to be a matter of armchair theorizing. If we had shoe socialism, we might be curious as to how shoes would be produced, who would produce them, and they would be delivered. How much would they cost? What colors or sizes would be made? The protection of nature is no different. Instead of asking who would do it (in the future), the correct question is why should the state do it (now).
Finally, there are thousands of models of parks that already exist privately — everything ranging from country clubs to beaches to golf courses. The question then becomes which model should prevail. Answers abound; everyone has an idea. So which one should be chosen, and why? In the market, this is solved by property rights — whoever is the owner decides. This hurts no one because the property was obtained without it being taken from anyone, and, furthermore, in many cases the owner will try to profit by choosing the plan that would benefit the consumers the most.
Though governments worldwide control large areas of land, there are numerous examples of actual private natural parks and preserves. These initiatives should serve as models of how nature can be protected without the need for taxation.
(B) Won't private property owners damage the land, animals, plants, and other resources?
The reasoning behind these kinds of questions never seems to go away. The premise is that property owners are careless and abusive, that they have no long-term outlook on their property, and are present-oriented. If correct, this view would mean that owners are only looking for immediate profit opportunities and exploit their resources as soon as possible. We would be left with nothing and the planet would be destroyed. Fortunately, this is incorrect.
People do value their property. When was the last time we saw people burning their houses immediately after buying them? Owners, particularly those involved with real estate and large projects like those being discussed, must invest resources to obtain property such as land. They have to spend large amounts of money and hire workers and administrators to maintain the property. Property owners value not only current use but also future use. If they are negligent with their land, its future value will take a hit.
Still unsure? A recent article reports a 54% increase of private land conservation since 2000:
Out on the east fork of New Mexico's Gila River, the endangered Gila trout is getting help from adjacent landowners who are setting aside 48,000 acres in several land trusts to protect its habitat by preventing development.
At the same time, on the shores of Chesapeake Bay, 206 properties totaling more than 38,000 acres of fragile estuary habitat for migratory birds and marine life, like the short nose sturgeon, have been permanently set aside using legal tools like land trusts and conservation easements.
It's all part of a huge new boom in conservation of private lands in which landowners voluntarily give up rights to develop their land - often in return for tax breaks, but also to save rugged landscapes they love.
Private land set aside for conservation grew 54 percent from 24 million acres to 37 million acres- an area larger than New England - between 2000 and 2005, according to a recent study by the Land Trust Alliance, a Washington-based umbrella group of local, state, and national land conservation groups.
National groups such as The Nature Conservancy were key in this push for preservation. But the biggest drivers for growth were volunteer local and state land trusts, whose protected acreage doubled from 6 million acres in 2000 to 11.9 million acres. Meanwhile the rate at which those associations were saving land tripled to 1.2 million acres a year between 2000 and 2005.
"People are not sitting around and waiting for a Washington bureaucrat to solve the problem of strip malls in their own backyard - they're forming land trusts," says Rand Wentworth, president of the alliance.
This is just one example of how people are spending money to protect the things they value. Imagine how much more could be done without taxation.
In the end, if people highly value visits to parks, they are willing to pay a premium for them. The benefits of having access to the park must be great, and so would be the park's capitalization.
(C) We cannot allow animals to be owned and traded as if they were property!
Lack of property rights is the problem; the value of endangered species is effectively zero. The state has claimed ownership rights over certain animals and bans their trade. There is no market for the polar bear or the bald eagle. And even though people value them because of their relative scarcity, there is no legal way to show demand for those animals in the market. Imagine, on the other hand, if we did have a market in endangered species. Immediately there would be incentives to protect them. There could be, just to name an example, a healthy market for the safe capture of animals so that they can be returned to their natural habitat or even a zoo.
The believer in socialist animal protectionism at this point could claim that under the free market scenario nothing would stop people from killing animals if they are not owned by anyone or protected by the government, and this would be true. However, in a free market (and, in general, a freer society) it would be considered trespass to enter someone else's property without his consent. Further, there is nothing today that stops anyone from killing endangered species. There are plenty of laws against murder and theft yet they keep happening. But in an animal market people by and large would generally know — as they know that jewelry or gold or vintage cars command a high price — that certain species are worth a lot of money to others. It is not unreasonable to believe that they would rather protect (perhaps for reward money) those animals than be totally indifferent.
There is a very telling example of the market at work. In Kenya, conservation groups and the United Nations pressured the government to prohibit the trade of ivory. After the ban, however, the number of elephants continued to drop due to illegal hunting (which is difficult and expensive to control). In Zimbabwe and Botswana, where it is legal to kill elephants, the number of elephants has been growing by 5% per year. During the 1980s, the Kenyan elephant population dropped from 65 to 19 thousand while in Zimbabwe the population grew from 30 to 40 thousand.
Why is it that even though we eat millions of chickens a day we're not running out of them? Because they have a value and it's in the best interest of the producers to keep the chicken population up to the demand level. It's unlikely that there will be a "chicken shortage crisis."
(D) We're running out of land! What will be left to protect?
[[{"fid":"75144","view_mode":"image_with_caption","fields":{"format":"image_with_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"US Federal Land","field_file_image_title_text[und][0][value]":"US Federal Land","field_caption_text[und][0][value]":"Map of all federally owned land in the United States (2005). Source: National Atlas of the United States.","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"image_with_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"US Federal Land","field_file_image_title_text[und][0][value]":"US Federal Land","field_caption_text[und][0][value]":"Map of all federally owned land in the United States (2005). Source: National Atlas of the United States.","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"US Federal Land","title":"US Federal Land","class":"media-element file-image-with-caption media-wysiwyg-align-center","data-delta":"1"}}]]The map above is very telling. It shows the amount of lands that the US federal government has appropriated and expropriated. Vast amounts of land, particularly west of the Rockies, and most of Alaska and Nevada, are being centrally controlled by Washington bureaucrats. Add the various state and local forests and parks and the picture becomes clear. The same people who wage war, inflate our money, fix potholes, regulate our lives, and impose trade restrictions — these are the same people who supposedly take care of nature. This travesty must be terminated at once.
The privatization of government land all over the world would open considerable opportunities to a huge number of explorers, scientists, conservationists, community organizations and entrepreneurs.
Conclusion The most compelling opposition to privatization hinges on the questions of who gets the land and how could privatization, if done by the state, possibly be done fairly? These are valid concerns; given that the state operates within political means, any privatization initiative would most likely favor organizations with ties to the administration.
This seemingly insurmountable problem is itself the product of government control of resources, and not a failure of the market or of entrepreneurs in general. Perhaps there is no one best method to return property to its rightful owner or owners.Granted, there are some difficulties in how a particular property is desocialized. While complex, these issues represent merely a technical and logistical problem and not an economic or ethical one. Many authors, such as Rothbard and Hoppe (see his "On Socialism and Desocialization" from "Democracy: The God That Failed") have proposed guidelines on how to desocialized state-controlled property. Also, free market environmentalist organizations such as PERC and The Commons offer a good number of articles and books about saving nature through property rights. However, one can be sure that the less state that we have, the better it is for freedom. Therefore, any initiative (such as secession, decentralization, deregulation, or abolition) that brings us closer to that goal — and the goal of desocializing nature — is a good one.
The case that I have presented is a fairly simple one: the abolition of government parks and nature preserves. Only by having a market can there be a sane profit-loss policy. If we love nature and want to preserve it, true property rights are needed.
Beautiful natural resources are a blessing. We must not allow the state to treat them with disdain by employing inefficient and unethical methods. The protection of nature cannot be left to socialism. The state has no business taking care of plants and animals. It has no business, in fact, doing anything at all.
The desire to protect certain artifacts of the human past, such as historical buildings or long-established patterns of land usage, is a prevalent concern today. Furthermore, the danger of losing such cultural treasures is frequently employed to defend coercive, governmental interference with the voluntary actions, uncoordinated by any central authority, that make up the free market.
While we deeply appreciate the end embraced by the advocates of legally mandated preservation — to maintain and enhance the connection we have with the heritage left us by our ancestors — we contend that the means by which they typically try to promote that end are ill-chosen. Increasing the power of the state to direct the fate of private property violates the rights enjoyed by property owners in the Anglo-American, liberal tradition and hinders the ability of the market price system to guide actors towards employing resources in their most-valued use. What's more, the preservationists' program does not even offer any guarantee that tomorrow the state will not exercise the increased authority they wish to grant it in a direction directly contrary to their goals.
To illustrate the problematic nature of coercive preservation efforts, we will offer two representative examples of how the preservationists' project actually has been implemented. We did not choose these instances because of any conviction that they comprise the most egregious cases of state-mandated preservation, but because we were familiar with them and saw them as fully adequate demonstrations that our theoretical objections to such policies meet the test of real-world applicability. Our first exemplar is drawn from among the variety of attempts to regulate the future of rural landscapes, while for our second, in the hope of showing the general nature of the obstacles facing state planners efforts to make sensible trade-offs between historical worth and more prosaic, day-to-day utility, we will turn to an urban setting.
Rural PreservationAmong the worst laws (we use "laws" in a loose sense here) passed in the United Kingdom in the 20th century are the Town and Country Planning Acts; the laws that nationalized the use of land. They have impoverished the lives of millions of people for over half a century.
The acts require permission from the state before land can be used or built upon. Authorization to build new houses is particularly hard to come by. If the proposed home site happens to lie in the inaptly named "green belt" - a vast swathe of ploughed fields, mud, and monoculture surrounding London — then it almost impossible to get permission to build.
The result is that building land in the southeast of England is hugely expensive. The land for even a small house might easily cost £50,000, even before a single brick is laid. Consequently millions of people simply cannot afford to own a home. Demagogic politicians and their allies in the press then blame this state-created shortage of affordable housing on the market and use it to justify massive programs of house-building by the state (so-called "social housing"). The market is thereby distorted still further and an ever-growing client class is created, dependent upon the state for a roof over their heads.
Although the UK is one of the more densely populated countries in the world, the relatively high cost of British housing has little to do with any unavoidable shortage of land. In fact, UK farmland is so cheap as to be almost free. The quite real shortage of buildable sites is the product of policy rather than geography; policy that has produced five decades of unnecessary hardship for millions of Britons. Vast quantities of land are left fallow while many families across the country are forced to live in private accommodations far more cramped than do most residents of comparably wealthy societies, or to become supplicants for state housing.
Nor is the diminution of Britons' material well-being offset by their being assured that at least the character of the land of olde England is protected. All too often, England's famous old towns and villages have had the heart ripped out of them (why is another story — but planning and local government are the culprits). The land protected from house building comprises thousands of square miles of oil seed, sugar beet, and other ecologically barren croplands.
John Corkindale of the IEA has written on this. He refers to research by Cheshire and Sheppard
who made use of comparative data from Reading and Darlington to examine what the impact on housing development and house prices in Reading might have been had the local planning authority adopted the more relaxed planning regime found in Darlington. The results suggested that plot sizes would have been 65 per cent bigger and the area of the town 50 per cent bigger, because people living in the area would have been able to afford larger housing with bigger gardens. Land prices in Reading would have fallen considerably and real incomes risen commensurately. (Corkindale, p. 4)
Urban Preservation
A parallel example from an urban context was recently discussed in The Village Voice (Gillette, 2007). The article discusses the author Tom Wolfe's campaign to stop the proposed alteration of a building at 980 Madison Avenue in Manhattan. The current structure is apparently fairly undistinguished, and was constructed only in 1949. The new owner of the property hired the renowned British architect Norman Foster to design a renovation and extension of the building, including a rooftop garden and two thirty-story, elliptical towers containing numerous luxury apartments. The design has won praise from many who have seen it.
But Wolfe and his allies want none of it. They claim the new design is not compatible with the character of the Upper East Side Historic District, in which it is contained. There are at least two ironic aspects to their opposition to the new construction. One is that the building they are attempting to preserve represented a change in the character of the neighborhood at the time it was built, as, indeed, did every other structure presently in the historic district. If today's preservation laws had been in place 100 years ago, it is likely that little of what the preservationists are trying to preserve would even exist. The other irony is that, if the innovative design for the new construction at 980 Madison Avenue is realized it is probable that, in a few decades, it will be regarded as the very sort of landmark requiring protection by preservation laws.
We can imagine hypothetical, past preservationists preventing the construction of the Athenian Parthenon (it will ruin the natural beauty of the unspoiled acropolis!), the Roman Coliseum (a massive structure, out of keeping with the neighborhood!), the Empire State Building (blocks the views of residents in the vicinity!), or any other edifice today considered as an important part of our cultural heritage.
The urge to protect cherished monuments from the past or particularly scenic rural landscapes is not without merit. However, the flaw in attempts to do so through legislation is that the political process cannot properly balance the value of such preservation with the cost of foregoing other possible uses for the land in question. Preservation advocates who employ the legal system to stop new projects get the benefits of keeping around the familiar landmarks they appreciate without having to take into account the requisite costs, which generally fall on the owner of the property.
Harvard economist Edward Glaeser, commenting on the controversy surrounding 980 Madison, sensibly noted that blocking the construction of new Manhattan residential space will result in housing costs being higher than they would be if the apartments were built. Wolfe's response demonstrates his ignorance of the fact that his pet cause entails very real costs: "[The proposed 980 Madison Avenue project] certainly isn't going to help the housing situation. Just more people who have the money will be able to move in" (Gillette, 2007, p. 21).
Wolfe apparently has never considered the fact that, when very rich people move into those new apartments, that will ease the demand for the residences they would have occupied otherwise, allowing the slightly less wealthy to acquire those spots. That, in turn, will free up the housing those people would otherwise have chosen, making them available to yet others, and so on. An increase in the housing stock at any price level will tend to lower housing costs in general, although, of course, that effect might always be offset or even swamped by some other factor working in the opposite direction.
Wolfe, not content with this first display of economic naïveté, continues, "To take [Glaeser's] theory to its logical conclusion would be to develop Central Park." Here, he confuses the recognition that action X would act towards lowering the cost of good Y to imply that, therefore, X must be done! Without a doubt, filling Central Park with apartment buildings would lower New York City rents. Similarly, butchering all of the dogs and cats in the United States for food would lower meat prices. But that in no way implies that either course of action is indisputably recommended. People quite sensibly prefer not to eat their pets, even though doing so would reduce their meal expenditures, just as New York City residents might prefer a bucolic respite in the midst of their urban environment, even given the higher housing costs that entails.
Glaeser is doing nothing more than noting that the elementary principles of supply and demand apply even to virtuous causes, while Wolfe, by refusing to concede such a basic truth, raises the suspicion that his campaign may have more to do with his public image than with concern for the greater good. (That, in fact, is just what Gillette suggests is the case in his Village Voice article.)
ConclusionIn contrast to the groping in the dark characterizing the political disposition of resources, the market process, while it does not eliminate the possibility of bad choices — market participants always may come to realize, after the fact, that they had misperceived the value of some good — offers the best chance of making good choices. Only market prices can reveal the current valuations that interested parties assign to the various uses conceived for any resource.
Our arguing that decisions about the fate of historical edifices and scenic landscapes should be in the hands of market participants in no way implies that we long for the day when all of our cultural treasures have been leveled to make way for "more efficient" operations, like factories, malls, and condominiums. We have a deep appreciation for how those survivors from earlier eras connect us to our forebears, enrich our understanding of how their actions and choices brought about the world we now inhabit, and help to disabuse us of the conceit that today's hot issues and fashionable obsessions have an unprecedented and cosmic significance.
But there are many promising ways of protecting the heritage left to us by our ancestors without resorting to threats of punishment and violence by the state. To cite just a few that spring to mind immediately: voluntary associations can purchase and preserve sites, owners can place covenants on their property to restrict alterations when selling it, and tourists can show their appreciation for some landmark by paying a fee to visit it.
Ardent preservationists may worry that leaving the fate of historically significant edifices and sites to the undirected and unpredictable interactions of free agents in the market does not guarantee a perfectly secure future for every one of those cherished heirlooms. And their suspicions are well-founded — sometimes, their very best efforts to outbid a potential buyer who intends to put something new in place of an antiquity will fail. However, it is a pipe dream to think that the alternative of governmental control can shield the objects of their devotion from the ubiquitous vagaries characterizing this world of flux and change. Human experience suggests that, sooner or later, the individual existence of any entity existing in time dissolves into the great sea of being from which it arose.
The fundamental impermanence of temporal being renders absurd all grandiose assertions that a new law means some site now will be "protected forever." But even more damaging to the case for state-mandated preservation is the fact that the most egregious destroyers of treasures from our past have not been market actors seeking profit, but states pursuing power, engaging in wars, urban renewal projects, and eminent domain seizures of long-established and beloved neighborhoods for highways, airports, sports stadiums, and commercial developments promising higher tax revenues.
It was the forces of the Venetian state (with some help from the Ottoman government) that blasted the roof off of the Parthenon after it had been held aloft for over two millennia. It was the army of the Roman Republic that razed the venerable cities of Carthage and Thebes. It was as a result of state actions that the great library of Alexandria is lost to us. World War I and II obliterated valuable relics of Europe's past and its cultural gems at a rate previously unimaginable. Examples from more recent history include the deed for which the Taliban first gained widespread notoriety, the demolition of a number of ancient, monumental statues of Buddha in Afghanistan, as well as the destruction by the Turkish government, this year, of antique Roman baths.
The crucial difference between the two approaches to preservation is that the path offered by the market, unlike the political process, prompts all interested parties to consider the costs, and not just the benefits, of their preferred use of some property. Those costs do not vanish when such decisions are reached by legislative or judicial decree, but only come to fall on the loser of the political battle, not because of any matter of justice, but merely because he proved to have less political influence than did his adversaries.
As recorded on the Deke Bellavia radio program, WWL 870AM, New Orleans, Lousiana, 03-29-2006 [33:03]
Presented at the Grove City College "Free Markets and the Environment" seminar on 19 March 2001.
Presented at the "Challenges and Choices for a Better World: Energy, Economics, and the Environment" conference in New Orleans, Louisiana, on 8 September 1991.
Presented at "The Economy and the Environment" seminar, hosted by the University of Tennessee-Chattanooga on 2 April 1991.
To the accompaniment of much fanfare and hoopla, the British government has released Sir Nicholas Stern's Stern Review on the Economics of Climate Change, a report that it commissioned but that it labels "independent."
The report is a rehash of now standard environmentalist claims concerning alleged disasters that await the world if it continues with its wicked ways of fossil fuel consumption: the disappearance of islands beneath the sea, the flooding of coastal cities, more severe droughts and hurricanes, famines, disease, the displacement of tens of millions of people from their traditional homelands — it's all regurgitated in the report.
A couple of times, however, the report provides a hint of something even much worse:
Under a BAU [business as usual] scenario, the stock of greenhouse gases could more than treble by the end of the century, giving at least a 50% risk of exceeding 5°C global average temperature change during the following decades. This would take humans into unknown territory. An illustration of the scale of such an increase is that we are now only around 5°C warmer than in the last ice age. (p. ix of the Executive Summary.)
It remains unclear whether warming could initiate a self-perpetuating effect that would lead to a much larger temperature rise or even runaway warming…. (p. 10 of the full report, the Stern Review.)
The frightening allusions to "unknown territory" and "runaway warming" come very close to conjuring up images of hellfire and brimstone as the fate of the world if it does not take Sir Nicholas's Report to heart and repent of its ways. But Sir Nicholas never actually does make this threat. He leaves it merely to implication.
Perhaps if it were made, it would be easier for people to identify the environmentalists' fears for the empty bugaboo that they are and dismiss them. Their response would need be only that if economic progress and the enjoyment of its fruits will consume the world in flames, and thus that living like human beings means we really will all go to hell, then so be it. Better to live as human beings now, while we can, than throw it away for the sake of descendants living as pre-industrial wretches later on. (But, of course, we will never have to make such a choice, for reasons that will become clear shortly.)
Surprisingly, the actual negative consequences Sir Nicholas alleges that will occur from global warming are extremely tame, at least in comparison with hellfire. In his "Summary of Conclusions," he writes:
Using the results from formal economic models, the Review estimates that if we don't act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP or more.
Sir Nicholas's use of the words "don't act" is very misleading. What he is urging when he speaks of "action" is a mass of laws and decrees — i.e., government action. This government action will forcibly prevent hundreds of millions, indeed, billions of individual human beings from engaging in their, personal and business private action — that is, from acting in ways that they judge to serve their own self-interests. Thus, what he is actually urging is not action, but government action intended to stop private action.
Furthermore, he does not explain why he believes that global warming means the end of all subsequent economic progress, though that is implied in the words "now and forever." He compares the dangers of global warming to "those associated with the great wars and the economic depression of the first half of the 20th century," (ibid.) yet seems to forget the stupendous economic progress that followed them.
According to Sir Nicholas, what we must do to avoid the loss of up to 20% of annual GDP, is ultimately to reduce our carbon dioxide emissions "more than 80% below the absolute level of current annual emissions." (p. xi of the Executive Summary. My italics.) Lest one think that such drastic reduction lies only in the very remote future, Sir Nicholas also declares,
By 2050, global emissions would need to be around 25% below current levels. These cuts will have to be made in the context of a world economy in 2050 that may be 3–4 times larger than today - so emissions per unit of GDP would need to be just one quarter of current levels by 2050. (Ibid.)
In appraising Sir Nicholas's views, it should be kept in mind that our ability to produce, now and for many years to come, vitally depends on the use of fossil fuels. These fuels are the source of most of our electric power and thus of our ability to use machinery. They propel our trucks, trains, ships, and planes. And, of course, their use entails the emission of carbon dioxide. Thus, it would seem that Sir Nicholas's means of preventing even a 20% loss of GDP would entail a far greater loss of GDP than 20%.
It follows that if it is output that concerns us, we would be better off simply accepting global warming, if that is what is in store, than attempting to avoid it in the way Sir Nicholas prescribes. We will certainly not produce 3–4 times the output in 2050 with 25% less carbon dioxide emission. Far more likely, if such a reduction is forced upon us, we will produce substantially less output, despite the probable existence of a substantially larger population by then.
Sir Nicholas appears to be as naïve in his estimate of the cost of replacing today's technologies of fuel and power as he is in estimating the effect of their loss. Without evidence of any kind, he claims that while the cost of "inaction" is as much as 20% of annual global GDP, "the costs of action — reducing greenhouse gas emissions to avoid the worst impacts of climate change — can be limited to around 1% of global GDP each year."
Thus his program is designed to appear as really quite a bargain: the world's governments will appropriate an additional mere 1% of global GDP each year in order to prevent their citizens from wantonly destroying as much as 20% of annual global GDP by foolishly pursuing their own self-interests. And it turns out that, in Sir Nicholas's view, even this 1% is far more than is required by the governments for the actual development of new technologies.
In his chapter titled "Accelerating Technological Innovation," he writes that "Global public energy R&D funding should double, to around $20 billion, for the development of a diverse portfolio of technologies." (p. 347 of the Stern Review.) Twenty billion dollars are a mere one-twentieth of one percent of the world's current annual GDP of roughly $40 trillion. That's supposed to be all that it takes to develop the technologies that will enable the world to eventually reduce carbon emissions by 80% from today's levels.
How easy and simple it is all supposed to be, if only we will do as we are told, and get started doing so right away. All we have to do is sit back and leave the direction of our lives in the hands of the government. It will solve the problem of changing the global technology of energy production with the same success that the Soviets and the British Laborites pursued their respective varieties of socialism and with the same success that our own government has conducted its wars on poverty, drugs, and terror, and in Vietnam and Iraq. Did I say, "success"?
Sir Nicholas's Review is characterized by an apparent belief in a kind of magical power of words to create and control reality. Thus, the actual fact,as reported in The New York Times, is that "About one large coal-burning plant is being commissioned a week, mostly in China." In the same report, The Times points out that "A typical new coal-fired power plant, [is] one of the largest sources of emissions, [and] is expected to operate for many decades." Totally ignoring these facts, Sir Nicholas believes he has said something meaningful and significant when he writes,
Developing countries are already taking significant action to decouple their economic growth from the growth in greenhouse gas emissions. For example, China has adopted very ambitious domestic goals to reduce energy used for each unit of GDP by 20% from 2006–2010 and to promote the use of renewable energy. India has created an Integrated Energy Policy for the same period that includes measures to expand access to cleaner energy for poor people and to increase energy efficiency." (p. xxiv of Executive Summary.)
To say the least, this represents the use of a mere statements of intent concerning action in the future in an effort to override the diametrically opposite character of China's and India's actual actions in the present, and in the foreseeable future as well if these countries are to achieve further substantial economic development.
Another illustration of the attempt to employ words as though their use could control reality, occurs in Sir Nicholas's discussion of "learning and economies of scale" in connection with low-carbon technologies. He notes that "The cost of technologies tends to fall over time, because of learning and economies of scale," and appears to conclude from this that low-carbon technologies can therefore eventually be as efficient as the high-carbon technologies they are supposed to replace when the latter are forcibly curtailed. He writes, "There have been major advances in the efficiency of fossil-fuel use; similar progress can also be expected for low-carbon technologies as the state of knowledge progresses." (Stern Review, p. 225.) It apparently does not occur to him that there may be some necessary order of sequence involved and that the use of high-carbon technologies is the necessary foundation for the possible later adoption of low-carbon technologies.
Presumably, he does not believe that in the period 1750–1950, industrialization could have proceeded on the foundation of low-carbon technologies. For example, before such technology as that of atomic power could be developed, generations of industrial progress had to take place on a foundation of fossil fuels. And this was equally true for the technology of wind turbines and solar power. The ability to produce the materials, components, and equipment required by these low-carbon technologies rests on the existence of previously established highly developed carbon-based technologies. Further substantial economic development on the same foundation is required for the further development of low-carbon technologies.
Wherever the use of high-carbon technology is cheaper than that of low-carbon technology, forcibly curtailing its use implies the forcible reduction of the physical volume of production in the economic system, including its ability to produce further capital goods. Thus, forcibly curtailing the use of carbon-based technology cuts the ground from beneath the development of future low-carbon technology. It aborts the development of the necessary industrial base. (For elaboration of these points, see my Capitalism, pp. 178–179, 212, 622–642.)
Sir Nicholas's and the rest of the environmental movement's hostility to carbon technology, is ultimately contrary to purpose not only insofar as it prevents the development of the low-carbon technologies they claim to favor, but also in that it simultaneously, and more fundamentally, operates to deprive the world of the ability to counteract destructive climate change, such as global warming.
Whether or not they are aware of it, in attempting to combat alleged global warming, Sir Nicholas, and the rest of the environmentalists, are urging a policy of deliberate counteractive global climate change by the world's governments. They want the world's governments to change the world's climate from the path that they believe it is otherwise destined to take. They want the world's governments to make the earth's climate cooler than they believe it will otherwise be as the next two centuries or more unfold. But their policy of climate control is the most stupid one imaginable. It's more stupid than a modern-day equivalent of a savage's attempting to control nature by the sacrifice of his goat.
The reason it's more stupid, much more stupid, is that the goat that they want to sacrifice is most of modern industrial civilization — the part that depends on the 80% of the carbon emissions they want to eliminate, and which will not be replaced through any magical power of words to create and control reality, however much they may believe in that power. It is precisely modern industrial civilization and its further expansion and intensification that is mankind's means of coping with all aspects of nature, including, if it should ever actually be necessary, the ability to control the earth's climate, whether to cool it down or to warm it up.
If mankind ever really finds it necessary to control the earth's climate, whether to prevent global warming or, as is in fact probably more likely, a new ice age, its ability to do so will depend on the power of its economic system. An economic system with the ability to provide such things as massive lasers, fleets of rocket ships carrying cargoes of various chemicals, equipment, and materials for deployment in outer space, with the ability to create major chemical reactions here on earth too, if necessary — such an economic system will have far more ability to make possible any necessary change in the earth's climate. That is the kind of economic system we could reasonably expect to have in coming generations, if it is not prevented from coming into existence by policies hostile to economic progress, notably those urged by Sir Nicholas and the environmental movement.
What Sir Nicholas and the rest of the environmental movement offer is merely the destruction of much of our existing means of coping with nature and the aborting of the development of new and additional means. To the extent that their program is enacted, it will serve to prevent effectively dealing with global warming if that should ever actually be necessary.
A major word of caution is necessary here. The above discussion implies that the use of modern technology to control climate is infinitely more reasonable than the virtually insane policy of attempting to control climate by means of destroying modern technology. The word of caution is that in the hands of government, a policy of climate control based on the use modern technology could be almost as dangerous as the policy of government climate control by means of the destruction of modern technology.
In fact, a possible outcome of today's intellectual chaos on the subjects of environment and government is a combination of major destruction of our economic system resulting from policies based on hostility to carbon technology and climate damage caused by governmental efforts to control climate through the use of modern technology. It's not impossible that what we might end up with is an economic system largely destroyed by environmentalist policies plus the start of a new ice age resulting from government efforts to counteract global warming through the use of technologically inspired counter measures.
The only safe response to global warming, if that in fact is what is unfolding, or to global freezing, when that develops, as it inevitably will, is the maximum degree of individual freedom. (For elaboration and proof of this proposition, see Capitalism, pp. 88–90.)
Any serious consideration of the proposals made in the Stern Review for radically reducing carbon technology and the accompanying calls for immediacy in enacting them makes clear in a further way how utterly impractical the environmentalist program for controlling global warming actually is. The fundamental impracticality of the program, of course, lies in its utterly destructive character. But in addition to that, the fact that people are not prepared easily or quickly to make a massive sacrifice of their self-interests dooms the enactment of the program.
Even if, in utter contradiction of the truth, the program were sound, it would simply not be possible to enact it in time to satisfy the environmentalists that the level of carbon buildup they fear will not occur. In other words, the world is quickly moving past the window of opportunity for enacting the environmentalists' program for controlling global warming. (Concerning this point, see pp. xi-xii of the Executive Summary, especially Figure 3 on p. xii.) The implication is that either they will have to find another issue or different means for addressing the issue.
The only different means, however, are technological in character. Environmentalism thus stands a very strong chance of ultimately reverting to the more traditional socialism of massive government construction and engineering projects. It's future may well lie with what is coming to be called"geo-engineering."We shall see.
IntroductionI. RightsII. The Myth of the Superiority of Primitive Communities over Technological SocietiesIII. The Claim that Modern Industrial Society is, by its very Nature, ToxicNotesMurray Rothbard's 1981 essay, "Law, Property Rights, and Air Pollution," is predicated on the notion that any legal system consistent with a truly free society bars only those acts that involve either the use of force or the threat of the use of force against a person or his justly acquired property and that "justly acquired property" can, and often does, include a homesteaded easement to pollute in a certain way or to a certain extent.[1]
There are many questions that could benefit from an extrapolation of the conclusions Rothbard drew in this seminal essay. It is therefore particularly unfortunate that he did not have the opportunity to explore these areas further nor did he ever, as far as I am aware, offer a general assessment of the environmental movement itself from the libertarian perspective he so ably put forward in this and earlier papers on property rights and its relation to economic growth. While there is no question that Rothbard would have condemned most of the policy recommendations embraced by the leading environmental groups as inimical to a free society based on private property rights, he nowhere analyzed the rhetoric of the movement in terms of libertarian theory.
The following essay does not pretend to do more than partially fill this gap. It attempts to touch on one aspect of modern environmentalism and to examine it against the backdrop of the values associated with a truly liberal society. What I hope to do is to explore certain traits common to the rhetoric of the environmental movement that I find particularly inimical to rational discourse and that serve only to support untenable and fallacious conclusions and recommendations that, if accepted, would prove devastating to civilization. These center, first, around a profound misuse of the term "rights"; second, around the notion that men in primitive pre-technological societies live in harmony with the environment while modern man is antagonistic and destructive of nature's resources; and, finally, that technology itself is, by its very nature, toxic.
I. RightsOne of the more distasteful features of environmental rhetoric is the terminological confusion with which it is riddled, whereby certain grants of privilege are constantly confused with rights. The rights to which serious political discourse has traditionally referred are negatively conceived and refer to limitations on how governments may act towards their citizens or how citizens may act toward each other. This conception of rights is the one put forward in, among other documents, the Declaration of Independence, the American Bill of Rights and the Declaration of the Rights of Man and of the Citizen.[2] Rights so conceived do not require that others be forced to act in specific ways if I am to exercise my rights but only that they refrain from intervening in certain areas without my consent. Thus, my right to life does not entail that others are obligated to do everything within their power to keep me alive but only that they cannot kill me.
Unfortunately, environmentalists have a tendency to employ the term "rights," not in this negative manner but in its far more vulgar sense, to refer to some privilege that entails that others not refrain from acting, but positively act in certain ways. They are, of course, not alone in this. The last hundred years have witnessed a serious erosion in political discourse as politicians have increasingly invoked such terms as "liberty" and "rights" solely to elicit certain emotional responses in their hearers. This deterioration in political language has reached a point where it is now not uncommon to hear people speak of their "rights" to "higher education," to "quality health care," even to "truth in airline scheduling," and so on.[3] Environmental discourse, far from being immune to such imprecision, has embraced it. And environmentalists, especially those employed as government functionaries of one kind or another, regularly use the term to refer to privileges that entail an obligation on others to provide certain services. Thus, Principle 1 of the Declaration of the United Nations Conference on the Human Environment held at Stockholm in 1972 declared that "man has the fundamental right to … adequate conditions of life in an environment of a quality that permits a life of dignity and well-being."[4] Similarly, the 1987 Report of the World Commission on Environment and Development refers to "the right of individuals to know and have access to current information on the state of the environment" and "the right to participate in decision making on activities likely to have a significant effect on the environment."[5]
Even when the term "rights" is employed by ecologists in what is seemingly its more traditional, negative sense, as, for example, when environmentalists write of "the right to live free from pollutants" it is often so used without any regard to the context in which these rights are situated. When one refers to "the right to a smoke-free environment," as numerous spokesmen of the anti-smoking campaign often do, surely it makes sense to ask "of just whose environment are we speaking?" While I might indeed have such a right to demand of others that they not smoke on my property, have I the same right when it comes to the property of others? But even put in such bald form, the majority of environmentalists would argue that, in most cases, I would indeed have such a right. Such rights obtain, they argue (and in this they are by no means alone), because most private property is not, in reality, private at all, since members of the public (either all members of the public, as is the case with, say, a department store, or certain specific members of the public, as is the case with a business office) are invited onto the property. By virtue of this fact, nominal private property is transmuted into commonly owned property, the disposal of which can justifiably be determined by political means. Indeed, most environmentalists have extended this notion of public ownership to the whole of the natural world. They write of the "common heritage of all humanity" and of "sharing the world's resources equitably."[6] It is as if each of us, when born, inherits our pro rata share of all the wealth of the world, the land and the oceans of the earth, and all that is on, above, or below it, without regard to the prevailing ownership of these resources. It is apparent that the term "right," as here used, designates something quite different from what is signified in the expressions "right to life," or "right to one's liberty." A "right" to a portion of the world's resources clearly obligates the civil authorities (and the population at large, who ultimately must fund the operations of the civil authorities) to certain positive acts. This is particularly true in this instance since one's "right" is, on examination, not an individual right at all, but rather a "collective" right (if such a perverse notion makes any sense at all) that, by its very nature, can be exercised only by some authority ostensibly representative of the collective.
"Politicians have increasingly invoked such terms as 'liberty' and 'rights' solely to elicit certain emotional responses in their hearers."The language of environmental science is particularly debased when the rights to which environmentalists refer pertain to non-humans. Even so eminent a jurist as William O. Douglas has referred to "the rights of nature,"[7] and this notion has been adopted by a host of other ecologists. These writers, in their attempt to emphasize the physical and biological interdependence of all life, have perverted the language of morals and politics to apply to all of nature, thus undermining all arguments that place man in a unique position with respect to the environment in which he lives.[8] As one ecologist has observed: "Humanity has no extraordinary moral claim or rights over the natural world."[9] Christopher Stone, Professor of Law at the University of Southern California, has proposed that "we give legal rights to forests, oceans, rivers, and other so-called 'natural objects' in the environment — indeed, to the natural environment as a whole."[10] The extension of rights to animals, it is argued, is nothing more than a continuation of the same movement that broadened the notion of rights to encompass all human beings, regardless of color or gender. Thus Peter Singer, one of the founders of the "animal liberation" movement and the person responsible for having first formulated the notion of "speciesism,"[11] writes that "the basic element — the taking into account of the interests of the being, whatever those interests may be — must, according to the principle of equality, be extended to all beings, black or white, masculine or feminine, human or nonhuman."[12] [13]
The "deep ecologists," of which Singer is a less extreme example, propose nothing less than that animals, plants, trees, even minerals, have rights that must be respected lest man violate the moral injunctions ultimately derived from natural law. Indeed, the extension of the ethical universe to such natural phenomena as mountains and rivers,[14] thus closes the circle with the most primitive forms of mysticism.[15] If we were to accept the claims put forward by what, in the movement, are called "the deep ecologists,"[16] that rights extend to all forms of life and, in some instances, to inanimate objects as well,[17] humanity would be frozen into inaction lest it trespass on the prerogatives of nature. What is particularly alarming is that this senseless conclusion, a clear reductio ad absurdum to most, is actually espoused by many prominent environmental spokesmen, whose antipathy for all human endeavor is one of the more repugnant aspects of their creed.[18] For these writers humanism is a term of derision,[19] which asserts the superiority of human life over animal and plant life and denies to non-human entities the rights that a properly construed morality dictates they possess.[20]
Lest it be supposed that an ardent emotional attachment to the world of nature is incompatible with an abhorrence for humankind, we would do well to remind ourselves that National Socialism also embraced both a comprehensive ideology and an extensive legislative program for the "protection of nature." Shortly after taking power the Nazi government sought to give legislative voice to the notion that modern capitalist society and its property relationships had uprooted man from his legitimate place in the natural, organic world. Laws aimed at protecting animals[21] and limiting hunting were soon followed by the law of 1 July 1935 for the protection of nature (Reichsnaturschutzgesetz). The preamble to the 1935 legislation, setting forth the rationale and intent of Nazi environmental legislation, displays the same romanticization of nature and disdain for the economic achievements of modern society that permeate current environmental literature.
Today as before, nature, in the forests and the fields, is an object of longing, joy and the means of regeneration for the German people.
Our native countryside has been profoundly modified with respect to its original state, its flora has been altered in many ways by the agricultural and foresting industries as well as by the unilateral reallocation of land and a monoculture of conifers. While its natural habitat has been diminishing, a varied fauna that brought vitality to the forests and the fields has been dwindling.
This evolution was often due to economic necessity. Today, a clear awareness has emerged as to the intellectual, but also economic, damages of such an upheaval of the German countryside….
The German government of the Reich considers it its duty to guarantee our fellow citizens, even the poorest among them, their share in the natural German beauty. It has, therefore, enacted the law of the Reich with a view toward protecting nature….[22]
"Protecting nature" was apparently perfectly compatible with a remorseless hatred of certain groups of humans,[23] particularly those, as Luc Ferry has pointed out, who were not rooted in the community, the "cosmopolites," whose heritage placed them outside the bounds of the social organism and who lacked connection with the soil. Ferry notes that
… the philosophical underpinnings of Nazi legislation often overlap with those developed by deep ecology, and this for a reason that cannot be underestimated; in both cases, we are dealing with a same romantic and/or sentimental representation of the relationship between nature and culture, combined with a shared revalorization of the primitive state against that of (alleged) civilization.[24]
II. The Myth of the Superiority of Primitive Communities over Technological SocietiesMost ecologists, regardless of their other differences, agree that modern industrial society is environmentally destructive and spiritually empty while, on the other hand, pre-technological societies were far more able to live harmoniously with the environment. The mind of pre-technological man, these writers claim, is more attuned to compatible coexistence with the ecosystem than is the individuated, self-regarding mind of modern man. Man in primitive societies identify with the plants and animals around them, hold the land to be sacred, and are true ecologists.[25] Consider the following assertions made by some of the more popular environmental writers:
"For the primal mind there is no break between humans and the rest of nature."[26]
The deification of the earth "appears with such regularity … in every preliterate culture, that we may think of it as a basic, almost innate, human perception."[27]
Tribal peoples "all share the affirmation that humans are part of a larger ecological community toward which they have certain responsibilities."[28]
No hard evidence is put forward to support these preposterous claims, which do little more than display the authors' immense ignorance of the complexity and range of differences in values and social structure that mark the huge number of disparate tribal societies.[29]
Martin Lewis, himself sympathetic to the goals embraced by the environmental movement, offers these statements as examples of the naive romanticization of primitive society in much ecological literature, which he describes as verging on "intellectual fraud."[30] Lewis advances abundant evidence that claims of this sort, far from having universal application to all primitive societies, in reality describe very few. Severe overhunting and overharvesting were the norm rather than the exception among tribal societies, many of which were highly destructive of nature.Lewis, Green Delusions, pp. 59-81
Consider the following example of this fanciful interpretation of pre-industrial society, whose conclusions tend to be embraced by most ecologists and which reflects the increasingly popular idea (fueled by ignorant and simple-minded depictions in the media) that all Native Americans regarded the environment with special veneration, with man and nature acting in balance and reciprocity, where the world was seen as a living being and where all living entities were respected. The article from which I quote appears in Environmental Ethics, the leading academic environmental journal, in 1990, and the following should give some indication of the conclusions put forward by the authors, Anne Booth and Harvey Jacobs:
Although they varied significantly between different cultures, Native American relationships with the natural world tended to preserve biological integrity within natural communities, and did so over a significant period of historical time. These cultures engaged in relationships of mutual respect, reciprocity, and caring with an Earth and fellow beings as alive and self conscious as human beings. Such relationships were reflected and perpetuated by cultural elements including religious belief and ceremonial ritual….
In contrast, invading Europeans brought with them cultures that practiced relationships of subjugation and domination, even hatred, of European lands. They made little attempt to live with their natural communities, but rather altered them wholesale. The impoverishment of the ecological communities of sixteenth and seventeenth-century Europe was so great that, in contrast, early settlers of the New World found either a marvelous paradise or a horrendous wilderness, but certainly something completely outside their experience.Anne L. Booth and Harvey M. Jacobs, "Ties That Bind: Native American Beliefs as a Foundation for Environmental Consciousness," Environmental Ethics XII (1990): 31.Booth and Jacobs are by no means alone in espousing the view that the New World was a primeval paradise prior to the arrival of European settlers. In an article that appeared the following year in the same journal, Saroj Chawla argues that, unlike Euro-Canadians and Euro-Americans, who tend to individualize and quantify, the Dene nation (that is, those native Americans of northern Canada) "think holistically and regard self-fulfillment and the development of personal identity in terms of introspective meditation and ritual" ("Linguistic and Philosophical Roots of Our Environmental Crisis," Environmental Ethics XIII (1991): 260). "To these tribes," she writes, "human beings and other forms of organic life are one" to be honored and revered (p. 257). So sophisticated is Ms. Chawla's reading of Native American anthropology that among the tribes to whom she explicitly refers in this context is the Netsilik, whose reverence for life includes one of the highest female infanticide rates in the world! However, this fact is clearly unimportant when compared to the broader claim that the Netsilik, like other pre-industrial societies of the world engage in "rituals and ceremonies which venerate and indirectly protect the environment," while also providing "personal identity and self-fulfillment" (p. 261). For those of European descent, on the other hand, "the well-being of the society is measured in terms of an uninterrupted growth of consumer goods and permanently rising levels of production and consumption" (p. 260), leading to lifestyles that are self-destructive and wasteful of the environment. In light of these comments, it is difficult to resist speculating on just what motivated Ms. Chawla to originally emigrate from India to an industrial-urban society such as Canada rather than to the Australian bush after she completed her M.A. at Delhi University.
What is particularly significant about this quotation is that the authors' descriptions of both Native American and European society, when they mean anything at all, are equally fallacious. What is one to make of such a sweeping characterization as "the impoverishment of the ecological communities of sixteenth and seventeenth-century Europe"? What part of Europe? When? Does "impoverishment" refer to economic impoverishment or to a species of undefined "spiritual" impoverishment? Only someone devoid of any knowledge of the social and economic history of Europe over the course of these two hundred years could make such a naive generalization. Are the authors referring to the military vicissitudes of the period (the Thirty Years War and the various peasant uprisings in Germany, the wars of religion in France, Swedish military involvement in central and eastern Europe)? Are they pointing to the severe depression that struck the once flourishing areas of the Italian peninsula? Or to the substantial rural development that occurred in England and the Low Countries? Do the authors mean to refer to the expansion of European-wide trade and the increase of the urban population at the expense of certain rural areas, with the result that between the end of the sixteenth and the middle of the seventeenth centuries, vast tracts of land in western Europe went uncultivated and uninhabited? Or to the fact that these same areas by the middle of the seventeenth century were repopulated and retilled? And what do these disparate economic developments have to do with "ecological communities" and their supposed impoverishment? Finally, there exists not one whit of historical evidence to support the claim that the early European settlers to the New World, most of whom were deeply religious and who regarded the land from which they hailed with a certain veneration, viewed the land which some of them had worked with hatred.
"The language of environmental science is particularly debased when the rights to which environmentalists refer pertain to non-humans.With respect to the authors' portrayal of Native American attitudes toward the environment, it is perhaps sufficient to point out that the article footnotes not one serious anthropological study on Native American religion nor on the role the land and its resources had in Indian thought. Indeed, one analyst of the ecological movement maintains that if we were to draw inferences about religious beliefs from the behavior of primitive people, we would find that they regarded nature as no more sacred than do Europeans, Americans, or Japanese. Primitive peoples, on the whole, are selfish and wasteful in their use of natural resources and possess no real notion of the forces of nature.Kaufman, No Turning Back, pp. 64-65. Some indication of the scholarly merit of Booth and Jacobs's essay can be gleaned from the authors' claim that Native Americans viewed all life with benign respect. "Above all else," they write, "Native Americans were, and are, life-affirming; they respected and took pleasure in the life they found around them, in all its diversity, inconsistency, or inconvenience."Booth and Jacobs, "Ties That Bind," p. 31. As Martin Lewis has pointed out, such claims fly in the face of serious anthropological studies of a number of North American tribes, who engaged in the wholesale destruction of wildlife and who routinely burned vast areas in order to facilitate their hunts. Indeed, Lewis maintains that "large areas of the American Midwest were apparently converted from heavy forest to tall-grass prairie under the continual pressure of Indian fire-setting."Lewis, Green Delusions, p. 65. Finally, anyone even casually acquainted with the views of Plains Indians and those of the Southwest regarding warfare or of the Iroquois toward the treatment of prisonersNative American attitudes towards violence and warfare are ably summarized in Harold E. Driver, Indians of North America (Chicago: University of Chicago Press, 1961): 353-384. can hardly take seriously the claim that Native Americans consistently "engaged in relationships of mutual respect, reciprocity, and caring" with their fellow human beings. Apparently, Booth and Jacobs are not aware of the fact that infanticide,Among the Indians of North America, "infanticide was practiced in every culture area. "Driver, Indians of North America, p. 435. slavery,Slavery was universal among the Indians of the northwest coast, Meso-America, and the Caribbean and was practiced in some areas of Arizona and New Mexico and the southwestern coastal plain. Among the Iroquois, apparently, a slave system never materialized because prisoners of war were generally tortured to death. See Driver, Indians of North America, pp.387-401. and the killing of the aged and sick,See Driver, Indians of North America, pp. 447-448, 454. were not uncommon practices among aboriginal societies in North America.
There is probably no clearer example of the sloppy scholarship and dearth of careful analysis that pervades much environmental literature than the frequency with which Chief Seattle's words are quoted in support of the view that Native American societies live harmoniously and at one with nature while the "white man" does nothing but despoil and rape his natural habitat.Chief Seattle's words are solemnly intoned every Earth Day and quoted in Vice President Al Gore's book on the "environmental crisis," Earth in the Balance: Ecology and the Human Spirit (Boston: Houghton Mifflin, 1992). Seattle's environmental speech, known among ecologists as the "Fifth Gospel," consists of a collection of mawkish, saccharine comments about the beauties of nature (highlighted by references to "the rustle of insects' wings," and "the lonely cry of the whippoorwill") and man's intimate connection to the natural world. "If men spit upon the ground," Chief Seattle informs us, "they spit on themselves. This we know — the earth does not belong to man, man belongs to the earth. All things are connected like the blood which unites one family. Whatever befalls the earth, befalls the sons of the earth," and so on.Excerpts from the speech appear in, among other sources, Myers, ed., Gaia: An Atlas, p.159. While Seattle, chief of the Duwamish, is an actual historical figure,Seattle apparently made his reputation by slaughtering other Indians. See Kaufman, No Turning Back, p. 59. the speech with which he is credited was in fact written in 1972 by a screen writer for a film titled Home, made for the Southern Baptist Convention.Rudolf Kaiser, "'A Fifth Gospel, Almost': Chief Seattle's Speech(es): American Origins and European Reception," in Christian F. Feest, ed., Indians and Europe: An Interdisciplinary Collection of Essays (Aachen: Rader Verlag, 1987): 505-526. Yet, despite its origins, the speech is regularly quoted by environmental writers and enlisted in support of the view that primitive societies are environmentally superior to those that are technologically advanced.
For "deep ecologists," humanism is a term of derision.Among the charges leveled against modern society, of which primitive societies alone are guiltless, is the institution of private ownership of property. Capitalist institutions particularly contribute to the despoliation of nature and its fragile resources.One leading Marxist environmentalist has recently warned that only the replacement of a market system by a centrally planned economy can save the planet, since capitalism is "inherently environmentally unfriendly." "Capitalism," we are informed, "continues to degrade ecosystems and create social injustice. The 1992 Earth Summit demonstrated that the powerful vested interests behind Western capitalism have no intention of radically changing their goals and methods to help create an environmentally sound or socially just global society." David Pepper, Eco-Socialism: From Deep Ecology to Social Justice (London and New York: Routledge, 1993): i [The quotation, for some bizarre reason, appears on the page preceding the title page.] Doubtless it is for this reason that environmentalism quickly became popular among so many Marxists, who eagerly embraced the ecological movement's glorification of a fictitious primitive communalism.See, for example, James Ridgeway, The Politics of Ecology (New York: E. P. Dutton, 1970)and Barry Weisberg, Beyond Repair: The Ecology of Capitalism (Boston: Beacon Press,1971). Research undertaken by these eco-socialists has discovered, for example, that before Western colonization, "third world" populations stood in ecological balance with their environment, where "harmony with nature was a feature of their lifestyles"Michael R. Redclift, "Redefining the Environmental 'Crisis' in the South," in Joe Weston, ed., Red and Green: a New Politics of the Environment (London: Pluto Press, 1986): 80-101. and that "poverty" as it is known today was almost unknown in pre-colonial Africa.M. Omo-Fadaka, "Communalism: the Moral Factor in African Development," in R. Ronald Engel and Joan Gibb Engel, eds., Ethics of Environment and Development: Global Challenge, International Response (London: Belhaven, 1990): 180.
In the minds of many environmentalists, purely ecological concerns have merged with a distaste for the "environmental imperialism" of modern society, whose economic engine is the free market and production for profit. And the industrialism that invariably accompanies an advanced capitalist economy inevitably comes at the expense of the many. "Industrialism," we are told, "is perhaps the greatest pyramid scheme in history," shifting the costs of production onto "the poor, the unwary, or the next generation."Christopher Manes, Green Rage, p. 228. The attempt to dominate nature is intimately associated with the domination of other human beings, which, far from being a ubiquitous feature of man's nature, is a hallmark of capitalist production. Thus, Murray Bookchin informs us that
the notion that man is destined to dominate nature is by no means a universal feature of human culture. If anything, this notion is almost completely alien to the outlook of so called primitive or preliterate communities. I cannot emphasize too strongly that the concept emerged very gradually from a broader social development: the increasing domination of human by human. Perhaps only by examining the attitudes of certain preliterate peoples can we gauge the extent to which domination shapes the most intimate thoughts and the most minute actions of the individual today.Murray Bookchin, The Ecology of Freedom: The Emergence and Dissolution of Hierarchy (Palo Alto, Cal.: Cheshire, 1982): 43.
III. The Claim that Modern Industrial Society is, by its very Nature, ToxicAt the risk of treating a subject with which many students of the ecological movement are familiar, I should like to touch on what I regard as the most pernicious aspect of modern environmental rhetoric, the contention that the technology associated with modern civilization brings in its wake an unending stream of catastrophes, ranging from the despoliation of the natural habitat and the depletion of the world's resources to the dehumanization of man himself.These doomsday scenarios are both catalogued and evaluated in some depth in the Competitive Enterprise Institute's excellent analysis of the ecological movement's concerns about environmental degradation. See Ronald Bailey, ed., The True State of the Planet (New York: The Free Press, 1995). Among the cataclysms that are certain to befall us within the next few years unless we are prepared to undergo monumental alterations to our economic system and to the values by which we live are
global famine on an unprecedented scale;the depletion of stratospheric ozone, with a resultant increase in ultraviolet radiation, which will bring in its wake an epidemic of skin cancer and the destruction of the earth's ecosystem;the permanent devastation of the land, sea, and air through pollution; and,global warming as a consequence of the emission of CO2 and other greenhouse gases.It is interesting that predictions regarding global warming follow by only a few years earlier predictions by ecologists that the earth was cooling at an alarming rate as a consequence of industrial emissions of dust particulates (aerosols) into the atmosphere (the effect of which was to reflect sunlight back into space). Ronald Bailey quotes Stephen Schneider, an atmospheric scientist at the National Center for Atmospheric Research as having warned in 1971 that, should the amount of aerosol emissions increase by a factor of four, this "could decrease the mean surface temperature by as much as 3.5K degrees. If sustained over a period of several years, such a temperature decrease could be sufficient to trigger an ice age" (I. S. Rasool and Stephen Schneider, "Atmospheric Carbon Dioxide and Aerosols: Effects of Large Increases on Global Climate," Science [July 9, 1971]: 138, quoted in Ronald Bailey, Eco-Scam: The False Prophets of Ecological Apocalypse [New York: St. Martin's Press, 1993]: 80). And, five years later, one eminent scientist warned that "the threat of a new ice age must now stand alongside nuclear war as a likely source of wholesale death and misery for mankind" (Nigel Calder, "In the Grip of a New Ice Age," International Wildlife, July, 1975, quoted in Dixy Lee Ray and Lou Guzzo, Environmental Overkill: Whatever Happened to Common Sense? [Washington, D.C.: Regnery Gateway, 1993]: 15).Yet, despite these scenarios of imminent doom associated with industrial society, none is more pervasive than the view that technology has spawned a vast and increasing number of chemical compounds that are hazardous to human health. This conclusion is shared not only by spokesmen for the environmental movement but appears to have captured the imagination of the media and the public.
North American tribes engaged in the wholesale destruction of wildlife and routinely burned vast areas in order to facilitate their hunts.The apocalyptic vision of a chemical armageddon was first put forward by Rachel Carson in 1962.Silent Spring (Greenwich, Conn.: Fawcett, 1962). I am indebted to Edith Efron's excellent study of the environmental movement's contentions regarding human health, The Apocalyptics: Cancer and the Big Lie (New York: Simon and Schuster, 1984) for the early history of environmental health claims. In Silent Spring, Ms. Carson claimed that the American food supply was being poisoned by highly toxic pesticides and preservatives that were contaminating the whole food chain. So influential was Ms. Carson's book, according to one historian, that it played a crucial role in passage of the Toxic Substances Control Act in 1976.Efron, The Apocalyptics, p. 33. Since the publication of her book, literally thousands (if not tens of thousands) of books, articles, and monographs have appeared warning of the carcinogenic nature of countless substances, many in everyday use. Indeed, in 1977, Professor Thomas Corbett of the University of Michigan, a noted expert on the relation between chemicals and cancer, went so far as to claim that fully eighty percent of all human cancers were the product of manmade chemical pollutants.Thomas H. Corbett, M.D., Cancer and Chemicals (Chicago; Nelson-Hall, 1977): 7, quoted in Efron, The Apocalyptics, p. 70. Since that time more and more people, including politicians who have held positions of great authority (not the least of whom was Vice President) have joined the chorus of those claiming that the products of industrial technology were poisonous to humans and were inexorably destroying the global ecosystem. In this they have had the support of a massive and ever-growing bureaucracy, whose very raison d'être is to indict as many industrial substances as possible as causes of human disease.
There is no epidemiological confirmation whatever for this view. Rather, supposedly predictive studies done on laboratory animals form the basis of the evidence supporting the conclusion that a vast array of substances are carcinogenic. Yet, despite the claims made by government regulators and seized upon by environmentalists as unequivocal confirmation of the evils of technological society. Such tests are, by their nature, seriously flawed and prove very little beyond what statistical model was employed in arriving at the results. As an example, using the same animal data but differing statistical models, it was possible to arrive at differences in the carcinogenic effects of saccharin that vary by some five million times.National Academy of Sciences, Saccharin: Technical Assessment of Risks and Benefits. National Research Council, Committee for Study on Saccharin and Food Safety Policy (Washington, D.C.: National Academy of Sciences, 1978): 72 and 61ff, quoted in Aaron Wildavsky, "Toxic Torts: Is There any There 'There'?" in Ronald Hamowy and Richard Stroup, eds., Hazardous to Your Health: Toxics, Torts and Environmental Bureaucracy (forthcoming). In addition, there are a number of other significant problems with live bioassays themselves that reflect on their value as predictive of potential carcinogenesis in humans. First of all, there is some question that chemicals that have been shown to be carcinogenic in laboratory animals are indeed carcinogenic in humans. Scientists have established that this is often true, but by no means always. Second, these bioassays assume that all tumors discovered in laboratory animals, whether benign or malignant, will, in man, become malignant.
"Environmentalism quickly became popular among … many Marxists, who eagerly embraced the ecological movement's glorification of a fictitious primitive communalism…."Finally, and most important, the nature of the tests themselves are unconvincing since they rely on the effects of the administration of huge doses of a substance on a necessarily small number of laboratory animals. The results of these tests are then translated, employing a straight linear method, into the effects of lower dosages. Thus, if dosage x is found to cause one tumor in every one hundred laboratory rats, it is assumed that dosages of one-hundredth x (x/100) will result in one malignancy in every ten thousand humans. But this principle of extrapolating the effects of lower dosages neglects to address the whole question of the dose-response threshold for human beings and further assumes that there are no substances for which no threshold in humans exists at all. The choice of this model, it is argued, since it is the most conservative, at least acts on the side of safety. But by so doing, the tests themselves become worthless inasmuch as they in no way serve to describe actual risk to humans.The Environmental Protection Agency itself concedes this point. See Elizabeth L. Anderson and the Carcinogen Assessment Group of the United States Environmental Protection Agency, "Quantitative Approaches in Use to Assess Cancer Risk," Risk Analysis III (1983): 281, where the authors conclude that "the linear non-threshold model has been used by the EPA to place plausible upper bounds on risk, not to establish risk." As Aaron Wildavsky has pointed out, it is senseless to divide all chemicals into those that are "cancer causing" or those that are not, without any reference to dosage.Waldavsky, "Toxic Torts: Is There any There 'There'?" To categorize substances in this way, especially given the huge number of potentially "carcinogenic" substances that occur naturally, is not only scientifically worthless but leaves the erroneous impression that it is possible to insulate the population from even the most minute doses of any chemical that, in some quantity, might prove harmful. Indeed, this absurd standardThis principle of "zero tolerance" underlies the Delaney Clause of 1959, by which the FDA is charged with preventing any substance whatever found to be carcinogenic in animal tests from being used as a food additive. has actually been proposed as the principle that should govern all legislation in this areaThe Ad Hoc Committee on the Evaluation of Low Levels of Environmental Carcinogens in 1970 made the following recommendation to the Surgeon General: "The principle of zero tolerance for carcinogenic exposures should be retained in all areas of legislation presently covered by it and should be extended to cover other exposures as well. Only in the case where contamination of an environmental source by a carcinogen has been proven to be unavoidable should exception be made to the principle of zero tolerance. Exceptions should be made only after the most extraordinary justification, including extensive documentation of chemical and biological analyses and a specific statement of the estimated risk for man, are presented. All efforts should be made to reduce the level of contamination to the minimum. Periodic review of the degree of contamination and the estimated risk should be made mandatory" (Report to the Surgeon General, United States Public Health Service, April 22, 1970, Ad Hoc Committee on the Evaluation of Low Levels of Environmental Chemical Carcinogens, National Cancer Institute, Evaluation of Environmental Carcinogens, Exhibit 10, in "Chemicals and the Future of Man," Hearings before the Subcommittee on Executive Reorganization and Government Research of the Committee on Government Operations, United States Senate, Ninety-second Congress, First Session, April 6 and 7, 1971, p. 181, quoted in Efron, The Apocalyptics, p. 92). and is embraced by many environmentalists as the only one consistent with a safe environment.
Despite the anti-technological bias implicit in such regulatory agencies as the Environmental Protection Agency, the Food and Drug Administration, the Occupational Safety and Health Administration, and the Consumer Product Safety Commission, who are all charged with protecting the public and the environment from any potentially harmful industrial intrusion, there remain some "deep ecologists" who condemn their findings as the product of a scientific worldview which is intimately related to the very technology they despise. Thus, Andrew Dobson regards "the modern scientific project" as "a universalizing project of reduction, fragmentation, and violent control." And Bill Devall condemns the "experts on nature" who have "killed their positive feelings of identification" with the natural environment and likens those whose concern is ostensibly to protect the environment from the predations of civilization with "the guards in Nazi death camps."Andrew Dobson, Green Political Thought (London: Unwin Hyman, 1990): 198; and Bill Devall, Simple in Means, Rich in Ends: Practicing Deep Ecology (Salt Lake City: Peregrine Smith, 1988): 48-49. Both quotations appear in Lewis, Green Delusions, pp. 124-125
What is so disturbing about the rhetoric of environmentalism is that it almost consistently displays an ignorance and simple-mindedness that is breathtaking. After all, environmental problems are, at bottom, economic problems. They have reference to the production and distribution of wealth, which is the subject matter of economic science. Clean air, clean water, the preservation of wilderness and of species, indeed, all environmental concerns, including the amount and rate of use of natural resources and the size of the human population, are all issues amenable to economic analysis. Yet most ecologists have only the most perverted notions concerning the application of economics to environmental issues.Indeed, many environmentalists hold economics in contempt because economic science is anthropocentric and oblivious to the notion of "meaning" in nature. Equally important, economics reduces environmental concerns to issues of costs and benefits. As one "environmental ethicist" has noted: "Environmental activists believe that an environmental policy based on purely economic reasoning results in the destruction, rather than the protection, of nature." Bryan G. Norton, "Thoreau's Insect Analogies: Or, Why Environmentalists Hate Mainstream Economics," Environmental Ethics XIII (1991): 248. See also Mark Sagoff, "Some Problems with Environmental Economics," Environmental Ethics X (1988): 55-74.The scorn for economic science reaches its apotheosis in the work of Hazel Henderson, whose monograph on The Politics of the Solar Age: Alternatives to Economics (Garden City: Doubleday, 1981), is nothing more than a collection of ignorant ramblings and disjointed and incoherent arguments.
Their writings tend to consist in the main of highly questionable scientific assertionsEnvironmental literature is suffused with an embarrassingly large number of examples of pseudo-science, much of which has been ably rebutted in a host of monographs. In addition to those already cited, see Kenneth R. Foster, David E. Bernstein, and Peter W. Huber, eds., Phantom Risk: Scientific Interference and the Law (Cambridge: MIT Press, 1993); Dixy Lee Ray, Trashing the Planet: How Science Can Help Us Deal with Acid Rain, Depletion of the Ozone, and Nuclear Waste (among Other Things) (Washington, D.C.: Regnery Gateway, 1990); Julian Simon, The Ultimate Resource (Princeton: Princeton University Press, 1987); Julian Simon and Herman Kahn, eds., The Resourceful Earth: A Response to Global 2000 (New York: Basil Blackwell, 1984); and Ben Wattenberg, The Good News Is the Bad News Is Wrong (New York: Simon and Schuster, 1984). and slovenly philosophical contentions that are reducible to private and purely arbitrary value judgments. Yet the environmental movement has been successful in capturing the interest and concern of countless people in the industrialized world. It has done this, I think, because ecologists have managed to gull the public into believing that their conclusions regarding the earth and its resources is uniquely disinterested and selfless. Doubtless this in part accounts for their use of such terms as "this planet" or "spaceship Earth," which suggest to many a perspective of cosmic objectivity, unsullied by private concerns. Yet, at bottom, many, far too many, environmentalists share their questionable sensibilities to the needs of the natural world with a petty disdain for human beings; hence such comments as those of Dave Foreman, the founder of Earth First!, who has observed that "we are a cancer on nature" and that "man is no more important than any other species," or those of the "Reverend" Thomas Berry, who has proclaimed that "we are an affliction of the world, its demonic presence. We are the violators of Earth's most sacred aspects."The quotations from Dave Foreman and Thomas Berry appear in Bailey, Eco-Scam, p. 10. See also the ravings of Chellis Glendinning and especially her "Notes toward a Neo-Luddite Manifesto," Utne Reader, March-April, 1990: 50-53. Ms. Glendinning calls for the dismantling of all nuclear, chemical, video, electromagnetic, and computer technologies and sees in capitalism the cause of most of mankind's current mental and physical ills. Her When Technology Wounds: The Human Consequences of Progress (New York: William Morrow, 1990) is a monument to the pathological manifestations of the environmental movement. What many environmentalists hope for is nothing less than the destruction of the institutions and artifacts associated with civilized life and a return to some primeval existence akin to some post-nuclear nightmare.
Thus Edward Abbey writes that
the military-industrial state will disappear from the surface of the Earth within fifty years. That belief is the basis of my inherent optimism, the source of my hope for the coming restoration of a higher civilization: scattered human populations modest in number that live by fishing, hunting, food-gathering, small-scale farming and ranching, that assemble once a year in the ruins of abandoned cities for great festivals of moral, spiritual, artistic and intellectual renewal — a people for whom the wilderness is not a playground but their natural and native home.Edward Abbey, "A Response to Schmookler on Anarchy," Earth First!, 1 August 1986: 22, quoted in Christopher Manes, Green Rage, p. 241. Manes himself longs for "a world in which everything is wilderness." "This ectopian vision," we are told, "seems remote from the environmental politics of our day, mystical, atavistic, even threatening. And yet the human race was born into just such a world. It was our home for uncounted millennia. It is still the world of dwindling populations of primal people. It is where we learned the values of community, art, creativity, curiosity. That we should be more comfortable now with the artificial industrial landscape of modern time, with its imperatives of competition, exploitation, and selfish consumption, suggests how successful civilization has been in demonizing nature" (p. 240).
While these statements are particularly dramatic, there is a strong element of contempt for humankind and of the history of human achievements in almost all environmental literature, and this, I would suggest, deprives it of any moral standing, which, given its other failings, is its only remaining claim to be taken seriously.
Ronald Hamowy is professor of history emeritus at the University of Alberta. He received his Ph.D. in social thought under F. A. Hayek at the University of Chicago. Send him mail. Comment on the blog.
This article first appeared in the Journal of Libertarian Studies, Vol. 12 Num. 1, and is available in PDF format.
Notes
[1] Murray Rothbard, "Law, Property Rights, and Air Pollution," Cato Journal II (1982): 55-99. The essay is reprinted in Walter E. Block, ed., Economics and the Environment: A Reconciliation (Vancouver, B.C.: The Fraser Institute, 1990): 233-279. It is available in PDF format at Mises.org.
[2] Article IV of the Declaration of the Rights of Man and of the Citizen declares that "liberty consists in the power to do anything that does not injure others; accordingly, the exercise of the natural rights of each man has for its only limits those that secure to the other members of society the enjoyment of these same rights."
[3] Probably the most famous instance of this confusion appears in President Franklin Roosevelt's address to Congress of January 6, 1941. Along side "freedom of speech and expression" and "freedom of worship," Roosevelt listed two new "freedoms," "freedom from want" and "freedom from fear," among the domestic objectives of his third administration.
One of the more spectacular examples of this corruption of political language occurs in the Universal Declaration of Human Rights. Article 25 reads: "Everyone has the right to a standard of living adequate for the health and well-being of himself and his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age, or other lack of livelihood in circumstances beyond his control."
It is testimony to how common this corruption in the language of rights has become that in a recent poll taken in Great Britain on which rights should be enumerated in a proposed bill of rights, the most popular item for inclusion was "the right to hospital treatment on the National Health Service within a reasonable time," which received greater support (88%) than "the right to a fair trial" (82%). "Britain's Constitution," The Economist, 21 October-27 October 1995: 66.
[4] United Nations, Report of the United Nations Conference on the Human Environment, document A/Conf. 48/14/Rev. 1, Chapter 1 (New York: United Nations, 1972).
[5] World Commission on Environment and Development, Report: Our Common Future,UNEP/GC.14/13 (New York: United Nations, 1987): 12-20.
[6] For particularly egregious examples of this kind of language, see Dr. Norman Myers, ed.,Gaia: An Atlas of Planet Management (Anchor Books. Garden City, N.Y.: AnchorPress/Doubleday & Co., Inc., 1984).
[7] Roderick Nash has adopted the term as the title of his book. See The Rights of Nature: A History of Environmental Ethics (Madison: University of Wisconsin Press, 1989).
[8] As one ecologist has noted: "No one can predict the full consequences of tinkering with any part of an ecosystem. Even the nonliving environment has properties without which life as we know it would be inconceivable." Consequently, the writer continues, "the rights of nature" must be protected by law. Eric Ashby, Reconciling Man with the Environment (Stanford: Stanford University Press, 1978): 82-85.
[9] Lynton K. Caldwell, In Defense of Earth: International Protection of the Biosphere (Bloomington: Indiana University Press, 1972): 236.
[10] Christopher D. Stone, "Should Trees Have Standing? — Toward Legal Rights for Natural Objects," Southern California Law Review XLV (1972): 456. One of the strengths of regarding natural objects as bearers of rights, Stone contends, is that it would reflect a fundamental shift away from the current view that nature exists for men (p. 489).
[11] "Speciesism," we are informed, "is a prejudice or attitude of bias toward the interests of members of one's own species and against those of members of other species." "It should be obvious," Singer continues, "that the fundamental objections to racism and sexism made by Thomas Jefferson and Sojourner Truth apply equally to speciesism." Peter Singer, Animal Liberation: A New Ethics for Our Treatment of Animals (New York: Avon Books, 1977) p. 7. This extended essay grew out of Singer's review of Animals, Men and Morals, edited by Stanley and Roslind Godlovitch and John Harris, which appeared in the New York Review of Books of April 5, 1973.
At no point does Singer deal with the question of whether, since we hold all human beings more or less responsible for their actions — especially those that violate the rights of other rights-holders — we are to extend this notion of responsibility to animal behavior.
[12] Singer, Animal Liberation, p. 6. See also Tom Regan, The Case for Animal Rights (Berkeley: University of California Press, 1983).
[13] In one of the more ironic perversions of language, one environmental philosopher, commenting on the notion of animal rights, argues that the rights to which animals may lay claim are exclusively negative — presumably John Locke can be credited with laying down the natural rights principles applicable to moose and beavers — while humans, after all, have positive rights as well! In characterizing the rights of animals as distinct from those possessed by humans, Alastair S. Gunn notes:
First, they are … primarily negative rights in the case of animals, though not in the case of humans. In a societal context, the "right to life" means far more than merely the right not to be killed. In a welfare state, the right to life is a legitimate claim on behalf of the poor, needy, or enfeebled, to positive action, such as the provision of food and medical treatment, on the part of society. My right to life is not regarded as protected if, although no one actually kills me, I am allowed to die of starvation and disease. (On the other hand, no one has infringed my right to life. At most, perhaps, they have failed in their duty to me — perhaps not even that, if I want to die, like the hunger strikers in Northern Ireland.) … In the case of nonhuman animals, though, I have suggested that human interference is rarely in the interest of animals. There may be exceptions, such as Singer's example of animals trapped in a flooded valley, or domestic animals and pets which we have allowed to become dependent upon us and which are thus our responsibility, but in general the interests of wild animals are best served by humans leaving them alone — their right to life is the negative right not to be killed. "Traditional Ethics and the Moral Status of Animals," Environmental Ethics V (1983): 143.
[14] Bill Devall and George Sessions, Deep Ecology (Salt Lake City: Peregrine Smith, 1985): 112. Tom Regan, among others, argues that sentience and consciousness are unnecessary for a thing to have moral standing. "On the Nature and Possibility of an Environmental Ethic," Environmental Ethics III (1981): 22.
[15] The extension of "rights" to animals is not new. Luc Ferry, in his excellent study of the environmental movement, discusses the numerous "trials" of animals, among them weevils, leeches, rats, mice, and reptiles, during the Middle Ages and notes that the notion of animals as bearers of rights "is entirely indicative of a premodern, which is to say a prehumanistic relationship to the animal kingdom as well as nature in general." The New Ecological Order, trans. Carol Volk (Chicago: University of Chicago Press, 1995): xiii.
[16] The term apparently originated in the work of its most outspoken defender, Arne Naess. See his "The Shallow and the Deep, Long Range Ecology Movements: A Summary," Inquiry XVI (1973): 95-100. See also Naess's Ecology, Community and Lifestyle: Outline of an Ecosophy, David Rothenberg, trans., (Cambridge: Cambridge University Press, 1989).
[17] See Jay McDaniel, "Physical Matter as Creative and Sentient," Environmental Ethics V (1983): 291-317.
[18] Ferry has laid bare the truly profound implications that the extension of legal rights to nonhumans would bring. It would do no less than mark the end of the humanist era, which traces its inception to the Enlightenment. "And this," Ferry continues, "is the main objective for these new zealots of nature. Its oddities aside … the debate on the rights of trees, islands, or rocks is based on no other grounds; it is a matter of determining whether the only legal subject is man, or whether, on the contrary, legal status should extend to what is today called the 'biosphere,' or the 'ecosphere,' formerly known as the 'cosmos.' From every point of view — ethical, legal, or ontological — man would be but one element among others, and [according to the environmentalists] the least sympathetic one at that, being the least symbiotic with the harmonious and orderly universe into which he is constantly, by his excess, by his 'hubris,' introducing the worst disorder." New Ecological Order, pp. xix-xx.
[19] See, for example, Christina Hoff, "Kant's Invidious Humanism," Environmental Ethics V(1983): 63-70, and Peter Miller, "Animals Have Interests Worthy of Our Moral Interest," Environmental Ethics V (1983): 319-333.
[20] See Paul W. Taylor, "The Ethics of Respect for Nature," Environmental Ethics III (1981):197-218.
[21] The legislation was enacted on 24 November 1933. The German Ministry of the Interior later issued a book of over 300 pages providing a detailed analysis and philosophical justification of the statute. See Das Deutsche Tierschutzrecht: Bestimmungen zum Schutze der Tiere (Berlin: Duncker and Humblot, 1939).
[22] Quoted in Ferry, New Ecological Order, p. 102.
[23] There is something particularly repugnant about the fact that Himmler, who was a confirmed opponent of the use of agricultural pesticides, oversaw the establishment of a series of experimental organic farms, among them one at Dachau, which were designed to grow organic herbs for use in medicines administered to members of the SS. See Anna Bramwell, Ecology inthe 20th Century: A History (New Haven: Yale University Press, 1989): 204.
[24] Ferry, New Ecological Order, 93.
[25] According to Wallace Kaufman, one-time lobbyist for the Wilderness Society, these are among some of the claims shared by almost all ecologists. See No Turning Back: Dismantling the Fantasies of Environmental Thinking (New York: Basic Books, 1994): 56-70.
[26] Devall and Sessions, Deep Ecology, p. 97.
[27] Kirkpatrick Sale, Dwellers in the Land: The Bioregional Vision (San Francisco: Sierra Club,1985): 5.
[28] Christopher Manes, Green Rage: Radical Environmentalism and the Unmaking of Civilization (Boston: Little, Brown and Co., 1990): 173.
[29] Stanley Diamond provides one of the better examples of the kind of sociological drivel that commonly appears in environmental writing. At one point he writes that "primitive society may be regarded as a system in equilibrium, spinning kaleidoscopically on its axis but at a relatively fixed point. Civilization may be regarded as a system in internal disequilibrium; technology or ideology or social organization are always out of joint with each other — that iswhat propels the system along a given track. Our sense of movement, of incompleteness, contributes to the idea of progress. Hence, the idea of progress is generic to civilization. And our idea of primitive society as existing in a state of dynamic equilibrium and as expressive of human and natural rhythms is a logical projection of civilized societies and is in opposition to civilization's actual state." In Search of the Primitive: A Critique of Civilization (New Brunswick, N.J.: Transaction Books, 1974): 172.
[30] Martin W. Lewis, Green Delusions: An Environmental Critique of Radical Environmentalism (Durham: Duke University Press, 1992): 55.
Libertarian writers fight uphill battling regulation after regulation. Any small tariff, restriction, and tax create adverse effects. Often, laws are so mangled together that one cannot make a difference with the removal of only one element.
Sometimes, however, the change of one regulation can make a world of difference. I offer a change with a remote law in New Orleans that can prevent the city's continued decline and fall. The edict that must be removed is the monopoly on gambling held by Harrah's casino.
The current law allows only one land-based casino in New Orleans. This casino, Harrah's of New Orleans, is primly located on Canal Street, conveniently across the street from the French Quarter. A gaming industry entrepreneur could not ask for a better location.
For a very long time, New Orleans has existed as a gambling city at least through back-door card games. Its gambling history vibrates through song specifically in the "House of the Rising Sun" covered by the Animals.
How will New Orleans benefit from the repeal of the casino restriction? There would be perhaps a dozen or more casinos offering low-skilled, high-paying jobs to the residents of New Orleans.
New Orleans, despite statistics of unemployment, has never had a deficit in the job market. Jobs are particularly easy to locate as many restaurants with traditional high turnover rates constantly seek new employees. The real problem of the New Orleans job market is finding a job that pays well and requires low skill at the same time.
The casino industry provides this alternative. Yes, being a casino card dealer requires intense knowledge of proper gaming etiquette. However, anyone can learn this on the job or through proper job training. Casinos pay high wages that make working preferable to leisure time on welfare.
Currently, the Iberville Projects are immaculately located near the French Quarter, the most likely place for an unskilled laborer to find employment. Yet the incentive is still not strong enough for subsidized unemployed laborers to walk two blocks.
Mississippi Gulf Coast, an area also ravaged by Hurricane Katrina, had about a dozen casinos. Why does Mississippi near a polluted beach have a dozen casinos while New Orleans, a capital of world tourism, has only one? The obvious answer is the difference in law.
In Mississippi, casinos are allowed as long as they are built on the water. In New Orleans, only one casino is allowed. If I was a gaming industry entrepreneur and someone asked, "Where would you rather build a casino? New Orleans or the Mississippi Gulf Coast?" Without a moment of hesitation, I would answer New Orleans!
Further evidence points to the fact that New Orleans can support multiple casinos. In the suburb of Kenner, the Treasure Chest casino does well for itself. Being out of the way, the Treasure Chest is not even utilizing the demand of tourists. It mostly runs on the risk-taking desires of locals. Casinos in Pearl River, Mississippi near the Louisiana border also serve New Orleans consumers.
Even the regulations on the Mississippi Gulf Coast pose a major threat to business. The casinos are forced to locate on the water. Can anyone think of a dumber regulation in a hurricane-molested area? The regulation was a direct catalyst for disaster and destruction.
Without the one land-based casino regulation, the dozen casinos on the Gulf Coast would likely be located in New Orleans instead. The jobs brought by the casino industry could create the high-paying jobs that would have solved a large part of New Orleans poverty.
The issue is not as simple as it may appear. Surely, any New Orleans mayor would realize the advantages to gainful employment from casinos. The argument of immorality and crime brought by gaming industries cannot be justified. If anyone knows a city more morally bankrupt than New Orleans … please inform me.
Obviously, the city has granted a fascist-like monopoly within the city limits over the lucrative tourist industry. This appears to be the apparent cause, and it is partially true.
Many feel that the casinos will ruin the feel and "style" of New Orleans. As mentioned earlier, this has always been a gambling town, and its reputation will surely not be smeared by the construction of more places to gamble.
This "style" argument was made against Wal-Mart entering the city one year ago. People worried that the first Wal-Mart in New Orleans would destroy the "style" of the city. The Wal-Mart prevailed and is currently located in the Warehouse District. I do not feel it necessary to describe to the reader the "style" of the Warehouse District. But surely it was not ruined by Wal-Mart.
What "style" are proponents of these restrictions trying to protect? Perhaps the projects and slums? I know nothing feels more historic than seeing houses equivalent to 19th-century slave cabins in most parts of the city. With economic restrictions, this "style" is the end result.
The casino would not destroy the city because of New Orleans's historic advantages. The casino gathers tourists through the significance of historic areas. If the casinos destroyed historic places, they would be also destroying their own profits.
If this is the reasoning for protecting Harrah's, why not have only one grocery store for New Orleans? Or one gas station? Or one fast food restaurant? If this policy was applied on a grand scale, the city would be in utter chaos!
The style of the city is only represented by the dollars consumers are willing to spend. Wal-Mart has been booming. Harrah's casino appears to get more customers than Bourbon Street these days. The truth is revealed in dollars and profits.
The day to allow completely free gambling in New Orleans is far overdue.
The study of the laws of economics has been greatly aided by the development of the idea of the evenly rotating economy (ERE) as an artificial construct wherein the world is held constant in a changeless and endless round of the same repetitive, mindless activities and transactions.
As Ludwig von Mises described it, "…in the evenly rotating economy there is no choosing and the future is not uncertain as it does not differ from the present known state. Such a rigid system is not peopled with living men making choices and liable to error; it is a world of soulless unthinking automatons; it is not a human society, it is an ant hill."Mises, Ludwig von. Human Action, 2006 Ludwig von Mises Institute, p. 249.
Environmentalists, it seems, have their own version of the ERE. The major difference is that environmentalists hold the evenly rotating environmental economy (EREE) to be real, and not as an artificial construct to look at exact conditions. Under the EREE, by holding the environment and all the processes it goes through as unchanging, the environmentalist can then readily blame the entirety of environmental changes on "greedy" human action. This is perhaps the single greatest fallacy of the environmentalist movement.Another major fallacy is the evidence backing climate change, which uses a massive infusion of empirical data to somehow 'prove' that the Earth's temperature has risen by so many hundredths of a degree in the past century, results that are barely outside the margin of error of the most technologically advanced measuring equipment.
The EREE, then, like the ERE, is a convenience, though, without which we cannot apply economics to understand the real world in which we find ourselves. Unlike the EREE or the ERE, the real world is one of flux, of change, where entrepreneurial activity flourishes, interest rates rise and fall, and people come to value different goods differently at various times, the winds blow from different directions on some days, floods occur periodically, all of which show that while the environment may exhibit some broad general patterns, these patterns are not continual. We do not see rain hit the same places in the same amounts on the exact same time on the exact same days every year just as we do not see the same movements in interest rates every year.
The social sciences cannot function as a laboratory science, and this is where the ERE needs careful handling. Human nature cannot allow for all things to be held equal. Obviously, then, the environment is limited by similar constraints; it too is a dynamic place. All weather save wind cannot be held equal to see the effect it may have on the Earth; the environment is a complex, ever-changing matrix, much like that of the market economy, which, like the environment may be said to exhibit general broad patterns at times, but without a endless continuation of the same activities.
When human action is curtailed by government regulation, then economic activity goes "underground." This is another way of saying that a free market has been established in defiance of a regulated market backed by threats of government involvement. If the environment were, in a sense, "regulated" or interfered with by human emissions of pollutants, then the environment would surely adapt and continue on in its operations, much in the manner of those who make exchanges on black markets. To assume that the environment is incapable of dynamic change overlooks how our present hydrogen-oxygen atmosphere developed.
If the EREE is true as environmentalists insist, then we find that humanity is responsible for dire environmental changes. How, then, the well-meaning environmentalist asks, can the environment be "protected" from the excesses of human action? The answer, it should be obvious, is property rights. But, to the environmentalist, this is not the obvious answer, so a comparison of property rights in a hypothetical free marketSince there is no country yet in existence that adheres to a completely free market economy. to empirically-proven conditions under the Soviet Union to see how the environment fares under each should provide a basis for making rational decisions regarding the role of property rights, and, as a corollary, government intervention.
Property Rights: In the Home of the Free
Murray Rothbard ingeniously solved the problem of air pollution that environmentalists quibble about endlessly. His argument for private property inclusive of air over a piece of land solves, among other things, the problem of pollution. "In so far as the outpouring of smoke by factories pollutes the air and damages the persons or property of others, it is an invasive act. Air pollution, then is not an example of a defect in a system of absolute property rights, but of failure on the part of the government to preserve property rights."Rothbard, Murray. Man, Economy and State. 2001 Ludwig von Mises Institute; p. 156. If property rights include the right to modify the air over one's land, then one may pollute so long as this pollution does not spill over into the air space of another. This is an outright impossibility given the flow of air; and many cunning ways can be developed to prevent emissions from getting into the air, anywhere from storing emissions in bottles to finding ways to convert emissions into water vapor, thus alleviating the problem. Emissions, the bane of environmentalists, would be significantly reduced on a free market, as individuals who do emit pollutants could face legal action by their victims.
The free market solution, then, is based on rational calculation by the individual as to the best use of the environment under his control. The incentives to preserve and protect such environment are sensible: preserving an asset is preferable to squandering it. But, in all their recommendations to adapt society such that economic activity has less of an impact on the environment, environmentalists make no mention of property rights of air and water as developed by Rothbard. Instead, environmentalists advocate a myriad of concepts from tax breaks on hybrid cars to trading emissions between companies to meet government regulation on maximum emissions output. No matter how close to a "market" solution, these recommendations do modify property rights, sometimes blatantly, such as the alleged right to "pollute" implied by the existence of emissions trading, and the more subtle forms such as behavior modification through aforementioned tax breaks. These concepts, all of which involve government regulation to achieve the goals of the environmentalists, lead to one important question: is rational economic calculation under environmentalism possible?
Property Rights under Socialism: Mandatory Ignorance
The only answer we can possibly draw is an assertive negative to the rhetorical question, which also leads to another error of interpreting the EREE as true. Environmental exploitation has occurred since primitive man began to plant crops and move out from caves and into homes purchased with the toil and sweat of labor and time. As the capitalist system advanced man, so it has advanced the way man interacts with the environment. Under socialism, the scourge of the twentieth century, the environment was exploited, depleted, and ravished by the Marxist labor theory of value which holds that only labor is the source of any value and unused land is therefore — like air — without value. The difference between the processes of acquiring resources from the environment under these systems ultimately reflected differing views on the role of property rights.
In the Soviet Union, "…officials and academics insisted that… pollution was a capitalist, not a socialist, problem. It was the inevitable result of private corporations pushing off their costs onto the public sector [externalities costs]. Since the Soviet Union had no private corporations, by definition there could be no pollution."Goldman, Marshall. "Environmentalism and Nationalism: an Unlikely Twist in an Unlikely Direction." The Soviet Environment: Problems, Policies and Politics. Ed., Stewart, John Massey. 1992, University Press: Cambridge, p. 1. The first stage of any misallocation of resource is the denial and suppression of the truth: that pollution is the discharge of substances into an area where they should not exist. Under this definition, a piece of trash that falls out of a trash can and onto the ground would rightly qualify as pollution. Modification of the environment, such as creating a lake by building a dam on a river, falls into a different category, but is noteworthy as it is also not a naturally-occurring event.
In the world of Marxist doublethink, the Soviet Union, where pollution was deemed impossible, faced a continual series of impossibilities in unprecedented environmental destruction and devastation. "The drying up of the Aral Sea is, for instance, an obvious result of the party line on irrigated cotton as the monoculture of Soviet Central Asia. Among other examples we could refer to wind erosion of soils and dust storms on a huge scale (due to the policy of ploughing Kazakhstan's virgin land — up to 30 million hectares in the 1950's)…"Altshuler, Igor, Golubchikov, Yuri, and Mnatsakanyan, Ruben. "Glasnost, Perestroika, and Eco-Sovietology." Ibid., p. 199. This wanton destruction of land to achieve short-term Soviet economic goals now prevents the land from being as productive in the present as it could have been had it not been mismanaged — a perversion of the broken window fallacy on a grand scale. Clearly, land is the foundational resource for all human activity, whether it is for the materials it provides, or for the physical space needed on which to provide services.
Conclusions
It seems, then, that environmentalism has become the last refuge of the socialist and leftist scoundrel; by holding to the theoretical EREE to place the blame for environmental changes on human activities such as the driving of automobiles, they are in a far better position to advocate eradication of private modes of transportation in favor of public transportation under such criteria as the 'environmentally friendly' solution.
But the solution to what? To the personal enjoyment and freedom that comes with owning a car?And, conversely, the responsibility for upkeep and maintenance. This is hardly a solution at all; merely the imposition of arbitrary values supposedly backed by an alleged compassion for the environment with, at best, shaky scientific theories in support. If individuals are stripped of the ability to use the environment to further their own ends to the point where sustenance becomes an issue, then they will have no choice but to succumb to government for their sustenance; some will hear the siren-song of "free" housing, health care, etc., far before they reach that breaking point. The choice, then, is a clear echo of the choice between socialism and capitalism: the environment, or civilization.
As we have seen, only property rights can instill the necessary desire to be respectful and resourceful with environmental assets. The logical implication is that as the standard of living rises in a country, so the treatment and appreciation of natural resources in that country will rise.
Government modifications of property rights in the name of environmental protection will only cause a decline in the standard of living; clearly "tragedy of the commons" is not a phrase in the environmentalist lexicon. No matter which way environmentalism turns, as long as it retains its socialist ambitions and accepts the EREE as true, then the successful implementation of environmentalist policies will serve to make the environment worse over time.
A recent story out of New Orleans sheds light on the inefficiency of socialist "charity." Not only was FEMA unable to cater to people's needs when they needed trailers, but now just the opposite is happening. Homeowners who have repaired their houses are having difficulty returning the trailers to FEMA. The agency, overwhelmed, is unable to inspect the trailers and assign them to other families. But the story does not end there. Homeowners cannot legally move the trailer off their property. They require a towing license. So while there are people still waiting for a trailer, others have a perfectly good available trailer that they are unable to get rid of. Even with a budget of billions of dollars, government agencies simply cannot do things efficiently; FEMA is not matching demand with supply.
The situation with financial help is no different. A US Government Accountability Office report has concluded that people are spending their FEMA money for non-emergency purchases. For example, many have used the funds for guns, alcohol, jewelry and gambling. A charitable organization, unlike the government, has to risk its own assets. If it decides that a particular family needs aid, it could verify that the goods and services provided are used for emergency and immediate needs only. There is an incentive to save resources so that others can also be helped. Charity cannot be managed bureaucratically; it must be efficient or face the consequences: the loss of money, reputation and future donors. While dishonest behavior would still arise under private charities, they would learn from their mistakes and continually improve their practices. The government, however, has to go through bureaucratic processes before it can improve: meetings, investigations, reports, witnesses, depositions, accusations, and other headache-inducing proceedings.
The bureaucrat is not in the business of making money by satisfying consumer demand. He is not in a business at all! The funds entrusted to him are the result of the taxpayer's productivity. He faces no risk of loss and thus can waste our money with impunity. Consider Mises's great definition of bureaucratic management:
"Bureaucratic management is the method applied in the conduct of administrative affairs the results of which has no cash value on the market. Remember: We do not say that a successful handling of public affairs has no value, but that it has no price on the market, that its value cannot be realized in a market transaction and consequently cannot be expressed in terms of money."
Indeed, what Katrina victims needed the most was a method of quickly and spontaneously assessing priorities. This can be best achieved through a market process, where needs are expressed in terms of money and where the dynamic fluctuations of price are the result of consumers and producers seeking to improve their state of affairs. If there is a decrease in the supply of housing or water or food, then prices will rise to reflect that change. Higher prices encourage entrepreneurs to increase the supply, satisfying the increased demand. As the needs are satisfied and demand lowers, so do prices and then the crisis is over. Sadly, the Katrina aid did not follow a market process. It was a free-for-all stampede of unconditional gifts on behalf of the government. Consequently, things turned ugly.
An MSNBC analysis tells us that "investigators studied more than 200 cases, and say in 70 percent of them aid recipients gave bogus Social Security numbers — numbers that belonged to dead people, to someone else or to no one at all. And when investigators checked out addresses given in these cases, about 40 percent were bogus — vacant lots or nonexistent apartments." Moreover, up to 900,000 of the 2.5 million applications were fraudulent. These are not just random events but deeply ingrained symptoms of government management.
A similar news report reveals just how widespread the abuses were:
There was little or no verification of the names, addresses or Social Security numbers of applicants registering by phone or the Internet for the $2,000 in aid, resulting in thousands of checks issued to those with duplicate or bogus information.
Duplicate payments were made to about 5,000 of the nearly 11,000 debit card recipients who received Katrina aid, first with debit cards and then again via electronic bank transfer.
Although FEMA says it bought 114,341 trailers for $1.7 billion, discrepancies abound in FEMA's documentation of the number ordered, received and occupied, making it difficult to ascertain the exact units available or whether government-owned property was otherwise accounted for.
FEMA may have bought too many temporary homes — 24,967 manufactured homes obtained for $857.8 million and 1,295 modular homes at $40 million — resulting in 10,777 such homes sitting empty in Hope, Ark., in sinking mud without proper storage. "It was unclear how the decision was made," the Homeland Security audit stated."
Everywhere we look, we find cases of inefficient and downright wasteful practices. FEMA's own rules, for example, ban mobile homes in flood plains, yet the same agency nevertheless ordered the construction of 26 thousand of them for Katrina victims.
Mises's most popular book, back in print: $8It does not matter one whit whether Mayor Ray "Chocolate City" Nagin or Governor Blanco or the enlightened central planners at FEMA were the ones guilty of improper allocation of resources. The truth is that the entire system of government aid continually fails to efficiently provide goods and services. Lacking a market test where gains and losses are used as guides, the government cannot possibly determine either the amount or the quality of goods and services to produce. All that can be done is a botched attempt, something like driving blind and drunk on an icy road at night with a flat tire and very strong winds.
It has been six months since the hurricane. There are folks out there having the time of their lives in posh hotel rooms watching the latest HBO series while FEMA, and ultimately all of us, pays for their fun. Then there are those who still want trailers and those who want trailers off their driveways.
These absurd occurrences are the result of intervention in the market, of socialist "solutions" to government-created problems, and of bureaucratic management. Not subject to the forces of supply and demand, government offers both too much and not enough of things.
For as long as intervention exists, economic chaos will reign supreme. Let the market restore order.
Manuel Lora is a freelance TV producer and multimedia specialist in New Orleans. vanguardist@gmail.com. He loves hanging out in the Mises chatroom. Comment on the blog
Economic ignorance rises to the top: that seems to be one explanation for FEMA's continued support of building in flood-prone areas, and Congressional demands for FEMA to do even more of the same.
A Washington Post story (Oct 11, 2005 ) by Gilbert Gaul noted, "The pattern of federal flood payments on Dauphin Island [AL] illustrates the growing share going to properties that get hit over and over. Federal data show that 300 buildings with multiple losses account for more than two-thirds of all flood payments the town has ever received — $21.3 million. Katrina claims could add tens of millions."
Gaul continued, "Nationally, properties with multiple losses account for about 25 percent of the flood program's losses while representing 2 percent of all insured property."
Now, if we are learning any lessons at all, we shouldn't be insuring two-time loser properties, especially when those risks are underwritten by the very people who have enough sense to stay away from hurricane magnets like Dauphin Island, namely the rest of us.
If the builders on that island (and countless other coastal properties, from Brownsville to Boston, and beyond) can't afford private insurance, they need to reassess their plans. They shouldn't expect "the federal government" to pay for their folly. Sure, they pay premiums to FEMA, but those payments are obviously below market value (else the market would take care of the insurance and there would be no rationale behind FEMA's involvement).
An Eric Lipton story in The New York Times (December 11) further noted the clash between FEMA's new demands and the insured residents' wishes. One 69-year-old lady he interviewed doesn't want to have to rebuild her Mississippi Gulf Coast home on FEMA's newly-required stilts. She doesn't want to climb that many stairs… but she still wants FEMA to insure her rebuilt home.
Lipton notes that FEMA's rules won't be final for a year or so, but adds, "During this critical rebuilding period, it is up to the local governments to decide if they will honor the agency's request to adopt the more conservative and more costly standards." He says that "when the maps become final, the federal agency will have the power to force the hands of local governments, since it can ban cities and their residents from the flood insurance program if they do not respect the official maps."
There's good news here, and bad news. First the bad news: most local governments will no doubt capitulate to FEMA. The good news, though, is worth examining.
People may not return to the flood-prone areas that the market would not insure at a reasonable price in any case. That would be good for everyone. FEMA may have fewer people to insure, and those FEMA does insure will be better-equipped to survive the next storm. Though governmental power will increase in this case, it will not increase as much as it would had FEMA carried on as it always has. Local governments may get fed up with FEMA's heavy-handedness, and a tiny revolt against additional governmental incursion may result (much as has happened in the wake of the Kelo decision, which gave a pass to governments to seize property in the name of the "public interest"). Delays in FEMA approval, coupled with lenders' reluctance to finance uninsured rebuilding, may induce some to move away — to some area where the next flood or hurricane won't destroy their homes.
The government should not be subsidizing insurance payments for anyone; and it's irresponsible to use other people's money to effectively encourage stupid people (who else builds in flood-prone areas?) to do ever-more-stupid things. Granting the natural right to behave stupidly, doing so should not come at other's expense.
Beyond the obvious, the federal government's insuring anybody for anything is a conflict with what's left of free enterprise in the insurance sector. Private insurers provide a measure of "concept-checking," as people consider building in risky places; having FEMA supply below-market-rate insurance merely encourages uneconomic behavior, lowering the costs of that behavior.
What would be the worst thing to happen if the government didn't subsidize people's insurance? You'll need to pick from these, and a few others:
Middle-class people would stay away from flood-prone areas. Rich people could afford private insurance, making their vacation spots even more-exclusive. Poor people could afford the land, balancing their risk with the opportunity for cheap accommodations. Like in Haiti, except by choice, with other opportunities. Insurance rates for all homeowners would drop, because the rich would be paying their own way, and the poor wouldn't be expecting handouts. Property values inland would rise, yet property on those tracts would be easier to insure, and at lower cost. Fewer people would ultimately be affected by the floods. The middle class wouldn't be there in the first place, making voluntary evacuation (of the resultant smaller population) less problematic. Rebuilding costs would be lower, as the rich would have enough insurance, and the low-cost housing would either not be rebuilt, or would be built in such a way that a catastrophe would not be as expensive the next time. Local governments in flood-prone areas would have fewer obligations to the federal government. They would be able to govern in the way that best suited the citizens of the area. Paperwork and staff could be cut, freeing more people to do honest work. Government expenses would plummet.
There is nothing wrong with anyone's building wherever he or she wants. But it is not my job (or your job) to make it easier for them to set themselves up for a fall.
If the economies (and government coffers) of Dauphin Island and other flood-prone places suffer because people don't rebuild there, that's too bad. With fewer residents and properties to regulate, they couldn't claim the need for so much money, anyway.
And maybe people should pay their own way to live where they want, whether it's in a sensible place, or some risky venue like, um, places where it floods all the time.
Tim Kern is a writer in Winter Haven, Florida. See his website. Send him mail. Commen ton the Blog.
Now that the furor over the botched response to Hurricane Katrina has largely subsided, we can calmly examine an aspect of the episode that most commentators have neglected. Let me motivate the examination by first making the (perhaps surprising) claim that I don't think the FEMA bureaucrats did anything particularly outrageous. Yes, it is true that the main damage to New Orleans was caused not by the hurricane per se, but by the government's poorly designed levee system. It is also true that, given the flooding, the federal presence only made matters worse. FEMA officials almost seemed to purposely sabotage relief efforts, by blocking private shipments of aid, detouring volunteer firefighters to Atlanta for two days to receive sexual harassment training, and even telling "First Responders" to wait before responding! And of course, the escalating threats against "price gouging" only further stanched the flow of vital supplies into the ravaged region.
In response to this less than helpful federal activity, many citizens accused President Bush of racism. Although I agree that Bush (like any politician) would have been more attentive to the needs of rich donors who supported his party, I'm not sure that overt racism is the explanation. As William Anderson observed, FEMA's response to the disaster was the epitome of government behavior: the State's primary objective is always to establish its own control, and then as an afterthought it may deign to help people (albeit in a bureaucratic and counterproductive fashion). To understand how reasonably well-intentioned government employees could have made the horrible decisions outlined above, let's consider the situation they faced.
A PLANNER'S NIGHTMARE
The FEMA officials were "in charge" of relief efforts for the ravaged areas. As news reports of the disaster alerted the nation to its severity, thousands upon thousands of people and agencies offered help. In that scenario, what were the overwhelmed officials supposed to do? They obviously didn't have a fully specified (let alone useful!) contingency plan to which they could refer; since they had no idea where, say, 500 bottles of water should be delivered, is it so surprising that they so often said, "Thanks for the offer, but hold off on shipping it here until we get back to you"?
The full complexity of the problem becomes apparent when we consider that some offers should have been refused. For example, suppose a group of well-meaning college age women wanted to go door to door handing out batteries in a neighborhood that was teeming with looters, sewer water, and downed power lines. Depending on the specifics, it is entirely possible that the "right" thing (and for the moment we'll have to be vague about the criteria of goodness here) would be to politely refuse their offer. This is because the cost in resources needed to escort them or give aid to them if they became sick, would likely exceed the benefits of getting batteries to the few residents still in the flooded area.
A CALCULATION PROBLEM?
Those familiar with Austrian economics will immediately recognize the similarity between FEMA's woes and those of a central economic planner. As Ludwig von Mises famously demonstrated, socialist economy is simply impossible. Beyond the incentive problems, there is a much more fundamental calculation problem: without private ownership of the "means of production," there are no meaningful prices for capital goods and raw materials. Therefore, the socialist planners cannot use the profit and loss test to decide if a particular enterprise uses up "too much" of the scarce resources in comparison to the benefits people get from the goods and services the enterprise yields.
However, it is too glibI am grateful to Sheldon Richman for pointing out the problems here. to simply say "calculation problem" when considering FEMA, and then move on to other examples of government folly. In the typical exposition, the reason the private entrepreneur is not himself plagued by a calculation problem is that his customers' expenditures give him the ability to bid away the necessary resources from other entrepreneurs. If the good or service he makes cannot fetch enough revenues from customers to "cover costs," then that's the market's way of saying, "The resources you want to use in your line are more urgently demanded elsewhere, according to the preferences of the consumers. Therefore you go out of business."
PROPERTY, NOT PRICES
But how does this work in the case of disaster relief? Is the laissez-faire economist really advocating the Dickensian caricature of companies selling bottles of water and first aid kits to the highest bidder?
No they are not, and this is a point often overlooked even by pro-market writers. Despite the clichés to the contrary, the market does not allocate goods to those who are willing to pay the most for them. On the contrary, in a free market goods are "allocated" to whatever use the owners decide.
In many cases, the owners will indeed not care for the identity of the prospective buyer or the uses to which they will put the goods in question, and will truly sell to whichever party offers the most. However, there are many cases where this rule doesn't hold. When parents maintain a college-bound child's room for Thanksgiving visits etc., they are not maximizing revenue. They are deciding to forego renting the room to a much higher bidder, and instead are giving it for free to their child.
To pick a more "economic" example, it is not true that laborers always sell their services to the highest bidder. Someone may give up the stressful (yet highly paid) life of corporate law and opt to be a librarian.
As these examples illustrate, the function of market prices is not to dictate how resources are deployed, but rather to let the owners make an informed decision. If there is a tremendous housing shortage, then the rising rental rates will let the parents know just how much someone else would like to use their child's room. And the best trial lawyer in the world will probably not end up as a librarian, because of the outrageous salary he or she would be turning down. Again, the market price of his or her services signals how much others value them.
PRIVATE DISASTER RELIEF
After Katrina, plenty of individuals (including shareholders acting through corporations) were willing to donate their property (including labor services) to help the victims. Naturally they weren't looking to make a buck, but market prices were still essential to coordinating relief efforts. This is most obviously true when one considers all of the tremendous coordination that the market achieves on a day to day basis during times of normalcy: All of the crude oil that is sent to refineries and ultimately finds its way into everyone's vehicle, all of the truckers who deliver products to various retail stores before spoiling, all of the clerks who show up at work in order to facilitate the purchase of these goods…
The situation is just far more complicated following a natural disaster. Certain established production routes are disrupted, and consumer preferences are suddenly different. Contrary to popular belief, it is in such situations where the dynamism and adaptability of the free market are needed most. There doesn't need to be anyone "in charge" of disaster relief, just as there doesn't need to be anyone in charge of computer production or tuna fish.
In a truly free market, private relief agencies would still exist. They would solicit donations and use the funds to help in ways they deemed most important. The crucial difference between private organizations and FEMA, however, is that the former would have to engage in voluntary activities. In particular, they couldn't prevent others from trying rival strategies for assisting the victims. Thus, although individuals would still make mistakes (everyone is fallible), the overall relief effort would be far more effective, because competing agencies would quickly make such mistakes obvious.
CONCLUSION
As in all other areas, the free market is superior to monopoly governments when it comes to disaster relief. Once we recognize that it is not prices per se but rather private property (with its associated voluntary exchanges) that undergirds the commercial success of the market, it is easy to see how private relief efforts could have helped Katrina victims far more than FEMA did.
Less than a year after a Tsunami killed approximately 275,000 people in the poorer part of Asia,Wikipedia. another 80,000 have died in Pakistan and India from an earthquake that hit on 8 October 2005.The Economist and Yahoo News. An estimated 3.3 million are now homeless in the harsh winter of the region.
Close to a million are still sleeping in the open — all at risk of dying — while the states of India and Pakistan each work to ensure that no territory is lost to the other in this long fought-over region. They will not even allow separated families on either side of the border to meet or even telephone.
For imperialist rulers, it is the land — not people — that matters. In the same vein, on 18 October, terrorists killed a state minister in the Indian part of Kashmir to prove that they were still active.
Millions suffer every year in the subcontinent from a cycle of horrible floods and water shortages. Millions die of easily and cheaply treatable diseases. Hundreds of thousands die like flies — and nature gets the blame.
Why is it that so many people die in these countries while the West hardly ever suffers from such problems? (Not even the flooding of New Orleans can compare.) Any layman should be able to correlate the facts to see that it does not have much to do with nature.
Facts will continue to come to light on the Kashmir catastrophe, but for the moment let us take a quick look at how much these disasters result from the wrath of nature, and how much is really the result of human arrogance and stupidity.
Environmentalism Against the EnvironmentWhen I was a kid, my family loved to travel to the mountains in the north of India. There were beautiful wooden houses everywhere. There was ample wood around, which was cheap, strong, and readily available. More importantly the skill developed over a period of generations was helpful to construct houses that absorbed shocks. Wood does not fall apart as easily as concrete does when an earthquake strikes, and it is a lot less heavy.
But that was then. We soon got "environmentalists" who called themselves saviors of the trees. They started haranguing everyone about how quickly forests were disappearing, and the price of wood went through the roof. People no longer owned their own trees.
To "make the nation strong," the state of India controlled the cement industry. They ensured that heavily subsidized cement was readily available in the mountains, while in the plains it was available only in the black market and at an exorbitant price. Within a decade the mountains were covered by ugly cement buildings. Cement houses were far less insulated and, in a final irony, they needed more wood for heating. So much for saving the trees.
(Many of these same "environmentalists" called for state intervention on behalf of the poor. As a result, the state provided huge subsidies on the supply of cooking gas, which ended up making it unavailable to the poor because the middle class bought it all up. This is another reason why more wood got burnt away.)
The cement houses crumbled whenever the ground shook. While the "environmentalists" and the state destroyed the natural order, the void in the construction industry was filled by corrupt bureaucrats. Most of the cement houses were made without any architectural supervision. The so-called "architects" in these countries mostly act as liaisons to bribe city bureaucrats to approve a house after the householder has built it himself. (As a high school student, I "designed" and supervised construction of my parents' house). These buildings were not designed to absorb the shock of earthquakes.
Nothing To Show for the Million Troops Stationed in KashmirKashmir is one of the world's most militarized zones. The two sides (India and Pakistan) are ever alert for a war. Each is believed to have the system and the roads to respond to any provocation from the other side. To enable them to prepare for war, Pakistan and India spend 3.9% and 2.5% of their GDPs respectively. The population of all of Jammu and Kashmir is about 11 million people (less than 1% of the combined population of India and Pakistan). The total deployed troops are a million strong.BBC News, The Guardian, and Tuscaloosa News.
Any sensible person would go crazy if he gave a few minutes to these numbers. Should the rescue work not have taken place almost instantaneously?
The people of Kashmir are obviously not the primary concern. The territory of Kashmir, which both countries try to claim, is one of the most wretched and abused parts of the subcontinent. Families have lived divided by an artificial border, and terrorists have filled up the gap to fight for their cause. They have of course become the worst exploiters.
Kashmir has the world's most militarized border, and many parts are accessible only by helicopter. There should have been plenty of everything for rescue operations after the earthquake struck. And what do they have there now? They are scrambling for lack of service personnel to carry out emergency services. Where are the million strong? Why did yet another incompetent state — the USA, which itself failed to provide assistance to its people during the New Orleans crisis — had to supply helicopters?
I lived in Bhopal when the Union Carbide gas leakage took place. For more than a month after the disaster, there was no state present. They sent self-righteous commands from hundreds of miles away. This is not untypical. In peacetime, the collectivists make a show of unity for their own selfish purposes; but in a crunch, we are individuals and we care more about ourselves and our friends and families. The more collectivist the society, the worse the problem is, because collectivism itself breeds irresponsible, unethical people. The state radio ignored what was happening and tried to convince us that everything was all right when there was death all around us.
Late in the 1980s, I had just left Bhopal when our train went off the rails. Derailed, the train cars plowed over farms like a rollercoaster. People were crying for God. The train eventually stopped with no one seriously injured. The train was still within the city limits, yet emergency services were nowhere to be seen. Much later that night, an empty train came to take us back to the station. At the station we were without any facilities all night; about 16 hours later we started for Bombay. Only one senior officer came during all this time, and that was to try to convince us which of his senior colleagues were at fault.
LessonsLesson number one: the people in these countries should have learned long ago is that when the crisis strikes, the state disappears.
As a kid, I remember the elders discussing why we needed martial law or a dictatorship to get over our problems, or why we should have a war with Pakistan to unite us as a nation. Lesson number two: human stupidity has no limits.
There is a Muslim majority in Kashmir. They do not have an entrepreneurial culture. The minority Hindus do. Over the past few decades, the majority has been systematically ousting the minority — creating unemployment for themselves. Lesson number three: culture can trump self-interest.
There was a recent news item — published in most media around the world — about the growing camaraderie among the Indian and Pakistani troops in the aftermath of the earthquake. Those who had fought an ugly battle for the last six decades and tried to take potshots at each other to celebrate their birthdays (yes, this is true) are suddenly brothers! Lesson number four: the media will romanticize whatever they can.
Lesson number five: Millions will continue to die, suffer, and live in utter misery, and the people of these countries will keep electing the same rulers. The culprits and the victims are the same; they only change positions.
Lesson number six: leftists in the West will keep blaming globalization and the free market for all these problems.
Watching the Capitol Hill hearings on what went wrong after Hurricane Katrina provided a glimpse of what it must have been like in the Politburo in the 1950s. The Soviet bureaucrats would gather with the party officials and factory managers to figure out why grain production was down or why shop shelves were empty or why the bread lines were ever longer and the quality ever worse.
They gathered under the conviction that they had a workable system that was being rendered unworkable because of the incompetence of certain key players in the chain of command. No one was permitted to say that the command system itself was the problem; this would too contrary to the prevailing political ethos. Instead, they had to place blame on someone, as if all problems could be reduced to issues of obedience. It was always a scramble. Whoever was finally said to be at fault faced certain ruin.
To be sure, there was plenty of blame to go around. With rats in a maze, there is a sense in which they are all responsible for not having found the exit. If those rats could also organize into a hierarchy of control and hold trials, it would surely produce quite a show with many victims. But at the end of the day, the rats would be no closer to getting out of the maze. And so it was in the US Congress: the hearings produced a great show with no results that will make a difference for our future.
The Soviet system had to fully unravel before it became permissible to state what it used to be a crime even to think: you can't manage an economy. You can make every demand, issue a million commands, exhaust every financial resource in the state's account, elevate some people and demote others, dress up in a military costume and make grand pronouncements from a glorified pedestal, cut off fingers, toes, and heads, but in the end, you can't make the economy perform in a way that serves the people unless you let market forces work.
Not just the Soviets had to learn this. Authoritarian regimes from the beginning of time have attempted to defy the laws of economics, step on the interests of the merchant class, control and redirect the wishes of consumers and entrepreneurs, bend and kick prices and wages this way and that, and inhibit trade in every way. But they cannot finally overpower the driving desire on the part of people to control their own fate and not be subject to the slavery that is collectivism of all colors, whether red, green, or brown.
Someday, the US managers of crises will have to realize this same point. But for now, they are like Soviet bureaucrats scrambling to make an unworkable system function, and creating a scene that is as farcical as it is tragic.
Consider first how the much-glorified Department of Homeland Security responded to the Katrina crisis. There is a mysterious missing day between the time the hurricane hit and the levees broke and flooded New Orleans. During this strange Monday, August 29 — a day in which there was a window of opportunity to prevent the meltdown of civilization — why didn't federal officials respond or even pretend to respond?
The head of the Department of Homeland Security, Michael Chertoff, said that he read in the Tuesday morning newspaper that, according to the headline, "New Orleans Dodged the Bullet." So, to his mind, there was nothing to do. This was his testimony. This is not exactly an awe-inspiring admission, but it speaks to a truth that few are willing to admit: government officials live normal lives. They do not partake of the mind of God. They get their news just like you and me. And they have far less information than the body of knowledge generated by the signaling process of the market economy and the private sector.
We might even say that they are in effect sub-normal in intelligence, because government officials stand outside of society, cut off from normal channels of information that the rest of us take for granted. They are isolated from markets and the regular pressures of life. They are not owners of what they control, and have no real stake in the value of their product. They are surrounded by some of the most peculiar people in the world, namely lifetime bureaucrats, power-mad politicians, and lobbyists on the make. This is their world and this is what they know.
Now, they enjoy the illusion of being better informed than the rest of us, so it would never occur to a high official to surf Google News to find out what is really going on. Thus was it apparently beyond the capacity of FEMA to find out that the National Weather Service had issued a flood warning soon after the hurricane hit. The National Weather Service in turn was only reporting what many private local media outlets were saying.
Certainly the municipal government of New Orleans got the message. It issued a warning to residents, and then all the officials packed up their stuff and headed to Baton Rouge. I suppose that this was the plan that the bureaucrats came up with after having received a $500,000 federal grant in 1997 to design a comprehensive plan for evacuation. Half a million dollars later, they agreed what the plan should be. Two words: let's go!
Now, we can learn from observing this. It is always the case that the government's first interest in a crisis is the protection of itself. The public interest is way down the list. Government employees have no ancient code that requires them to go down with the ship. The seafaring captain might feel disgrace if he lost his crew and passengers but returned safely to shore, but the government bureaucrat would see this as nothing but rational self-interest at work. From their point of view, public service is not a suicide pact.
If this is so, are we wise to expect government service at times of crisis? Well, here is where it gets complicated. They always promise that they will take care of us. On the day the Hurricane hit, for example, President Bush made the following announcement: "For those of you who are concerned about whether or not we're prepared to help, don't be. We are. We're in place. We've got equipment in place, supplies in place. And once the — once we're able to assess the damage, we'll be able to move in and help those good folks in the affected areas."
Well, given the calamity that followed, this statement by Bush might as well have been a Soviet propaganda poster about the glorious future of socialism.
If the only response by government were to turn and run, they could be accused of hypocrisy, but it would be better than the alternative of bad government that stayed to ruin the work that markets and private individuals do.
As the Hurricane approached, for example, Mr. Bush, along with nearly every office holder in the entire region, immediately announced that there would be no tolerance of so-called price gouging. What is and what is not gouging remain #ff0000 by law, but there are still criminal penalties attached to doing it. If you raise your prices to the point where you attract a complaint, there is a good chance that you will be thrashed as a gouger.
And yet, we have to ask ourselves what the purpose of a price is. It is a signaling device that allows market players, including both producers and consumers, to adjust their economic behavior in light of supply and demand. If supply remains the same and demand rises, the price too will have to rise so the market can clear properly. Otherwise there will be shortages and surpluses that will prove to be a benefit to no one. William Anderson has called gouging rules a form of back-door price control, and he is right. They create victims, encourage economic dislocations, and foster black markets.
One might think that a Republican administration would understand this, but reflect on the fact that Iraq still has very strict price controls on gasoline, controls that were instituted by the US after Saddam was overthrown. Don't think for a minute that it is beyond the capacity of the Bush administration to do what the Nixon administration did, which was to believe that the laws of markets can be overridden by regulatory force.
Anti-gouging laws, to the extent they are obeyed, will create shortages. But in telling the sad tale of Katrina, I would like to begin not with a case of shortage, but with a strange case of surplus.
One week after the hurricane, FEMA ordered the Army Corps of Engineers to buy 211 million pounds of ice from IAP Worldwide Services of Florida. Trucking companies were notified of a grand opportunity since the government was paying the bills for delivery, and the dispatchers sent out the word. There is no space to explore the workings of IAP Worldwide, but I will observe that the company, which exists solely to get paid by your tax dollars as a federal contractor, has a new CEO who most recently held the position of vice president of national security programs for the notorious Kellogg Brown and Root. His name is David Swindle.
But back to the story of the ensuing chaos. One trucker picked up ice in Greenville, Pennsylvania, and was told to drive it to Carthage, Missouri. When he arrived in Carthage, he was told by a FEMA official to go to Montgomery, Alabama. After a day and a half sitting in Montgomery, he was told to go to Camp Shelby, Mississippi, after which he was sent to Selma, Alabama, after which he was sent to Emporia, Virginia, where he stayed for a week burning fuel, until he was sent to North Carolina, and finally to Fremont, Nebraska, where he dropped the ice in a government storage unit. That's 4,000 miles over two weeks.
This was hardly the only case.
The news media chronicled the stories of these truckers. A truck full of ice was sent from Dubuque, Iowa, to Meridian, Mississippi, then to Barksdale Base in Louisiana, then to Columbia, South Carolina, and finally to Cumberland, Maryland, where he waited for six days before being sent to Bettendorf, Iowa, where the ice was unloaded. Another truck was sent from Wisconsin to Missouri to Selma to Memphis, before finally dropping off the ice in a storage unit.
Do you know how many drivers were enlisted in this incredible charade? 4,000. No one knows for sure how much ice ever got through or how much good it did, if any.
In one of the first incidents reported of what was to be two weeks of catastrophe, a group of volunteer fire fighters from Houston came to New Orleans wanting to help. They were told to wait. They waited 48 hours and were ordered to go back. A group of doctors from Maryland tried to get in but FEMA sent them on to the Red Cross, which said it could do nothing without the approval of federal health officials.
After the New Orleans mayor made a call for firefighters to come help, hundreds of volunteers were sent to Atlanta, where they were put in a conference room at the Sheraton hotel and subjected to seminars on sexual harassment and other bureaucratic matters. They were then told that their job would be to distribute flyers with a message on it: call 1-800-621-FEMA. Many or even most of these well-trained people caught on to the racket and left town. Those who stuck it out and headed for Louisiana were aghast that their first assignment was not to fight fires, which had been raging for a week, but to escort President Bush on his TV-laden tour of the area.
You can see all the photos on WhiteHouse.gov.
In fact, FEMA refused offers of help of all sorts, mainly because of issues of control. FEMA declined helped from Amtrak in evacuating people from New Orleans. The Chicago municipal government was trying to send volunteers from the fire department, police department, and hospitals. FEMA said no. The same happened to New Mexico, whose governor volunteered equipment and personnel.
FEMA prevented Wal-Mart from delivering three tank trucks of water, and the Coast Guard from delivering 1,000 gallons of diesel fuel. It even cut the communications lines for Jefferson Parish. The local sheriff ending up posting armed guards to protect the restored lines from FEMA — an interesting model that many communities around the country would do well to imitate in the future.
A chief medical officer for a large ambulance company says he was unable to find helicopters to pick up dying patients at the Superdome. He walked outside and discovered that two helicopters, donated by an oil services company, had been ordered to wait in the parking lot. Morticians attempted to donate their help. But FEMA said absolutely not, on grounds that they were not officially certified by FEMA to perform such services, so the bodies of the dead piled higher.
As for the National Guard, for days it would not allow reporters into the superdome where tens of thousands were trapped. People were hungry and thirsty, but the National Guard would not allow the Red Cross to deliver any food.
Here is the astounding statement from the spokesperson of the Red Cross: "The Homeland Security Department has requested and continues to request that the American Red Cross not come back into New Orleans… Right now access is controlled by the National Guard and local authorities…. We cannot get into New Orleans against their orders."
The Salvation Army attempted to rescue two of its own officers trapped in a building and on dialysis. They rented three boats for a rescue. But they were not allowed through, though to be fair the Salvation Army did not specifically name the government as at fault, but it did point out that all private efforts were running into similar kinds of obstacles, so the message was clear.
Meanwhile, the USS Bataan, a floating hospital for 600 patients, that had ridden out the storm, was still sitting empty by the third day, not permitted to do its job.
An astounding case of ineptness comes to us from the case of three Duke University students who drove to New Orleans to help but were turned away by the National Guard. They had seen the news and knew that they could help, and wondered why they should be pushed around by bureaucrats. Being college sophomores, they took a risk. They forged press credentials, with fake IDs and shirts and the works. They went back and adopted a haughty tone. The National Guard waved them through.
Then the students drove to the Convention Center. There they found thousands of sick, hungry, thirsty, and dying people in desperate need. They found a man who had welts all over his body. He was in a tree covered with fire ants as the waters rose, and there he stayed there being bitten repeatedly for up to 24 hours.
The boys picked him up along with three others and drove them to a Baton Rouge hospital. They made another trip there and back with more people before they began to become frightened of what the government might do to them. On one return trip, they observed 150 empty buses driving the other way — and they have a video to prove it.
One can only express astonishment at how the government treated the tens of thousands of people that it had herded like cattle into large public spaces. For reasons that are still unclear, the government couldn't get its act together on transporting them out even as the people themselves were forbidden to leave. Once the central planners decided to move all these people from the Superdome to the Astrodome, no means of transport arrived, even as aerial photos showed miles and miles of public buses available.
Indeed, the first bus to reach Houston was not driven or approved by the government. It was commandeered by 20-year-old named Jabbar Gibson, who drove it from the floods and picked up as many people as he could and drove all the way to Houston, a 13-hours drive! He beat the government's system by a day. Meanwhile, the tens of thousands of people who had been shoved into the Superdome on Sunday, before the floods came, were still suffering in that massive calamity by Friday and Saturday.
Perhaps the most astounding case of incompetence has received the least attention. It relates to a 500-boat flotilla stretching over 5 miles that left for New Orleans from Acadiana Mall in Lafayette. It involved 1,000 people who had hoped to rescue hospital patients and take them to safety. It consisted of private boaters, fishermen, hunters, and others who had spent their entire lives navigating the waterways of Louisiana.
Once this caravan arrived, they were turned away by the Department of Wildlife and Fisheries, now being run by FEMA. All five hundred boats were ordered out.
After pleading, some people were told that they could take the boats to a rescue operation launch site. They reported that at this site, there were 200 agents of the government standing around doing absolutely nothing even as people were dying in hospitals and thousands were desperate to get out. After three hours, even these few boats were told to go away.
Now, President Bush has been criticized for being out to lunch on all of this. Indeed, some staff members put together a DVD of the evening news coverage for him to watch on Air Force One, which was the only way they could get him to understand the depth of the crisis. The purpose of the action was not so much to help people, of course, but rather to stop the meltdown of the president's reputation.
In fact, by the time he actually arrived in Louisiana, food and medicine deliveries, such as they were, had to be halted on order of the White House, to make room for the presidential caravan.
Then there was the matter of the government's proposed cash gifts to the victims of Katrina. Most FEMA employees knew nothing about it when their phones and offices were mauled by people demanding their cash. FEMA's website registration for victims required Internet Explorer 6.0 and could not work with any other browser. Of course this is somewhat academic, since most of the victims had no computer access at all. But those who called the number were often told to go online to register. Most of the time, people couldn't get through on the phone or online.
In one particularly interesting detail, Katrina triggered the first use of the Department of Homeland Security's great accomplishment since it was created after 9-11: the National Response Plan, a 426-page central plan for dealing with a crisis on the level of the post-Katrina floods. Here is how the government describes it:
"The National Response Plan establishes a comprehensive all-hazards approach to enhance the ability of the United States to manage domestic incidents. The plan incorporates best practices and procedures from incident management disciplines — homeland security, emergency management, law enforcement, firefighting, public works, public health, responder and recovery worker health and safety, emergency medical services, and the private sector — and integrates them into a unified structure. It forms the bases of how the federal government coordinates with state, local, and tribal governments and the private sector during incidents."
What happened to the National Response Plan after the floods? It remained what it always was: a colorful PDF download, a thick book on the management shelves, an item in the Government Printing Office catalog, bird-cage liner, and many other things. One thing it was not was a national response plan that did all those glorious things listed above. As with all these plans from time immemorial, it was a dead letter.
As for the National Guard, it did what the military does best: it started harassing the residents. Working with the police, it began to enforce an order for everyone to evacuate. As the New York Times summarized the order: "no civilians in New Orleans will be allowed to carry pistols, shotguns, or other firearms of any kind."
The National Guard allowed themselves to be videotaped going from house to house, and mansion to mansion, knocking down doors, searching for weapons, handcuffing owners and humiliating them. They called them the "holdouts," a phrase out of Baghdad.
One storm trooper — that's a pretty good name for them — was asked whether he would shoot residents if they resisted. Yes, he said. He added, "It's surreal. You never expect to do this in your own country."
The police also broke into the offices of a heroic little company in New Orleans that did not flee. Its name is DirectNIC, an Internet Service Provider, and it was staffed by friends of the Mises Institute. Through careful preparations, good generators, lots of fuel, and vast amounts of courage, this company kept providing internet service throughout. For several days after the flooding, it was the only source of information coming out of New Orleans. They had a camera on the streets below, and ventured out to take pictures of the scenes. They were first to report the looting, the explosions, the fires, and to chronicle the craziness. They became so good at acquiring fuel that they military actually came to them for diesel.
Millions were logging into their feed, and for four of the most critical days the Mises Institute actually provided the group with an external server in order to make their broadcasts possible. They were showing what the mainstream media would not show and could not show. But late one night, there was a pounding at the door. The National Guard had seen lights in the window and demanded to know what was going on in this room. Though these young people had already been interviewed on MSNBC, Fox, and were the talk of the blogosphere, the troops knew nothing about them. Astounded and confused at what they saw, the troops allowed their pictures to be taken and went on their way.
I've provided a look at some of the terrible failures by the government — not only failing to do what it claims it will do, but actively working to prevent others from helping out. The cost to human life and prosperity is incalculable. But, one might say, at least the government is generous now in preparing to spend perhaps $250 billion to clean up and reconstruct what was destroyed.
But who will get this money and where will it go? Cynics could not be more correct: the first companies to receive the money were our old friend Kellogg Brown and Root, a current client of President Bush's former campaign manager and former head of FEMA. KBR is a subsidiary of Halliburton, the company formerly headed by Dick Cheney. Another winner is Bechtel, whose former head is now in charge of Bush's Overseas Private Investment Corporation. The top rebuilding priority: repairing government military bases in Louisiana and Mississippi.
If you work for one of these companies, you will do very well by this aid. As for the victims, everyone knows that what rebuilding they do will come from their own savings. You can expect no assistance from this monstrosity that taxes and controls you relentlessly on the pretext that it will protect you and care for you when no one else will.
Fortunately for people who lived in flooded areas, they did not face the crisis alone. The private commercial sector, along with thousands of religious charities, was there to help. Indeed, John Tierney of the New York Times was one of the few mainstream journalists to note that Wal-Mart improved its image after Katrina. Its stores in the disaster-stricken areas still carried generators in areas. Wal-Mart trucks rode into to areas immediately following the hurricane and gave away chain saws, boots, sheets, and clothes for shelters, plus water and ice. It alone had prepared for emergency with its own emergency operations center.
Chris Westley further noted that Wal-Mart gave $20 million in cash donations, 1,500 truckloads of free merchandise, food for 100,000 meals, and the promise of a job for every one of its displaced workers. After comparing FEMA's failures with Wal-Mart's successes, he concluded that the government emergency management ought to be abolished.
Tierney, meanwhile, drew the wrong conclusion. He says that the Wal-Mart CEO "is the kind of leader we need to oversee the tens or hundreds of billions that Washington will be spending on the Gulf Coast. Scott could insist on low everyday prices while still leaving the area as well prepared for the next disaster as Wal-Mart was for Katrina."
In fact, if Lee Scott were given a government job, it would only be a matter of time before he became just another Michael Brown, the disgraced former FEMA head. This isn't a matter of character. It is a matter of the maze in which you find yourself — the one made by the market so that it has large exit signs, or the one that is government's, that is, the one with no exits at all.
As Walter Block, Mark Thornton, and many others have shown, it was not the storm as such that did the damage, but the failure of the government levees. Combined with the levees-only river management strategy of the Army Corps of Engineers, the floods were a disaster waiting to happen. Just imagine if the town were private like your home or car. Insurance companies would have taken a huge role in risk assessment, not only charging more for higher risk but insisting on management strategies that reduce risk and rewarding those who adopt those strategies with better premiums. This works on the same principles as you home owners' insurance, which combines rules and incentives to reduce the likelihood of losses.
Government insurance, however, makes us less cautious and more willing to take risks. It prices coverage from losses far too low and creates an environment where disasters like flooding are waiting to happen. With programs like subsidized flood insurance, government is like a bad mother who pays her children to run with scissors.
Government ownership is even worse because there are no signaling systems in operation at all. It was also government that created a false sense of security for people in New Orleans, who were led to believe that the levees would hold and pumps would work. And when the floods finally did come, they were told the government would be there to manage the crisis.
But the government cannot manage crisis, as the response to Katrina demonstrated. The local government fled. The state government was dithering. And the federal government actively worked to prevent good things from happening. The thousands and millions of acts of private heroism that took place after Katrina occurred despite the government and not because of it.
And yet what lessons does the political culture want us to take from this? It is the same lessons we are instructed to learn after NASA spends and spends and still can't seem to make a reliable space shuttle. We are told that NASA needs more money. The public schools absorb many times more — thousands times more — in resources than private schools, and still can't perform well. So we are told that they need more money.
The federal government spends trillions over years to "protect" the country and can't fend off a handful of malcontents with an agenda. And so we are told that the government needs to start several new wars and erect a massive new bureaucracy and put sections of the country under martial law at the slightest sign of trouble.
So too, Congress can allocate a trillion dollars to fix every levee, fully preventing the last catastrophe, but not the next one. The real problem is the same in all these cases, not insufficient resources but public ownership and management.
Public ownership has encouraged people to adopt a negligent attitude toward even such obvious risks. Private developers and owners, in contrast, demand to know every possible scenario as a way to protect their property. But public owners have no real stake in the outcome and lack the economic capacity to calibrate resource allocation to risk assessment. In other words, the government manages irresponsibly and incompetently.
Actually, it was Mr. Bush who said one of the most sensible things, on September 2, 2005: "If you want to help, if you're listening to this broadcast, contribute cash to the Salvation Army and the Red Cross…. They're on the front lines providing help to the people who need help."
But it was two weeks later when his other instincts kicked in and he delivered a very different message, one that is deeply alarming. He said: "It is now clear that a challenge on this scale requires greater federal authority and a broader role for the armed forces — the institution of our government most capable of massive logistical operations on a moment's notice."
Interesting that his beloved military was not there at a moment's notice. It now cites its own failures as the great excuse to expand its powers. So the government will spend the next several years preparing for another Katrina that will never come, just as it spent the last several years preparing for another 9-11 that will never come. The next crisis will be something completely unexpected, and once again the government will fail. But we will be left with a government with some very bad habits, among which are declarations of martial law, mandatory evacuations, gun and price controls, and other totalitarian ways.
And given that that this is a Republican administration with its own internal culture, and its attachment to military means, we get what can only be described as the continuation of the fascist track: the militarization of the country under its own armed forces.
So far as I know, this passing remark by Mr. Bush has provoked no commentary in the national press. Commentators in the organized conservative movement have displayed an appalling deference to administration's priorities, with National Review consistently arguing for more spending and militarization, Rush Limbaugh calling for price gougers to be strung up, and even some free-market friends calling for billions to rebuild New Orleans as a way of showing terrorists that we won't let the weather get in the way of progress. On the last point, I kid you not.
Conservatives have been especially bad on tolerating egregious uses of the military. We need to reflect on what it means to have the military take over in the event of crisis. What kind of ideology promotes such things, and looks the other way when it happens? I think I know, and it serves as a reminder that not all threats to freedom come from the Left.
A clue comes from the neo-Nazi novel called the Turner Diaries, sometimes cited as the motivating force for the bombing of the Oklahoma federal building, which ends in what the author regards as a political utopia. After a world war that exterminates all non-whites, a military regime takes over the United States and centrally plans the economy under permanent martial law. All food and water are distributed on military trucks, all production takes place on a planned basis, and the merchant class is required to obey or be shot.
The author describes this race-based national socialism as if it is a system with an inherent appeal to the reader, and perhaps there are people economically ignorant enough and full of enough loathing for humanity and freedom to regard it as attractive. I do know that in our own times there are people waiting in the wings who long for power and who are drawn to the ideal of a militarized society and a centrally managed economy. Some call themselves conservatives, and they are as much a threat to civilization as those who call themselves liberals.
But let me end with several notes of optimism. The first is implied in all that I said above. The government cannot actually do what it promises, and there is a way in which we can only be thankful for that. It cannot succeed in managing a central plan. Its plans will always fail. The government tries to use its failures as an excuse for more power, but with every failure comes a substantial degree of public humiliation for the public sector, and that humiliation can provide a basis for the undoing of government authority.
Some people say that a loss of government authority will mean the breakdown of civilization. Actually it will create the preconditions for the reestablishment of civilization, and in a state of freedom that can happen very quickly. The aftermath of Katrina illustrated in a million individual acts of charity and enterprise that people can manage their affairs, even amidst the chaos.
The calamity following Katrina was an egregious display, one that gave the federal government a black eye. The Democrats will continue to use this to harm the Republicans, which is fine by me, but it is not just Mr. Bush that is suffering, but the whole apparatus of central planning by decree from above. A government that cannot manage a crisis should not be trusted to manage anything at all. Thanks to Katrina and its dreadful aftermath, I think it's fair to say that the age of not trusting government has returned with a vengeance.
It took decades for the rot to give way underneath the Soviet apparatus of central planning. But eventually the implausibility of the entire project was no longer possible to deny. It gave way under an intellectual reaction against the whole of socialism. We are seeing something like that take place today, as government fails in Iraq and New Orleans and in every place around the country and the world where it causes problems and creates no solutions.
The age of confident central planning is behind us. Right now, the state is just trying to keep its head above water. If freedom is to have a future, the time will come when it will sink to an ignoble end, and we will wonder how we ever believed in this myth called government crisis management.
The advocates of freedom and the partisans of private enterprise will be there with the intellectual equivalent of flotillas, barges, buses, helicopters, and the whole apparatus necessary to rescue liberty from every attempt to kill it. And when our City on a Hill comes to be, it will be privately built to withstand any flood.
__________________
This speech was given at the Supporters Summit, October 7, 2005, Auburn, Alabama. Listen to it here.
President Bush tells us to drive less and limit trips to only the essentials, while the EPA's EnergyStar program is urging us all to "change a lightbulb" in our homes, from a regular one to a government-approved one, which they claim will save hundreds of millions.
You are also supposed to take a pledge: "I pledge to do my part to save energy and help protect our environment by changing a light in my home to an ENERGY STAR qualified one"--then the government will send you a free "zipper pull."
We can see where this is headed: back to the days of relentless brow-beating, intimidation, regulation, and calls for national sacrifice—possibly even regimentation and control—all in the name of saving energy. (How much energy is consumed in making and sending the zipper pull?)
Just in time to check this growing mania comes The Bottomless Well, by Peter W. Huber and Mark P. Mills (Basic Books, 2005). It provides nothing less than a total shift of paradigm for viewing the energy crises that have animated the media for at least the past 35 years. For those to whom the book's revelations are largely new, a lifetime's habits of thought on the subject of energy face complete refutation.
And here it is: energy is abundant, virtually everywhere, and with technologies already in use, is accessible to man's appropriation and use. And while the use of energy can create pollution of various forms, all such pollution is subject to abatement by . . . use of more energy. Breathtaking corollaries cascade one from the next both in consequence and in support of this proposition, such as, the more energy is used, the more can be found and exploited for any and all of the growing range of purposes to which energy applies.
Many of the book's revelations are delivered through what might be called shift of point of view. The authors identify the familiar steam engines of Newcomen and then Watt as the beginning of use of energy for mechanical power. But for what purpose were these machines devised? Why, to get more energy (specifically, to remove water from coal mines)! And by no coincidence, their fuel was that very coal that they were helping to mine.
Canards of conventional thinking tumble like tenpins. Chief among these may be the widespread, ill-considered assumption that improvements in efficiency, such as those mandated for vehicle engines by the Corporate Average Fuel Economy (CAFE) Act of 1978, can produce reductions in total energy consumption.
Using both a priorireasoning long familiar to Austrian and other enlightened economists together with a tsunami of empirical data, the authors demonstrate that the reverse is ineluctably true: improvements in efficiency lead to the consumption of more energy, whether in vehicle engines, electrical appliances, electricity generation, or computation.
Another of these is that Earth must eventually suffocate or burn up under a growing mantle of carbon dioxide and other emissions from the process of burning fossil fuels such as coal and petroleum. Theories of global warming have been debunked both well and often prior to this book, but this book brings to the discussion three facts that overcome the concern even if it should in fact be grounded in reality.
First, technologies exist to reduce carbon-dioxide and other emissions that require for their implementation little more than the will to consume the additional amounts of energy required for their use.
Second, nuclear power, an obvious and available solution to greenhouse-gas concerns since the 1960s, is today safer (against both terrorism and operational mishap) and more efficient than it ever has been, such pollution as it generates in the form of spent fuel being far easier to deal with than anti-nuclear interests have led the public to believe.
And third, perhaps most astonishingly, North America, with its massive total and per-capita burning of fossil fuels, is evidently not a producer of carbon to global processes, but according to reliable measurements, actually absorbs carbon in net from other parts of the world whose carbon accounts are in surplus.
Peter W. Huber is the author of four previous books on public policy and science, including Hard Green: Saving the Environment from the Environmentalists. Mark P. Mills is a physicist whose work has been concentrated in electricity and electronics, and who served on the consulting staff of the White House Science Office. While neither of these authors claims any formal qualifications in economics, their book is in fact all about economics as it plays out in a world of permanent physical realities conditioned by ever-shifting political and legal currents.
The book contains few explicit policy prescriptions but, just as a good novel conveys values without ever once actually propounding them, simple, actionable policy directions seem to shine forth from every chapter of this eye-opening analysis.
As to policy, the book devotes much more attention to the actual effects of energy policies that have been enacted. The effects of these policies are, for each of them when viewed in total, inimical not only to human welfare, but to their stated goals, typically either conservation of energy sources, reduction of pollution, or both.
The upshot of the cases studied, from global warming to exhaustion of energy sources, is the energy equivalent to Ludwig von Mises's profound insight that all economic regulation is ultimately and inevitably harmful to the very goals it was emplaced for in the first case.
In a very few cases, the authors allow themselves an aside in which they express hope that a promising new development will not end up being frustrated by future regulation, or they note that some past seminal development occurred entirely without benefit of, or in spite of, government regulation.
In the end, the authors shine a light on the record of government interference in energy markets that discloses the anti-life qualities that its outcomes invariably express. In fact, as the authors literally state on more than one occasion, energy is life.
And vice-versa.
The environmentalist fear mongers are gearing up for a new propaganda blitz, based on an alleged connection between the two recent major hurricanes and alleged global warming. They apparently believe that modern education and cultural reconditioning have been at work long enough for most Americans by now to have adopted the mentality of primitive tribal villagers, who can be frightened into sacrificing their sheep and goats (substitute SUVs and air conditioners) to avoid the wrath of nature.
In the hope that a sufficient portion of the American population still possesses enough rationality and self-respect to reject this intellectual outrage with the anger and contempt it deserves, and in the hope of encouraging them to do so, we present George Reisman’s 1990 essay “The Toxicity of Environmentalism.”
This is an essay, as topical today as when it was first written, which lays bare the hidden agenda of the movement and skewers its every aspect, especially the notion that global warming, real or imagined, is an excuse for collectivist control of the economic system.
Recently a popular imported mineral water was removed from the market because tests showed that samples of it contained thirty-five parts per billion of benzene. Although this was an amount so small that only fifteen years ago it would have been impossible even to detect, it was assumed that considerations of public health required withdrawal of the product.
Such a case, of course, is not unusual nowadays. The presence of parts per billion of a toxic substance is routinely extrapolated into being regarded as a cause of human deaths. And whenever the number of projected deaths exceeds one in a million (or less), environmentalists demand that the government remove the offending pesticide, preservative, or other alleged bearer of toxic pollution from the market. They do so, even though a level of risk of one in a million is one-third as great as that of an object from airplane falling from the sky on one's home.
While it is not necessary to question the good intentions and sincerity of the overwhelming majority of the members of the environmental or ecology movement, it is vital that the public realize that in this seemingly lofty and noble movement itself can be found more than a little evidence of the most profound toxicity.
Consider, for example, the following quotation from David M. Graber, a research biologist with the National Park Service, in his prominently featured Los Angeles Times book review of Bill McKibben's The End of Nature:
"This [man's "remaking the earth by degrees"] makes what is happening no less tragic for those of us who value wildness for its own sake, not for what value it confers upon mankind. I, for one, cannot wish upon either my children or the rest of Earth's biota a tame planet, be it monstrous or — however unlikely — benign. McKibben is a biocentrist, and so am I. We are not interested in the utility of a particular species or free-flowing river, or ecosystem, to mankind. They have intrinsic value, more value — to me — than another human body, or a billion of them.
"Human happiness, and certainly human fecundity, are not as important as a wild and healthy planet. I know social scientists who remind me that people are part of nature, but it isn't true. Somewhere along the line — at about a billion years ago, maybe half that — we quit the contract and became a cancer. We have become a plague upon ourselves and upon the Earth.
"It is cosmically unlikely that the developed world will choose to end its orgy of fossil-energy consumption, and the Third World its suicidal consumption of landscape. Until such time as Homo sapiens should decide to rejoin nature, some of us can only hope for the right virus to come along."
While Mr. Graber openly wishes for the death of a billion people, Mr. McKibben, the author he reviewed, quotes with approval John Muir's benediction to alligators, describing it as a "good epigram" for his own, "humble approach": "'Honorable representatives of the great saurians of older creation, may you long enjoy your lilies and rushes, and be blessed now and then with a mouthful of terror-stricken man by way of a dainty!'"
Such statements represent pure, unadulterated poison. They express ideas and wishes which, if acted upon, would mean terror and death for enormous numbers of human beings.
These statements, and others like them, are made by prominent members of the environmental movement. The significance of such statements cannot be diminished by ascribing them only to a small fringe of the environmental movement. Indeed, even if such views were indicative of the thinking of only 5 or 10 percent of the members of the environmental movement — the "deep ecology," Earth First! wing — they would represent toxicity in the environmental movement as a whole not at the level of parts per billion or even parts per million, but at the level of parts per hundred, which, of course, is an enormously higher level of toxicity than is deemed to constitute a danger to human life in virtually every other case in which deadly poison is present.
But the toxicity level of the environmental movement as a whole is substantially greater even than parts per hundred. It is certainly at least at the level of several parts per ten. This is obvious from the fact that the mainstream of the environmental movement makes no fundamental or significant criticisms of the likes of Messrs. Graber and McKibben. Indeed, John Muir, whose wish for alligators to "be blessed now and then with a mouthful of terror-stricken man by way of a dainty" McKibben approvingly quotes, was the founder of the Sierra Club, which is proud to acknowledge that fact. The Sierra Club, of course, is the leading environmental organization and is supposedly the most respectable of them.
There is something much more important than the Sierra Club's genealogy, however — something which provides an explanation in terms of basic principle of why the mainstream of the ecology movement does not attack what might be thought to be merely its fringe. This is a fundamental philosophical premise which the mainstream of the movement shares with the alleged fringe and which logically implies hatred for man and his achievements. Namely, the premise that nature possesses intrinsic value — i.e., that nature is valuable in and of itself, apart from all contribution to human life and well-being.
The antihuman premise of nature's intrinsic value goes back, in the Western world, as far as St. Francis of Assisi, who believed in the equality of all living creatures: man, cattle, birds, fish, and reptiles. Indeed, precisely on the basis of this philosophical affinity, and at the wish of the mainstream of the ecology movement, St. Francis of Assisi has been officially declared the patron saint of ecology by the Roman Catholic Church.
The premise of nature's intrinsic value extends to an alleged intrinsic value of forests, rivers, canyons, and hillsides — to everything and anything that is not man. Its influence is present in the Congress of the United States, in such statements as that recently made by Representative Morris Udall of Arizona that a frozen, barren desert in Northern Alaska, where substantial oil deposits appear to exist, is "a sacred place" that should never be given over to oil rigs and pipelines. It is present in the supporting statement of a representative of the Wilderness Society that "There is a need to protect the land not just for wildlife and human recreation, but just to have it there." It has, of course, also been present in the sacrifice of the interests of human beings for the sake of snail darters and spotted owls.
The idea of nature's intrinsic value inexorably implies a desire to destroy man and his works because it implies a perception of man as the systematic destroyer of the good, and thus as the systematic doer of evil. Just as man perceives coyotes, wolves, and rattlesnakes as evil because they regularly destroy the cattle and sheep he values as sources of food and clothing, so on the premise of nature's intrinsic value, the environmentalists view man as evil, because, in the pursuit of his well-being, man systematically destroys the wildlife, jungles, and rock formations that the environmentalists hold to be intrinsically valuable. Indeed, from the perspective of such alleged intrinsic values of nature, the degree of man's alleged destructiveness and evil is directly in proportion to his loyalty to his essential nature. Man is the rational being. It is his application of his reason in the form of science, technology, and an industrial civilization that enables him to act on nature on the enormous scale on which he now does. Thus, it is his possession and use of reason — manifested in his technology and industry — for which he is hated.
The doctrine of intrinsic value is itself only a rationalization for a preexisting hatred of man. It is invoked not because one attaches any actual value to what is alleged to have intrinsic value, but simply to serve as a pretext for denying values to man. For example, caribou feed upon vegetation, wolves eat caribou, and microbes attack wolves. Each of these, the vegetation, the caribou, the wolves, and the microbes, is alleged by the environmentalists to possess intrinsic value. Yet absolutely no course of action is indicated for man. Should man act to protect the intrinsic value of the vegetation from destruction by the caribou? Should he act to protect the intrinsic value of the caribou from destruction by the wolves? Should he act to protect the intrinsic value of the wolves from destruction by the microbes? Even though each of these alleged intrinsic values is at stake, man is not called upon to do anything. When does the doctrine of intrinsic value serve as a guide to what man should do? Only when man comes to attach value to something. Then it is invoked to deny him the value he seeks. For example, the intrinsic value of the vegetation et al. is invoked as a guide to man's action only when there is something man wants, such as oil, and then, as in the case of Northern Alaska, its invocation serves to stop him from having it. In other words, the doctrine of intrinsic value is nothing but a doctrine of the negation of human values. It is pure nihilism.
It should be realized that it is logically implicit in what has just been said that to establish a public office such as that recently proposed in California, of "environmental advocate," would be tantamount to establishing an office of Negator of Human Valuation. The work of such an office would be to stop man from achieving his values for no other reason than that he was man and wanted to achieve them.
Of course, the environmental movement is not pure poison. Very few people would listen to it if it were. As I have said, it is poisonous only at the level of several parts per ten. Mixed in with the poison and overlaying it as a kind of sugar coating is the advocacy of many measures which have the avowed purpose of promoting human life and well-being, and among these, some that, considered in isolation, might actually achieve that purpose. The problem is that the mixture is poisonous. And thus, when one swallows environmentalism, one inescapably swallows poison.
Given the underlying nihilism of the movement, it is certainly not possible to accept at face value any of the claims it makes of seeking to improve human life and well-being, especially when following its recommendations would impose on people great deprivation or cost. Indeed, nothing could be more absurd or dangerous than to take advice on how to improve one's life and well-being from those who wish one dead and whose satisfaction comes from human terror, which, of course, as I have shown, is precisely what is wished in the environmental movement — openly and on principle. This conclusion, it must be stressed, applies irrespective of the scientific or academic credentials of an individual. If an alleged scientific expert believes in the intrinsic value of nature, then to seek his advice is equivalent to seeking the advice of a medical doctor who was on the side of the germs rather than of the patient, if such a thing can be imagined. Obviously, Congressional committees taking testimony from alleged expert witnesses on the subject of proposed environmental legislation need to be aware of this fact and never to forget it.
Not surprisingly, in virtually every case, the claims made by the environmentalists have turned out to be false or simply absurd. Consider, for example, the recent case of Alar, a chemical spray used for many years on apples in order to preserve their color and freshness. Here, it turned out that even if the environmentalists' claims had actually been true, and the use of Alar would result in 4.2 deaths per million over a seventy-year lifetime, all that would have been signified was that eating apples sprayed with Alar would then have been less dangerous than driving to the supermarket to buy the apples! (Consider: 4.2 deaths per million over a seventy year period means that in any one year in the United States, with its population of roughly two hundred and fifty million people, approximately fifteen deaths would be attributable to Alar! This is the result obtained by multiplying 4.2 per million times 250 million and then dividing by 70. In the same one-year period of time, approximately fifty thousand deaths occur in motor vehicle accidents in the United States, most of them within a few miles of the victims' homes, and undoubtedly far more than fifteen of them on trips to or from supermarkets.) Nevertheless, a panic ensued, followed by a plunge in the sale of apples, the financial ruin of an untold number of apple growers, and the virtual disappearance of Alar.
Before the panic over Alar, there was the panic over asbestos. According to Forbes magazine, it turns out that in the forms in which it is normally used in the United States, asbestos is one-third as likely to be the cause of death as being struck by lightning.
Then there is the alleged damage to lakes caused by acid rain. According to Policy Review, it turns out that the acidification of the lakes has not been the result of acid rain, but of the cessation of logging operations in the affected areas and thus the absence of the alkaline run-off produced by such operations. This run-off had made naturally acidic lakes non-acidic for a few generations.
Besides these cases, there were the hysterias over dioxin in the ground at Times Beach, Missouri, TCE in the drinking water of Woburn, Massachusetts, the chemicals in Love Canal, and radiation at Three Mile Island. According to Prof. Bruce Ames, one of the world's leading experts on cancer, it turned out that the amount of dioxin that anyone would have absorbed in Times Beach was far less than the amount required to do any harm and that, indeed, the actual harm to Times Beach residents from dioxin was less than that of drinking a glass of beer. (The Environmental Protection Agency itself subsequently reduced its estimate of the danger from dioxin by a factor of fifteen-sixteenths.) In the case of Woburn, according to Ames, it turned out the cluster of leukemia cases which occurred there was statistically random and that the drinking water there was actually above the national average in safety, and not, as had been claimed, the cause of the leukemia cases. In the case of Love Canal, Ames reports, it turned out upon investigation that the cancer rate among the former residents has been no higher than average. (It is necessary to use the phrase "former residents" because the town lost most of its population in the panic and forced evacuation caused by the environmentalists' claims.) In the case of Three Mile Island, not a single resident has died, nor even received an additional exposure to radiation, as the result of the accident there. In addition, according to studies reported in The New York Times, the cancer rate among residents there is no higher than normal and has not risen.
Before these hysterias, there were claims alleging the death of Lake Erie and mercury poisoning in tuna fish. All along, Lake Erie has been very much alive and was even producing near record quantities of fish at the very time the claims of its death were being made. The mercury in the tuna fish was the result of the natural presence of mercury in sea water; and evidence provided by museums showed that similar levels of mercury had been present in tuna fish since prehistoric times.
And now, in yet another overthrow of the environmentalists' claims, a noted climatologist, Prof. Robert Pease, has shown that it is impossible for chlorofluorocarbons (CFCs) to destroy large quantities of ozone in the stratosphere because relatively few of them are even capable of reaching the stratosphere in the first place. He also shows that the celebrated ozone "hole" over Antarctica every fall is a phenomenon of nature, in existence since long before CFCs were invented, and results largely from the fact that during the long Antarctic night ultraviolet sunlight is not present to create fresh ozone.
The reason that one after another of the environmentalists' claims turn out to be proven wrong is that they are made without any regard for truth in the first place. In making their claims, the environmentalists reach for whatever is at hand that will serve to frighten people, make them lose confidence in science and technology, and, ultimately, lead them to deliver themselves up to the environmentalists' tender mercies. The claims rest on unsupported conjectures and wild leaps of imagination from scintillas of fact to arbitrary conclusions, by means of evasion and the drawing of invalid inferences. It is out and out evasion and invalid inference to leap from findings about the effects of feeding rats or mice dosages the equivalent of a hundred or more times what any human being would ever ingest, and then draw inferences about the effects on people of consuming normal quantities. Fears of parts per billion of this or that chemical causing single-digit deaths per million do not rest on science, but on imagination. Such claims have nothing to do either with actual experimentation or with the concept of causality.
No one ever has, can, or will observe such a thing as two groups of a million people identical in all respects except that over a seventy-year period the members of one of the groups consume apples sprayed with Alar, while the members of the other group do not, and then 4.2 members of the first group die. The process by which such a conclusion is reached, and its degree of actual scientific seriousness, is essentially the same as that of a college students' bull session, which consists of practically nothing but arbitrary assumptions, manipulations, guesses, and plain hot air. In such a session, one might start with the known consequences of a quarter-ton safe falling ten stories onto the head of an unfortunate passerby below, and from there go on to speculate about the conceivable effects in a million cases of other passersby happening to drop from their hand or mouth an M&M or a peanut on their shoe, and come to the conclusion that 4.2 of them will die.
Furthermore, as indicated, in contrast to the procedures of a bull session, reason and actual science establish causes, which, in their nature, are universal. When, for example, genuine causes of death, such as arsenic, strychnine, or bullets, attack vital organs of the human body, death is absolutely certain to result in all but a handful of cases per million. When something is in fact the cause of some effect, it is so in each and every case in which specified conditions prevail, and fails to be so only in cases in which the specified conditions are not present, such as a person's having built up a tolerance to poison or wearing a bulletproof vest. Such claims as a thousand different things each causing cancer in a handful of cases are proof of nothing but that the actual causes are not yet known — and, beyond that, an indication of the breakdown of the epistemology of contemporary science. (This epistemological breakdown, I might add, radically accelerated starting practically on the very day in the 1960s when the government took over most of the scientific research in the United States and began the large scale financing of statistical studies as a substitute for the discovery of causes.)
In making their claims, the environmentalists willfully ignore such facts as that carcinogens, poisons, and radiation exist in nature. Fully half of the chemicals found in nature are carcinogenic when fed to animals in massive quantities — the same proportion as applies to man-made chemicals when fed in massive quantities. (The cause of the resulting cancers, according to Prof. Ames, is actually not the chemicals, either natural or man-made, but the repeated destruction of tissue caused by the massively excessive doses in which the chemicals are fed, such as saccharin being fed to rats in a quantity comparable to humans drinking eight hundred cans of diet soda a day.) Arsenic, one of the deadliest poisons, is a naturally occurring chemical element. Oleander, one of the most beautiful plants, is also a deadly poison, as are many other plants and herbs. Radium and uranium, with all their radioactivity, are found in nature. Indeed, all of nature is radioactive to some degree. If the environmentalists did not close their eyes to what exists in nature, if they did not associate every negative exclusively with man, if they applied to nature the standards of safety they claim to be necessary in the case of man's activities, they would have to run in terror from nature. They would have to use one-half of the world to construct protective containers or barriers against all the allegedly deadly carcinogens, toxins, and radioactive material that constitute the other half of the world.
It would be a profound mistake to dismiss the repeatedly false claims of the environmentalists merely as a case of the little boy who cried wolf. They are a case of the wolf crying again and again about alleged dangers to the little boy. The only real danger is to listen to the wolf.
Direct evidence of the wilful dishonesty of the environmental movement comes from one of its leading representatives, Stephen Schneider, who is well-known for his predictions of global catastrophe. In the October 1989 issue of Discover magazine, he is quoted (with approval) as follows:
". . . To do this, we need to get some broad-based support, to capture the public's imagination. That, of course, entails getting loads of media coverage. So we have to offer up scary scenarios, make simplified, dramatic statements, and make little mention of any doubts we may have. This 'double ethical bind' we frequently find ourselves in cannot be solved by any formula. Each of us has to decide what the right balance is between being effective and being honest."
Thus, in the absence of verification by sources totally independent of the environmental movement and free of its taint, all of its claims of seeking to improve human life and well-being in this or that specific way must be regarded simply as lies, having the actual purpose of inflicting needless deprivation or suffering. In the category of malicious lies fall all of the environmental movement's claims about our having to abandon industrial civilization or any significant part of it in order to cope with the dangers of alleged global warming, ozone depletion, or exhaustion of natural resources. Indeed, all claims constituting denunciations of science, technology, or industrial civilization which are advanced in the name of service to human life and well-being are tantamount to claiming that our survival and well-being depend on our abandonment of reason. (Science, technology, and industry are leading products of reason and are inseparable from it.) All such claims should be taken as nothing but further proof of the environmental movement's hatred of man's nature and man's life, certainly not of any actual danger to human life and well-being.
It is important to realize that when the environmentalists talk about destruction of the "environment" as the result of economic activity, their claims are permeated by the doctrine of intrinsic value. Thus, what they actually mean to a very great extent is merely the destruction of alleged intrinsic values in nature such as jungles, deserts, rock formations, and animal species which are either of no value to man or hostile to man. That is their concept of the "environment." If, in contrast to the environmentalists, one means by "environment" the surroundings of man — the external material conditions of human life — then it becomes clear that all of man's productive activities have the inherent tendency to improve his environment — indeed, that that is their essential purpose.
This becomes obvious if one realizes that the entire world physically consists of nothing but chemical elements. These elements are never destroyed. They simply reappear in different combinations, in different proportions, in different places. Apart from what has been lost in a few rockets, the quantity of every chemical element in the world today is the same as it was before the Industrial Revolution. The only difference is that, because of the Industrial Revolution, instead of lying dormant, out of man's control, the chemical elements have been moved about, as never before, in such a way as to improve human life and well-being. For instance, some part of the world's iron and copper has been moved from the interior of the earth, where it was useless, to now constitute buildings, bridges, automobiles, and a million and one other things of benefit to human life. Some part of the world's carbon, oxygen, and hydrogen has been separated from certain compounds and recombined in others, in the process releasing energy to heat and light homes, power industrial machinery, automobiles, airplanes, ships, and railroad trains, and in countless other ways serve human life. It follows that insofar as man's environment consists of the chemical elements iron, copper, carbon, oxygen, and hydrogen, and his productive activity makes them useful to himself in these ways, his environment is correspondingly improved.
All that all of man's productive activities fundamentally consist of is the rearrangement of nature-given chemical elements for the purpose of making them stand in a more useful relationship to himself — that is, for the purpose of improving his environment.
Consider further examples. To live, man needs to be able to move his person and his goods from place to place. If an untamed forest stands in his way, such movement is difficult or impossible. It represents an improvement in his environment, therefore, when man moves the chemical elements that constitute some of the trees of the forest somewhere else and lays down the chemical elements brought from somewhere else to constitute a road. It is an improvement in his environment when man builds bridges, digs canals, opens mines, clears land, constructs factories and houses, or does anything else that represents an improvement in the external, material conditions of his life. All of these things represent an improvement in man's material surroundings — his environment. All of them represent the rearrangement of nature's elements in a way that makes them stand in a more useful relationship to human life and well-being.
Thus, all of economic activity has as its sole purpose the improvement of the environment — it aims exclusively at the improvement of the external, material conditions of human life. Production and economic activity are precisely the means by which man adapts his environment to himself and thereby improves it.
So much for the environmentalists' claims about man's destruction of the environment. Only from the perspective of the alleged intrinsic value of nature and the nonvalue of man, can man's improvement of his environment be termed destruction of the environment.
The environmentalists' recent claims about the impending destruction of the "planet" are entirely the result of the influence of the intrinsic value doctrine. What the environmentalists are actually afraid of is not that the planet or its ability to support human life will be destroyed, but that the increase in its ability to support human life will destroy its still extensively existing "wildness." They cannot bear the thought of the earth's becoming fully subject to man's control, with its jungles and deserts replaced by farms, pastures, and forests planted by man, as man wills. They cannot bear the thought of the earth's becoming man's garden. In the words of McKibben, "The problem is that nature, the independent force that has surrounded us since our earliest days, cannot coexist with our numbers and our habits. We may well be able to create a world that can support our numbers and our habits, but it will be an artificial world. . . ." (Italics supplied.)
The toxic character of the environmental movement implies the observance of a vital principle in connection with any measures which the movement advocates and which might actually promote human life and well-being, such as those calling for the reduction of smog, the cleaning up of rivers, lakes, and beaches, and so forth. The principle is that even here one must not make common cause with the environmental movement in any way. One must be scrupulously careful not to advocate even anything that is genuinely good, under its auspices or banner. To do so is to promote its evil — to become contaminated with its poison and to spread its poison. In the hands of the environmentalists, concern even with such genuine problems as smog and polluted rivers serves as a weapon with which to attack industrial civilization. The environmentalists proceed as though problems of filth emanated from industrial civilization, as though filth were not the all-pervasive condition of human life in pre-industrial societies, and as though industrial civilization represented a decline from more healthful conditions of the past.
The principle of noncooperation with the environmental movement, of the most radical differentiation from it, must be followed in order to avoid the kind of disastrous consequences brought about earlier in this century by people in Russia and Germany who began as basically innocent and with good intentions. Even though the actual goals and programs of the Communists and Nazis were no secret, many people did not realize that such pronouncements and their underlying philosophy must be taken seriously. As a result, they joined with the Communists or Nazis in efforts to achieve what they believed were worthy specific goals, above all, goals falling under the head of the alleviation of poverty. But working side by side with the likes of Lenin and Stalin or Hitler and Himmler, did not achieve the kind of life these people had hoped to achieve. It did, however, serve to achieve the bloody goals of those monsters. And along the way, those who may have started out innocently enough very quickly lost their innocence and to varying degrees ended up simply as accomplices of the monsters.
Evil needs the cooperation of the good to disguise its nature and to gain numbers and influence it could never achieve on its own. Thus, the doctrine of intrinsic value needs to be mixed as much as possible with alleged concern for man's life and well-being. In allowing themselves to participate in advancing the cause of the mixture, otherwise good people serve to promote the doctrine of intrinsic value and thus the destruction of human values.
Already large numbers of otherwise good people have been enlisted in the environmentalists' campaign to throttle the production of energy. This is a campaign which, to the degree that it succeeds, can only cause human deprivation and the substitution of man's limited muscle power for the power of motors and engines. It is actually a campaign which seeks nothing less than the undoing of the Industrial Revolution, and the return of the poverty, filth, and misery of earlier centuries.
The essential feature of the Industrial Revolution is the use of man-made power. To the relatively feeble muscles of draft animals and the still more feeble muscles of human beings, and to the relatively small amounts of useable power available from nature in the form of wind and falling water, the Industrial Revolution added man-made power. It did so first in the form of steam generated from the combustion of coal, and later in the form of internal combustion based on petroleum, and electric power based on the burning of any fossil fuel or on atomic energy.
This man-made power is the essential basis of all of the economic improvements achieved over the last two hundred years. Its application is what enables us human beings to accomplish with our arms and hands the amazing productive results we do accomplish. To the feeble powers of our arms and hands is added the enormously greater power released by these sources of energy. Energy use, the productivity of labor, and the standard of living are inseparably connected, with the two last entirely dependent on the first.
Thus, it is not surprising, for example, that the United States enjoys the world's highest standard of living. This is a direct result of the fact that the United States has the world's highest energy consumption per capita. The United States, more than any other country, is the country where intelligent human beings have arranged for motor-driven machinery to accomplish results for them. All further substantial increases in the productivity of labor and standard of living, both here in the United States and across the world, will be equally dependent on man-made power and the growing consumption of energy it makes possible. Our ability to accomplish more and more with the same limited muscular powers of our limbs will depend entirely on our ability to augment them further and further with the aid of still more such energy.
In total opposition to the Industrial Revolution and all the marvelous results it has accomplished, the essential goal of environmentalism is to block the increase in one source of man-made power after another and ultimately to roll back the production of man-made power to the point of virtual nonexistence, thereby undoing the Industrial Revolution and returning the world to the economic Dark Ages. There is to be no atomic power. According to the environmentalists, it represents the death ray. There is also to be no power based on fossil fuels. According to the environmentalists, it causes "pollution," and now global warming, and must therefore be given up. There is not even to be significant hydro-power. According to the environmentalists, the building of the necessary dams destroys intrinsically valuable wildlife habitat.
Only three things are to be permitted as sources of energy, according to the environmentalists. Two of them, "solar power" and power from windmills, are, as far as can be seen, utterly impracticable as significant sources of energy. If somehow, they became practicable, the environmentalists would undoubtedly find grounds for attacking them. The third allowable source of energy, "conservation," is a contradiction in terms. "Conservation" is not a source of energy. Its actual meaning is simply using less. Conservation is a source of energy for one use only at the price of deprivation of energy use somewhere else.
The environmentalists' campaign against energy calls to mind the image of a boa constrictor entwining itself about the body of its victim and slowly squeezing the life out of him. There can be no other result for the economic system of the industrialized world but enfeeblement and ultimately death if its supplies of energy are progressively choked off.
Large numbers of people have been enlisted in the campaign against energy out of fear that the average mean temperature of the world may rise a few degrees in the next century, mainly as the result of the burning of fossil fuels. If this were really to be so, the only appropriate response would be to be sure that more and better air conditioners were available. (Similarly, if there were in fact to be some reduction in the ozone layer, the appropriate response, to avoid the additional cases of skin cancer that would allegedly occur from exposure to more intense sunlight, would be to be sure that there were more sunglasses, hats, and sun-tan lotion available.) It would not be to seek to throttle and destroy industrial civilization.
If one did not understand its underlying motivation, the environmental movement's resort to the fear of global warming might appear astonishing in view of all the previous fears the movement has professed. These fears, in case anyone has forgotten, have concerned the alleged onset of a new ice age as the result of the same industrial development that is now supposed to result in global warming, and the alleged creation of a "nuclear winter" as the result of man's use of atomic explosives.
The words of Paul Ehrlich and his incredible claims in connection with the "greenhouse effect" should be recalled. In the first wave of ecological hysteria, this "scientist" declared:
"At the moment we cannot predict what the overall climatic results will be of our using the atmosphere as a garbage dump. We do know that very small changes in either direction in the average temperature of the Earth could be very serious. With a few degrees of cooling, a new ice age might be upon us, with rapid and drastic effects on the agricultural productivity of the temperate regions. With a few degrees of heating, the polar ice caps would melt, perhaps raising ocean levels 250 feet. Gondola to the Empire State Building, anyone?"
The 250-foot rise in the sea level projected by Ehrlich as the result of global warming has been scaled back somewhat. According to McKibben, the "worst case scenario" is now supposed to be eleven feet, by the year 2100, with something less than seven feet considered more likely. According to a United Nations panel of alleged scientists, it is supposed to be 25.6 inches. (Even this still more limited projected rise did not stop the UN panel from calling for an immediate 60 percent reduction in carbon-dioxide emissions to try to prevent it.)
Perhaps of even greater significance is the continuous and profound distrust of science and technology that the environmental movement displays. The environmental movement maintains that science and technology cannot be relied upon to build a safe atomic power plant, to produce a pesticide that is safe, or even to bake a loaf of bread that is safe, if that loaf of bread contains chemical preservatives. When it comes to global warming, however, it turns out that there is one area in which the environmental movement displays the most breathtaking confidence in the reliability of science and technology, an area in which, until recently, no one — not even the staunchest supporters of science and technology — had ever thought to assert very much confidence at all. The one thing, the environmental movement holds, that science and technology can do so well that we are entitled to have unlimited confidence in them is forecast the weather — for the next one hundred years!
It is, after all, supposedly on the basis of a weather forecast that we are being asked to abandon the Industrial Revolution, or, as it is euphemistically put, "to radically and profoundly change the way in which we live" — to our enormous material detriment.
Very closely connected with this is something else that might appear amazing. This concerns prudence and caution. No matter what the assurances of scientists and engineers, based in every detail on the best established laws of physics — about backup systems, fail-safe systems, containment buildings as strong as U-boat pens, defenses in depth, and so on — when it comes to atomic power, the environmental movement is unwilling to gamble on the unborn children of fifty generations hence being exposed to harmful radiation. But on the strength of a weather forecast, it is willing to wreck the economic system of the modern world — to literally throw away industrial civilization. (The 60 percent reduction in carbon dioxide emissions urged by that United Nations panel would be utterly devastating in itself, totally apart from all the further such measures that would surely follow it.)
The meaning of this insanity is that industrial civilization is to be abandoned because this is what must be done to avoid bad weather. All right, very bad weather. If we destroy the energy base needed to produce and operate the construction equipment required to build strong, well-made, comfortable houses for hundreds of millions of people, we shall be safer from the wind and rain, the environmental movement alleges, than if we retain and enlarge that energy base. If we destroy our capacity to produce and operate refrigerators and air conditioners, we shall be better protected from hot weather than if we retain and enlarge that capacity, the environmental movement claims. If we destroy our capacity to produce and operate tractors and harvesters, to can and freeze food, to build and operate hospitals and produce medicines, we shall secure our food supply and our health better than if we retain and enlarge that capacity, the environmental movement asserts.
There is actually a remarkable new principle implied here, concerning how man can cope with his environment. Instead of our taking action upon nature, as we have always believed we must do, we shall henceforth control the forces of nature more to our advantage by means of our inaction. Indeed, if we do not act, no significant threatening forces of nature will arise! The threatening forces of nature are not the product of nature, but of us! Thus speaks the environmental movement.
All of the insanities of the environmental movement become intelligible when one grasps the nature of the destructive motivation behind them. They are not uttered in the interest of man's life and well-being, but for the purpose of leading him to self-destruction.
It must be stressed that even if global warming turned out to be a fact, the free citizens of an industrial civilization would have no great difficulty in coping with it — that is, of course, if their ability to use energy and to produce is not crippled by the environmental movement and by government controls otherwise inspired. The seeming difficulties of coping with global warming, or any other large-scale change, arise only when the problem is viewed from the perspective of government central planners.
It would be too great a problem for government bureaucrats to handle (as is the production even of an adequate supply of wheat or nails — as the experience of the whole socialist world has so eloquently shown). But it would certainly not be too great a problem for tens and hundreds of millions of free, thinking individuals living under capitalism to solve. It would be solved by means of each individual being free to decide how best to cope with the particular aspects of global warming that affected him. Individuals would decide, on the basis of profit and loss calculations, what changes they needed to make in their businesses and in their personal lives, in order best to adjust to the situation. They would decide where it was now relatively more desirable to own land, locate farms and businesses, and live and work, and where it was relatively less desirable, and what new comparative advantages each location had for the production of which goods. The essential thing they would require is the freedom to serve their self-interests by buying land and moving their businesses to the areas rendered relatively more attractive, and the freedom to seek employment and buy or rent housing in those areas.
Given this freedom, the totality of the problem would be overcome. This is because, under capitalism, the actions of the individuals, and the thinking and planning behind those actions, are coordinated and harmonized by the price system (as many former central planners of Eastern Europe and the Soviet Union have come to learn). As a result, the problem would be solved in exactly the same way that tens and hundreds of millions of free individuals have solved much greater problems, such as redesigning the economic system to deal with the replacement of the horse by the automobile, the settlement of the American West, and the release of the far greater part of the labor of the economic system from agriculture to industry.
Indeed, it would probably turn out that if the necessary adjustments were allowed to be made, global warming, if it actually came, would prove highly beneficial to mankind on net balance. For example, there is evidence suggesting that it would postpone the onset of the next ice age by a thousand years or more and that the higher level of carbon dioxide in the atmosphere, which is supposed to cause the warming process, would be highly beneficial to agriculture.
Whether global warming comes or not, it is certain that nature itself will sooner or later produce major changes in the climate. To deal with those changes and virtually all other changes arising from whatever cause, man absolutely requires individual freedom, science, and technology. In a word, he requires the industrial civilization constituted by capitalism.
This brings me back to the possibly truly good objectives that have been mixed in with environmentalism, such as the desire for greater cleanliness and health. If one wants to advocate such objectives without aiding the potential mass murderers in the environmental movement in achieving their goals, one must first of all accept unreservedly the values of human reason, science, technology, and industrial civilization, and never attack those values. They are the indispensable foundation for achieving greater cleanliness and better health and longer life.
In the last two centuries, loyalty to these values has enabled man in the Western world to put an end to famines and plagues, and to eliminate the once dread diseases of cholera, diphtheria, smallpox, tuberculosis, and typhoid fever, among others. Famine has been ended, because the industrial civilization so hated by the environmentalists has produced the greatest abundance and variety of food in the history of the world, and created the transportation system required to bring it to everyone. This same hated civilization has produced the iron and steel pipe, and the chemical purification and pumping systems, that enable everyone to have instant access to safe drinking water, hot or cold, every minute of the day. It has produced the sewage systems and the automobiles that have removed the filth of human and animal waste from the streets of cities and towns.
Such improvements, together with the enormous reduction in fatigue and exhaustion made possible by the use of labor-saving machinery, have resulted in a radical reduction in mortality and increase in life expectancy, from less than thirty years before the beginning of the Industrial Revolution to more than seventy-five years currently. By the same token, the average newborn American child today has a greater chance of living to age sixty-five than the average newborn child of a nonindustrial society has of living to age five.
In the earlier years of the Industrial Revolution, the process of improvement was accompanied by the presence of coal dust in towns and cities, which people willingly accepted as the by-product of not having to freeze and of being able to have all the other advantages of an industrial society. Subsequent advances, in the form of electricity and natural gas, have radically reduced this problem. Those who seek further advances along these lines, should advocate the freedom of development of atomic power, which emits no particulate matter of any kind into the atmosphere. Atomic power, however, is the form of power most hated by the environmentalists.
Also essential for further improvements in cleanliness and health, and for the long-term availability of natural resources, is the extension of private ownership of the means of production, especially of land and natural resources. The incentive of private owners is to use their property in ways that maximize its long-term value and, wherever possible, to improve their property. Consistent with this fact, one should seek ways of extending the principle of private ownership to lakes, rivers, beaches, and even to portions of the ocean. Privately owned lakes, rivers, and beaches, would almost certainly be clean lakes, rivers, and beaches. Privately owned, electronically fenced ocean ranches would guarantee abundant supplies of almost everything useful that is found in or beneath the sea. Certainly, the vast land holdings of the United States government in the western states and in Alaska should be privatized.
But what is most important in the present context, in which the environmental movement is operating almost unopposed, is that anyone who is afraid of becoming physically contaminated by exposure to one or another alleged toxic chemical should take heed that he does not place an indelible stain on his very existence through his exposure to the deadly poison of the environmental movement. This is what one is in danger of doing by ingesting the propaganda of the environmental movement and being guided by it. I do not know of anything worse that anyone can do than, having been born into the greatest material civilization in the history of the world, now take part in its destruction by cooperation with the environmental movement, and thus be a party to untold misery and death in the decades and generations to come.
By the same token, there are few things better that one can do than, having become aware of what is involved, take one's stand with the values on which human life and well-being depend. This is something which, unfortunately, one must be prepared to do with few companions in today's world. The great majority of those who should be fighting for human values — the professional intellectuals — either do not know enough to do so, have become afraid to do so, or, still worse, have themselves become the enemies of human values and are actively working on the side of environmentalism.
It is important to explain why there are so few intellectuals prepared to fight environmentalism and why there are so many who are on its side.
I believe that to an important extent the hatred of man and distrust of reason displayed by the environmental movement is a psychological projection of many contemporary intellectuals' self-hatred and distrust of their own minds arising as the result of their having been responsible for the destruction wrought by socialism. As the parties responsible for socialism, they have certainly been "a plague upon the world," and if socialism had in fact represented reason and science, as they continue to choose to believe, there would be grounds to distrust reason and science.
In my judgment, the "green" movement of the environmentalists is merely the old "red" movement of the communists and socialists shorn of its veneer of science. The only difference I see between the greens and the reds is the superficial one of the specific reasons for which they want to violate individual liberty and the pursuit of happiness. The reds claimed that the individual could not be left free because the result would be such things as "exploitation" and "monopoly." The greens claim that the individual cannot be left free because the result will be such things as destruction of the ozone layer and global warming. Both claim that centralized government control over economic activity is essential. The reds wanted it for the alleged sake of achieving human prosperity. The greens want it for the alleged sake of avoiding environmental damage. In my view, environmentalism and ecology are nothing but the intellectual death rattle of socialism in the West, the final convulsion of a movement that only a few decades ago eagerly looked forward to the results of paralyzing the actions of individuals by means of "social engineering" and now seeks to paralyze the actions of individuals by means of prohibiting engineering of any kind. The greens, I think, may be a cut below the reds, if that is possible.
While the collapse of socialism is an important precipitating factor in the rise of environmentalism, there are other, more fundamental causes as well.
Environmentalism is the leading manifestation of the rising tide of irrationalism that is engulfing our culture. Over the last two centuries, the reliability of reason as a means of knowledge has been under a constant attack led by a series of philosophers from Immanuel Kant to Bertrand Russell. As a result, a growing loss of confidence in reason has taken place. As a further result, the philosophical status of man, as the being who is distinguished by the possession of reason, has been in decline. In the last two generations, as the effects of this process have more and more reached the general public, confidence in the reliability of reason, and the philosophical status of man, have declined so far that now virtually no basis is any longer recognized for a radical differentiation between man and animals. This is the explanation of the fact that the doctrine of St. Francis of Assisi and the environmentalists concerning the equality between man and animals is now accepted with virtually no opposition.
The readiness of people to accept the closely connected doctrine of intrinsic values is also a consequence of the growing irrationalism. An "intrinsic value" is a value that one accepts without any reason, without asking questions. It is a "value" designed for people who do what they are told and who do not think. A rational value, in contrast, is a value one accepts only on the basis of understanding how it serves the self-evidently desirable ultimate end that is constituted by one's own life and happiness.
The cultural decline of reason has created the growing hatred and hostility on which environmentalism feeds, as well as the unreasoning fears of its leaders and followers. To the degree that people abandon reason, they must feel terror before reality, because they have no way of dealing with it other than reason. By the same token, their frustrations mount, since reason is their only means of solving problems and achieving the results they want to achieve. In addition, the abandonment of reason leads to more and more suffering as the result of others' irrationality, including their use of physical force. Thus, in the conditions of a collapse of rationality, frustrations and feelings of hatred and hostility rapidly multiply, while cool judgment, rational standards, and civilized behavior vanish. In such a cultural environment, monstrous ideologies appear and monsters in human form emerge alongside them, ready to put them into practice. The environmental movement, of course, is just such a movement.
But if, because of these reasons, there are no longer many intellectuals ready to take up the fight for human values — in essence, for the value of the intellect, for man the rational being and for the industrial civilization he has created and requires — then all the greater is the credit for whoever is willing to stand up for these values now and, in so doing, don the mantle of intellectual.
There is certainly ample work for such "new intellectuals" to do.
At one level, the work directly concerns the issue of environmentalism.
The American people must be made aware of what environmentalism actually stands for and of what they stand to lose, and have already lost, as the result of its growing influence. They must be made aware of the environmental movement's responsibility for the energy crisis and the accompanying high price of oil and oil products, which is the result of its systematic and highly successful campaign against additional energy supplies. They must be made aware of its consequent responsibility for the enrichment of Arab sheiks at the expense of the impoverishment of hundreds of millions of people around the world, including many millions here in the United States. They must be made aware of its responsibility for the vastly increased wealth, power, and influence of terrorist governments in the Middle East, stemming from the high price of oil it has caused, and for the resulting need to fight a war in the region.
The American people must be made aware of how the environmental movement has steadily made life more difficult for them. They must be shown how, as the result of its existence, people have been prevented from taking one necessary and relatively simple action after another, such as building power plants and roads, extending airport runways, and even establishing new garbage dumps. They must be shown how the history of the environmental movement is a history of destruction: of the atomic power industry, of the Johns Manville Company, of cranberry growers and apple growers, of sawmills and logging companies, of paper mills, of metal smelters, of coal mines, of steel mills, of tuna fishermen, of oil fields and oil refineries — to name only those which come readily to mind. They must be shown how the environmental movement has been the cause of the wanton violation of private property rights and thereby of untold thousands of acres of land not being developed for the benefit of human beings, and thus of countless homes and factories not being built. They must be shown how as the result of all the necessary actions it prohibits or makes more expensive, the environmental movement has been a major cause of the marked deterioration in the conditions in which many people now must live their lives in the United States — that it is the cause of families earning less and having to pay more, and, as a result, being deprived of the ability to own their own home or even to get by at all without having to work a good deal harder than used to be necessary.
In sum, the American people need to be shown how the actual nature of the environmental movement is that of a virulent pest, consistently coming between man and the work he must do to sustain and improve his life.
If and when such understanding develops on the part of the American people, it will be possible to accomplish the appropriate remedy. This would include the repeal of every law and regulation in any way tainted by the doctrine of intrinsic value, such as the endangered species act. It would also include repeal of all legislation requiring the banning of man-made chemicals merely because a statistical correlation with cancer in laboratory animals can be established when the chemicals are fed to the animals in massive, inherently destructive doses. The overriding purpose and nature of the remedy would be to break the constricting grip of environmentalism and make it possible for man to resume the increase in his productive powers in the United States in the remaining years of this century and in the new century ahead.
In addition to all of this vital work, there is a second and even more important level on which the new intellectuals must work. This, ironically enough, entails a form of cleaning up of the environment — the philosophical, intellectual, and cultural environment.
What the cultural acceptance of a doctrine as irrational as environmentalism makes clear is that the real problem of the industrialized world is not "environmental pollution" but philosophical corruption. The so-called intellectual mainstream of the Western world has been fouled with a whole array of intellectual toxins resulting from the undermining of reason and the status of man, and which further contribute to this deadly process. Among them, besides environmentalism, are collectivism in its various forms of Marxism, racism, nationalism, and feminism; and cultural relativism, determinism, logical positivism, existentialism, linguistic analysis, behaviorism, Freudianism, Keynesianism, and more.
These doctrines are intellectual toxins because they constitute a systematic attack on one or more major aspects of the requirements of human life and well-being. Marxism results in the kind of disastrous conditions now prevailing in Eastern Europe and the Soviet Union. All the varieties of collectivism deny the free will and rationality of the individual and attribute his ideas, character, and vital interests to his membership in a collective: namely, his membership in an economic class, racial group, nationality, or sex, as the case may be, depending on the specific variety of collectivism. Because they view ideas as determined by group membership, these doctrines deny the very possibility of knowledge. Their effect is the creation of conflict between members of different groups: for example, between businessmen and wage earners, blacks and whites, English speakers and French speakers, men and women.
Determinism, the doctrine that man's actions are controlled by forces beyond his power of choice, and existentialism, the philosophy that man is trapped in a "human condition" of inescapable misery, lead people not to make choices they could have made and which would have improved their lives. Cultural relativism denies the objective value of modern civilization and thus undercuts both people's valuation of modern civilization and their willingness to work hard to achieve personal values in the context of it. The doctrine blinds people to the objective value of such marvelous advances as automobiles and electric light, and thus prepares the ground for the sacrifice of modern civilization to such nebulous and, by comparison, utterly trivial values as "unpolluted air."
Logical positivism denies the possibility of knowing anything with certainty about the real world. Linguistic analysis regards the search for truth as a trivial word game. Behaviorism denies the existence of consciousness. Freudianism regards the conscious mind (the "Ego") as surrounded by the warring forces of the unconscious mind in the form of the "Id" and the "Superego," and thus as being incapable of exercising substantial influence on the individual's behavior. Keynesianism regards wars, earthquakes, and pyramid building as sources of prosperity. It looks to peacetime government budget deficits and inflation of the money supply as a good substitute for these allegedly beneficial phenomena. Its effects, as the present-day economy of the United States bears witness, are the erosion of the buying power of money, of credit, of saving and capital accumulation, and of the general standard of living.
These intellectual toxins can be seen bobbing up and down in the "intellectual mainstream," just as raw sewage can be seen floating in a dirty river. Indeed, they fill the intellectual mainstream. Virtually, every college and university in the Western world is a philosophical cesspool of these doctrines, in which intellectually helpless students are immersed for several years and then turned loose to contaminate the rest of society. These irrationalist doctrines, and others like them, are the philosophical substance of contemporary liberal arts education.
Clearly, the most urgent task confronting the Western world, and the new intellectuals who must lead it, is a philosophical and intellectual cleanup. Without it, Western civilization simply cannot survive. It will be killed by the poison of environmentalism.
To accomplish this cleanup, only the most powerful, industrial-strength, philosophical and intellectual cleansing agents will do. These cleansing agents are, above all, the writings of Ayn Rand and Ludwig von Mises. These two towering intellects are, respectively, the leading advocates of reason and capitalism in the twentieth century. A philosophical-intellectual cleanup requires that all or most of their writings be introduced into colleges and universities as an essential part of the core curriculum, and that what is not included in the core curriculum be included in the more advanced programs. The incorporation of the writings of Ayn Rand and Ludwig von Mises into a prominent place in the educational curriculum is the central goal that everyone should work for who is concerned about his cultural environment and the impact of that environment on his life and well-being. Only after this goal is accomplished, will there be any possibility that colleges and universities will cease to be centers of civilization-destroying intellectual disease. Only after it is accomplished on a large scale, at the leading colleges and universities, can there be any possibility of the intellectual mainstream someday being clean enough for rational people to drink from its waters.
The 21st Century should be the century when man begins the colonization of the solar system, not a return to the Dark Ages. Which it will be, will depend on the extent to which new intellectuals can succeed in restoring to the cultural environment the values of reason and capitalism.
The Free Market 26, no. 10 (October 2005)Katrina gave the Gulf region of the United States a lesson in government failure, and how. In the weeks following the hurricane, it became clear that most of the destruction was not the work of Mother Nature but those who are charged with preventing precisely such disasters as this.
To begin on a personal note, I am a professor of economics at Loyola University New Orleans. The university is currently shut down. Many students have gone elsewhere, and my colleagues and I have worked to find other places to live and work until the university reopens. I escaped the disaster in time, and was safely ensconced in western Canada when the floods came. My heart goes out to those who were very much less fortunate.
Now to the lessons.
The levees that were breached by the hurricane were built, owned and operated by government. Specifically, they were owned and maintained by the Army Corps of Engineers. The levees could have been erected to a greater height. They could have been stronger than they were. There might have been a better detection system. All of these factors are clear in hindsight. As to preparing for the future, that is not government’s specialty.
Similarly, the drainage system could have operated more effectively. Here, the New Orleans Sewerage and Water Board was at fault. It consists of three main operating systems: sewerage, water, and drainage. Had they been more effective, a lot of the inconvenience, fright, and even loss of life undergone in this city could have been avoided.
Then, too, these facilities may have fooled many people into thinking they were safer than they actually were. I know this applies to me. Thus, people were in effect subsidized, and encouraged to settle in the Big Easy. Without this particular bit of government mismanagement, New Orleans would likely have been settled less intensively or possibly residents might have had to bear the higher costs associated with keeping the sea at bay.
Actually, we will never know since there is no market feedback mechanism at work between the quality and functioning of the infrastructure and the costs associated with maintaining and insuring it against failure. Instead, the infrastructure on which life depended was entrusted to public officials, who are isolated agents, cut off from market oversight and accountability and impervious to change.
I am not appalled with these failures. After all, it is only human to err. Were these levee facilities put under the control of private enterprise, there is no guarantee of zero human suffering in the aftermath of Katrina. No, what enrages me is not any one mistake, or even a litany of them, but rather the fact that there is no automatic feedback mechanism that penalizes failure, and rewards success, the essence of the market system of private enterprise.
Will the New Orleans Sewerage and Water Board suffer any financial reverses as a result of the failure of their installations to prevent the horrendous conditions now being suffered by New Orleanians? To ask this question is to answer it. What about the ownership and maintenance of the levees by the Army Corps? It’s not even debated.
As Bush said in his speech: "City and parish officials in New Orleans, and state officials in Louisiana will have a large part in the engineering decisions to come. And the Army Corps of Engineers will work at their side to make the flood protection system stronger than it has ever been."
So there you have it.
In the same speech, he summed up the creed of government that every failure should be met with ever more power and money: "The system, at every level of government, was not well-coordinated, and was overwhelmed in the first few days. It is now clear that a challenge on this scale requires greater federal authority and a broader role for the armed forces—the institution of our government most capable of massive logistical operations on a moment’s notice."
The idea of militarizing all crisis situations is particularly disturbing. In the days following the flood, the National Guard went house to house disarming people, which can only increase the likelihood of more looting. The troops broke down doors and handcuffed people solely for the crime of living in their own homes. This is what armed forces do.
These are steps backward. A crucial step forward would be the privatization of this enterprise as part of the rebuilding process (if that indeed occurs; for more on this, see below). Perhaps a stock company could be formed; I suspect that the largest hotels, restaurants, universities, hospitals and other such ventures would have an incentive to become owners of such an enterprise.
Right now, the levees, pumps, and response teams are run by the very same types of folks responsible for the post office and the motor vehicle bureau. I take no position on whether levees are a good or bad thing; only that if they are to be built, this should be done by an economic entity that can lose funding, and thus put its very existence at risk, if it errs. This can only apply to the market, never the state.
This is not the place to examine in detail the case for private ownership of bodies of water such as the Mississippi River, Lake Pontchartrain, and, indeed, all oceans, rivers, seas, and lakes. But the same principles apply here as they do to land. Suffice it to say that this is a question that should be explored, for it is no accident that where there is private property there is safety and responsibility, and where there is not there is none.
Another government failure was overlooked in the days following the flood. Consider that many roads, highways, and bridges were washed out, collapsed, or were swept away. This makes it far more difficult for rescuers to get to the beleaguered city, and for refugees to leave. You will never guess who built, operated and maintained these facilities. Yes, it was government!
It of course cannot be denied that various oil drilling rigs also came unglued, and that these were all privately owned. One of them even collided with a bridge, greatly damaging it. However, there is a significant difference between the two types of events. The market test of profit and loss applies only to the latter, not to the former. Those oil companies that built their platforms more strongly will tend to grab market share from those that did not. No such regimen operates in the governmental sector. Imagine if the oil drilling rigs were all built by the state. They would have undoubtedly created far more damage.
We must also consider questions of population density. Ideally, under a regime of economic freedom, what determines whether a geographical area should be settled at all, and if so how intensively? It depends upon whether or not, in the eyes of the human economic actors involved, the subjective costs outweigh the benefits. The reason no one lives in the north or south poles, and that population density in Siberia, Northern Canada, and the desert areas of Nevada is very low, is that the disadvantages are vastly greater than the advantages in those places.
However, if government subsidizes building in areas people on their own would not choose to locate, then the populace can no longer allocate itself geographically in a rational manner. Similarly, if the government declares drought-stricken farmlands an emergency area, and heavily subsidizes agriculture in such locales, there is also misallocation of settlement in this regard.
The Federal Emergency Management Agency, created in 1979, became part of the US Department of Homeland Security only on March 1, 2003. The federal government has been doling out gobs of money to inhabitants of areas struck by tornados, storms, snow, and other inclement weather for years. Such declarations number in the dozens for 2005 alone. Southern Louisiana, Mississippi, and Alabama have already been declared federal disaster areas. Billions of dollars will pour into these political jurisdictions. Thus, locational decisions are and will continue to be rendered less rational than otherwise, if people had to pay the full costs of their geographical settlement decisions.
As it happens, lots of valuable capital is located in New Orleans. This fact would incline us to reinvest in that locale, storms be damned. But only private enterprise can make such a decision on a rational basis. When government muddies the waters, this cannot take place.
The best way then, to rationally determine whether or not the Big Easy should be saved, is to leave this decision entirely to free enterprise—to capitalist entrepreneurs, who, alone, can rationally make such determinations. As the Austrian side of the socialist calculation debate has demonstrated, only with market prices can this be done. Moreover, private owners make such decisions with their own money, or funds entrusted to them; if they err, they alone suffer. They do not bring the rest of us down along with them.
For anyone watching the rescue efforts after the flood, it was clear who and what was responding. It was not government, which only began getting its act together after the public-relations disaster in the first week. Private charitable organizations—which are also part of the market economy—responded heroically and quickly and well. I’m particularly proud of the role the Mises Institute played in providing a means for a lone internet company in New Orleans to broadcast from the scene of disaster to the entire world.
Katrina led to a horrible calamity. The lesson it teaches us is one that all of history teaches: private enterprise offers hope for success whereas government offers only a guarantee of failure.
Walter Block is professor of economics at Loyola University New Orleans (wblock@loyno.edu).
This fall, school kids across the country will again be taught a chief doctrine in the civic religion: recycle, not only because you fear the police but also because you love the planet. They come home well prepared to be the enforcers of the creed against parents who might inadvertently drop a foil ball into the glass bin or overlook a plastic wrapper in the aluminum bin.
Oh, I used to believe in recycling, and I still believe in the other two R's: reducing and reusing. However, recycling is a waste of time, money, and ever-scarce resources. What John Tierney wrote in the New York Times nearly 10 years ago is still true: "Recycling may be the most wasteful activity in modern America."
Reducing and reusing make sense. With no investment in resources, I can place the plastic grocery bag in the bathroom garbage can and save a penny or so for some more-pressing need. Reducing and reusing are free market activities that are profitable investments of time and labor.
Any astute entrepreneur will see the benefit of conserving factors of production. Today, builders construct houses using less wood than similar houses built just 20 years ago. In addition, these houses are built sturdier; for the most part anyway.
The Green's love for trees did not reduce the amount of wood used in construction; the reduction was simply a reaction to the increasing cost for wood products. Using less wood makes financial sense, and any entrepreneur worth his profit will change his recipe to conserve wood through better design or by substituting less dear materials for wood products.
A recent Mises article, Ethanol and the Calculation Issue, noted the inability to calculate the true cost of producing Ethanol. No one can calculate the cost of all the factors of production in the direction from the highest order labor and land down to the lowest order Ethanol at the pump. Certainly the Chicago School, Keynesians, etc., will give the calculation the old college try, to no avail of course. Absent government supports, the price of Ethanol at the pump reveals the most accurate economic cost of producing that fuel.
The same applies to recycling. What is the true cost of all the factors involved in the recycling process? I do not have a clue. Though using Misesian logic, I know that the cost of recycling exceed its benefit. This is the simple result of the observation that recycling does not return a financial profit.
I used to recycle; it paid. As a child living in the Pittsburgh area, I would collect and clean used glass containers. After collecting a sufficient amount of glass, my father would drive the three or so miles to the local glass factory where the owner gladly exchanged cleaned waste glass for dollars. In this instance, I was an entrepreneur investing factors of production in order to turn dirty waste glass into capital. The value of the exchange exceeded my preference for time, hard work, and my parents' soap, water, and auto fuel. (Of course all of my exchanges against my parents' resources were high on my preference list, but that is another issue altogether). In this activity, I was not recycling in the standard use of the term. I was producing factors of production — cleaned glass — for a profit.
So, what is wrong with recycling? The answer is simple; it does not pay. In addition, since it does not pay, it is an inefficient use of the time, money, and scarce resources. As Mises would have argued: let prices be your guide. Prices are essential to evaluate actions ex post. If the accounting of a near past event reveals a financial loss, the activity was a waste of both the entrepreneur's and society's scarce resources.
That said, I am supposed to believe that I need to invest resources into cleaning and sorting all sorts of recyclable materials for no compensation; an activity that many considered economically efficient. In addition, in some local communities, residents have to pay extra so that a waste company will recycle their paper, plastic, and glass as the recycling bins come with a per-month fee.
In other areas, such as my township, the garbage company profits at the mercy of the political class. The trustees in my township specified that in order to win the waste removal contract, the winning company had to provide recycling bins. Further, they have to send special trucks around to empty those neatly packed bins and deliver the bins' contents to companies that have no pressing need for these unraw materials. The recycling bins are ostensibly free, but in reality, their cost is bundled into my monthly waste removal bill.
Since there is no market for recyclable materials, at least no market price sufficient to return my investment in soap and water, not to mention time and labor, I conclude that there is no pressing need for recycling.
Ok, but what about the lack of landfills nationwide? If landfills were truly in short supply, then the cost of dumping waste would quickly rise. I would then see the financial benefit to reducing my waste volume. And since the recycling bin does not count toward waste volume, the more in the recycling bin, the less in the increasingly expensive garbage cans. Prices drive entrepreneurial calculations and, hence, human action. Recycling is no different.
Come on now, there cannot be any benefit to even the neoclassical society if you actually have to pay someone to remove recyclables.
Since recycling does not turn a profit, it is more efficient to utilize the scarce resources devoted to recycling activities in other modes of production. Instead of wasting resources on recycling, it would be more prudent to invest that money so that entrepreneurs can create new recipes to conserve scarce materials in the production process.
Human action guides resources toward the activities that meet the most pressing needs. This movement of resources means that those activities that do not meet pressing needs are relatively expensive. Why? Those activities have to bid for factors of production along with the profitable activities — activities that are meeting the most pressing needs. The profitable activities will drive the cost of those scarce factors upward leading to financial ruin for those activities that do not satisfy the most pressing needs. Forced recycling is such a failed activity.
The concept of diminishing recyclable resources is fraught with errors. Glass headed to the landfills will sit quietly awaiting someone to desire its value. The glass is not going anywhere, and should glass become as dear as gold — or even slightly less dear, you can bet that entrepreneurs will begin mining landfills for all those junked glass bottles.
The only caveat to this train of thought is what Rothbard wrote about when he discussed psychic profit: the perceived benefit one receives from performing an action, even if that action leads to an economic loss.
If recycling at a financial loss leads you to greater psychic profit, then recycle, recycle, recycle. Let your personal preferences guide your actions, but do not force your preference schedule on others who have a different preference rank for their own actions. And, do not delude yourself into thinking that you are economizing anything; you are simply increasing your psychic profit at the expense of a more rational investment. But, hey, your actions are your business; just don't use government to force your preferences on my lifestyle.Who reaps the real psychic reward from recycling? The statist do-gooder and the obsessed conservationist. Since recycling is now a statist goal, the do-gooders and greens force the cost of recycling on the unsuspecting masses by selling recycling as a pseudo-spiritual activity. In addition to these beneficiaries, there are those who have not considered the full costs of recycling, but their psychic benefit is more ephemeral than real. The other winners are the companies that do the collecting and process the materials, an industry sustained by mandates at the local level.
Oh, and do not tell my children half the recycling story. Remember Hazlitt and turn over the second and third stones before drawing an economic conclusion.
For the most part, we know what happened — and what did not happen — after Katrina had battered parts of the U.S. Gulf Coast and flooded most of New Orleans. Despite promises of aid "around the corner," adequate government assistance did not reach many of the refugees, and especially the people of New Orleans who were stuffed into the Superdome, the New Orleans Convention Center, not to mention nursing homes and roofs of houses.
As we now know, government agents stymied attempts by private individuals and organizations to bring provisions to people who had none. People languished for about five days before the "cavalry" arrived, bringing provisions and some bit of hope.
Thus, the "discussion" is usually framed as follows: The Federal Emergency Management Agency (FEMA), led by an incompetent lawyer who was unaware of the desperation of the hurricane and flood survivors, botched rescue operations, mistakenly turned away people who were bringing provisions, and generally mismanaged the rescue and relief efforts.
Why this happened generally is explained according to one's political preferences. Many people — including most Democrats — say that it was because the Bush Administration is racist, and that since most of the refugees in New Orleans were black and poor, the president and his minions simply did not care about them.
Others point to the war in Iraq because it has diverted both funds and manpower that were needed immediately after the storm. Still others (like Anne Rice in a New York Times column) claim that it was total indifference by the people of the United States, not just a failure of government.
The huge outpouring of private aid, from donation of money, food, clothing, time, and housing (many people simply have taken in refugees — white and black — in their own homes) stands in contrast to Rice's "America is hopelessly racist and hates the poor" and demonstrates that the will to sacrifice for those truly in need certainly exists in this country. While it is not surprising that the elitist New York Times would take this as its standard view, it also is a shame when the country's "newspaper of record" can't even record the right things.
Yet, for all of the public angst over the federal government's — and especially FEMA's — post-disaster response, most observers have missed what is painfully obvious: the government's response was perfectly in character to how people in government act in such situations. To say this in an alternative way, government was being government the same way that a dog is a dog.
As anyone knows, dogs are territorial animals, and governments are territorial entities. The first rule that a government agent follows when confronted with an "emergency" is to "secure the area." For example, when two young men were merrily going on a murder and mayhem spree at Columbine High School in 1999, the vaunted police "SWAT" team stayed outside and encircled the complex because someone said that the area had to be "secured" before police actually could try to save anyone. (Of course, we found out later that not only did police fail to save people, but at least one person bled to death because police refused to get help until the man had died. This was not incompetence; it was the normal workings of the "I am in charge and don't you forget it" mentality that permeates government at all levels.)
Immediately after the hurricane had stopped in New Orleans, for example, a Wal-Mart had brought a truckload of bottled water; FEMA officials turned the truck away, declaring that it was "not needed." Before we dismiss this incident as yet another example of incompetent government, we should realize that the official's actions were completely within the character of government.
When governments act to provide services to individuals, they are done within a very different context than what occurs when private organizations provide services. The post-Katrina services performed by the Red Cross and other organizations such as civil groups and churches did not come with the threat of force attached to them. Church volunteers cannot arrest or even kill someone in those circumstances, but a representative of the government can perform such things without recrimination (and on more than one occasion did just that post-Katrina).
Moreover, government services are performed in as visible a manner as possible. Anyone who has watched some of the post-hurricane coverage has seen press conference after press conference after photo-opportunity of government officials from President George W. Bush to mayors, governors, FEMA and military personnel and the like, people whose job is to be seen doing "good" for political constituents. These things are done with the podium and the TV camera in mind.
The FEMA official who waved off the Wal-Mart truck was correct; FEMA did not "need" Wal-Mart to help. In fact, people from FEMA did not want Wal-Mart to help, as the company would have been able to steal some of the thunder that "rightfully" should belong to FEMA and other government agencies.
Now, it did not matter to FEMA officials that a large number of people needed the provisions that the Wal-Mart truck was carrying. While I am sure that any member of FEMA would employ rhetoric to the contrary, but I stand by my point. It does FEMA no good at all for Wal-Mart to do something for which FEMA receives no credit. Furthermore, this "securing the area" business is nonsense, and the people at FEMA know it. Yes, there are risks that people take going into areas just after something devastating like a hurricane or earthquake has occurred, but the vast majority of people who put themselves into such situation know beforehand about the nature of dangers they are facing.
Because FEMA has been designated the main provider and organizer of post-natural disaster rescue and relief operations, this presents a number of problems that occur at the outset. Despite all of the pre-disaster planning that might occur, a real event has its own set of problems that must be evaluated (literally) on the ground, not in an office in Washington, D.C. To put it another way, a Hayekian "knowledge problem" exists in a situation in which immediate responses are critical.
Even if the heads of FEMA were stellar professionals (which they are not), they still would not have been able to make informed and intelligent decisions from their original vantage points. Instead, the very people who should have been making decisions — the ones who were closest to the disaster — were the ones purposely left out of the loop.
As pointed out earlier, the "knowledge" problem comes to the fore. However, others have tried to give their own explanations, and, to be honest, many of them simply are bad. Paul Krugman, for example, said that the poor initial response was due to the influx of conservative ideology that fails to recognize the greatness and wisdom of government. He writes: "The federal government's lethal ineptitude wasn't just a consequence of Mr. Bush's personal inadequacy; it was a consequence of ideological hostility to the very idea of using government to serve the public good. For 25 years the right has been denigrating the public sector, telling us that government is always the problem, not the solution. Why should we be surprised that when we needed a government solution, it wasn't forthcoming?"
George Bush hostile to using government? One has to wonder whether some writers read the papers at all.
The way that we should address such issues is not to give the government more power, which is what the political classes of the left and right are demanding. Krugman, one must understand, is calling for a breach in the rule of law, the creation of what only can be called mini-dictatorships.
Two emergency medical workers attending a New Orleans conference when the disaster struck give an account of living under such dictatorial rule:
We decided we had to save ourselves. So we pooled our money and came up with $25,000 to have ten buses come and take us out of the City. Those who did not have the requisite $45.00 for a ticket were subsidized by those who did have extra money. We waited for 48 hours for the buses, spending the last 12 hours standing outside, sharing the limited water, food, and clothes we had. We created a priority boarding area for the sick, elderly and new born babies. We waited late into the night for the "imminent" arrival of the buses. The buses never arrived. We later learned that the minute they arrived to the City limits, they were commandeered by the military.
It gets worse:
We organized ourselves and the 200 of us set off for the (Greater New Orleans) bridge (that crosses the Mississippi River) with great excitement and hope. As we marched pasted [sic] the convention center, many locals saw our determined and optimistic group and asked where we were headed. We told them about the great news. Families immediately grabbed their few belongings and quickly our numbers doubled and then doubled again. Babies in strollers now joined us, people using crutches, elderly clasping walkers and others people in wheelchairs. We marched the 2-3 miles to the freeway and up the steep incline to the Bridge. It now began to pour down rain, but it did not dampen our enthusiasm.
As we approached the bridge, armed Gretna sheriffs formed a line across the foot of the bridge. Before we were close enough to speak, they began firing their weapons over our heads. This sent the crowd fleeing in various directions. As the crowd scattered and dissipated, a few of us inched forward and managed to engage some of the sheriffs in conversation. We told them of our conversation with the police commander and of the commander's assurances. The sheriffs informed us there were no buses waiting. The commander had lied to us to get us to move.
We questioned why we couldn't cross the bridge anyway, especially as there was little traffic on the 6-lane highway. They responded that the West Bank was not going to become New Orleans and there would be no Superdomes in their City.
They later attempted to build a small camp on the abandoned freeway, only to be attacked by police and forced to move, so they were forced to survive in other ways:
In the pandemonium of having our camp raided and destroyed, we scattered once again. Reduced to a small group of 8 people, in the dark, we sought refuge in an abandoned school bus, under the freeway on Cilo Street. We were hiding from possible criminal elements but equally and definitely, we were hiding from the police and sheriffs with their martial law, curfew and shoot-to-kill policies.
And when they finally made it to the airport, there were the final acts of official degradation:
We arrived at the airport on the day a massive airlift had begun. The airport had become another Superdome. We 8 were caught in a press of humanity as flights were delayed for several hours while George Bush landed briefly at the airport for a photo op. After being evacuated on a coast guard cargo plane, we arrived in San Antonio, Texas.
There the humiliation and dehumanization of the official relief effort continued. We were placed on buses and driven to a large field where we were forced to sit for hours and hours. Some of the buses did not have air-conditioners. In the dark, hundreds if us were forced to share two filthy overflowing porta-potties. Those who managed to make it out with any possessions (often a few belongings in tattered plastic bags) we were subjected to two different dog-sniffing searches.
Most of us had not eaten all day because our C-rations had been confiscated at the airport because the rations set off the metal detectors. Yet, no food had been provided to the men, women, children, elderly, disabled as they sat for hours waiting to be "medically screened" to make sure we were not carrying any communicable diseases.
This official treatment was in sharp contrast to the warm, heart-felt reception given to us by the ordinary Texans. We saw one airline worker give her shoes to someone who was barefoot. Strangers on the street offered us money and toiletries with words of welcome. Throughout, the official relief effort was callous, inept, and racist.
No doubt, defenders of the police will say that they were "keeping order," but one also has the sense that the actions of the police helped to make things even more disorderly. On the other hand, the so-called "renegades" who are criticized by the government and larger organizations like the Red Cross, help bring order to the chaos. Writes Laurie Holloway in the Tennessean after her visit to crisis areas in Mississippi:
I'm telling you, without the churches, this disaster would be even worse, as hard as it is to believe that's possible. Donate if you will to the Red Cross or the Salvation Army, but know that the bureaucracy behind the big organizations is simply staggering. Without the people setting up the "renegade" food, clothing and supplies distribution centers, usually at churches, there would be many, many more deaths. Supplies are pouring into this area from all across the nation, huge truckloads of canned goods, water, medical stuff. They're being collected at these churches, and they're very organized about getting the supplies out to folks. I'm very impressed.
That is not the message the government wants you to hear. Remember, the "official" word on such private, mini-relief activities has been that they are "not helpful." But, remember that many of the most "helpful" people are those who have not carried weapons, but rather a strong commitment in their hearts to do whatever is necessary. Write the "refugee" EMTs:
We also suspect the media will have been inundated with "hero" images of the National Guard, the troops and the police struggling to help the "victims" of the Hurricane. What you will not see, but what we witnessed, were the real heroes and sheroes of the hurricane relief effort: the working class of New Orleans. The maintenance workers who used a fork lift to carry the sick and disabled. The engineers, who rigged, nurtured and kept the generators running. The electricians who improvised thick extension cords stretching over blocks to share the little electricity we had in order to free cars stuck on rooftop parking lots. Nurses who took over for mechanical ventilators and spent many hours on end manually forcing air into the lungs of unconscious patients to keep them alive. Doormen who rescued folks stuck in elevators. Refinery workers who broke into boat yards, "stealing" boats to rescue their neighbors clinging to their roofs in flood waters. Mechanics who helped hot-wire any car that could be found to ferry people out of the City. And the food service workers who scoured the commercial kitchens improvising communal meals for hundreds of those stranded.
Most of these workers had lost their homes, and had not heard from members of their families, yet they stayed and provided the only infrastructure for the 20% of New Orleans that was not under water.
For those who maintain that the government "failed" its "mission," I must say that they are wrong. True, the government with its ham-fisted policies of blocking relief missions, imposing price controls, and acting in a dictatorial, but incompetent style, seems to have "failed" in making things better, especially in the days directly after the storm passed. But, if you understand that government is a mechanism by which some people impose their will by force over others, then you would have to admit that the government succeeded and succeeded beyond its own expectations.
Thus, I leave readers with this question: If you believe that the government "failed" in the aftermath of Katrina, will the government then have less or more "authority" when the next disaster strikes? I think all of us know the answer.
You can always expect government to behave exactly like government. When you consider your political position, consider whether this institution ought to be put in charge or disaster relief at all, or the economy, or society, foreign policy, health care, education, courts, the environment or anything at all. Katrina and its aftermath is only the latest exhibit in the ongoing historical documentary in favor of a government-free society.
What if there was no such thing as FEMA?
I asked myself that question after reading about the Federal Emergency Management Agency's bungled efforts to serve the poor and suffering in the area formerly known as New Orleans. Following Hurricane Katrina and its aftermath, FEMA was criticized for inaction, epitomized by Director Michael Brown's August 29th memo suggesting workers be allowed two days to get to the ravaged region. (Incredibly, Homeland Security spokesman Russ Knocke defended the two-day delay as necessary to provide workers with adequate training.)
On the same day, notes the New York Post,Brown urged local fire and rescue departments outside Louisiana, Alabama, and Mississippi not to send trucks or emergency workers into disaster areas without an explicit request for help from state or local governments. Above all, the goal of any relief effort (as Brown wrote in another memo) is to "[c]onvey a positive image of disaster operations to government officials, community organizations and the general public."
Conveying such an image will be a tall order. Other news reports noted how FEMA prevented the Coast Guard from delivering fuel and the Red Cross from delivering food, barred morticians from entering New Orleans, blocked a 500 boat flotilla from delivering aid, and ignored a Navy ship equipped with a 600-bed hospital — all while thousands died. Let's face it: If Michael Brown wasn't a political appointee and operated instead in the private sector, Congress would be going after him with criminal charges like he was Ken Lay.
But such a comparison is not fair to the former Enron chief. After all, Lay had enough of a clue to resign and find legal representation. Brown has not resigned, but he was taken off New Orleans duty under pressure for oddities in his resume. What's more,the agency itself will likely face no repercussions; in fact its budget will likely be increased. (I have called this tendency for failure to lead to expansion Westley's Law.) Most everyone knows this. Even in New Orleans, when a major storm threatened to test the publicly-managed levees, over 80 percent of the population decided to get out when it had the chance.
The comparison of Enron to FEMA does have its limits. Enron, after all, was effectively abolished by market forces. But since FEMA operates outside the market, and indeed exists because of government's legal monopoly on the use of force, it lives to waste and redistribute and expand for another day.
More than a week following the catastrophe and several days of bad press, FEMA announced a program to give $2000 cash to every household that claims to be affected by Katrina. Then the program was abruptly cancelled, then reactivated, then cancelled, then reorganized, and who knows where it stands now. The latest FEMA news release says that a
"call to the Department of Homeland Security's Federal Emergency Management Agency (FEMA) will start the process with federal and state programs designed to assist in your recovery. Registering with other agencies -- such as the American Red Cross or your county emergency management office -- will not connect you with FEMA. It takes approximately 20 minutes to complete the registration process at the FEMA toll-free number at 1-800-621-FEMA (3362)..but because of the high volume please be patient and keep trying."
"Be patient and keeping trying" should be the adopted as the official slogan of government.
By all accounts, it is not going to be very discriminating about to whom it gives funds while touting relaxed verification rules and modern forms of disbursement, including electronic funds transfers to bank accounts and the distribution of debit cards — provided the agency can get its act together and actually accomplish this without the confusions that have so far prevented the program from doing much of anything at all.
If there were no FEMA, no such wealth distribution (to say nothing of the waste) would take place, while much of the currently squelched efforts by private individuals, non-profits, and firms would be flourishing all along the Gulf Coast. FEMA's boorish behavior underscores it real purpose, which is always to spend its budget and get good press doing it, because such activities will reflect well on the public sector.
Contrast that with the goal of private relief organizations such as the Salvation Army or the Red Cross. Because their spending is limited to voluntary donations, they have a greater incentive to spend their funds in ways that bring the most benefit. Since no one household or individual situation is the same, no one needs exactly the same amount of aid. Six-member Household A may need medical supplies, diapers, and food, while four-member Household B may have been taken in by friends or family members and may only need food. Whatever the situation, private relief organizations have a greater incentive to discriminate in such cases. They certainly would not assume that the marginal cost of serving every household is the same, as does FEMA with its arbitrary, two-grand disbursements to all comers.
More importantly, FEMA's generosity with other people's money discourages families and other private networks from forming and reaching out to help each other in times of need. Household B above would have less of an incentive to search out family or friends when FEMA is making funds available. The result is a weaker social fabric and greater dependence of the State.
But why should FEMA care? This isn't primarily about relief. This is about public relations for the public sector while it removes homeowners from their own property under gunpoint. This is about drawing attention away from decades of federal levee management and federal flood insurance programs. This is about not losing the black vote in the city that practically invented vote-buying. Even if relieving human suffering is on FEMA's radar screen, it is far down its list of major priorities.
There's more. If FEMA never existed, there would be:
reduced moral hazard problems that result when individuals' incentives are skewed by the impression that no matter what, the federal government will bail them outa greater incentive to give to private relief organizations by people who withhold funds now because they are already being taxed to fund FEMAless rebuilding in areas prone to disasters (and, given New Orleans' levee system, obvious targets of terrorism)less of the fraud that is FEMA's trademark, such as when the agency distributed $31 million to 13,000 Miami-Dade residents in Florida following Hurricane Frances, even though Dade County experienced no hurricane conditionsFor a small glimpse of how the private sector can respond to tragedies such as those occurring along the Gulf Coast, you only need to look as far as Wal-Mart, which has been showing that it is about more than low prices and economies of scale. The firm, hated by the Left for helping to bring autonomy to low-income individuals, had 45 trucks loaded and ready for delivery in its Brookhaven, Mississippi, distribution center and secured a special line at a nearby gas station to ensure that its employees could make it to work before Hurricane Katrina made landfall.
After the storm, while FEMA's Brown was shooting memos, Wal-Mart offered $20 million in cash donations, 1,500 truckloads of free merchandise, food for 100,000 meals and the promise of a job for every one of its displaced workers. According to the Washington Post, the firm "turned the chain into an unexpected lifeline for much of the Southeast and earned it near-universal praise at a time when the company is struggling to burnish its image."
This is simply good business, and Wal-Mart is far from the only overtaxed firm trying to provide it along the Gulf Coast, reflecting the naturally cooperative relationship between producers and consumers.
On NBC's "Meet the Press" on Sunday, Aaron F. Broussard, president of Jefferson Parish in the New Orleans suburbs, told host Tim Russert that if "the American government would have responded like Wal-Mart has responded, we wouldn't be in this crisis." He's not the only one who glimpsed what might have been if there were no such thing as FEMA in the first place.
Here I was, sitting in my office at Loyola University, New Orleans, where I teach economics, very busy doing what I take to be the Lord's work, and something unlikely as a wind on steroids rends asunder my work and life. It presented denizens of New Orleans with a stark choice. Evacuate at great inconvenience and run the risk that the oncoming bad weather will veer elsewhere rendering such flight unnecessary, or stay put and brazen it out, and have to deal with flooding, lack of electricity, no air conditioning in 90-degree-plus temperatures, to say nothing of actually loss of life and/or limb, either due to the storm itself, or to the aftermath, including looting, flooding, and loss of law and order.
My own modus operandi, finely honed after spending almost half a decade in New Orleans, has been to wait until the very last minute, and then bolt out of there, tail between my legs, and then sit in bumper-to-bumper traffic. For Ivan, I crept to Baton Rouge, a trip of a little over an hour in ordinary circumstances, in nine hours. For Katrina, I left home early Sunday afternoon (8/28/05) inched up to Vicksburg in eight hours, which would usually take a little over two hours. Then, I went on up to Little Rock, my previous stamping ground (actually, it was Conway, a town of about 50,000, which lies about 30 miles northwest of the capital of Arkansas), and from there to Vancouver by plane.
I am now safely ensconced in western Canada, writing up the notes I took en route. Happily, I escaped lightly, without too much inconvenience. But my heart goes out to those who were very much less fortunate.
What has this to do with political economy, the usual subject of my writing interest? A lot, that's what.
I. Private EnterpriseFirst of all, the levees that were breached by the hurricane were built, owned and operated by government. Specifically, by the Army Corps of Engineers. The levees could have been erected to a greater height. They could have been stronger than they were. The drainage system could have operated more effectively. Here, the New Orleans Sewerage and Water Board was at fault. It consists of three main operating systems: sewerage, water, and drainage. See here, here and here. Had they been, a lot of the inconvenience, fright, and even loss of life undergone in this city could have been avoided.
Then, too, these facilities may have fooled many people into thinking they were safer than they actually were. I know this applies to me. Thus, people were in effect subsidized, and encouraged to settle in the Big Easy. Without this particular bit of government mismanagement, New Orleans would likely have been settled less intensively. (On the other hand, at one time this city was the largest in the South; statist negligence of a different kind — graft, corruption, over-regulation— is responsible for it having a smaller population than otherwise.)
I am not appalled with these failures. After all, it is only human to err. Were these levee facilities put under the control of private enterprise, there is no guarantee of zero human suffering in the aftermath of Katrina. No, what enrages me is not any one mistake, or even a litany of them, but rather the fact that there is no automatic feedback mechanism that penalizes failure, and rewards success, the essence of the market system of private enterprise.
Will the New Orleans Sewerage and Water Board suffer any financial reverses as a result of the failure of their installations to prevent the horrendous conditions now being suffered by New Orleanians? To ask this question is to answer it.
One crucial step forward then, would be the privatization of this enterprise as part of the rebuilding process (if that indeed occurs; for more on this, see below). Perhaps a stock company could be formed; I suspect that the largest hotels, restaurants, universities, hospitals and other such ventures would have an incentive to become owners of such an enterprise.
Right now, the levees are run by the very same types of folks responsible for the post office and the motor vehicle bureau. I take no position on whether levees are a good or bad thing; only that if they are to be built, this should be done by an economic entity that can lose funding, and thus put its very existence at risk, if it errs. This can only apply to the market, never the state.
This is neither the time nor place to examine in detail the case for private ownership of bodies of water such as the Mississippi River, Lake Ponchartrain, and, indeed, all oceans, rivers, seas and lakes. But the same principles apply here as they do to land. Suffice it to say that this is a question that should be explored, for it is no accident that where there is private property there is safety and responsibility, and where there is not there is not.
Secondly, numerous roads, highways and bridges were washed out, collapsed, or were swept away. This makes it far more difficult for rescuers to get to the beleaguered city, and for refugees to leave. You will never guess who built, operated and maintained these facilities. Yes, it was government!
It of course cannot be denied that various oil drilling rigs also came unglued, and that these were all private enterprises. One of them even collided with a bridge, greatly damaging it. However, there is a significant difference between the two types of events. The market test of profit and loss applies only to the latter, not to the former. Those oil companies that built their platforms more strongly will tend to grab market share from those that did not. No such regimen operates in the governmental sector. Imagine if the oil drilling rigs were all built by the state. They would have undoubtedly created far more damage.
II. The Dead Hand of the PastIt is by no means clear that there should even be a city in the territory now occupied by New Orleans.
Ideally, under a regime of economic freedom, what determines whether a geographical area should be settled at all, and if so how intensively? It depends upon whether or not, in the eyes of the human economic actors involved, the subjective costs outweigh the benefits. The reason no one lives in the north or south poles, and that population density in Siberia, Northern Canada and the desert areas of Nevada is very low, is that the disadvantages are vastly greater than the advantages in those places.
However, if government subsidizes building in areas people on their own would not choose to locate, then the populace can no longer allocate itself geographically in a rational manner. Similarly, the government declares drought-stricken farmlands an emergency area, and heavily subsidizes agriculture in such locales, there is also misallocation of settlement in this regard.
The Federal Emergency Management Agency (FEMA), created in 1979, became part of the U.S. Department of Homeland Security only on March 1, 2003. The federal government has been doling out gobs of money to inhabitants of areas struck by tornados, storms, snow and other inclement weather for years. Such declarations number in the dozens for 2005 alone. Southern Louisiana, Mississippi and Alabama have already been declared federal disaster areas. Tons of money will pour into these political jurisdictions. Thus, locational decisions are and will continue to be rendered less rational than otherwise, if people had to pay the full costs of their geographical settlement decisions.
It may well be that with the advantage of hindsight, the Big Easy is like severalof these other places: not too cold, or drought-stricken, but too low, below sea level, and thus too much in danger of being flooded.
States Mises in this regard:
"Suppose that, making use of our entire store of technological skill and our present-day knowledge of geography, we were to undertake to resettle the earth's surface in such a way that we should afterwards be in a position to take maximum advantage of the natural distribution of raw materials. And suppose further that for this purpose the entire capital wealth of the present were at our disposal in a form that would allow us to invest it in whatever way was regarded as the most suitable for the end in view.
"In such a case the world would certainly take on an appearance that would be very considerably different from the one it now presents. Many areas would be less densely populated ... The great trade routes would follow other courses."
At first glance, this does not support a New Orleans with anything like its close-to-one-half-million population at its present location. Yes, this city is situated at the mouth of a great river, and offers a world-class port to international shipping. On the other hand as recent events have so tragically demonstrated, these benefits may be more than offset by the fact that it lies below sea level.
Does this mean that New Orleans would be doomed under a free enterprise system? This is quite possibly the case, if we could do everything all over again, and start off de novo, at the present time. But not necessarily, given that vast investment has already been made in streets, buildings, pipes, etc. Even though, perhaps, if we knew then what we know now, no city would have been erected south of Lake Ponchartrain, it does not logically follow that it should not be rebuilt at present, under realistic assumptions.
Given the New Orleans is now located where it is, it is entirely possible that it is economical for there to remain a large human settlement in that area. What cannot be denied is that when government enters the picture, economic calculation of this sort becomes impossible.
Mises continues his analysis:
"With regard to choice of location ... new plants appear most efficient in the light of the existing situation. But ... consideration for capital goods produced in the past under certain circumstances makes the technologically best ... (location) ... appear uneconomical. History and the past have their say. An economic calculation that did not take them into account would be deficient. We are not only of today; we are heirs of the past as well. Our capital wealth is handed down from the past, and this fact has its consequences ... (S)trict rationality ... induces the entrepreneur to continue production in a disadvantageous location ... "
That is, New Orleans might well be a "disadvantageous location" based on the assumption that we can with hindsight rearrange all previous locational decisions. But, we can do no such thing. Rather, capital (buildings, roads, pipelines, etc.) are bequeathed to us at a certain location. As it happens, lots of valuable capital is located in New Orleans. This fact would incline us to reinvest in that locale, storms be damned. But only private enterprise can make such a decision on a rational basis. When government muddies the waters, this cannot take place.
The best way then, to rationally determine whether or not the Big Easy should be saved, is to leave this decision entirely to free enterprise — to capitalist entrepreneurs, who, alone, can rationally make such determinations. As the Austrian side of the Socialist Calculation Debate has demonstrated, only with market prices can this be done. Moreover, private owners make such decisions with their own money, or funds entrusted to them; if they err, they alone suffer. They do not bring the rest of us down along with them.
III. Weather SocialismBut there is a third element we cannot ignore: weather socialism.
According to an old adage, critics of government can properly blame this institution for many things, but bad weather is not among them. Wrong, wrong. At the risk of sounding out of step with the mainstream (a new experience for me) the state is responsible not only for hurricanes, but for tornados, storms, typhoon, tsunami, excessive heat, excessive cold, too much rain, too little rain, floods, droughts, desertification, tempests, squalls, gales, rainstorms, snowstorms, thunderstorms, blizzards, downpours, cyclones, whirlwinds, twisters, monsoons, torrential rains, cloudbursts, showers, etc. You name any kind of bad weather conditions, and the government is to blame.
Why, pray tell? Because the state at all levels grabs off almost 50% of the GDP in taxes, and its regulations account for a significant additional amount of wealth not created. If the voracious government left all or even most of the property created by its rightful owners — those who created it in the first place with their own hands — the weather problem could undoubtedly be better addressed by private enterprise.
And for what wondrous tasks does the government waste trillions of our earnings? Let me count some few of the ways. It subsidizes farmers who ought to be allowed to go bankrupt when they cannot earn an honest profit in their industry. As the number of farmers has declined over the years, the number of bureaucrats in the Department of Agriculture has increased. Welfare for farmers and agricultural mandarins.
Speaking of welfare, this is but the tip of the iceberg. Our masters in Washington D.C. distribute our hard-earned money to people who bear children they cannot afford to feed, and to corporate welfare bums. Then there is the Department of Education (weren't the Republicans going to get rid of this sore on the body politic?) that presides over a public school system that warehouses and mis-educates our children.
And don't get me started on our system of medical socialism that wastes yet other precious resources. We don't have HillaryCare yet but we are well on our way. Then, too, we must count government throwing our money at the Post Office, the Space program, ethanol, foreign "aid," unemployment insurance, the list goes on and on.
The drug war incarcerates thousands of innocent people — who could be out there creating additional wealth — at a cost exceeding tuition and room and board at some of our most prestigious universities. Last but certainly not least, speaking of war, the U.S. has been bullying its way around the world for decades, creating untold havoc. Katrina can't hold a candle to our armed forces in terms of killing innocent people. There are no truer words than that "War is the health of the State."
Suppose that the "public sector" were not wasting untold riches. What has this got to do with improving weather conditions? Well, a lot of the money returned to the long-suffering taxpayers (and much of the additional wealth created by the ending of economic regulations) would be allocated in the usual directions: sailboats and pianos, and violin lessons and better food and more entertainment, etc. But some of it would likely be invested in more research and development as to the causes and cures of unwelcome weather conditions.
Is there any doubt that in 100, or 1,000, or 10,000 years — assuming the government does not blow us all up before then — we will no longer be plagued by uncooperative clouds? I don't say that if the state disappeared tomorrow the next day we would have clear weather (and rain to order from 2am — 4am), but surely the ending of the former would bring about the latter that much more quickly.
How would this work? Wouldn't the problem of "public goods" rend the market a "failure," as our friends from the Chicago so-called "free enterprise" school of economics would have it? Their argument is that if I come up with a way to stop storms dead in their tracks, or better yet, orchestrate matters such that they do not form in the first place, everyone else will "free ride" on my innovation. The other beneficiaries will simply refuse to pay me for this boon I confer on them, so I will not invest any money on this task in the first place. And neither will you. So the private enterprise system cannot handle such challenges.
Stuff and nonsense.
First of all, this task need not be accomplished on a for profit basis. Non-profit organizations, too, are part of the private sector of the economy. Just looking at the charitable outpourings to New Orleanians from all corners of the country, we can see that there is no shortage of benevolence and good will for the victims of Katrina. I should single out for special mention in this regard that “evil” profit maximizing large corporation that grinds down suppliers, immiserates its ownworkers due to its anti union policies, bankrupts small grocers, and just all around exploits every else it touches: . This hated corporation contributed $1 million to the Salvation Army for hurricane relief.More recently, Wal-Mart committed an additional $15 million for this purpose. As part of this commitment , Wal-Mart will “establish mini-Wal-Mart stores in areas impacted by the hurricane. Items such as clothing, diapers, baby wipes, food, formula, toothbrushes, bedding and water will be given out free of charge to those with a demonstrated need.
In contrast, I do not recommend the American Red Cross. I still have not forgiven them for turning aside risks of spreading AIDS and infecting hundreds of people, many of them hemophiliacs. Unhappily, from my own point of view, Wal-Mart, sent another $1 million to the Red Cross. But my favorite charities, if you want to really help the inhabitants of the Gulf Coast, are two. Both support free enterprise, the last best hope for people there and everywhere. One is the Mises Institute ; two, any of the State Libertarian Parties of Louisiana, Mississippi, or Alabama. But not the national party, until they deal with this issue.
The point is, if we the people had vastly more money at our disposal than we do now, thanks to government profligacy with our funds, we would be able to donate some of it to the not-for-profit sector to engage in research and development for weather control.
Secondly, the market has a way of internalizing the so-called externalities that supposedly prevent firms from providing storm-busting services. Within limits, and depending upon technology, the purveyors of flood insurance would be able to turn the rain and wind on and off like a spigot, depending upon the locational densities of their clientele.
For example, if in area A 90% of the landowners are members of Hurricane Busters, Inc., and in area B only 10% are, there is little doubt as to which will be better served by this particular firm. Then, too, there will be not only social pressure, but economic pressure, for large firms in any geographical area to sign up for such services. Those that do not (particularly in states stretching from Texas to Florida, and most certainly in New Orleans) will tend to find their customer base disappearing.
As but one small instance of this phenomenon, companies with large parking lots have recently instituted reserved spaces for pregnant women and new moms. No government agency forced them to do any such thing. (Prediction: the state will soon do just that, so as to garner credit for this very human and profitable policy). As this movement catches on, few will be able to resist. A similar situation is likely to arise with regard to protection from hurricanes. At the very least, if government would but get out of the way, it would clear the path for private enterprise to more quickly bring us the day when the Katrinas of the future will be obviated.
To conclude, here is what I see as the libertarian position on the storm and its aftermath. No national guard or other representatives of the state should be brought in. They are in effect "murderers and thieves." Instead, private police agencies, appointed by property owners, should deal with the looters.
Further, no tax money should be poured into New Orleans. These are stolen funds, and should be returned to their rightful owners, the taxpayers of the nation. Of course, this applies, in spades, to those victimized by Katrina. But the refunds should be in the form of money, not expenditures for rebuilding, which their proper owners may or may not favor.
Private enterprise alone should determine if the Big Easy is worth saving or not. Problems of "transactions costs" will be far easier to overcome than challenges presented by an inept and economically irrational government. Possibly a Donald Trump type might try to buy up all the buildings at a fraction of their previous value, and save his new investment by levee building and water pumping. He wouldn't need to get 100% sales. A lesser amount, say, 90%, might do, and he would only make his initial purchases subject to reaching this level. That is, he might first purchase options to buy.
"No one can escape the influence of a prevailing ideology," wrote Ludwig von Mises, and Gulf Coast residents know precisely what it means to be trapped — ostensibly by a flood but actually by statist policies and ideological commitments that put the government in charge of crisis management and public infrastructure. For what we are seeing in New Orleans and the entire Gulf Coast region is the most egregious example of government failure in the United States since September 11, 2001.
Mother Nature can be cruel, but even at her worst, she is no match for government. It was the glorified public sector, the one we are always told is protecting us, that is responsible for this. And though our public servants and a sycophantic media will do their darn best to present this calamity as an act of nature, it was not and is not. Katrina came and went with far less damage than anyone expected. It was the failure of the public infrastructure and the response to it that brought down civilization.
The levees that failed and caused New Orleans to be flooded, bringing a humanitarian crisis not seen in our country in modern times, were owned and maintained by the Army Corps of Engineers. The original levees surrounding this city below sea level were erected in 1718, and have been variously expanded since.
But who knew that a direct hit by a hurricane would cause them to break? Many people, it turns out. Ivor van Heerden of Louisiana State University, reports Newsday, "who has developed flooding models for New Orleans, was among those issuing dire predictions as Katrina approached, warnings that turned out to be grimly accurate. He predicted that floodwaters would overcome the levee system, fill the low-lying areas of the city and then remain trapped there well after the storm passed — creating a giant, stagnant pool contaminated with debris, sewage and other hazardous materials."
Newsday goes on: "Van Heerden and other experts put some of the blame on the Mississippi River levees themselves, because they channel silt directly into the Gulf of Mexico that otherwise would stabilize land along the riverside and slow the sinking of the coastline."
He is hardly some lone nut. National Geographic ran a large article on the topic last year that begins with a war-of-the-worlds scenario and reads precisely like this week's news from New Orleans. It is the Army Corps of Engineers that has been responsible for the dwindling of the coastline that has required the levees to be constantly reinforced with higher walls. But one problem: no one bothered to do this since 1965. That's only the beginning of the problems created by the Corps' levee management, the history of which was documented by Mark Thornton following the last flood in 1999.
Only the public sector can preside over a situation this precarious and display utter and complete inertia. What do these people have to lose? They are not real owners. There are no profits or losses at stake. They do not have to answer to risk-obsessed insurance companies who insist on premiums matching even the most remote contingencies. So long as it seems to work, they are glad to go about their business in the soporific style famous to all public sectors everywhere.
And failure of one structure has highlighted the failures of other structures. The levees could not be repaired in a timely manner because roads and bridges built and maintained by government could not withstand the pressure from the flood. They broke down.
And again, it is critical to keep in mind that none of this was caused by Hurricane Katrina as such. It was the levee break that led to the calamity. As the New York Times points out: "it was not the water from the sky but the water that broke through the city's protective barriers that had changed everything for the worse.... When the levees gave way in some critical spots, streets that were essentially dry in the hours immediately after the hurricane passed were several feet deep in water on Tuesday morning."
Indeed, at 4pm on Monday, August 29, all seemed calm, and reports of possible calamity seemed overwrought. Two hours later the reports began to appear about the levee. A period of some twelve hours lapsed between when the hurricane passed through and when the water came rushing into the city. There is some dispute about precisely when the levees broke. Some say that they were broken long before anyone discovered it, which is another outrage. There was no warning system. There is no question that plenty of time was available between their breakage and the flooding to enable people to make other arrangements — and perhaps for the levees to be repaired. People were relieved that the rain subsided and the effects of Katrina were far less egregious than anyone expected.
That's when the disaster struck. The municipal government itself relocated to Baton Rouge even as the city pumps failed as well. Meanwhile, the Army Corp of Engineers apparently had no viable plan even to make repairs. They couldn't bring in the massive barges and cranes needed because the bridges were down and broken, or couldn't be opened without electricity. For public relations purposes, they dumped tons of sand into one breach even as another levee was breaking. But even that PR move failed since most helicopters were being used to move people from spot to spot — another classic case of miscalculation. Many bloggers had the sense that the public sector essentially walked away.
But the police and their guns and nightsticks were out in full force, not arresting criminals but pushing around the innocent and giving mostly bad instructions. The 10,000 people who had been corralled into the Superdome were essentially under house arrest from the police who were keeping them there, preventing them even from getting fresh air. A day later the water and food were running out, people were dying, and the sanitary conditions becoming disastrous. Finally someone had the idea of shipping all these people Soviet-like to Houston to live in the Astrodome, as if they are not people with volition but cattle.
After evacuations, the looting began and created a despicable sight of criminal gangs stealing everything in sight as the police looked on (when they weren't joining in). Now, this scene offers its own lessons. Why don't looting and rampant criminality occur every day? The police are always there and so are the hoodlums and the criminals. What was missing that made the looting rampage possible was the bourgeoisie, that had either left by choice or had been kicked out. It is they who keep the peace. And had any stayed around to protect their property, we don't even have to speculate what the police would have done: Arrest them!
Now, in the coming weeks, as it becomes ever more obvious that the real problem was not the hurricane but the failure of the infrastructure to work properly, the political left is going to have a heyday ( here too ). They will point out that Bush cut spending for the Army Corp of Engineers, that money allocated to reinforcing the levees and fixing the pumps had been cut to pay for other things, that we are reaping what we sow from failing to support the public sector.
The ever-stupid right will come to the defense of Bush and the Iraq War that has completely absorbed this regime's attention, pointing out that Bush is actually a big and compassionate spender who cares about infrastructure, while demanding that people recognize his greatness, along with all the other pieties that have become staples of modern "conservatism."
But this is a superficial critique (and defense) that doesn't get to the root of the problem with public services. NASA spends and spends and still can't seem to make a reliable space shuttle. The public schools absorb many times more — thousands times more — in resources than private schools and still can't perform well. The federal government spends trillions over years to "protect" the country and can't fend off a handful of malcontents with an agenda. So too, Congress can allocate a trillion dollars to fix every levee, fully preventing the last catastrophe, but not the next one.
The problem here is public ownership itself. It has encouraged people to adopt a negligent attitude toward even such obvious risks. Private developers and owners, in contrast, demand to know every possible scenario as a way to protect their property. But public owners have no real stake in the outcome and lack the economic capacity to calibrate resource allocation to risk assessment. In other words, the government manages without responsibility or competence.
Can levees and pumps and disaster management really be privatized? Not only can they be; they must be if we want to avoid ever more apocalypses of this sort. William Buckley used to poke fun at libertarians and their plans for privatizing garbage collection, but this disaster shows that much more than this ought to be in private hands. It is not a trivial issue; our survival may depend on it.
It is critically important that the management of the whole of the nation's infrastructure be turned over to private management and ownership. Only in private hands can there be a possibility of a match between expenditure and performance, between risk and responsibility, between the job that needs to be done and the means to accomplish it.
The list of public sector failures hardly stops there. The outrageous insistence that no one be permitted to "gouge" only creates shortages in critically important goods and services when they are needed the most. It is at times of extreme need that prices most need to be free to change so that consumers and producers can have an idea of what is needed and what is in demand. Absent those signals, people do not know what to conserve and what to produce.
Bush was on national television declaring that the feds would have zero tolerance toward gouging, which is another way of saying zero tolerance toward markets. If New Orleans stands any chance of coming back, it will only be because private enterprise does the rebuilding, one commercial venture at a time. Bush's kind of talk guarantees a future of mire and muck, the remote possibility of prosperity and peace sacrificed on the altar of interventionism.
Moreover, every American ought to be alarmed at the quickness of officials to declare martial law, invade people's rights, deny people the freedom of movement, and otherwise trample on all values that this country is supposed to hold dear. A crisis does not negate the existence of human rights. It is not a license for tyranny. It is not a signal that government may do anything it wants.
This crisis ought to underscore a point made on these pages again and again. Being a government official gives you no special insight into how to best manage a crisis. Indeed the public sector, with all its guns and mandates and arrogance, cannot and will not protect us from life's contingencies. It used to be said that infrastructure was too important to be left to the uncertainties of markets. But if it's certainty that we are after, there is a new certainty that has emerged in American life: in a crisis, the government will make matters worse and worse until it wrecks your life and all that makes it worth living.
Read a typical news article, editorial, or even a history or economics text, and the “case” for regulation is posed in the following way: In their zeal for profits, business owners will cut corners when it comes to safety, which is even truer when their product falls into the categories of food and drugs.
Capitalists, it is argued, are prone even to make people susceptible to terrorist attacks, all in the name of preserving their profits. Therefore, government must regulate businesses in the “public interest.” The darker side of regulation—its use as a tool of business cartelization or trade protection—generally does not make the news headlines.
Thus, when the State of Alabama recently announced that it was banning the importation of Vietnamese basa fish, the stated reason was to protect health and safety. Declared the August 16 Mobile Register:
Alabama is joining Louisiana in banning the sale of a Vietnamese-imported fish that competes with U.S.-farmed catfish, agriculture officials said Monday.
Alabama Agriculture Commissioner Ron Sparks initiated the statewide ban on the sale of Vietnamese basa fish, similar to catfish, on Friday. The ban will last until all the basa fish in the state can be tested for an antibiotic outlawed for agricultural uses in the United States, he said.
Of course, one can imagine that testing each basa fish (as opposed to the accepted means of taking statistically-reliable samples) will take a long time. (Protection of the “public health,” after all, is a time-consuming matter.) Further down in the article, we hear that the real intention of state officials is to protect Alabamians from terrorists, as officials attempt to raise the level of intensity (and further justify their actions):
Jesse Chappell, a fisheries specialist with the Alabama Cooperative Extension System, said, "The apparent intent is to protect people from virulent infections and bioterrorism". . . . (Emphasis mine)
In other words, some sneaky terrorists might be trying to kill Americans by slipping poisoned catfish into our food supply. (After all, Vietnam does have a government that calls itself communist.) Or at least, that is what the regulators are trying to tell us:
Sparks and Louisiana Agriculture Commissioner Bob Odom said that testing by the U.S. Food and Drug Administration had tipped them off last week that some basa were getting into the country containing fluoroquinolones, a class of antibiotics that cannot legally be used for agriculture in the United States.
Mississippi's agriculture commissioner, Lester Spell, put out a news release Friday telling customers to avoid buying "foreign imported basa that may contain unapproved antibiotics."
However, is “protecting” the health of Alabama residents the main goal of those who are imposing the ban? It seems that there is another side, as the reporter points out:
All this follows a recent Mississippi State University study that showed basa were preferred over U.S.-farmed catfish in a taste test 3-to-1. A follow-up test conducted last week by a Baton Rouge marketing company found 49.5 percent of participants preferred Vietnamese basa, while 46 percent selected American catfish.
Yes, it seems that the authorities in Alabama and Louisiana are desperate to protect the people from their own taste buds. Moreover, the fish is cheaper than the farm-raised southern catfish, as the article acknowledges. According to the news account:
The decision thrilled Alabama catfish farmers. Among U.S. growers, Alabama is second only to Louisiana in farmed catfish production, and farmed catfish represent Alabama's fourth-best selling agricultural product, ranking just below eggs, according to the Alabama Cooperative Extension System.
Elsewhere, an advocate for the catfish farmers declared that the ruling will help to create a “level playing field,” which, in reality, means tilting the market away from the better-tasting and less-expensive basa fish and toward Alabama catfish. Says Chappell:
"In Vietnam they can use these antibiotics. Because of the tougher regulations here, American catfish farmers can't. They only have access to two or so antibiotics, and neither of them is very good," Chappell said. "As a result, we show up at the firefight with a pea shooter."
This quote gives us pause, for it seems that Chappell is saying that the basa may very well be safer than catfish in the United States precisely because the antibiotics used in Vietnam are likely to be more effective than what U.S. fisheries are allowed to use. While there are problems with the use of any antibiotics in foods (given that germs can develop resistance to them), the alternatives are not particularly appealing, as most consumers would prefer to take their chances with antibiotic-fed fish as opposed to eating diseased food.
Therefore, as we take stock of the situation, we can note the following:
U.S. regulations have stymied domestic producers of catfish, who would like the opportunity to produce healthier fish, but are blocked by the government,In response to problems which it helped to cause, the government impedes the importation of inexpensive, healthy—and tasty—fish.In this example, we see many of the reasons that Austrians are so vehement in their criticism of government economic regulation. For one, the “safety” regulations that determine which antibiotics catfish farmers are permitted to feed to their fish are based on conjecture of what could happen. The regulators are as much in the dark as everyone else, and the myth of the omniscient government regulator is just that: a myth.
Second, in the name of dubious “safety” claims, the governments of Alabama and Louisiana actually are acting to protect politically-connected owners of businesses. Given that some of the problems that catfish farmers face are the result of regulation-imposed costs and restrictions, it is obvious that the way to better serve the consumers of those states would be to lighten the regulatory burden. Instead, we have government acting to impose even more costs and to limit consumer choices.
The actions by Alabama and Louisiana officials are only a brief chapter in a sorry gigantic volume of the annals of regulation. One should think of regulation not as a set of rules that help establish “the rules of the game” (as so many mainstream economics textbooks claim), but rather as a web of interlocking lies based upon high-sounding rhetoric that in the end rob consumers and sap the promise out of the economy.
Environmentalism sees market failure as the cause of environmental problems. Block sees the absence of private property rights and the interference of government as the causes of problems. Libertarianism provides solutions. Man is not a cancer on the planet. Markets have not failed.
Endangered Species Acts encouraged negative incentives of shoot, shovel and shut up. Man has not caused catastrophic global warming. Carbon dioxide is not a pollutant; it is food for life itself. The sun and the cosmos have been instrumental in all climates.
Lecture 5 of 10 from Walter Block's Radical Austrianism, Radical Libertarianism.
When I once went to visit a public sector electricity-generation plant in New Delhi, one of their top officers told me this: I dump the ash (the residue from burning coal) in the river, I do not pay the railways for delivery of the coal, I do not pay the coal company, and I will keep running it this way.
Forget about the so-called charitable thoughts of public servants, I could not believe that I was talking to a human being. He was corrupt and irresponsible to the core. Why is someone in such a high position like that? Is it a special racial trait of Indians? Or is it a result of the irresponsible system that socialism, and collectivist cultures create?
Public Sector or pyramid schemes?There are three publicly owned electricity-generating plants in Delhi; all are coal-based. They should never have been set up there. Profit is never the driving force in setting up a government-owned business. So this is what happened and continues:
A rule of the thumb in setting up coal-based power generating plants is that they should be based close to the sources of coal, as the power cables are everywhere, and all you have to do is to hook up power plants with cables. The further you are from the coal pit, the greater are the expenses of transporting the coal. Also, if you are closer to the pit, you can transport the ash (crushed and burnt soil, which exists in coal) back to the extinct mines and fill them up; otherwise you simply don’t.
But, the politicians had other motives: employment generation and spreading industry uniformly around the country without consideration for economics. And of course all this means environmental damage of horrendous proportions as I attempt to show.
So these plants were set up thousands of kilometer away from the coal-pits. This generated cargo payments for the railways, and additional employment. The power-generating plants gave employment to thousands when they could be conveniently run by a fraction of people. The coal companies had been (and still are) nationalized so they freely gave employment as well. The federal government gave guarantees to make payments. It looked like a utopia similar to one of those pyramid schemes that do a good business in these countries for a visible minority at the cost of the rest. Then it eventually fails most of that visible minority.
Coal companies sold the coal for little, and then usually did not get paid anyway. They did not care for the quality of their products, as whatever resources they had went to generate employment (this is only the sanitized version for the sake of keeping the theme—in the heart of hearts humans are more rational than that!). More than half of the coal they sent was actually soil. The electricity plants could not complain, as they were not paying anyway.
The so-called coal needed other expensive liquid fuel to keep the boilers running at the generating-plants. The plants started getting clogged with ash and were highly inefficient, as they were processing soil, which was almost half the input, for no good.
When I first went to one of the plants, I sank knee deep in what looked like ground. What was happening was that the electricity generating plants were not getting paid as the government was giving free electricity to many (in Delhi about 50% of electricity did not get paid for). So they did not have the funds to clean up the ash. The ash stayed lying in the power plants everywhere, slowly finding its way into the river and the air of the city. Imagine that these plants generated thousands and thousands of tons of ash, which is made of very small particles, and flies easily. Of course there were no funds there to improve the technology and maintain the equipment.
The customer who did not pay did not care about how much electricity they used. The technology for conserving electricity, and hence environmental efficiency, could never take hold.
Those who were honest to pay had to make up for everyone else. (Until not very long ago, the government had banned the use of private generator even if they were for personal purposes—how else could they generate whatever money they did? Others paid bribes to run their own, creating noise and local air pollution.)
The pollution related departments of the government had a lot of teeth to stop such polluting electricity plants. But then imagine, how could one arm of the government stop the other arm? Instead of closing these plants down they agreed on sanitizing statistics to fool everyone—and this was so oft repeated that they started to believe in it themselvesA commonly held belief in India is that Indian coal is great for the environment—it has only half as much sulphur (by weight) as the typical coal found internationally. All you have to do is to mix more soil in coal and get "better" coal.. How could this cover up be done so easily I don’t know as one of these power plants is right opposite the South East Asian Regional Office of the World Health Organization, the other two not too far away. They spew black soot and cover WHO’s building.
The thousands of people who worked in these plants had lifetime job guarantees so all they did was sit and gossip.
The railways, as they did not get paid, did not have the funds to provide for the safety of their services. Their services were unreliable. So the electricity plants had to keep months’ of stock of coal with them. During this time the coal absorbed water worsening its fuel efficiency (and remember this means more coal for the same electricity; and for those who do not like economics, more global warming and wastage of limited resources).
Railways did not cover the coal (remember there were no funds or motivation involved) while they transported it these thousands of kilometers away, spreading coal dust around the country for no good. No one could complain. Nor did anyone care if the coal got stolen on the way.
Railways either needed electricity or oil to run themselves. Of course they did not pay the electricity generating plants, and the oil companies (all government owned). For this analysis I will keep the oil companies out; and also train wagon manufacturing companies and the steel companies (all publicly owned, suffering similar fate). The railways had to ferry people for subsidized money as well, a lot traveled without tickets. The services provided by the railways were in shambles. To make whatever they could to survive they overcharged the higher class, and the private cargo.
So the private cargo could not afford the railways. They used the road to supply their goods. As you can assume the roads did not get much funding, and much of the highways would fail to pass the test of the minor road in the West. The trucks had very limited lives. The traffic jams would take hours. The fuel efficiency was abysmal, and environmental and human consequences of the whole package horrendous. The food got spoiled by the time it got to its destination, other goods got damaged, reverberating hurt and environmental damage all over the economy, from this and other similarly socialized industry.
Last year (in March 2004), I was supposed to take an Air India flight from Delhi to Frankfurt. I would have flown from Delhi to Mumbai, back to Delhi, then back to Mumbai, and then to Frankfurt. It is the same airline that 50 years ago, before nationalization, was one of the top in the world. Indian Railways was the pride of the British empire. The tunnels they dug to reach the mountains were among the last ones. The oil industry is a government monopoly. Oil refineries were set up where there was no oil. Until 1991, the State had virtually all manufacturing in its control. NALCO, the State run Aluminum Company extracts the ore and does the preliminary processing in the northwest and then sends it all the way to a remote part of the east for final processing. BHEL, a huge monopoly public company, which manufactured machinery for the industry, has its units spread all around the country, requiring massive parts to be transported, to and fro, from one place to another. Government control of the textile industry so badly crippled it that you still mostly see "Made in China" or "Taiwan" on clothes. The State provides massive subsidies for fertilizers encouraging overuse and polluting the underground water.
All this is only a glimpse of the socialist economy. In late 1980s, the public sector had a share of 27.1% of the GDP and 71% of the organized employment (cite).
Even an honest pyramid scheme would failThe small private sector, already reeling under horrible and demeaning regulatory control, sustained socialism for a while. When this funding, the deficit, and foreign loans/aid could not keep the pyramid scheme running, the system collapsed, as it did in India in 1991.
In the meantime, socialism had created corruption and complexities of enormous proportions with deeply vested interests. Once created, even with the best of intentions, it would take decades and generations to untangle the wasteful complexities.
The conclusion is short and did not need this entire long and stupid story: you need to produce something to distribute it; a federal guarantee has no value if all it can do is print and not produce. Only profit-based industry incorporating externalities can correct the poverty situation and environmental problems.
Socialist systems would fail even if they were genuinely concerned and honest.
And there is much more to it than just money and environmentAlas the aforesaid is not the worst, as a socialist system is never honest and cannot be, and generates an immoral and characterless society. All you have to do is to imagine how all these players were adjusting, and accommodating to the system, relying on earning benefits not from their productive work (even if they did produce), but from their positions, using any creativity they had to bend the system or to exploit it, losing confidence in their abilities and developing servile and dependent minds. When you have accepted being corrupt (as socialism asks for—forcibly take away from someone to give to someone else), you can very easily transfer that logic to apply to your family and then to yourself. The character issue is the area where the worst of socialism lies. It has impoverished the souls.
Modern variants of positive legal theory state that the law should be what the legislators say it is. But what principles are to guide the legislators? And if we say that the legislators should be the spokesmen for their constituents, then we simply push the problem one step back, and ask: What principles are supposed to guide the voters?
The U.S. Supreme Court’s 9-0 decision overturning the obstruction of justice verdict against Arthur Andersen Company comes too late to save the firm or the jobs of thousands of employees who found themselves out of work when the government destroyed the firm three years ago.
Indeed, the Andersen decision—despite going against federal prosecutors—in itself is a verification of a larger truth, that being that there is almost nothing individuals can do in order to check the devastating power wielded today by the American political classes. Andersen might have had the law on its side, but that fact was not able to save the company from a government determined to break the law in order to make a political point.
As usual, most commentators, even those sympathetic to Andersen, have missed the larger story. The Wall Street Journal, while in a recent editorial praising the high court, also said this:
The Andersen prosecution is an exception to what has otherwise been a good Bush Administration record in prosecuting corporate wrongdoing. The Justice Department needed a political scalp at the time, and it is certainly true that Andersen's senior partners had a lot to answer for. But putting the company out of business harmed the innocent as well and arguably let the most culpable escape.
This is one of those loaded statements about which a volume of work needs to be written, but in this short space one needs to begin somewhere.
U.S. attorneys have been quite busy since the fall of Enron in late 2001, prosecuting numerous individuals for what essentially are business failures, Frank Quattrone and Ken Lay being two of the most obvious ones. Martha Stewart spent time in federal prison for essentially not asking the government, “Mother, May I?” when she sold some of her stock. At the present time, Lea Fastow sits in a Houston federal lockup, her guilty plea taken in exchange for the feds not trying to give her husband Andrew a life sentence for his actions while at Enron.
(Who says the U.S. Government does not take hostages? There is no other way to explain the questionable indictment of Lea Fastow except to say that the government essentially took her hostage in order to extract a politically-popular conviction of her husband, with federal agents reminding the couple that if they did not take the deal, their two young children essentially would be made orphans if the couple fought the charges in federal court.)
In the aftermath both of the 2001 recession and the September 11 attacks, it was all too clear that many large businesses were overextended, having predicted a much more rosy future than what actually came to pass. Furthermore, the previous business boom had followed the classic pattern as explained by the Austrian Theory of the Business Cycle (ATBC), with the Federal Reserve System aggressively pumping up bank reserves, something that ultimately led to speculative bubbles, malinvestments, and the near-collapse of some business sectors most influenced by this artificial boom. As I pointed out five years ago, the vaunted “New Economy” was little more than the same Fed-induced, boom-fed delusion that ultimately brought us the gloomy economic climate of the 1970s and the disastrous Great Depression of the 1930s.
It is not surprising that many firms became highly-leveraged during this boom; indeed, it makes perfect sense for companies to increase their indebtedness during a time of easy money, since it permits them to pay back the debt in the future with cheaper dollars. Those associated with the Austrian School of Economics do not endorse such behavior, and certainly condemn the Fed’s inflationary policies, but the response of firms to this situation is quite rational.
Furthermore, when Congress in 1993 passed legislation (signed by President Bill Clinton) to deal with the so-called income gap by attempting to cap executive salaries at $1 million through tax laws, it de facto encouraged other forms of executive compensation, with stock options being the mechanism of choice for many firms. Federal Reserve policies ultimately created the stock market bubble, giving a false financial picture for these companies. When many firms collapsed earlier this decade, it gave federal prosecutors an opening to pin securities fraud charges upon executives, since the feds could claim that the executives, in seeking to find “gray-area” ways to prop up their firms’ stock prices, actually were trying to fatten their own bank accounts.
(In December 2002, Kelly O’Meara of Insight Magazineinterviewed me for two hours about the Enron case. She claimed to me—without any proof, of course—that Lay and other Enron executives were actually engaging in a “pump-and-dump” scheme in which they were quietly unloading their stocks and putting the money into offshore banks. In her article which quoted me, she all-but-demanded that the government freeze Lay’s assets, even before any charges had been filed. Especially in Lay’s case, that charge clearly is not true, but such is the mentality of the Bush Administration and its media supporters.)
Many of the prosecutions—and I would contend that this especially is true in regards to Enron—that have been conducted in the wake of the business collapses were instituted for politicalreasons. The WSJ is correct; politicians were screaming for scalps and the Bush Administration was all-too-happy to oblige, given that the prosecutions served as a means to further extend state power over the actions of business owners and managers. That these actions have dampened investment opportunities in the country—and have helped to drive U.S. investors to look overseas—also works to the advantage of the political classes, as they can claim that investors and business owners are unpatriotic and should be even further regulated and prosecuted.
Granted, it would have taken courage for the Bush Administration and Congress to call for cooler heads, and to have conducted a serious investigation as to why the stock market collapsed and why the Dot.com boom was built on a foundation of sand. To have done so, and to have dealt with the truth, also would have made it necessary for those in government to come clean with how government intervention into the monetary sector of the economy touched off what ultimately would become a financial disaster. To use Milton Friedman’s famous analogy, it would be more likely that cats would start barking than to hear the feds admit their role in this shady affair.
So, instead of truth, we have prosecutions in which truth is stretched out of proportion into unrecognizable shapes. Of course, to successfully prosecute individuals, one must have the legal mechanisms with which to work. Thus, we see the use of “obstruction of justice,” “conspiracy,” and “fraud” charges to railroad politically unpopular people into prison.
While having an ominous sound, “obstruction of justice” is nothing more than the accused not preserving all of their property and records after an alleged “crime” has been committed. However, as Martha Stewart and Frank Quattrone have found out, one can be convicted of “obstruction of justice” even if there were no justice to obstruct, given that in both of their cases, there was no underlying crime that they would need to “cover up.” Furthermore, “obstruction of justice” runs only one way, as federal prosecutors and investigators are encouraged to lie, destroy evidence, hide the facts, or create wild tales all in the name of prosecuting crime. By the government’s definition, federal agents cannot obstruct justice, since they are justice.
(Yes, there are laws on the books supposedly prohibiting the hiding of exculpatory evidence or lying in court, but prosecutors generally do not like to indict themselves, so they are de facto immune from prosecution. On the federal side, no matter how outrageous the conduct of U.S. attorneys, they almost always are successful in claiming immunity from any liability, civil or criminal, for their actions.)
In Andersen’s case, some senior managers who were involved in auditing Enron shredded some documents related to that company. However, the feds never established that those documents were germane to their investigation, or that the auditors were trying to destroy evidence that hinted to the commission of a real crime. Basically, U.S. attorneys told a jury that managers shredded some documents, but no one knew if those documents were important and, furthermore, no one is sure that those documents could have pointed to criminal activity, anyway. It was clear even at the trial that since the feds were not able to prove criminal intent on behalf of the managers involved, the mens rea doctrine should have prevailed. (Mens rea, or what the great English Jurist William Blackstone called a “vicious will,” has been the cornerstone of American criminal law since Colonial days.) That is what the Supreme Court ruled, but too late to save Andersen.
Charges like “conspiracy,” “money laundering,” and “fraud” are just as specious. If more than one person is involved in an action the feds say might be illegal, then “conspiracy” charges kick in. As in “obstruction of justice,” a real crime does not need to be committed for “conspiracy” to be a factor. One can conspire to perform an action that is never carried out and still be convicted in federal court.
The charging of individuals with “fraud” also is problematic, since most fraud cases do not fall into the category of what most of us would use to define fraud. In its dictionary form, fraud describes an action by one party to deceive someone else intentionally. For example, I receive almost daily emails from someone claiming to represent EBay, with the message telling me that there has been suspicious activity going on in my account. The message instructs me to download a website in which I give my name, Social Security number, bank account number, and credit card numbers.
It is clear once the site is downloaded that it is notan official EBay program. (I won’t go into details, but suffice it to say that even an amateur like me can sniff out this scheme.) Whoever has sent me the email is trying to obtain my financial information so he can steal from me. This clearly falls into the category of fraud, as the individuals involved in this scheme are misrepresenting themselves for the purpose of stealing from others who believe they actually are submitting information to EBay. The actions and intents of those who have launched such a scheme are quite clear.
Almost all of the fraud cases that the Bush Department of Justice have launched post-Enron, however, fall into a much murkier category. That is because many federal “crimes,” and especially those that fall into the “white collar” category, are much more difficult to define. In the previous example, it is clear that whoever engaged in this scheme was doing so with criminal intent, and that the act itself also was criminal. The question, then, is this: Who is committing this crime? Should a suspect be arrested, prosecutors would have to prove that the person in the dock was directly and knowingly involved in that scheme.
Many federal “white collar” crimes involve actions that the accused openly admits in doing. The question before the judge and jury is not whether the individual in the dock is the one who engaged in certain behaviors, but rather if the alleged action was illegal.
Take the Ken Lay case, for example. The feds are trying to claim that his sales of Enron stock in the fall of 2001 were part of a scheme to commit fraud. Lay admits to selling the stock, and that issue is not in dispute. However, he says that he was selling stock to raise cash to satisfy payments for margin calls on other investments. Furthermore, he also was purchasing Enron stock all the way to the company’s collapse.
Lay also encouraged Enron employees to purchase Enron stock, which the feds claim is proof of fraud. Yet, that proves nothing, since Lay was willing to put his money where his mouth was. Moreover, there is no way that Enron employees could have purchased enough stock due to Lay’s exhortations to artificially prop up the stock price, as the feds contend.
In other words, there clearly exists a mens rea problem here. In fact, most “white collar” cases not only run into the issue of mens rea, but the even tougher issue of whether or not the disputed activity even can be defined as a crime. Furthermore, if the political classes are so concerned about “deceitful” business practices, then why is it legal for the government to carry literally trillions of dollars of unfunded liabilities, something that would be illegal in the private sector? Why is it legal for the U.S. government to hide expenditures in “off-budget” entities? Why is it legal for the U.S. Government and the Federal Reserve System to engage in activities to artificially prop up the value of the dollar while at the same time accusing managers and business owners of the “crime” of “artificially” propping up stock prices?
The issue here is not one of ethics; rather, it is one of power. The political classes permit themselves the luxury of engaging in deceitful activities because it sends a signal to the rest of us that they are above the law. In the aftermath of the Andersen debacle, it is clear that in terms of the dollar value of wealth, the government illegally destroyed far more wealth when it brought down Andersen than anything Enron could have done. When one brings in the government’s attempt to destroy Microsoft, not to mention the Fed’s actions to artificially inflate the currency, it is clear that the U.S. Government obliterates prosperity on a regular basis.
The only difference is that Enron executives are in the dock, most facing lengthy prison terms, while the political classes are treated as heroes by the same mainstream news media that vilifies business executives. Thus, even when handed a rare defeat in the courts, as what happened with Andersen, the political classes still win. They already had made their point by demonstrating that they had the power to bring down a large and important business firm and create financial havoc in the process. They proved that they could destroy the lives of millions of people—and not lose a dime in the process, and even gain more power.
A free market, capitalist, exchange, political, economic system is far more environmentally friendly than any statist system, including the welfare state, socialism (whether democratic or centrally planned), or fascism. To demonstrate this, I would like to engage in some conjectural history, that is, to imagine how the world might be different had government never intervened to protect the environment but rather left all matters to property owners to sort out.
When we examine history, part of this involves carefully imagining how things might have happened otherwise. It is plain enough, for example, that without the American Revolution, without slavery, without the Russian Revolution, without Hitler's Holocaust, and so forth, the world would be better or worse than it is.
In our personal histories, too, we can imagine, with some discipline and understanding of ourselves, of human psychology and of ethics, how our lives and that of those on whose lives we had an impact would be better or worse had we made different choices, taken different actions from those we actually took.
Indeed, the study of history has as one of its purposes to learn how in similar circumstances we can do better. And sometimes doing better means making sure that different laws and public policies from those that actually became part of our history would have had to be chosen.
This fact needs to be recalled when we consider such current problems as those involving what is commonly referred to as the environment. What might have prevented some of the lamentable pollution that we now experience? No, not all of it was preventable. Some environmental problems are inherent in the ecology of the globe—for example, the Los Angeles basin had been subject to atmosphere inversions throughout the past which left it filled with what we now call smog but was the combination of haze, dust, smoke from wild fires, and so forth.
Other so-called environmental problems, such as wildlife extinction, also occurred not through human agency but because of natural events. Only when human agency is involved—so that we can consider the different choices people could have made—can we entertain the possibility of having done things better. Indeed, a point rarely noted these days, the very idea of critically assessing past policies and conduct involves the assumption that human beings can make basic choices and they might have made ones different from those they did actually make.
Reconsidering Approaches to Environmental Problems Consider the proposal that current champions of free-market environmentalism often make, a proposal that defenders of the politicization of environmental problems oppose almost automatically.
This proposal boils down to the very general principle, namely, that it is better all around for land and other property to be owned privately than publicly. Common or public ownership results, in other words, in what has been dubbed the tragedy of the commons. This occurs when everyone in a given society is convinced that some realm belongs to us all, so that we all are entitled to make use of it to our hearts' content. This leads to depletion of resources.
The remedy champions of politicized environmentalism offer, namely, that the government ration our use of public or common resources, will not work. Environmentalists may gain temporary advantages from governments, but soon other interests take over.
Imagine how it might have been had the free-market idea been made part of basic law: all land would be owned by individuals and any use made of the land would require the agreement of the owners. This would have made it nearly impossible to implement massive technological projects such as building railways, highways, airports, sports and recreational arenas unless complete consent had been given by the owners over whose property these projects would have had to be constructed.
The Fifth Amendment to the U.S. Constitution suggests this approach, stating that only for public use may private property be taken. Public policies must protect individual rights. So, very little of what there is to be owned can belong to the public. The rest must remain at the disposal of private owners.
Such a general approach to ownership of land, for example, would not have made possible the implementation of massive projects in the name of the public and thus would have diversified resource use throughout the country. The building of railways, highways and many other pseudo-public projects would not have occurred with the aggressiveness they actually occurred in this country's history.
Counterfactual Knowledge Of course, it may not be possible to know exactly what might have happened instead of what in fact did happen. But just as it is possible to know that freeing those held in slavery is better all around than keeping them enslaved, that not perpetrating the Holocaust is better than doing so, in less dramatic matters, too, it is possible to know that certain policies are superior to others. It is the contention of those who champion a free society that implementing the principles of the right to private property on the broadest possible scope would have worked out for better as far as our environmental woes are concerned.
And as with those more Draconian evils, so with this one, it is better late than never! Thus the best approach to environmental issues is to privatize—that is how responsible environmental management is encouraged (though never guaranteed, as it certainly isn't when government takes on the task).
The Merits of the Classical Liberal Infrastructure Societies where the principle of freedom of association is upheld and where private property makes it possible for one to enjoy a significant measure of sovereignty, are certainly better ones than those growing in levels of involuntary servitude, even to the highest or noblest goals one can imagine, including environmental rectitude. This is true, beyond any reasonable doubt.
Yet, sadly, most propose political solutions to problems they see with the environment and support state regimentation as the default solution to whatever problem they perceive.
The late Michael Kelly, a very fine writer-thinker on many fronts, offered a line of criticism of the radical, free-market thesis which is worth quoting and scrutinizing at some length. Kelly argues that if you think that it is private individuals, working in voluntary cooperation, who make good things happen, think again:
This is mostly myth. If we look at the great moments in innovation, the developments that changed everything, we almost always find that the private geniuses did their bit, but the great clumsy, heavy hand of government is frequently what turned that bit into a new way of life.
Ford gave us the cheap car, but Eisenhower gave us the interstate. Edison gave us the light bulb, but the TVA wired the farms. Most of the great advances in flight, and all the advances in space flight, have their origins in government—specifically military—work. So, too, with the Internet, which rose out of the government’s ARPANET system. It was government that linked America’s coasts by rail, government that constructed the Panama Canal, government that built all the really big stuff. The revolution in flight … came about not only because of the work of private geniuses but also because a bunch of bureaucrats at NASA pushed it, and because those bureaucrats were lucky to have had as their boss since 1992 an engineer named Daniel Goldin …
Now consider some doubts about Kelly’s challenging remarks. Let’s start with Frederick Bastiat’s argument in which the French political economist shows that although what governments do often takes center stage on the historical and reportorial scene, it is folly to forget that such doings displace a lot else that might have happened had government not substituted its one size fits all judgment and coercive action for that of individuals who act by means of a great variety of voluntary cooperative efforts. This argument is especially relevant to Kelly's list.
Reconsidering Government Triumphs To start with, consider Eisenhower and the interstate. No one can reasonably dispute that this federal policy gave a very serious boost to the automobile and in the process suppressed, most likely, the development of alternative, probably much more environmentally friendly, modes of transportation. Or take TVA, which was by no means a godsend to all, as some have maintained. Most of those in the region had electricity already, but TVA simply grabbed up many of the existing power companies.
With the TVA, all of the best farmland in the Tennessee Valley was placed under water. Farmers were kicked off their lands, forced to sell at below market prices and many died prematurely as a result of the stress. The Tellico Dam fiasco became famous because of the snail darter, but it was a horrible project even without the intervention of the flawed ESA. In that case, landowners were kicked off their lands even though they were not going to be under water. Instead, TVA sold the land to developers and figured in the potential profits as part of the cost-benefit analysis.
Of course, TVA’s environmental impact is now estimated as devastating.
The ARPANET system did give rise to the Internet but, as many historians argue, that was of minimal significance. The initial ARPANET was clumsy and only after a demand for the service developed did it become efficient and useful. Kelly was right—as was, also, former U.S. Vice President Al Gore—that the initial ideas that produced the Internet had come from efforts by the Department of Defense to enhance the defense of the country. However, these ideas could have developed independently and once they became divorced from state matters become far more productive than beforehand.
As to the railways that government has made possible from one end of the continent to the other, this has produced massive monopolies that later were used to justify antitrust legislation and that have run roughshod over private farming across the country. In the case of the Transcontinental Railroad, it was a subsidized fiasco. One of the consequences of this monstrosity was the early attempt to wipe out the Indians. The railroad certainly hastened their demise, especially since it came so soon after the Civil War when folks like Sherman and Sheridan were still in command and had prominently in mind eliminating the Indians altogether. I need say little about the fiasco that the Panama Canal has arguably been, politically and even economically, given what might have been done instead. The story is the same all the way across, including the flight industry where government airports have been the source of much consternation both for environmentalists and for those with different visions as to how that industry might and should have developed.
Where Force Is Out of Order The bottom line, though, is this: Governments use force to accomplish their goals. Force, unless used in defense—as the military is supposed to use it—wreaks havoc in its path, even where the ostensible results seem to be grand.
When law and public policy favor the system of eminent domain and the use of publicly owned lands and waters for whatever happens to be in democratic demand, the result is akin to a zero sum game: the favored policy or law wins and the disfavored one loses. Whereas in the free market there are many demands that get satisfied to a greater or lesser extent.
My main point, then, is plain: had there been a consistent and firmly implemented system of private property rights, there would not have been massive environmental mismanagement. But it is better late than never.
Some of this essay draws on Tibor R. Machan, Putting Humans First: Why We are Nature's Favorite (Lanham, MD: Rowman and Littlefield, 2004).
Austrian economics lacks a formalized, self-conscious theory of environmental economics. But in fact all of the major elements of such a theory already exist and in that sense what is needed is to piece together the relevant aspects of Austrian economics in order to draw out and focus a theory that is already there.
The purpose of this paper is to do just that. In developing an Austrian theory of environmental economics, very little new theoretical ground will be plowed. But by bringing together Austrian concepts of costs and the praxeological foundations of economics we discover a unique perspective on pollution and the role of property rights in solving environmental problems. Furthermore by placing environmental problems withinthe context of personal and interpersonal plan formulation, we discover that they are not about the environment per se but about the resolution of human conflict.
Why an Austrian TheoryEnvironmental economics is steeped in standard neoclassical theories of efficiency and Pigouvian welfare economics. These theories have been rejected by Austrian School economists as conceptually unsound and as yielding analysis that does not reflect the real world. This in turn has led to policy prescriptions that, while theoretically and formally elegant, are nonoperational.
In particular, environmental economics is an outgrowth of the theory of externalities and is primarily focused on maximizing the social value of resource usage. This is defined as that allocation of resources obtained in a perfectly competitive general equilibrium. Social inefficiency arises when the social costs associated with external effects, such as air or water pollution, are not incorporated into the cost of producing the pollution generating product or its market price. From this perspective, the overall value of production can be increased to society by conforming the output of the pollution-generating product to the level that would be generated if the pollution costs were being reflected in its price. Under such a circumstance there would be an efficient reallocation of resources where less of the offending product and more of other goods and services would be produced. The value of the production gained will more than offset the value of production lost, increasing social welfare. When production and consumption are arranged such that all such pollution costs are accurately reflected in product prices, within the context of otherwise competitive markets, the market is said to be Pareto efficient, i.e., society, on net, cannot be made better off.
From this perspective, the process of production, exchange, and consumption in a strictly voluntary setting cannot be free of the kinds of inefficiencies generated by these negative externalities or "residuals" of the production and consumption process. Kneese, et al. (1973, p. 28) explains this inevitability as follows:
If the capacity for the environment to assimilate residuals is scarce,By this it is meant that the environment does not have the ability to naturally absorb environmental residuals in a way that is costless to society. the decentralized voluntary exchange process cannot be free of uncompensated technological external diseconomies unless (1) all inputs are fully converted into outputs, with no unwanted material and energy residuals along the way, and all final outputs are utterly destroyed in the process of consumption, or (2) property rights are so arranged that all relevant environmental attributes are in private ownership and the rights are exchanged in competitive markets.This is the world of efficient outcomes as demonstrated by Coase (1960) where all relevant property rights are specified and, because markets are "competitive" transaction costs are zero and the inefficiencies associated with externality problems can be bargained away. Neither of these conditions can be expected to hold in an actual economy.
The Austrian case against the standard Pigouvian approach has been argued (Cordato 1992a and 1995) and will not be recounted in any detail here. But in order to understand the genesis of the alternative, the core problems with the standard approach need to be made explicit. These problems can be summarized as follows:
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Efficiency is a "praxeological," i.e., individual goal seeking problem, not a value maximization problem. From a policy perspective, then, social efficiency is assessed in terms of the extent to which legal institutions facilitate consistency between the ends that actors are pursuing and the means that they are choosing to accomplish those ends.
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Costs are subjective and therefore social costs and social value, as the terms are typically construed, do not exist as either measurable or even theoretical concepts. The standard approach is dependent upon being able to measure and therefore make objective these concepts. For example, the standard approach to environmental economics depends on being able to identify situations where the marginal private benefit of an activity exceeds the marginal social cost. This inherently involves making interpersonal utility comparisons and the summing of interpersonal evaluations across individuals. Neither of these can be held as methodologically valid.
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Pareto optimality, i.e., the perfectly competitive general equilibrium, is irrelevant as a real world efficiency benchmark. This is largely because of the implications of 1 and 2. Because human action takes place through time, with knowledge and therefore supply and demand for inputs and outputs constantly changing, the particular Pareto optimum for any point in time is irrelevant. Strict adherence to subjective value and therefore subjective cost theory also leads to the rejection of Pareto optimality as a normative benchmark. Outside of a framework of unanimity it is impossible to talk about Pareto superior changes to a given state of the world without invoking interpersonal cost/benefit analysis.
While these arguments form the basis of a critical analysis of standard welfare and therefore environmental economics, they also allow us to bring to bear a uniquely Austrian perspective on both the positive and normative analysis of environmental problems. When viewed through the praxeological lenses of Austrian economics, with all that that implies, concepts such as pollution, environmental costs and degradation, and even the tragedy of the commons take on meanings that are quite different, and ultimately more rigorous, than definitions found in standard discussions.
The Praxeological Nature of Environmental ProblemsMisidentifying Pollution as a Social Cost Problem
What constitutes an "environmental problem"? At first glance the answer might appear obvious. Issues like air and water pollution, animal extinction, or the over-use of resources, such as might be associated with the "tragedy of the commons," all come to mind. But of course this assumes a common framework of analysis that gives rise to certain definitions of these terms and explanations about why these phenomena are problematic. For example, consider a classic tragedy of the commons problem, commercial fishing in the ocean. The conclusion is that, absent the enforcement of legal constraints, any given species of fish will be "over-extracted" by fishermen who face every incentive to catch as many fish as possible now, before the next boat comes along. In other words, there is no incentive to conserve or restock or in any way nurture the given supply of fish. But on its face this discussion doesn’t explain why this is a problem. Economists see the rate of fish extraction in the commons as an "environmental problem," rather than just one of an infinite number of extraction rates that are possible, because they have a "correct" rate in mind. From the perspective of standard environmental economics, this resource, the fish, is being over-utilized because the depletion rate is greater than would occur in a Pareto optimal world. The "tragedy of the commons," is a "tragedy" because fish are being extracted beyond the point where the marginal private benefit of the fish being caught are greater than the marginal social cost. It is therefore the starting point in terms of economic analysis that gives rise to the definition of not only a tragedy of the commons but all other environmental problems.
Very similar stories could be told with respect to issues of air and water pollution. Indeed, it is the underlying economic analysis that determines what is considered pollution in the first place. If a byproduct of production that is emitted into the air ends up giving rise to a divergence between marginal private benefit in the production of the associated product and marginal social costs, then the product output will be greater than its Pareto optimum level. That byproduct will then be defined as an air-pollutant. If, on the other hand, the byproduct does not have that result, for example water vapor, a byproduct of many production processes, then that byproduct is not considered to be a pollutant.
But as noted previously, this analysis does not give us a firm methodological foundation for identifying what is and isn’t a pollutant. It rests on an approach to social costs that takes the analyst’s eye off the ball: individual actors. The concept of social costs, as typically invoked, completely disembodies and impersonalizes costs. Social costs exist outside of and apart from individual choosers. As Richard Posner argues, "the question of whose cost is not a profitable one in economic analysis" (1973, p. 94). This view of costs becomes quite clear in applying concepts such as the Coase theorem or the Hicks-Kaldor compensation principle. With the former, the issue of who is imposing costs on whom is unimportant to the ultimate solution. As Posner notes, "the relevant question . . . is who could prevent the loss at lower cost, not whose cost the damage ‘really’ is" (p. 94). In the second, individual pollution cost bearers never need to be compensated for either past or ongoing harm so long as the output from the pollution generating production process conforms to a Pareto optimal solution. The relevant costs that must be overcome are not those that are being born by the victims but those that are being incurred by "society" because of the "misallocation" of resources generated by the externality. In both cases, what is important is whether or not the level of emissions and the joint output of all the affected production processes are "efficient." As we will see, in either case an "efficient" solution could be implemented without ever addressing the actual pollution problem as seen from an Austrian perspective.
The "social cost" approach to environmental economics has led to the "dehumanization" of issues related to the environment. Pollution or "tragedy of the commons" problems are not problems because of the damage that some people may or may not be inflicting on others, but because they create what amounts to disembodied harms. A problem occurs because some goods are "overproduced" while other goods are "underproduced." In its more extreme form this has led to a separation of the concepts of costs and harm from human beings completely, substituting notions such as "costs to the environment," and damage to the ecosystem. For example, Pearce and Turner in making a case for a tax on packaging claim that "environmental damage from packaging waste is not reflected in the prices of packaged products" and that "the size of the levy needs to be related directly to the environmental damage done by the production and consumption of the packaging, or to the costs of restoration to the environment" (Pearce and Turner 1992, p. 6). Nowhere in the article is there mention of actual people who are damaged. Costs are associated with "restoration to the environment" not compensating victims. Once the concept of costs is separated from individual human beings, i.e., from the act of choosing, it looses its footing and so does the economic analysis.
Pollution as Interpersonal ConflictEconomic analysis of the environment that starts from a praxeological perspective shifts the focus from maximizing the social value of output or equating price to marginal social cost, to efficient intra- and inter-personal plan formulation and execution, i.e., the internal consistency between the means that people use and the ends that they desire to achieve. Within this context, pollution problems that are indeed problems create an interpersonal conflict over the use of means and therefore obstruct efficient plan formulation and execution. Pollution is therefore not about harming the environment but about human conflict over the use of physical resources. Generally formulated, a pollution or environmental problem arises when individual or group A and individual or group B are simultaneously attempting or planning to use resource X for conflicting purposes. Unless emissions into the air, discharge into a river, or the extraction of fish from the ocean give rise to such a conflict then there is no economic, i.e., efficiency problem. Humans cannot harm the environment. Instead, they can change the environment in such a way that it harms others who might be planning to use it for conflicting purposes.
Most of the classic "textbook" environmental cases can be formulated in this context. Whether it’s the problem of a factory discharging chemicals into a river and destroying the fishing downstream, or the odors from an animal farm fouling the air in nearby housing developments, or Coase’s classic cases of straying cattle or railroads emitting sparks, they can all be seen as interpersonal conflicts. In each case people are simultaneously making conflicting plans with respect to the use of a physical resource, and it is this conflict that allows us to identify what is transpiring as an environmental problem. If there were no
recreational users of the river or housing developments downwind from the pig farm there would be no pollution. Environmental problems are not really problems for or with the environment, but human problems of mutual plan formulation and the achievement of goals. From an Austrian perspective, Robinson Crusoe cannot be a polluter.
The Role of Property RightsIt is widely recognized, even within the most orthodox literature in environmental economics, that property rights have an important role to play in resolving environmental problems. Both more traditional Pigouvians, as exemplifiedby Kneese, et al. (quoted above) and their Coasean critics recognize to varying degrees that the origin and solution to environmental problems lie with the extent to which property rights are clearly defined. And, on this level, Austrians would agree.
But the praxeological approach described above gives rise to a different kind of property rights analysis and distinctly different conclusions concerning property rights based solutions to environmental problems. Whereas the standard approaches are focused on minimizing social costs or facilitating a Pareto optimum, the approach described here is focused on minimizing interpersonal conflict. For Austrians the role of property rights in abating such conflicts has its roots in Menger. In his Principles of Economics, Menger argued that all "economic goods" must come under the rule of private property in order to avoid conflicts of interest regarding their usage. He stated that
when all members of society compete for a given quantity of goods that is insufficient . . . a practical solution to this conflict of interest is . . . only conceivable if the various portions of the whole amount at the disposal of society pass into the possession of some of the economizing individuals, and if these individuals are protected by society in their possession to the exclusion of all other individuals. (Menger 1981, p. 100)
In a later passage Menger seems to recognize problems that might be associated with air and water pollution or the tragedy of the commons where the resource in question is generally viewed as a noneconomic or free good. Menger, again referring the relationship between private property and human conflict states that
It applies also to all non-economic goods with respect to which the boundary between requirements and available quantities is already so close . . . that any misuse or ignorance on the part of some members of the economy may easily become injurious to the others. . . . For these and similar reasons the phenomenon of property can also be observed in the case of goods that appear to us still, with respect to other aspects of life, as non-economic goods. (Menger 1981, p. 105)
While under most circumstances and for most uses the ocean is essentially a noneconomic good, it may not be in terms of its use for harvesting certain kinds of fish. Or while the air may be considered a noneconomic good for many uses, it may not be if one of those uses is to emit odors from certain farming activities. As Menger argued, the only "practical solution" to conflicts that arise over the "economic" aspects of these otherwise "noneconomic" resources is private property.
For Austrians then, if the defining characteristic of pollution is that it is the consequence of a human conflict over the use of a resource, then it is logical that both the origin and the solution of the problem is to be found in a lack of clearly defined or enforced property rights. This property rights approach to negative externalities can be found in the work of most Austrians who have written on the subject. But what has gone unrecognized is that the writings of Mises, Rothbard, and others on this subject have been an application of insights found in Menger regarding the nature of and the solution to human conflict in a world of scarcity.
Resolving Conflict vs. Solving a Maximization ProblemThe focus of the Austrian approach to environmental economics is conflict resolution. The purpose of focusing on issues related to property rights is to describe the source of the conflict and to identify possible ways of resolving it.
For both Coasean property rights analysts and more traditional Pigouvians, the goal is different. It is to achieve some form of "optimal" distribution of resources. Coase, in his analysis, seeks to maximize the total value of output, and alternative property rights arrangements are seen in this light. As he notes in his classic 1960 article, "one arrangement of rights may bring about a greater value of production than any other" (Coase 1960, p. 16). For Pigouvians the goal is to achieve a Pareto optimal distribution of resources by seeing to it that the generator of negative externalities considers all social costs in making production or consumption decisions. In both cases attention is diverted from those who are party to the conflict and toward finding a "value" maximizing allocation or resources. But from an Austrian perspective this is not a tenable goal as it necessarily involves interpersonal utility comparisons and unreasonable assumptions about human knowledge and the static nature of the world (Cordato 1995). This is why, as noted above, a solution to a particular problem may be "efficient" within Coasean and/or Pigouvian context but irrelevant from an Austrian perspective. For example, it is unlikely that a Pigouvian tax, even if it could be appropriately calculated, would do anything to solve the "Austrian" problem. If the tax is collected only to bring about the correct price/output combination and an "optimal level of pollution" (à la the Hicks-Kaldor compensation principle), leaving the initial conflict unresolved, there would be no reason to consider the solution to be efficient from an Austrian perspective. For similar reasons, the same would be true if a Coasean judge decided to allow a pig farmer to continue to emit odors into local housing developments because the homeowners are the "least cost avoider."
Property Rights and Public PolicyFor Austrians then, public policy in the area of the environment must focus on resolving these conflicts over the use of resources that define pollution, not on obtaining an ultimately unobtainable "efficient" allocation of resources. The traditional Austrian approach to property rights analysis in this area can and should be seen in this light. Also, by viewing the works of Rothbard, Mises, Block and others from this perspective of conflict resolution one can obtain a better understanding of why Austrians have been so critical of Ronald Coase’s approach to property rights analysis. While property rights are equally important for Coaseans and Austrians, their normative goals are significantly different.Austrian disputes with Coasean property rights analysis have been detailed in a number of articles and will not be recounted here. For only a sample of these articles see Block (1977); Cordato (1992b); Krecke (1996); North (2002). For Coaseans the focus is on alternative rights arrangements and maximizing the value of output. For Austrians, whose goal is to resolve conflicts, the focus is on clarifying titles to property and rights enforcement.
If a pollution problem exists then its solution must be found in either a clearer definition of property rights to the relevant resources or in the stricter enforcement of rights that already exist. This has been the approach taken to environmental problems by nearly all Austrians who have addressed these kinds of issues (see Mises 1998; Rothbard 1982; Lewin 1982; Cordato 1997). This shifts the perspective on pollution from one of "market failure" where the free market is seen as failing to generate an efficient outcome, to legal failure where the market process is prevented from proceeding efficiently because the necessary institutional framework, clearly defined and enforced property rights, is not in place.
Two Approaches to Conflict Resolution: Polluter Pays and First Come First Served
A pollution problem then can take one of two forms, either titles to the relevant resources are clear but the rights to use that property by the title holders are not being enforced, or titles to a resource are not clear and two or more parties wish to use the resource for conflicting purposes. Obviously, each of these would require a different approach to solving the problem. But in each case the solution should focus on resolving the conflict and therefore allowing for the efficient formulation of plans by all parities involved.
The polluter pays principleFor a more extensive discussion of the polluter pays principle within the wider context of contemporary environmental policy debates see Cordato (2001).
In environmental policy the polluter pays principle is an outgrowth of Pigouvian welfare economics. The optimal price-output combination will arise in a market when external pollution costs are reflected in the marginal cost of production, i.e., are internalized by the polluter. In other words, if the polluter is made to "pay" a dollar amount that is equivalent to the marginal social costs associated with the pollution that he is generating, "efficiency" will prevail. Generally speaking there are two approaches to applying the polluter pays principle. The most traditional and straightforward is the Pigouvian excise tax. In this case the polluter is forced to "pay" either through a tax that is equivalent to the "pollution costs" per unit of output or per unit of effluence. The second is through tradable emissions permits. In this case an "efficient" level of pollution is determined and permits to pollute which total to this efficient level are bought and sold in the marketplace. The polluter is forced to pay either explicitly by having to purchase permits in the market or implicitly by having to forgo selling the permits that he holds.
There are two fundamental problems with these approaches to "making the polluter pay." First is that both of these approaches are fundamentally forms of market socialism and suffer from all of the problems that Austrians have typically made against central planning (Cordato 1997). Most specifically, a central authority must know in advance what the efficient outcome is. In the case of the tax, a central authority must know in advance the exact amount of the externality costs being imposed by the polluter, and the correct price and output, not only for the good in question but, since efficiency only makes sense in a general equilibrium context, for all other affected goods and services. In the case of tradable permits, the knowledge requirements are essentially the same. This is because the central authority must first determine the "efficient" level of emissions for the particular pollutant, which also must be determined within the context of a general equilibrium solution.
A second problem is that the focus is on achieving the efficient price/output combination and not eliminating the conflict or the harm that is being generated. "Internalizing the cost" typically means seeing to it that the producer/polluter faces a marginal cost curve that would be the same as the curve that would be faced if he were bearing all the costs of production including the costs associated with the pollution. Whether or not the costs that third parties bear are eliminated or compensated for or the intrusion into their plan formulation process is ended is incidental and ultimately irrelevant. This is particularly obvious with respect to the tradable permits approach where an efficient level of pollution is chosen and potential polluters are issued permits to, in the aggregate, emit that level. From an Austrian perspective, after implementing such a policy you are still likely to be left with a pollution problem, all-be-it a possibly less severe one (see McGee and Block 1994).
In spite of these problems the polluter pays principle should not be jettisoned. When all property titles are clearly delineated, a reconstructed polluter pays principle that is rooted in the strict enforcement of property rights makes sense. A polluter is someone whose production byproducts are seeping onto the property of others and interfering with plans that they may have for the use of that property. By interfering with these plans the polluter is reducing the efficiency by which the victim of the pollution can pursue his or her goals. What is meant by "making the polluter pay" is that it is the polluter’s responsibility, to the extent possible, to make the victims of the pollution whole (see O’Driscoll and Rizzo 1985, p. 142). There is a conflict over the use of a resource. The source of that conflict is the generation of a production byproduct that crosses from property that is owned and controlled by the generator of the byproduct to property that is owned and therefore should be controlled by a nonconsenting party. The responsibility for ending the conflict lies with the polluter who should be responsible for truly internalizing the costs of the conflict generating activity. In this case, internalizing the costs of the pollution does not simply mean facing a new supply curve that has shifted to the left by the right amount. For the polluter it instead means eliminating the costs of his polluting activities to those whose property usage is being curtailed. This might be done by eliminating the emissions, confining them to his own property, or by compensating the victims of the polluting activity by an amount that fully addresses the grievance.
First come first served
The second scenario under which a pollution problem can arise is when property titles and therefore property rights are unclear. A and B are attempting to use the same resource for conflicting purposes, with neither A nor B nor anyone else having clear rights to the use of the resource. A typical example might be where effluence is being discharged into a river that is being used for fishing or recreational purposes further downstream.
First of all, it should be made clear that in this type of case, the effluence is not really the problem. The problem that is generating the conflict is the lack of property rights definition. Typically, it is the scenario described by Menger where use of an otherwise noneconomic good becomes injurious to others and therefore, at least in that use, moves from noneconomic to economic. Unlike in the former case where the goal is to insure that "the polluter pays," in this case the goal is to determine who has the right to use the resource.
It should be noted that we cannot determine, as Coaseans might insist, that the rights go to the person whose use will maximize the overall value of production. There is no methodologically sound way of making such a determination. It also means that we cannot determine, without injecting a sense of personal aesthetics, that a more pristine resource, a portion of a river that is used for swimming or fishing, is preferable to a less pristine resource, the same area used as a waste receptacle. In other words, the responsibility for internalizing costs does not automatically go to the person generating the production byproduct.
In such a case, a solution might be to use the principle of first come first served (see Rothbard 1982). This has several virtues from the perspective of an efficient running market process. First it can reduce the possibility that a conflict will arise in the first place, or it might generate a negotiating process that could resolve potential problems before they arise. With the knowledge that a first user rule is likely to be upheld by the courts someone who desires to use a resource in a way that conflicts with a known first user will either decide not to go ahead with his plans or will go to the first user to negotiate a compromise. This also increases the level of certainty for the first user who can go ahead and implement his plans with reasonable expectations that his rights to use the relevant resource will be enforced in the face of others whose future plans might conflict. Such a rule would also increase the efficiency of the market process by reducing overall uncertainty in the plan formulation process by enhancing both the amount and quality of information that is captured in relative prices (see Cordato 1998).
Austrian Theories of Welfare EconomicsThus far we have avoided any detailed discussion of Austrian welfare economics. This is primarily because the theory that is outlined here does not hinge on acceptance of one or another of themore general standards for assessing social welfare found in the Austrian literature. In particular I refer to Rothbard’s (1977) demonstrated preference standard of social utility; Kirzner’s (1988) plan coordination standard; and Cordato’s (1992a) knowledge based theory of catallactic efficiency. Instead it is derived from what all of these theories hold in common, namely Austrian economics’ praxeological foundations. As such, this theory is consistent with all three of these approaches to social welfare.
The starting point for all Austrian welfare economics is the goal seeking individual and the ability of actors to formulate and execute plans within the context of their goals. Furthermore, in all three approaches, social welfare or efficiency problems arise because of interpersonal conflict. For Rothbard such conflicts arise because of interferences with the voluntary use of one’s own property. This prevents a demonstration of true preferences, moving one to a lower level of utility than would otherwise be achieved. For Kirzner interpersonal conflict that cannot be resolved by entrepreneurship and the market process gives rise to a lack of plan coordination and therefore social inefficiency. And for Cordato, conflict, that similarly cannot be resolved by the market process, gives rise to catallactic inefficiency by preventing useful information from being captured by prices. A theory of environmental economics and pollution that evolves from problems associated with human conflict then would be a natural implication of each of these welfare standards.
In addition, these standards would argue that irresolvable inefficiencies, i.e., inefficiencies that cannot find a solution in the entrepreneurial workings of the market process, arise because of institutional defects associated with the lack of clearly defined or well enforced property rights. In a setting where rights are clearly defined and strictly enforced, plans may conflict but the resolution to that conflict is embedded in the exchange process. In other words, conflict may arise at the planning stages but is resolved before the actors proceed with implementation of those plans. For example, persons A and B may have conflicting plans with respect to resource X, but if ownership to X is clearly defined as being in the hands of A, B, or a third party C, then there will not be a conflict over the actual use of X. It will be understood by A or B that before proceeding with their plan they must gain rights to X. For Kirzner especially, the entrepreneur plays a key role in resolving this potential conflict by bringing together those who may have plans with respect to the use of certain resources and the resource owners.
In the absence of clearly defined and strictly enforced property rights this process breaks down and the conflict becomes irresolvable through the market process. Under all three Austrian approaches to welfare economics, therefore, the solution to pollution problems, defined as a conflict over the use of resources, is to be found in either clearly defining or more diligently enforcing property rights. Not surprisingly this is the approach that has been taken by nearly all Austrian economists who have looked at the issue dating back to Menger.
ConclusionThe purpose and one hopes the contribution of this paper, has been to reconstitute both positive and normative environmental economics "from the ground up" using the praxeological method of Austrian economics. As noted at the outset, this exercise is more about pulling together building blocks that are scattered throughout the Austrian literature than fashioning a completely new set of building materials. In pursing this goal we have integrated the Austrian focus on the actor’s means-ends framework, including its emphasis on the subjective nature of value and therefore costs, with the definition of what constitutes an environmental problem. By defining such problems in these terms, both the nature of pollution and the definition of a polluter take on new meaning. Environmental problems are brought to light as striking at the heart of the efficiency problem as typically seen by Austrians, that is, they generate human conflict and disrupt inter- and intra-personal plan formulation and execution. This is in contrast to either Pigouvian or Coasean environmental economics, which defines pollution problems primarily in terms of resource allocation.
It is also demonstrated that the property rights approach to policy analysis taken by Mises and Rothbard is not only conceptually different from the approach taken by Coase, but is a natural outgrowth of, and directly follows from its praxeological roots. The role of property rights in environmental economic analysis is integrated into the Mengerian role of property rights more generally. For Menger, the social purpose of private property is to resolve interpersonal conflicts and allow for the peaceful pursuit and fulfillment of plans. In pursuing this analysis modern Austrian discussions of environmental issues are seen as part of an historical continuum, starting with Menger.
The confusion that currently surrounds the formulation of environmental policy is an outgrowth of a theory of environmental economics that is fundamentally flawed. The standard approach is rooted in indefinable concepts of social cost and general equilibrium and implies policies that cannot be implemented in the real world. In light of this most economists have accepted the idea that their role is to devise efficient methods for achieving politically determined pollution or emissions targets. As noted by Lloyd Orr,
economists have moved to the position of advocating effluent charges as a means of meeting politically determined environmental standards at minimum cost. The proposed solution establishes . . . the charge structure required to meet the predetermined standards. (Orr 1981, p. 57)
Politicians determine what is and isn’t pollution and what the appropriate emissions targets are. The economist steps in to advise policy makers about how to develop an excise tax or a tradable emissions scheme that utilizes the "efficiency" of market incentives to achieve the politically determined result (see Cordato 1997).
Austrians can offer an alternative approach that does not depend on having to define or measure what is conceptually indefinable or unmeasurable. This is not to suggest that the clear definition of property rights is an easily achievable goal in all situations. It is not. But, while the Austrian approach to solving pollution problems may face implementation problems at the margin, i.e., with certain "tough cases," defining and enforcing property rights already stands as the fundamental way in which interpersonal conflicts of all kinds are avoided or dealt with. This approach is clearly operational as it has been in operation, to one extent or another, throughout human history. The challenge for Austrians is to explain how we apply the theory in certain tough cases, not to explain, in reality, how it can be applied at all.
Enron: $1 billion write-down of retained earnings, followed by $618 million quarterly loss. 21,000 put out of work in ensuing bankruptcy. CFO Andrew Fastow sentenced to ten years in prison. Jeff Skilling and Kenneth Lay arrested and charged with federal crimes.
Worldcom: $10 billion inflation of profits through failure to record expenses. CFO Scott Sullivan reduces prison term through plea bargain in which he cooperates with prosecution of former CEO Bernie Ebbers, now on trial.
Arthur Andersen: auditor of Enron and Worldcom loses accounting license in consequence of these and other scandals and is liquidated, putting 65,000 employees worldwide out of work. Sarbanes and Oxley launch Congressional initiative resulting in the eponymous act of Congress to curb future abuses of corporate trust.
United Nations Intergovernmental Panel on Climate Control (IPCC) sponsors adoption of the Kyoto Protocol by most industrialized nations around the world, with estimated costs of legally binding compliance estimated at over $150 billion per year. The chief promotional artifact in the proceedings, the "hockey stick" historical temperature chart of IPCC Third Scientific Assessment Chapter Lead Author Michael Mann , is shown to be based on a computer program that produces hockey sticks from over 99 percent of ten thousand samples of random noise fed to it. Stephen McIntyre, retired Canadian minerals consultant, demonstrates numerous other defects and distortions in both the data and statistical methodology, ultimately the subject of a front-page article in the Wall Street Journal of February 14 and a follow-up editorial on February 18.
Anyone sent to jail on that last one? That biggest one, by far? No.
Any charges? No, and none anticipated.
Lawsuits? None yet (possible reason: too many plaintiffs).
Any bankruptcies? Certainly not of the IPCC, nor of the tax-funded agencies that paid for the research that culminated in the hockey stick.
What about the auditor? There is no auditor. No audits? No, except for the self-funded undertaking of McIntyre and partner Ross McKitrick, and Dr. Mann has cut them and apparently everyone else off from further information on the mysterious process that "proved" an episode of global warming in the Twentieth Century and pointed to human activity as the guilty party.
Congressional action? Well, the US Senate has declined to ratify the Kyoto Protocol, but that’s about it.
Government investigation? Despite the fact that the US government funded eleven out of the twelve "Funded Proposals" cited in Dr. Mann’s curriculum vitae , it neither conducts audits of the results reported nor requires that information be made available to others for conducting audits at their own expense and initiative.
But the Kyoto Protocol remains in force and legally binding.
Government and science have found each other, and the spawn of this marriage look set to destroy global wealth on a scale that will render the greatest of history’s wars trivial by comparison. The ultimate outrage of all this is that the people who are subjected to the ravages of the wrong-headed policies promoted by these self-seekers are taxed to pay for the production of this junk science to begin with.
Scientists, like the rest of us, have among their number many members of a certain very dangerous group: those who would govern. And like the governing class everywhere, they seek to govern without the encumbrance of having to tolerate dissent from those who pay their salaries and experience the consequences of the policies they emplace.
Indeed, they resist inquiries from the unannointed into the bases of their pronouncements and, while feeding on the tithes exacted from the unwashed, insist on handing their pronouncements down as dicta that may not be questioned. The flavor of this may be discerned palpably in a visit to realclimate.org, a Web site launched early this year by climatologists and other "scientists" (today’s codeword for priest).
This Web site expresses the "frustration" felt by real scientists who have to contend with the inquiries and ignorance of non-scientists who are inflamed by their petty suspicions that they are being oppressed in the name of bogus theories. As well, it provides an eight-point set of standards for article comments (which are required to be "constructive" among other things). In "language your parents could understand," the Web site provides a "Dummies’ Guides" to its subject, and the impression that they truly regard their audience (and parents) as dummies is irresistible.
What the site does not provide in its Links section is a link to the Web site of the opposition, the more-modestly named climateaudit.org, set up about the same time to publicize flaws detected in the data and mathematics of the "hockey stick" found by semi-retired minerals consultant Stephen McIntyre of Toronto. Yes, this site does provide a link to realclimate, and doesn’t seem to qualify comments or commenters. Some of the comments on climateaudit are hostile to articles and comments on the site, while over at realclimate, things are eerily more-harmonious. I’m always grateful when the propagandist’s hand is so easily discerned.
Actually, as described in the Wall Street Journal editorial of February 18, two climatologists, Willie Soon and Sallie L. Baliunas, had the temerity to advance criticism of Mann’s article in 2003. The tsunami of protest from the academy against this suggestion that man may not be warming up his planet after all would have made Trofim Lysenko , the Soviet Union’s quack official geneticist of the 1930s, proud.
The "fact" of global warming is today as entrenched in the government-sponsored academy as ever was Lysenko’s theory that acquired traits, such as selfless devotion to the common good, could be inherited by the children of parents so indoctrinated. In the abject retraction by the journal that carried Soon and Baliunas’s heresy, Climate Research, they announce the resignations of their editor-in-chief and two other editors.
Peer review, the overrated orthodoxy-dominated system by which journal articles are supposedly vetted, has turned into a mechanism for enforcement of the ruling paradigm, if it was ever anything else. Among other things, it did not catch the errors in Mann’s seminal article. But peer review, which is not only unpaid, but highly political as well, has as a matter of practice never entailed what McIntyre calls an "audit" of the data and mathematics involved in developing the conclusions arrived at in an article.
Because of this, not only do journals not make a practice of publishing the data and algorithms behind the development of the conclusions, but peer reviewers virtually never have occasion to request the information either. A few exceptions such as the journals of the American Economic Association, have begun to appear.
Michael Crichton, whose current novel State of Fear describes a vast hoax perpetrated on a fearful world by rogue climatologists, is predictably excoriated on realclimate. Crichton stands to make a very large amount of money from acting on the skeptical side of this controversy.
But the greatest credit must go to the unpaid Stephen McIntyre and his partner in this quest, Ross McKitrick. They are the ones who first blurted out: "The professor has no clothes!"
I didn't think anyone would dare to apply the Bastiat's Broken Window fallacy to the human tragedy that is still playing itself out along the rim of the Indian Ocean, but sadly, faith in economic fallacies is even more common than deadly tsunamis.
That is why I was surprised to hear the Institute for International Economics' C. Fred Bergsten (known affectionately as See Fred) this morning (December 29th) on National Public Radio's Morning Edition explain how this crisis would actually provide long-term benefit to that region of the world.
Bergsten said ,
Like any disaster, you get negative effects through destroying existing property and people's health, but you do get a burst of new economic activity to replace them, and on balance, that generally turns out to be quite positive.
Over time, properties that have been destroyed will be fully replaced, and probably by better and newer substitutes, so at the end of the reconstruction process, the countries will probably be wealthier.
To be fair, Bergsten admitted this disaster is, above all, a human tragedy, but his comments ignore other effects that will result when positive economic growth results from any disaster, whether it occurs due to a matter of policy (wars) or to unanticipated changes in the physical environment (tsunamis). These effects:
involve forced capital consumption, shifting capital from other uses to those necessitated by the disasterignore the opportunity cost of capital that is being transferred to the disaster sites (costs that should be considered before assuring public radio listeners that the resulting economic activity "generally turns out to be quite positive") encourage construction in areas that would likely be less inhabited if construction decisions were left to market forces, which is the same thing that happens when the U.S. Federal Emergency Management Agency continuously finances reconstruction after reconstruction along coastal areas in the U.S. that are regular targets of hurricanes legitimize the fallacies that disasters are good for economies, when in fact, while they allow governments to take credit for measured increases in gross domestic product, they reduce the quality of life to most everyone involvedI say most everyone because some groups in the economy clearly benefit, and often this includes firms that depend on government contracts resulting from emergency funding. Firms such as Halliburton or Bechtel may do great work in the private sector, but absent government contracts, these firms would play a much less notorious role in the society because their market power would be based, not on the forced conscription of capital that is taxation, but on voluntary exchanges between buyers and sellers. Politicians also benefit, if only because of the publicity they receive when disbursing other people's money to the disaster sites.
It doesn't have to be this way. Natural disasters are a fact of life, but the evidence is clear that they cause much less destruction than wars (and other fruits of the nation-state). For instance, as horrific as the loss of human life resulting from last week's tsunamis is, it doesn't come close to the loss of innocent human life that has resulted from U.S. intervention in Iraq since the 2003 invasion.
According to a study reported last fall in the British medical journal The Lancet, this number is already well over 100,000. Compared to the innocent civilian deaths resulting from the wars of the 20th century, it is clear that large, bureaucratic nation-states are a greater threat to human life than occasional and inevitable natural disasters.
Indeed, wars are synthetic natural disasters, writ large. As Ludwig von Mises pointed out in Human Action: "Modern war is merciless, it does not spare pregnant women or infants; it is indiscriminate killing and destroying. It does not respect the rights of neutrals. Millions are killed, enslaved, or expelled from the dwelling places in which their ancestors lived for centuries."
He could have been describing much of what is occurring today both in Iraq and along the rim of the Indian Ocean.
It is also clear that the best protection against natural disasters is not an expansion if the public sector on an international basis, but wealth creation. It is no mistake that natural disasters, which are quite equitable in distribution between rich and poor countries, are more devastating to the poor than the rich. The establishment of a thriving private sector in Sri Lanka, India, and Indonesia is crucial for a quality of life to develop there that can withstand earthquakes and their aftermath as well as does the California coast.
But such development will not occur from state-managed, broken-window-like economic growth extolled by many mainstream economists. War and natural disasters are not good for the economy. The evolution of property rights institutions and the autonomy they engender, as well as free trade and the social cooperation it engenders, are the human race's best long-term insurance against both.
There is a slogan: "Everyone talks about the weather but no one does anything about it." It is especially true because so much of our transportation infrastructure is publicly owned.
Every winter of bad weather brings us the same scenes of bleak road and highway conditions. Spinning tires, "beached" cars the shoulder of the road, cars stuck in the median and spun-out cars, impassable roads, banks of snow interfering with traffic flow, hazards of all sorts. The economic costs are high indeed.
Northeast Ohio experienced its first significant snowfall of the fresh winter season. The snowstorm was quite a surprise; the weather reports did not indicate an oncoming snowstorm for the day. Nonetheless, the snow began falling at 11:00 a.m. and did not relent until sometime the next day. By 3:00 p.m. conditions had substantially worsened. The lake effect snow (The weather front moves across Lake Erie, picks up more moisture and dumps it on Cleveland.) became a force to reckon with on top of the gusting wind. The driving conditions were terrible; it was a white-out.
My friend Ben and I were leaving downtown Cleveland after a day of job searching in Cleveland's financial district. As we came out of the parking garage we realized just how horrendous the drive home would be. City traffic was what one would expect it to be for rush hour, slow going. Interstate traffic was another story. It was not moving. What normally would be a 45 minute drive home turned into a 90 minute drive because of the atrocious conditions of Interstates 71 and 90.
As time passed we did not see even one plow/salt truck. This prompted a discussion between my friend and I on how much better the roadways would be if they were privately owned. Obviously with privatized roads, the owners of these roads would have huge incentives to keep the roadways as clean as they possibly could during snowstorms.
The profit incentives of being able to claim that one's roadway is much safer during inclement weather than a competitor's would be tremendous. Surely word of mouth would spread through consumers on which roadways were consistently safer to travel during inclement weather. The road owner who does nothing to keep his roadways clean during snowstorms would certainly suffer large profit losses.
What seems to be the state's problem with keeping roadways clean of snow is that there simply are not enough plow/salt trucks to do all of the work. Isn't there a word for that scenario? What is it called? Ah yes, shortage! The state has a shortage of plow/salt trucks.
The process works like this: all limited access highways are taken care of first, followed by primary city streets, and in a distant third are residential streets. I say a distant third because many of these streets do not get cleaned until the middle of the night or the next day. Some people have to wait until the sun gets around to being warm enough to melt the snow. Instead, road entrepreneurs would have their own teams of plow/salt trucks and know the precise number of these vehicles to have in order to efficiently keep their roadways clean of snow and ice.
Some nonbelievers may think that privatized roads will never function as well as the current system of state owned roads. That it is impossible for the plow/salt trucks to operate efficiently to clean the roadways during rush hour because they are bogged down in traffic with the rest of the drivers.
This is true; however, the market has already devised inventions to invalidate that assertion. As my friend mentioned, some bridges are currently being installed with a system that monitors road conditions for ice and snow. When weather conditions reach a certain threshold sprinkler heads pop up from the road and spray a non-corrosive agent onto the road to melt the snow and ice. Brilliant!
The noncorrosive melting agent is currently used on select bridges in order to help keep the I-beams from rusting too quickly. Currently, the plow/salt trucks spread salt on the roadways as they drive along the road. When the salt interacts with the snow and ice it makes salt water, which then washes down over the I-beams, causing them to rust. This would be another selling point for the private road owner because his bridges would need less construction, meaning less traffic jams as a result of less construction.
Where else would this noncorrosive melting agent be useful? I know, along the entire roadway, making those roads car-friendly as well. No more salt water washing up on cars causing premature corrosion. Every car owner who has to deal with these driving conditions knows that the salt water is harsh on the entire car, causing premature corrosion on the underbody, aluminum or chrome wheels and on the body. What a great way to attract consumers by not only having cleaner roadways, but also roadways that do not damage one's car.
To be sure, the price to travel on a road that has an electronic monitoring system of road conditions and the noncorrosive melting agent would be a premium over other private roads that use the traditional method of salt to keep the road clean. However, it is entirely the consumer's decision in his willingness to pay for more safety and less corrosion versus a road that is less clean and uses corrosive agents to aid in snow and ice removal. Surely the road owners would always be seeking new methods to keep their roads as clean and safe as possible during snowstorms in the most efficient manner.
Thus, other entrepreneurs would pursue avenues to meet the demands of road owners.
Of course the state did not invent the noncorrosive melting agent, it was the free market motivated by the profit incentive. The state has no interest in improving driving conditions in the snow and ice because the state does not have to bother with such trivial aspects as profits and losses and competition in the way private firms do. Therefore, the state does not invest in ways to improve its capital. Besides, people are conditioned to driving on treacherous roads during snowstorms; they only wish the roads could be safer to travel.
As Ben and I discussed this topic I began to realize why initially I did not think that the drive home would be so arduous. We were walking on the sidewalk to different office buildings. These buildings were not owned by the state, but rather by private firms. The owners of these buildings have an incentive to keep their walkways clear of snow and ice so that their customers do not slip, fall and break their bones or sustain a head injury.
I noticed at one building there was a team of FIVE people shoveling snow and spreading salt over an area of approximately 1,000 square feet. That's probably the same number of plow/salt trucks operating to clean the city streets of Cleveland. In all honesty, the sidewalks were cleaner than the roadways!
Unfortunately, the idea of private roadways is alien for most people; they are used to the hazardous roadways of the state. As shown though, the private market would provide safer road conditions and substantially less corrosive melting agents on the road.
Therefore, it cannot be denied that privately owned roads are surely the solution to the unsafe, corrosive roads of the state because through the private sector consumers would have more choices in which roads to use instead of the current situation of the state's horrendous roads.
The principle that there is a perpetual tendency in the race of man to increase beyond the means of subsistence is usually attributed to Malthus. But he was really just the popularizer of a belief that was (and is) fairly widespread. William Hazlitt, a mighty adversary of Malthus, does not think he was the first to write about it, either. In fact, plagiarism is hinted at. See Hazlitt's excellent essay on this topic here. The great Australian philosopher, David Stove, in the same vein as Hazlitt, thinks:
There are anticipations of his 'principle of population' in the writings of David Hume, Benjamin Franklin, Joseph Townsend, and no doubt others beside; but not, or not to any extent worth mentioning, in any writings whatever before about 1750. And yet people could have made, at any time during thousands of years before that date, at least a rough comparison between the size of a batch of fertilized cod eggs, or viable pine seeds, and the number of this batch which survived to reproduce in turn.
But whatever may have been the reason for it, it was left to Malthus to teach naturalists the strength of the organic tendency to increase, and of the resulting pressure of their numbers on their food. And he happened to do so in a book which, for reasons quite unconnected with evolution, reached an unusually great number of readers.David Stove, Against the Idols of the Age. Roger Kimball, editor, (New Brunswick, N.J.: Transaction Publishers, 2001) p. 237.
The Malthusian population principle is always incorrect, but its proximity to the truth varies. It is also an instance where we can appreciate one of Rothbard's empirical generalizations—of high predictive value, but not apodictically certain—that nonAustrian individuals tend to specialize in the area they are least competent. As Stove put it:
It is . . . a curious irony that the general biological principle which he put forward comes steadily closer to being true, the further one departs from the human case, and is a grotesque falsity only in the one case which really interested Malthus: man.
Human populations, once they reach a certain size and complexity, always develop specialized orders, of priests, doctors, soldiers. To the members of these orders sexual abstinence, either permanent or periodic, or in "business hours" (so to speak), is typically prescribed. Here, then, is [a] fact about our species which is contrary to what one would expect on the principle that population always increases when, and as fast as, the amount of food available permits.Ibid, p. 247.
Stove talks of many other instances, and not just in our species, where the Malthusian population principle is broken, but the one refutation will suffice for the purposes of this article. Similarly, Hazlitt wrote,
I am ashamed of wasting the reader's time and my own in thus beating the air. It is not however my fault that Mr Malthus has written nonsense, or that others have admired it. It is not Mr Malthus's nonsense, but the opinion of the world respecting it, that I would be thought to compliment by this serious refutation of what in itself neither deserves not (sic) admits of any reasoning upon it.
I encourage readers to devour all of Hazlitt's work on the matter. He even wrote an overview.
The Malthusian law is the basis of the environmental movement. Its application is often masked by the term "carrying capacity," which is the number of individuals that a unit of area can hold. And, more recently, "ecological footprint," which is a measure of how many units of area an individual uses—literally an inversion of carrying capacity. In practice, ecological footprints have very amusing results. For example, if we all wanted to live like Bill Gates, at current resource levels we would need multiple planet Earths.
These concepts, as they are commonly used, would have to be among the most un-Austrian. Subjective individualism is ignored; uncertainty of the future is ignored; impossibility of quantification of human action is ignored; and government intervention is always put forward as the solution. It is nothing more than the flip side of the free-rider problem: we can exclude others, therefore we should not increase the rate or take more than our fair—i.e., equal—share in which we exclude others; otherwise there will be nothing left for others.
What Malthus failed to realize is that, as William Godwin nicely pointed out, "possible men do not eat, [whereas] real men do."William Godwin, Of Population. (New York: Augustus Kelley, 1964) p. 480. What they will eat in the future and exactly how it is grown cannot be deduced, no matter how elaborate the Malthusian equations are. Arguing that there is already proof of overpopulation by citing a problem, like poverty, is no argument at all: it is to consider proof of overpopulation as its theorized result.
Any numbskull can find statistics to show that if the resource base stays the same and population increases then all hell will break loose. This is the Malthusian mirage. Based on this sophisticated doctrine, believers go around telling people that we should desist from further folly, for the impending threat of doom is ever looming.A case in point is Paul Ehrlich, respected by many, for example: The Swedish Academy of Sciences has awarded him its prestigious Crafoord Prize; the MacArthur Foundation gave him a $345,000 "genius grant"; he is a winner of the World Ecology Award; was given the $200,000 Tyler Prize for Environmental Achievement, along with the $422,000 Blue Planet Prize from another leftist foundation, just to name a few. Of course, he is also an endowed chair holder at Stanford University. And government, of course, is our only hope. Another silly use of this method is finding out that the population of Italy is decreasing, hence, they project that after a while there will be no Italians left.
The predictions based on the Malthusian fallacy are used as indicators of sustainability—i.e., temporal egalitarianism—itself a nonsensical concept. Things change over time. In any case, as P.A. Yeomans, the Australian agriculture designer said: " conservation is never enough"; it is not something one can aim toward, and therefore, not something that will solve a problem. An improvement on a previous state of affairs cannot be the same as them. Therefore nobody would voluntarily act to bring about it about, since no advantage would accrue.
The exception to this is for those who consider knowledge that things are the same as they were before, as being satisfying; they are happy because time has passed. But asking why they are happy that things are the same as they were before will hopefully lead to a revision of their mindset. There must be something that they do not like about the past; something they do not want continued.
It is from here that we uncover the underlying concern and error of most environmentalists: exploitation of resources, and blaming business, not government. These environmentalists, with their sustainability fetishes, fail to comprehend elementary economics. No sane property owner would want the capital value of his property diminished, therefore he would do whatever was in his power to preserve, and even increase, its capital value. Implied in this is that the property owner, whenever he feels it appropriate, uses his property for current ends. Otherwise what's the point of preserving it?
Comic InterludeHere are some passages from the leaders of the environmental movement. Ted Trainer is considered by many to be an "ecological pioneer,"Stuart Hill and Martin Mulligan, Ecological Pioneers (Cambridge, U.K.: Cambridge University Press, 2001) p. 210. yet this is what he says:
A satisfactory society cannot be driven primarily by the profit motive or market forces. If the profit motive and market forces are allowed to be the major determinants, the inevitable results will be increased inequality, deprivation of those in most need and more and more of the existing wealth and resources taken by the rich. Unless they are carefully limited and controlled, market forces and the profit motive will destroy the social bond and the environment.Ted Trainer, Saving the Environment (Sydney, NSW: UNSW Press, 1998) p. 47.
This might have been worth my while addressing directly, but then, as I continued reading I came across this final straw: "Perhaps the most important point about a sustainable society is that economics would not be important."Ibid, p. 53. This is a silly comment. How would you know if a society was sustainable without any important knowledge of economics? In fact, "sustainable" is an economic term. As if Trainer's intellect can't be topped, Murray Bookchin, the founder of social ecology, has this profound insight to share:
Any attempt to solve the environmental crisis within a bourgeois framework must be dismissed as chimerical. Capitalism is inherently anti-ecological. Competition and accumulation constitute its very law of life, a law which Marx pungently summarised in the phrase, "production for the sake of production." Anything however hallowed or rare, "has its price" and is fair game for the marketplace. In a society of thus kind, nature is necessarily treated as a mere resource to be plundered and exploited. The destruction of the natural world, far from being the result of mere hubristic blunders, follows inexorably from the very logic of capitalist production.Murray Bookchin, Post-Scarcity Anarchism (Montreal: Black Rose Books, 1990) pg 18–19. NB: there are many social ecologists who disagree with Bookchin.
End of Comic InterludeGovernment bureaucrats, not private workers, are the exploiters. Democratic government does not own things in the same way as a private individual does. This is the real tragedy of the commons. The "owners," who are really just "minders," possess higher time preference than a private individual would. They have no incentive to preserve the resource for longer than they "mind" it for. If they do not use the resource sooner, rather than later, someone else will. Even a monarchical government is still not as environmentally friendly as total private ownership. This is because the degree to which the private individuals preside over their land is limited. Their reliance on government for property preservation serves to compromise their own efforts. Here we come to the issue of calculation under socialism. Since valuation is subjective, government cannot allocate and manage resources as well as private individuals can. Hence, all governments hinder the cause of nonsuicidal environmentalists.
Suicidal environmentalists believe that the human race is a burden on the environment. They claim that for the sake of dolphins, koalas and cockroaches, we should cease to exist. They believe that by existing, humans take up space that other life forms could have used. We also eat other organisms, which would not be eaten—by us—if we did not exist.
We can see how ridiculous this view is when we apply it to any other living thing. To some extent, all life takes up space or other resources that other organisms could have used. Why do environmentalists think that humans are not entitled to do things at the level of other organisms? So much for these environmentalists professed avoidance of treating humans differently than other organisms, of considering humans as part of the environment. This is the misanthropic muddle. Typically, Rothbard gets to the bottom of this absurdity:
It is true that if the American continent had never been populated many millions of miles of square forest would remain intact. But so what? Which are more important, people or trees? For if a flourishing conservation lobby in 1600 had insisted that the existing wilderness would remain intact, the American continent would not have had room for more than a handful of fur trappers. If man had not been allowed to use these forests, then these resources would have been truly wasted, because they could not be used. What good are resources if man is barred from using them to achieve his ends?
Then there is the common argument that at any time a natural resource is used, any time a tree is chopped down, we are depriving future generations of its use. And yet this argument proves far too much. For if we are to be prohibited from felling a tree because some future generation is deprived of doing so, then this future generation, when it becomes "present," also cannot use the tree for fear of itsfuture generations, and so on to prove that the resource can never be used by man at all—surely a profoundly "anti-human" thesis, since man in general is kept in subservience to a resource which he can never use.Murray Rothbard, Egalitarianism as a Revolt Against Nature (Washington, D.C.: Libertarian Review Press, 1974) p. 110–11.
The environmental movement, far from being "friends of the earth," does more to destroy the environment than most nonenvironmentalists. Those environmentalists who are upset at the fact that they are taking up space should go shoot themselves, and thereby practice what they preach and stop annoying the rest of us: a win-win situation.
The environment—that is, the natural order of things—has only one true movement: libertarianism. The other philosophies, instead of an environmental movement deserve a bowel one. They do not study the environment, but rather, impose their own preconceived fallacious ideas on it.
The only choice for those concerned about the environment is to be a fully-fledged libertarian of the Austrian breed. From this correct position it is seen that the market is superior in serving all legitimate ends on both logical and utilitarianBenjamin Marks, Agriculture Need Not Be Criminal, forthcoming. grounds. Libertarianism is neither illogical nor suicidal. It addresses real and solvable problems. It proves that free enterprise is the best means toward environmental protection ends.
Mises on MalthusI have always found Mises's endorsement of the Malthusian population principle quite surprising. He claims it is " one of the great achievements of thought... The objections raised against the Malthusian law ... are vain and trivial. [It is] indisputable." And, " The Malthusian Theory of Population is ... part of the social theory of Liberalism." Mises dismisses Marx's criticism of the Malthusian law, of which Marx calls "a schoolboyishly superficial and clerically stilted plagiarism," on the basis that Marx, Instead of refuting, tends to abuse. But is not Marx's abuse of Malthus accurate?
Could it be that on this Marx is right and Mises wrong?
Here, again, we can turn to Rothbard for guidance. Mises gives Malthus the credit for recognizing "the existence of a theoretical 'optimum' population that maximizes real output per head, given existing land and capital." When, in actual fact, it is this which "would go far to end the dreary Malthusian controversies in economic theory. For whether a given increase in population at any time will lead to an increase or decrease in real output per head is an empiricalquestion, depending on the concrete data. It cannot be answered by economic theory," as Malthus tries.
Mises himself on this says: "The question whether at any given time production has reached this point [where "production per head diminishes"] is a question of fact which must not be confused with the question of general principle."
Mises also places great emphasis on the fact that only in the free market can overpopulation be avoided. According to Mises, Malthus's warning comes true under socialism: only can a society based on private ownership of the means of production harmonize the number of births with the limitations of the means of subsistence. This, again, is the issue of calculation under socialism. So, with the Malthusian doctrine as Mises saw it, there is still no excuse for government interference on utilitarian, let alone legal-logical grounds.
In conclusion, the Malthusian problem is one that economics solves. No wonder the Malthusians want to get rid of economics. Their rule only applies in noneconomic "societies." And, even then, only in its abridged Misesian form. The environmental movement of today is aiming toward living in a non-economic "society" by showing why it would be unpleasant to live in. It is staggering how a movement like this could amass such a following.
This talk was delivered at the Mises Institute’s Supporters Summit on Radical Scholarship: the Guerrilla Movement for Liberty, on October 15, 2004, in San Mateo, California.
You can learn so much about human nature, the workings of society, and the functioning of markets by looking at the aftermath of a natural disaster. It is a fascinating laboratory for observing how society functions under the worst conditions.
If you have ever been through a natural disaster, and paid attention to how the preparation and clean-up takes place, you know precisely what I am referring to: the splendid creative power of human energy to cooperate to overcome the most astonishing barriers.
Such settings can teach us so much about politics and economics. If society can function in these radically abnormal settings, if markets can work well, we discover so much about the power of the same forces and institutions to manage under normal conditions.
Florida has been through four hurricanes this year, and the damage has been overwhelming. Contrary to what you read in various newspapers, this destruction is not a good thing for the Florida economy. For people who have read Bastiat's story of the boy with the rock, as told by Henry Hazlitt in his book Economics in One Lesson, we marvel at how people still haven't learned the lesson. In the midst of destruction, someone will always raise a voice to defend the view that the destruction has a wonderful upside, that the rebuilding will stimulate rebuilding.
My favorite example this season comes from USA Today. The headline read: "Economic Growth From Hurricanes Could Outweigh Costs" (September 27, 2004). The story read as follows: "Economists tallying the numbers expect the hurricanes will be neutral in their effect on the U.S. economy, or may even give it a slight boost, particularly because of an expected reconstruction boom in the already red-hot construction industry."
Then comes the inevitable quotation from a naïve economist, who pretends to have highly specialized if counterintuitive knowledge: "It's a perverse thing," said Steve Cochrane of Economy.com. "But from an economic point of view, it is a plus."
Tell you what: let's not put Mr. Cochrane in charge of national economy policy. We might find man-made disasters hitting all of our communities in order to help us. Maybe instead of sending all those bombs overseas, they could be dropped right here at home, so as to spur a massive rebuilding boom. It's a perverse thing, he might say, but it's for our own good.
If you understand why people believe that, you can understand why there exists something called Keynesian economics, which postulates that everyone can be made better off by letting the government rob people and give money to bureaucracies to spend. You can also understand how it is that people cheer on inflation and taxation as productive devices. You can see why so many are still under the impression that war is an economic stimulus, and that Iraq will somehow be better off with billions in reconstruction spending rather than by not having had their towns and cities blown up in the first place.
In short, if you can understand why people celebrate a hurricane's productive power, then you can understand how it is that people think that Leviathan as we know it today is an institution to celebrate and adore, and why we should build on its marvelous successes like Social Security, public schooling, the war on drugs, and the war on terror. These same people should also celebrate other institutions such as crime waves for their productive power. After all, when people have things looted from them, they must then go out and buy more things, which stimulates more production and so on.
Conversely, if we are to realize that hurricanes are, after all, not a good thing for Florida or anywhere else, we have taken the first step toward seeing what is wrong with all forms of what Mises called destructivism. This is the ideology that sees some merit in undoing, demolishing, reversing, or hobbling the march of human enterprise. Who would favor such an ideology? Many of the same people who think hurricanes and wars are good for us.
At first, destructivism would seem perverse and easy to refute. In fact, destructivism has a hold on the public mind. It was unleashed in the 20th century and it continues to play a huge role in public affairs today. It is the ideology that celebrates confiscatory taxation, punishing regulation, aggressive war, and the daily acts of public administration that destroy wealth.
Natural disasters are something human society has to cope with, and the market has found brilliant ways of doing so. Government, on the other hand, is a man-made disaster that is sustained only by the ideological ignorance of the population that somehow believes that because destruction is officially sponsored by the law and the legislators, or otherwise endorsed by the democratic process, that it yields great good or forestalls great evil.
In the same way that society has learned to deal with natural disasters, and this is part of the miracle of human creativity I will address, we have also learned how to deal with the persistent presence of government, in ways that have surprised government's biggest critics.
But let us begin with the time before the natural disaster to see how the market handles these settings. Long before the storm appears in the high seas, the market institution of insurance has assessed the risk and offered to bear that risk for people at a price.
Homeowners with a mortgage are required to insure their houses, and insurance companies must make an assessment of the risk associated with the location and the likelihood of disaster. If the risk is high, the premiums are high too, and so people will not build there. The homeowner himself does not need to know the risks; that information is conveyed in the price, and he responds accordingly.
Of course, the presence of government-provided insurance foils this market system and ends up creating hazards, which is exactly what federal flood insurance (created in 1968) does. It subverts the market process and encourages irrational decision-making. This is the only reason that people in large numbers build on flood plains and islands that are ripe targets for hurricanes. Nonetheless, the operation of the private insurance market does the bulk of the work to guide rational building patterns.
When the news appears that a hurricane is coming, the first reaction of the population is to stock up on provisions, and who is there to provide but private enterprise. Indeed, we take it all for granted. It is not government or bureaucracies that make available many days in advance such items as dry goods, batteries, flashlights, water, generators, and all the rest. It is the free market, and, yes, these firms make money in the process, by providing a service people want.
So plentiful were bottled water and canned tuna and batteries in Auburn the week before Ivan, that panic buying subsided very rapidly. It dawned on people that a dozen stores were going to have plenty available for everyone. Order came about because consumer expectations fell in line with resource supply. People were calm not because government told them to be or because they believed that public authorities would care for them. Rather, people had confidence that private enterprise would supply what people demanded, regardless of the conditions.
When the hurricane actually hit, government offices were closed but Wal-Mart and Lowe’s and Kroger remained open throughout, with vast quantities of extra provisions on hand. When it became clear that the hurricane had passed, restaurants opened within minutes. Tree cutting services were everywhere. Handymen were hawking their wares.
The main concern of everyone is electricity, a service provided not by private enterprise, but by a monopoly under the supervision of government. For some reason, everyone knows that power goes out in a storm. The providers know this too. The consumers do too, and so does the press. Everyone lives with it. No one questions it. The wind blows, the rain comes, the lights go out, and we wait until regulators deign to turn us back on.
Imagine such a service as provided purely by private enterprise. Surely the first order of business would be to create an energy flow that managed to stay on during an emergency. The problem would be overcome by entrepreneurs and capitalists, chiefly because the consumer is king. With electricity, however, we all just accept the fact that it goes down in a storm and we must wait for the bureaucracy to supervise its turning on.
When private enterprise fails, we don't hesitate to complain, demand, and even sue. But when government fails at its most essential duty of keeping the lights on, most people don't even bother to complain. I should add that this is a very serious matter, one that often involves life and death.
Electricity is a common example of what used to be considered a public good, one that private enterprise, it was said, could not provide or for which competition would be wasteful. Of course we now know this claim to be ridiculous—just look what private enterprise has done with cell and wireless technology—and that the main barriers to reliable energy provision are the government monopolies that keep private enterprise out.
Nonetheless, private enterprise has done its best to get around the restrictions. Large stores like Home Depot are fully prepared with enough private generators to power their stores, and home generators are ever more common.
As a side note, it is certainly true the Post Office will do everything possible to deliver your mail in a storm, or at least we have developed a general expectation that the service will not be dramatically worse in a storm than it is while the sun is shining. Perhaps that is not saying much. But I'm sure you are relieved to know that, no matter what the weather, the government can get to you to deliver a message.
You will notice that natural disasters tend to be far less deadly in wealthy, capitalist countries than in poor socialist ones. The press invariably attributes this to building codes, as if socialists had never thought of that. Now, nothing strikes me as more absurd than the assumption that only government cares if your own house can withstand an earthquake or tornado. The people who live there, the banks, the insurers, the builders—none of them have any interest in solid construction and so the regulators have to be involved. That's the theory anyway, and it is ridiculous.
Moving on in the parade of folly, let me say a few words about price gouging. Nowadays, every state and most towns have strict rules against raising prices to too great an extent during a storm. This shuts down an important rationing mechanism when it is needed most, and also prevents the market economy from signaling consumers concerning dramatic shifts in the relative value of available resources and services.
In saying this, I have no doubt that there are unscrupulous people out there waiting to exploit a human emergency to make vast sums of money. And yet, this is a far better option than what is the actual choice: not cheaper service but no service at all. I assume that everyone would prefer the option of a high price, whether or not you buy, to no good or service at all. A temporarily high price also serves the function of signaling other entrepreneurs and capitalists about market disequilibria. It permits a faster market clearing.
There are few things as disgusting as prosecutions of gouging cases. The owner of a gas station, believing that he might be able to sell gas for $5 per gallon, for however brief a time, will risk life and limb to get to his shop to open it for travelers. That is his passion and vocation. Take him to jail for engaging in voluntary exchange and you have violated a human right. Tell that same person that he is notpermitted to sell at a higher price, and there will be no gas available. That is our choice: what some people call gouging—or no goods and services. Government, as we know from the case of electricity, prefers the latter.
Another way in which government prevents people from responding rationally to a crisis is through mandatory evacuation orders, premised on the idea that government officials know what is better for you than you know yourself. In the aftermath of one of these orders, the newspapers are always shocked to see that some people might have taken advantage of the evacuation, stayed behind, and helped themselves to the property of others. I suppose nobody in government had really thought about the message that a mandatory enforced evacuation sends to criminals: something along the lines of COME AND GET IT!
A regulation that Murray Rothbard found to be particularly egregious is that which prevents people from returning to the homes after a natural disaster. It is particularly cruel because immediately following the storm is when the real wonders of human cooperation come into play. Every resident from the smallest renter to the owner of the largest landed estate examines the space outside his or her door and assesses what needs to be done. There is no expectation that someone else should be responsible for it. The locus of control and responsibility is clearly defined. Mother nature acted, but it is property owners who must respond. And so they do, starting with what is theirs. But it does not stop there. We also help our neighbors in need. Anyone with a chainsaw gets busy, starting again with his own property and extending services out to neighbors. Heroic efforts take place all across the community, the town, the county, and the state.
Private enterprise is there too, with building materials, tree cutting services, plumbers, and repair services of all sorts. If it is something you need or want, it is available. One by one, hour by hour, the damaged area is cleaned up, at least that part of it that is privately owned. If you have gone through this in the past, it is truly a marvel to behold the power and productivity of thousands and tens of thousands of people caring for their own and helping out neighbors. In my own observation, it seems to take less than a day to do more than half the clean up. What we observe in these cases is not just the free market at work but the whole workings of human society, people cooperating commercially and charitably toward their mutual betterment.
What we see in this case is something that nearly all the social science literature claims cannot happen. The economists doubt that prices and wages can respond quickly enough to re-equilibrate supply and demand according to new conditions. Not only do we see this happening in real life; we actually observe private enterprise attempting to anticipate change that is coming and be prepared before it happens. And keep in mind that this is true during times of emergency and crisis, not just during normal times. Contrary to the claims of social democrats from time immemorial, that markets are fine from day to day but not during exceptional events, we find that markets love nothing more than a challenge that offers a profit opportunity. Where government sees only devastation, markets see possibility.
We see this happen in war-torn areas, where the merchant class struggles against impossible odds to provide. We see this in American cities with areas so violent that most people would try desperately to avoid even driving through. But the merchant class sees a chance for providing a service, and so risks life and limb. All over the world where the risks are high and the barriers seemingly insurmountable, we see private enterprise providing and serving others. This is true of the smallest peasant money changer to the largest multinational corporation. Commerce does what others are unwilling to do. And it is hardly ever given credit.
But we should not single out commerce as a special case within society. It is the conviction of the liberal intellectual tradition dating back to the Middle Ages that society contains within itself the capacity for internal self-management. This is in contrast to the claims of the sociology literature, which posits that human society is riddled with conflict between groups: races, ages, ethnicities, and abilities. The sociologists have sliced and diced the human population to such an extent that it would seem impossible for anyone to get along at all, and certainly not in times of emergency.
But a natural disaster shows precisely the opposite, that there are many paths to human cooperation. It can take commercial forms or it can take the form of charity, and within each of those we see thousands of variations of forms. In the end, society works to accomplish amazing things by bringing together the individual efforts of every person and property owner, and it does it all without central command or coordination.
Let's return to the scene of the hurricane. Within a week after a natural disaster, we find that most places have restored normalcy and order and even beauty. All that is left to do involves plantings and more fundamental building projects of various sorts. But the settings have been fully prepared. The recovery is well on its way. This is the great surprise that greets us in the aftermath of the storm. People love to brag and talk and go on about all the horrors created by natural disasters, but the truly marvelous and newsworthy thing is not the disaster but the wonderful manner in which it is repaired: by voluntary human effort.
The public parks, the school grounds, and the land claimed by the state is usually cleaned up in far longer time. But these days this is for a reason that goes beyond the usual bureaucratic incompetence. Every community seeks disaster assistance, money that usually ends up in the hands of local governments where officials pass it out to their friends. The newspapers cooperate in this creation of phony disasters in the hope of getting big bucks from the likes of the Federal Emergency Management Agency.
The morning after Ivan, our local paper headline in massive type: DEVASTATION. It showed a picture of a man carrying sticks across his lawn, an awning from a burger joint flipped up due to wind, and a tree that had tipped over onto someone's porch. This was not exactly the kind of devastation that would take hundreds of millions of taxpayer dollars to fix. But everyone knows that after the storm, all official institutions have to play up damage as much as possible in order to gain the attention of federal authorities.
The whole enterprise of disaster aid has become one of the great rackets of modern government. Today we have the disgusting spectacle of senators and presidents coming to visit weather-injured places, as if they have within their capacity the ability to size up damage and make provisions for making it all correct. We are supposed to believe that they know more about the proper course of action than insurance adjustors and property owners.
If we had honest politicians, they would say: "Of course I'm sorry about what happened to that beach in Florida, but my presence there would only distract from the essential work being done by owners and their insurers. I don’t know anything about the topic, and even if I did, I would not want to steal from some to give to others to realize my political priorities."
I'm reminded of the classic story of how Congressmen Davey Crockett was denounced by a constituent for having voted to pay for the rebuilding of Georgetown after a fire. He never did it again. These days, I suppose, we would be grateful for such a modest response by the Congress. We would be glad that the entire apparatus of the Leviathan state had not begun a global War on Arson and arrested anyone carrying matches.
Like dictators and führers, politicians always come to the scene of a natural disaster carrying a wad of cash. William Anderson documents that this scam really took off during the Clinton presidency, but these days government sits through every natural disaster with bated breath, hoping for a chance to do what it does best: grab power and hand out other people's money to friends of the state. As for the actual rebuilding, it is done by private enterprise, and in a timely and efficient manner. It is the social means (to use Oppenheimer's phrase) that rebuilds and restores, not the state.
I have taken you through all of this in order to illustrate a larger point about how private enterprise and the social means respond to every manner of exogenous shock that attempts to derail the path of progress. The biggest barrier of all, something far more costly than all the natural disasters combined and even great criminals acts such as that which occurred on 9-11, is government itself. It daily interferes with the path of progress through taxes, regulations, distortions such as subsidies and price controls, as well as wars and trade barriers. It is helpful to think of the way free enterprise responds to government: it’s the way society responds to a natural disaster. Yes, some people get rich off government. But taken as a whole, it is a disastrous cost on society that must be overcome.
Government is not productive. It is not creative. It does not bring blessings. Government spending drains resources from society, taking from those in whose hands it has the highest value and putting into the hands of people who serve the state. Regulation forestalls choice. Taxation loots from people the reward of work and productive endeavor.
Most destructive of all is war, and yet it is war that people are most likely to credit with bringing prosperity. But as Mises says, "War prosperity is like the prosperity that an earthquake or a plague brings. The earthquake means good business for construction workers, and cholera improves the business of physicians, pharmacists, and undertakers; but no one has for that reason yet sought to celebrate earthquakes and cholera as stimulators of the productive forces in the general interest."
Of course he wrote that in 1919. Today, I'm sure we would have no problem finding people who say such preposterous things. Austrians are unique in having great clarity about the damage caused by government. And yet sometimes even Austrians have a tendency to underestimate the power of free enterprise to overcome obstacles to serve the world and bring prosperity to the multitudes. I doubt that even the most ardent fan of free markets would have imagined that ex-Red China could be transformed in such a short period of time, that Eastern Europe would undergo a total upheaval towards prosperity in a mere ten years, that New York could so quickly bounce back after 9-11, that the recovery after the dot com bust would be so rapid.
Alone among schools of economics, Austrians understand the dangers of credit expansion of all sorts, of how even small interventions can cause terrible dislocations, how the downside of government policies are overlooked by just about everyone. To explain and articulate the downside is our comparative advantage. This is one reason that Austrians tend to be better at anticipating the bust than seeing the boom. To explain the fact of ongoing destruction is not the same as having perfect predictive power concerning the creative response by producers and entrepreneurs.
Austrians have had their fair share of gloom-and-doomers among financial economists, and they have been right more times than we realize. Mark Thornton has a new study out that examines what economists were saying during the height of the dot com boom. He found that Austrians were just about the only ones who saw that it had to come to an end. And many called the timing exactly right. This was at a time when most everyone else saw nothing but endless price increases for securities in our future.
But being able to see the downside should not make us blind to observing the astonishing ways in which private enterprise is able to adjust itself so well in the presence of government intervention. Despite living with the largest governments ever created in the history of the world, the free market has been able to work around them to be the source of the second greatest technological revolution of the last 500 years, namely that which has taken place between the invention of the microchip and the commercialization of wireless technology. We live today with technology that would have been unimaginable even five years ago.
Let me just give an example of this. It is within the power of any of us in this room to have delivered to a family member living anywhere in this country just about any CD, book, clothing, or food item that they may desire, by express to their door by noon tomorrow, merely by clicking on a few buttons from any one of the laptops located in this room, and to track that package on its way to delivery through live websites. All of this takes place within the framework of the market matrix. If you take a trip to your local wireless dealer or office supply store and have a look at the technology that is out there these days, you observe an amazing array of astonishing gizmos that have been created, perfected, marketed, and employed outside the radar screen of government.
There was a time when something like the Food and Drug Administration or the Consumer Product Safety Commission could claim to keep up with all the products we use. But today the consumer markets are moving so fast and with such power that government can't possibly keep up. When it gets involved in an antitrust suit involving technology, we can only marvel at the sheer ignorance with which government regulators and judges approach these topics. Truly government today is living decades behind the rest of the world, on the belief that its old-fashioned methods of coercion and propaganda can competently deal with a digital world of wireless and instant everything.
Communications technology is the most obvious example. Government once aspired to control all the command posts in society, among which was the technology that permitted people to talk to each other and pass on information. Government still attempts this, with its ridiculous post office and public utility monopolies. But the private sector has moved way beyond this. We have email, cell phones, instant messaging, Google, and amazing technologies that combine all of these to produce an alternative communication infrastructure that lives and thrives outside the ability of government to manage it. Hillary Clinton complained that the web lacked much-needed gatekeepers. Well, that was years ago. The would-be gatekeepers are still nowhere to be seen, and we are none the worse off.
We should never forget, in the midst of all our warnings about government power, that government is deeply incompetent, and laughably so. Consider the attempts by the World Trade Organization to presume to manage global trade. The WTO was created in 1995 as a follow-up to the failed attempt in 1948 to create a Keynesian-style command center for the management of the world economy. Today, the WTO, at its least intrusive, serves as little more than a dispute resolution panel—a service that would otherwise be provided by private enterprise. The idea that it serves as some sort of planning board for the world economy is utterly laughable, not because the WTO would not relish that role, but that it would be impossible for it to do so.
The WTO came about in 1995, about the period when world trade began to blossom as it had not in 100 years. China was solidly on the path toward its present renaissance. East Asia was becoming a hugely viable market. Latin America was entering onto a new path of integration. Most importantly of all, Eastern Europe and Russia have opened up.
The economy is global now, and there is no going back. The division of labor has vastly increased and all the world's population is involved in the great task of creating and producing to meet human needs. Where does this leave government? Doing what it has always done: looting people, starting wars, and generally being a pain in the neck. It continues to grow like a tumor on the world, but private enterprise has consistently outrun the ability of government to chase it and tackle it. It is this market, the very institution based on human liberty that we are so dedicated to defending, that is also our main weapon against the state.
Now, I'm not arguing that technology can somehow make government irrelevant. I'm sorry to report that many governments in the world retain weapons of mass destruction. The biggest government of all has the most weapons, and this government in question is the only one that has ever actually employed a nuclear weapon against civilians. Instead of naming that government, let's just call it government X. Government X has decided that it should be the world's only superpower and that it should stand in judgment over all countries in the world. It has decided that it alone has the right model of culture and politics, and that it is a snap to make carbon copies of itself in far-flung places through a few well-placed bombs.
At least, this was the view of the regime in charge of Government X only a year and a half ago. It reflected a kind of hubris and even insanity. Had that regime been successful in its wars against two other governments, let's call them Y and Z, we might have had cause to be gravely pessimistic about the future of warfare, as Government X marched through the entire alphabet of countries and changed their regimes to copies of the high-tax social democratic militarism so well practiced by Government X. But this is not the case. Military history has few failures as colossal as the war of Government X against Governments Y and Z. And while we are right to feel great sadness for the terrible loss of life on all sides, we should not regret that the empire was denied success. These wars were nothing but cases of government intervention gone terribly wrong, unnatural disasters visited upon the populations of all the countries involved.
And yet we overcome. World trade proceeds apace, and production continues, not because of the order brought to the world by government, but in spite of the disorder brought to the world by government. The market has not only taken on the burden of confronting nature itself, which erects so many obstacles to the well-being of the human population, but government as well, which is the largest obstacle to progress ever known in the history of civilization.
One reason natural disasters alarm us is that there seems to be very little we can do to alter their course. Anti-hurricane intellectuals can do very little about changing the direction of an Ivan or Jeanne. However, intellectuals can alter the course of unnatural disasters such as government. Governments themselves are products of ideas, mostly bad ones, and they can be curbed and dismantled by other ideas.
As lovers of liberty, it is essential that we constantly warn about the dangers presented by the state. But it is also our job to constantly say, in as many ways as we can, that it does not have to be this way. The state is not the foundation of society, it is not the source of our security, it does not bring about prosperity, and it does not protect us. Government instead stands outside of society and lives off its proceeds, and does so for its own benefit and not that of society. To understand this and impart this message to the current generation of students that benefits so enormously from the blessings wrought by the market is surely a task worthy of all our efforts.
This afternoon I have spoken at length about crisis and destruction and the response. I've done so because of something I've noted from the students who now come to us for the Mises University and read our materials. The events of 9-11 have shaped the current generation of students. These students do not remember the ideological wars that we older folks grew up with, which pitted communism against capitalism.
Today, the essential question is whether government or the market is the essential source of our security and justice. To those students who have accepted the claims of the state, that justice comes through war, and that the state must abolish all that came before in the name of providing future protection, to these students, the state is the heroic institution of our time. It has become for them, tragically, the source of social salvation.
On the other hand, the event also raised up a new generation of very thoughtful, highly active, and analytically rigorous students who have seen through the propaganda. They have seen how the state so cynically used a tragedy and crisis of its own creation in order to fasten a kind of despotism on a country with a libertarian heritage, and how this response has made us less safe and wrought vast amounts of destruction. That dreadful day forced a choice on an entire generation: to follow the path of power wherever it leads, or to rethink all the assumptions that dominate the intellectual climate of our time.
Those of us in the Misesian tradition of thought are very fond of intellectual combat and delineating the differences between our way of thinking and that of our adversaries, whether they are on the right or the left or somewhere in between. At the very core of the difference is one's view of the viability of human cooperation apart from state intervention. If you can understand how a small community can recover from a hurricane without the aid of government, or if you can understand how a magnificently productive global economy can grow and thrive and provide for billions, without the aid of a global state, then you understand a very critical point. It is this: society and all its works can thrive without central management by a coercive apparatus. If people have liberty, property, and law, they have the basis of what it takes to make a civilization. Anything that compromises those institutions is a force for de-civilization.
After a natural disaster hits, we open our doors to see a space desperately in need of clean up. With regard to government in the world today, we see something very similar. Let us open our doors and look without flinching at the terrible mess that the state has made of our world. To those who say this is beautiful and productive, let us explain why this is not so. Let us point to wars and poverty, mass sickness and disease, and explain their cause. Let us stand up to those who would celebrate destruction and show that it is unnecessary and terribly tragic. And let us not despair when we see a world torn asunder by the state, but rather see the evidence of invention and creativity which surrounds us, and look for every opportunity for rebuilding.
I have been distracted for the last few years by other matters and have just recently returned to my world of natural resource management to discover that the major happening in at least the last two decades has slipped by without notice.
Remember the nineties? The radical environmental movement screaming that the world as we knew it was destined to doom because of the nasty chip mills, the clear cut destruction of the forests, the pollution of our waters caused by cutting trees, and all of the other "chicken little" mantras?
Near the end of that decade, a study was begun in order to find out just how badly the southern forests really were damaged. Not an industry study, "tainted" by profit motive, but a honest-to-goodness government study, pure in heart, uninfluenced by anything but a search for truth.
The USDA Forest Service took the lead in this study and enlisted help from the U.S. Environmental Protection Agency, the U.S. Fish and Wildlife Service, and the Tennessee Valley Authority. For over two years, more than 25 scientists and analysts worked on this study. More than 100 scientists from universities, state and federal agencies, industry and conservation organizations provided peer reviews to enhance the accuracy and completeness of this report. Finally, in late 2001, the report was made public and was received with huge waves of apathy.
Why? The report was of no use to the radical environmental community because, with painstaking research and documented facts, it destroyed every assertion they had made concerning the forests of the south. It gave the lie to their "chicken little" scenarios and was impregnable to their attack because of the unimpeachable integrity of those who had created the study. So the radical environmental community just acted as if it had never happened.
But what of the natural resource managers, landowners, and true environmentalists? Are we so cowed by the beating that we have been getting from the fringe that we recognize good things only by some lessening of the pain we endure? Don’t we know vindication when we see it?
The Southern Forest Resource Assessment documents one of the greatest natural resource management triumphs in the history of man.
From the stump landscapes of the early 1900’s, the southern forests have recovered to become one of the wood baskets of the world. Vibrant, never static, quickly responding to changing conditions, the southern forests meet the needs of today and are poised to embrace tomorrow.
The Resource Assessment does not cover the why of this marvelous transformation, but I will tell you why. It is because the southern forests are privately owned. The essential difference between the southern forests and the burning, stagnant forests of the west and looted forests of foreign lands is that of private ownership. Each landowner managing his own lands (and doing it very well as the Assessment shows) for his own perceived self-interest.
Maybe we do not respond to this study because we are used to having things presented to us in sound bites by talking heads. Perhaps we have forgotten that there is work attached to a study and work attached to understanding a study. Let’s do the work.
First, The Southern Forest Resource Assessment is a government study. This means that those who researched and wrote it have no incentive to paint rosy pictures. The future of government foresters, in fact of all government employees, lies in finding areas of concern and alarm that will justify their continued employment. If you work for the government, failure is necessary in order to get the money to continue your life’s work. Successful government programs are killed because there is no need to spend money if the problem is solved.
Witness the "man on the moon" program for the U.S. Government. In government, success means cuts in funding, failure means increased funding. What this suggests is that we should not expect The Southern Forest Resource Assessment to loudly proclaim the success of forest resource management in the South over the last 100 years, but should look for it to outline areas of concern and alarm for the future. This it does very thoroughly.
Next, we should examine the documentation in the Assessment and draw conclusions about what are now the southern forests in light of information about what they used to be. Here is where the good news lies.
We discover that the area of the southern forests has remained surprisingly stable since the early 1900’s. We are not paving over our forests.
We see that our forests are growing more wood than we are removing from them. In the past fifty years we have increased the balance in our forest savings account by over 73 percent. The interest on this account (growth) should mean that, even with increased harvest, we will still be adding to our balance in the future. Rather than running out of trees, we are growing more than we can use.
In addition, we are learning ways to make our forests more productive. We can grow twice as much timber on our land if the markets tell us to do so.
We see that the South now produces more timber than any other single nation in the world.
The present forests of the south are now the major wood producing area of the world. Contrasted to the forests of my youth and earlier, the change is phenomenal, a real, concrete example of successful natural resource management.
Now we should look at the Assessment to determine just what the areas of concern and alarm in this report actually are and make judgments about just how alarmed and concerned we should be. The most interesting thing I found was that none of the radical environmental "chicken little" scenarios even made it to the concern and alarm stage of the report. Chip mills, clear cutting, and harvesting trees did not even make the first cut of activities to be alarmed and concerned about. No surprise to those of us in the natural resource management business, but, I am sure, a major disappointment to those who make up ELF (Earth Liberation Front) and their ilk.
The Southern Forest Resource Assessment goes on to find many areas of concern and alarm in the southern forests, critters facing extinction, changes in land use, disease and insect infestations, fragmentation of forest areas, increasing recreational and other uses of forest lands, the list goes on and on. Remember they had almost three years to discover these areas of concern and alarm and no one accuses them of being lazy. But the big area of alarm and concern was determined to be the increasing use of forest for urban expansion. In fact, the Assessment says that urbanization poses the single largest and most permanent threat to the sustainability of the southern forests. Let’s work on this a little.
The Assessment predicts (based on a forecasting model) that a total of 31,000,000 forested acres will be gobbled up by cities over forty-eight years. Ignoring the fact that all forecasts of natural resources more than five years into the future have one common failing—they are wrong—let’s look at these numbers a little closer. The Assessment shows that the southern forests contain a total of 214,000,000 acres so our 31,000,000 acres lost to urbanization represents 14.48 percent of the total. But this loss is spread over forty-eight years, so the annual loss of forest area to urbanization is only 0.3 percent.
But there is more. At the same time that the nasty cities are eating our forests, open farmland is being planted to trees or allowed to revert to forest at a forecasted rate that will increase the forest land 25,000,000 acres in this same forty-eight year period. Ignoring again the fallacy of paying attention to forty-eight year forecasts, this means that the forest recaptures 25,000,000 of the 31,000,000 acres that it lost to urbanization during the same time period. This represents a net loss of 2.8 percent of our forest lands or, over the forty-eight year period, an annual loss of 0.06 percent of our forest lands. Not a number that strikes terror in this old heart, especially since it is, by the nature of its computation, wrong.
I do not wish to intimate that there are no areas of concern or alarm in our southern forests. I think that the Southern Forest Resource Assessment does an admirable job of identifying these areas. But I would assert that the solutions to these concerns and alarms lie in the realm of encouraging the folks who created our marvelous southern forests, the private landowners, to be aware of and perhaps to address these concerns. This means letting the markets make it worth their while to do so.
The traditional approach to concerns and alarms has been to pass laws and restrictions to private action. This always results in bureaucracy, waste, stagnation, and eventual destruction of the resource in question. Case in point—the National Forests of the western United States
The correct response to areas of concern and alarm in our southern forests is to keep government out of the way and allow the landowners to deal with the opportunities and respond to the markets that areas of concern and alarm usually obscure.
I recognize that privately owned forests represent chaos in the minds of those who wish to find certainty in this uncertain world. There is no telling what is going to happen next! You can look back at the past and make projections and estimates. You can build models to forecast the future and point to the results with concern and alarm, but you cannot predict what private owners operating in free markets are going to do.
We all like things to be neat and tidy, so our response to chaos is usually to try to fix it—to bring order to the chaos. But it has been discovered, for example, that the beating of our heart is a chaotic system and does not respond well to efforts to make it neat and tidy. It seems that systems that need to be agile and efficient (in case one encounters a saber tooth tiger) must be unstable and chaotic. I suggest that the heartbeat of our economic system is similar and fixing it, making it neat and tidy, is not the best way to make it work.
We should learn to accept and embrace this lack of order and tidiness as the price we pay for a system that is responsive and efficient. History and The Southern Forest Resource Assessment have shown that just because our southern forests are not predictable does not mean that they do not work. From the chaos of private ownership has come the brilliant success of the southern forests during the last one hundred years. Keeping government regulation and control out of our private forests is the key to providing the future forests that we and our descendants want, the nation needs, and the world can use as the shining example of how natural resources should be managed.
Down under, in Australia, it is often thought that we are a dry country. What if I was to tell you that we have more rainfall than the United States! As the legendary Aussie, agriculture designer, P.A. Yeomans said: "Australia is not short of water on any comparable per capita basis." However, "the incidence of rainfall is not very reliable."P.A. Yeomans, Ken Yeomans ed. Water for Every Farm. (Southport, QLD, Australia: Keyline Designs, 2002) pg 141. Some of his works are available free online: The Keyline Plan, The Challenge of Landscape, and The City Forest.
At current, Sydney’s water supply is in dire straits. Government has declared itself the monopolist of water. The water storage level is 45.8% of capacity. And there is a growing supply and demand imbalance. The solution to our water supply problems is to eliminate government interference. In Australia considering the erratic incidence of rainfall it is all the more important.
Note: whether it starts flooding tomorrow and the drought well and truly breaks is not consequential to this article. In fact, chances are, I’d just be writing one on the effects of large volumes of rainwater, on our government sabotaged waterworks and waterways.
In our analysis of this "supply and demand imbalance," perhaps the most obvious point is; where on the free market will you find a supply and demand imbalance? One where fines are enforced for using too much of the resource or for non-optimum usage or for usage at the wrong time of day? Where at whim the price of water and conditions of use can be changed, with no contracted notification? On the free market things are priced so as to clear the market. Government cannot possibly do this. They claim everyone has a right to water at below the market price. I wonder if they will still be saying that when they run out?
Apologists for government monopoly of water use the usual litany of long refuted arguments. Here I will address two. (1) That water is something each individual needs therefore government must provide it. And (2) who, other than government, has the capital necessary to build the massive dams necessary for water storage?
Point 1 suffers from the fallacies of non sequitur (how is therefore implied?), conceptual realism (what is government, if not a group of individuals?), and contradictions galore, i.e., why doesn’t government provide us with food and clothing? Also, why doesn’t government allow me to steal off others, even if I claim it is for their own good?
As for the 2nd point, water tanks on each property would make much much more economic sense if government did not supply water below cost or have the monopoly of the water grid. And to add insult to injury, up until a few decades ago, government banned water tanks. All for the individual’s health, of course! Now government subsidizes the water tank industry, but this just leads to a whole other set of problems. For example, it hinders improvements in the water tank industry, by encouraging marginal production to continue, rather than the development of superior production lines.
Second, smaller rather than larger dams, like those built by the government, are actually less economic, both in storage and in transportation costs. In the tradition of the Australian Keyline planner, P.A. Yeomans, his son Ken states:
One reason [for the higher storage costs] appears to be the, far higher cost per cubic metre (or yard) of earth for the wall of the "big" dam which is usually over 10 times higher than the cost of the earth placed in the farm dam. And here the cost of transporting the material is a large factor in this comparison. Whereas on the farm, a dam site to be used has to have good earth for wall construction at, and usually within, the dam site. A suitable site for a "big" dam has no such favourable feature. The materials have to be much more carefully selected and invariably carried far greater distances. Concrete walls for these structures are much more costly again.Ken Yeomans ed. In P.A. Yeomans, Water for Every Farm. (Southport, QLD, Australia: Keyline Designs, 2002) p. 99.
As implied in this, transportation length will be increased since big dams are more spread than smaller ones and topographies suitable for big dams are not as easy to come by. (Not that government could possibly choose the best location anyway). Leakage of water increases relative to transportation. Percent of leakage in the Sydney area is around 10.7%, which is comparable to other areas of Australia and the world. It seems to me that to lose over 10% of your product is a bucketload!
Also, inland where the government dams are, there is not as much rainfall compared to the coast, where most of the people live. We have a situation where, there is plenty of rain on the coast, yet still restrictions on water usage, as there is still a drought out west where the government dams are.
Now, it should be obvious that the "huge amounts of capital necessary," are not. But for arguments sake lets say they are. Surely if an entrepreneur sees a potential market for water from big dams (like those of the government) he will invest capital into the venture. If he can convince others of its ability to satisfy customers relative to cost (profitability), then he can allow them to participate in and contribute capital toward the venture as well. The point is: where does government get its money (other than through counterfeit)?
Lastly, when we consider the alternatives to the incomprehensibly huge amount of money the Australian government has spent over the years, it makes you think . . . Instead of the money the Australian government spends on its "defence" force, they could of used the money to divert rivers inland.Ion L. Idriess, The Great Boomerang. Reprinted in Peace Plans 1444 (Berrima, NSW, Australia: Libertarian Microfiche Publishing [1945]). Instead of having a dry and arid inland, Australia would have rainforest. It would have opened up huge areas of farmland. Just to think of it!
Or, to further satirize the government and its propensities, instead of wasting money to create pointless jobs in the Snowy Mountains Scheme, they could have built the beginnings of a huge (a few thousand kilometres long) mountain range, which would stop the clouds from just passing over the inland and hallelujah.out of print – L.J. Hogan, Man Made Mountain. (Sydney: Charter Books, 1979). And the mountains would be hollow and we could put shopping centres inside and . . .
I do not know if these seemingly wacky ideas make economic sense, as my entrepreneurial instincts are a bit immature. All such ideas need to be tested by market standards. However, if anybody is willing to give me an appropriate sum of money, I will green the desert. What an investment! Think of all the free riders!
As we can see, there is no positive role for government in the supply of water. It has created a drought where there is none. It could very well threaten the lives of its subjects if the "drought" escalates. There is no valid reason for government interference in the water supply.
The best solution, in my opinion, is for those with suitable air quality (everyone in Sydney) and roofing to install water tanks and capture rainwater off their roofs. It is easy and beneficial to secede from government’s water grid. After a few years you will save money. It is better for your health (government wont be able to contaminate your water supply). And, as long as your calculations are correct, you are much less likely to be affected by drought, than reliance on government. How about it?
The recent federal indictment of former Enron Chairman Ken Lay seems to be quite popular with the political classes and the public at large, following the trend in prosecutions of "white collar crime" over the past few years.
Attorney General John Ashcroft might be unpopular among Democrats and the mainstream media for many things, but the press always seems to love the latest scalps of U.S. corporate figures that the DOJ throws them.
Thus, with Lay's indictment has come a spate of approving stories from outlets from the New York Times to U.S. News, Time, and Newsweek. Indeed, the only problem with the indictments, at least according to Democrat presidential contender John Kerry, is that they did not come soon enough.
While the press sings the praises of federal prosecutors, however, the current set of indictments against Lay may have even less merit than the government's indictments (and subsequent convictions) of Martha Stewart and Frank Quattrone, both of which we have strongly criticized on this page. Yes, that is correct; the most unpopular man in the USA very well may not have committed any crimes.
Before tackling the merits (or demerits) of the government's case against Lay, there are a few things the readers should know. The first is that although Lay may not be guilty of the crimes with which the government has charged him, someone involved with the case has committed a felony. It is against the law to leak grand jury testimony or procedures to the press, including information that a sealed indictment has been issued (and the contents of that indictment).
This is ironic; most of the nation's newspapers have been enthusiastic about the indictment of Lay, yet whoever received secret information about the indictment (and subsequently published it) aided and abetted a felony. Given the history of the conduct of federal prosecutors in high-profile, white collar cases, however, it is almost certain that the felony leak came from the U.S. attorney's office in Houston, where the indictment took place.
Thus, federal prosecutors are unencumbered with the burden of legal penalties when they commit actual crimes (as opposed to many of the make-believe "derivative" crimes with which business executives are charged). That should give everyone pause as to the ethical boundaries (or lack of them) that bind these "public servants" as they go about the government's business of increasing the nation's prison population.
The "prosecutor as hero" theme reverberates in the media. What follows (from the July 19, 2004, edition of U.S. News) is typical of the state-worshiping press in the wake of the Lay indictments:
The federal prosecutors mopping up after corporate scandals can remember the summer of 2004 as their season of sweet victory. Last week a jury convicted Adelphia Communications founder John Rigas and his son Timothy Rigas of conspiracy, bank fraud, and securities fraud. A judge denied Martha Stewart's bid for a retrial and will deliver her sentence this week. And charges finally reached the top in the biggest case of all when a grand jury indicted former Enron CEO Kenneth Lay on 11 criminal counts, including bank fraud, securities fraud, and making misleading statements.
One would remind people that the supposed pursuit of "justice" is not a game in which we have "victory." These are legal procedures that destroy families, incarcerate talented people, and eviscerate legitimate business firms, apparently so that U.S. attorneys can bask in the glory that only the news media can provide.
Second, the reaction of the John Kerry camp should ring alarms as to how his administration would pursue "justice" if given the reins of legal power. The problem with the Lay indictment, according to Kerry, whose campaign advertisements tout his experience as a prosecutor, is that it did not come soon enough; Bush's friendship with Lay delayed what Kerry claimed should have been done three years ago.
This is disconcerting, to say the least. It took a long time for the DOJ to put together a case against Lay that even is presentable, and the indictment itself presents a weak (but politically charged) legal case. Kerry's response makes one wonder if he even believes that Lay should receive a fair trial at all—or, for that matter, even a trial, as opposed to summary judgment or the infamous military tribunals.
Ken Lay is a political prisoner. To put it another way, the charges against him are political, not criminal in nature. He was in charge of a company that had a spectacular fall, which is not a surprise, given that Enron was riding the crest of a speculative bubble that almost certainly was going to burst. (It is too bad that Lay, a Ph.D. economist, did not have training in the Austrian Business Cycle Theory, as he might have recognized the unstable conditions of the boom—conditions that mistakenly were called the "New Economy.")
Indictments are written for maximum effect, and Lay's is no exception. (One is reminded of the indictment against Michael Milken, which began with the statement that Milken earned $550 million in 1987, which the government held out as de facto proof that Milken was guilty as charged.) Yet, after one slogs through the 65 pages or so (another ploy by the government to imply guilt—the longer the document, the more guilty someone must be) in the federal indictment, one is struck by the lack of criminality.
The most "damning" charges stem from stock sales Lay made after it became clear that Enron was headed for trouble. Yet, his behavior during this whole episode does not square with the criminality that the government is alleging. For the most part, Lay held the bulk of his investments in Enron stock. When some of his financial advisors told him to diversify, he insisted on borrowing against his Enron stock to purchase other securities.
However, at times he received margin calls, which means that the borrower must produce cash immediately; the only thing he could sell quickly was his Enron stock, but then he also continued to purchase that stock even in the face of company problems. At the same time, he urged employees to purchase the stock—as he was doing.
These matters are public record, yet news accounts have made statements like "he was quietly dumping his Enron stock at the same time that he was urging employees to buy more," which says more about the integrity of U.S. mainstream journalists than it does Lay's stock sales. Even a cursory glance at the record demonstrates that reality is not what the government is claiming. But then, neither the government nor mainstream journalists are bound by truth; nothing should get in the way of a good story or a politically popular indictment.
A more problematic situation involves testimony that Andrew Fastow will give against Lay as part of his own plea bargain agreement, in which Fastow will allege that Lay was the "mastermind" behind the various schemes in which Enron officials tried to hide the company's losses. There is good reason, however, to doubt much of the veracity of what Fastow will testify, given the circumstances of his plea agreement. In order to get Fastow to roll, the government indicted his wife, Lea, for things not related to the Enron problem, something that ordinarily she might have been able to fight in court.
(As the noted criminal attorney Harvey Silverglate puts it, in situations like this, individuals testifying in order to reduce their own sentences are just as apt to "compose" as to "sing." If the perjury committed by one of the government's key witnesses in the Martha Stewart trial tells us anything, it is that the DOJ prosecutors prefer to hear rather creative and newly-composed "music.")
The Fastows have two young children, and prosecutors told them that if convicted, the youngsters would grow up without parents. No, U.S. attorneys did not use the thumbscrew or the rack, but they employed torture all the same. Given the duress under which Fastow and his wife made their plea agreements (she is in a federal lockup for one year, a place reserved for violent criminals, he will serve 10 years), it is doubtful that his testimony will be truthful.
Perjured testimony in federal court, unfortunately, has become a prosecution staple. As Paul Craig Roberts and Lawrence Stratton have written in their book The Tyranny of Good Intentions, federal prosecutions for the most part are politically driven and certainly not trustworthy. The 10-part series in the Pittsburgh Post-Gazette by Bill Moushey is another excellent expose of the federal criminal system, and we recently published an attack on the federal criminal system in Reason.
Nor is Lay likely to find an impartial or sympathetic jury anywhere. A Google search using "Ken Lay" comes up with approximately 195,000 hits, which means that few Americans have not heard about him or Enron. Furthermore, almost everything they know comes either from the mainstream press or from politicians, neither group having a vested interest in being truthful. If a federal judge was willing to accept a verdict in the Martha Stewart case in which at least one motivated juror committed a felony so he could be chosen (and, no doubt, had made up his mind before the trial that he would vote to convict her), then one doubts that whoever presides over the Lay trial will be anything other than a government stooge.
What a minefield the federal criminal system has become! It is not a copy of the state justice systems. For the most part, in the state systems, a crime (robbery, murder, rape, etc.) that harms someone has been committed, and it is up to the jury to decide whether or not the person in the dock is the one who carried out this particular act.
The federal system is quite different. As Silverglate writes:
In the federal system, we know what each party did. We try to squeeze those actions into some vague, broad criminal statute. If we succeed with one, he then testifies that his immediate superior not only conspired with him, but said things leading to a conclusion that he knew what he was doing was illegal. (Consciously intending to violate a known legal duty is the standard for a felony.)
As stated earlier, we are pessimistic about Lay's chances of avoiding conviction. His jurors most likely will consist of middle-class individuals who are loyal to the U.S. Government and will be of the mentality that anyone in the dock must be guilty by definition. Since the media has a vested interest in having been "right" in its demonization of Lay, it is doubtful that the coverage of the trial and pre-trial activities will change in its pro-prosecution, pro-government bias.
The Bush Administration has taken much heat for the economic downturn that has marked much of its tenure, and the government has been looking for someone in the business community to blame. Instead of admitting its own faults (remember the steel tariffs and other economic shenanigans) and telling the truth about why this recession has occurred, Bush and his underlings have looked for scapegoats in the private sector and Lay and many of his associates have been juicy—and politically popular—targets. Lay and other executives that have been charged with crimes did not cause the recession—that is Alan Greenspan's accomplishment—but the government has been glad to jump on the "corporate crime wave" bandwagon and the lapdog press has followed suit.
In his classic book Crisis and Leviathan, Robert Higgs points out how various crises enable government officials to grab power that before might have been denied to them. When he was a U.S. Senator, John Ashcroft objected to an attempt by Janet Reno's DOJ to slip through sets of laws that would further tilt the playing field toward the prosecution. (Ashcroft rightly called the proposed bill an example of "Big Brother.")
After the 9/11 attacks, however, Ashcroft's alleged allegiance to constitutional rights disintegrated along with the World Trade Center. To make matters worse, there were some spectacular business failures, including Enron and WorldCom. The 9/11 disasters and the business collapses provided opportunities for both U.S. attorneys and opportunistic politicians to claim that the recession was caused by a "corporate crime wave." Democrats blamed Republicans for having a lax system of regulations (despite the fact that many of the firms had strong relationships with various Clinton Administration members and Democratic members of Congress).
Not surprisingly, Republicans jumped when Democrats pulled their chain; furthermore, they had two "crises" through which to seize more power. The wars in Iraq and Afghanistan (the bulk of the government's so-called war on terror) gave government agents enormous power—as the recent torture scandals involving prisoners of war have demonstrated.
The high-profile business collapses also have enabled the government to further criminalize what in many circumstances would have been acceptable business behavior. When combined with the Patriot Act, which ratchets up laws against "money laundering" and gives government regulators and prosecutors easy access to whosever accounting books they wish to examine, the government has been able to grab enormous new powers, and the increase in "white collar" criminal charges has proceeded accordingly.
It's doubtful that Lay is guilty of criminal activity, especially in the sales of Enron stock. However, as the chairman of the firm, he had fiduciary responsibilities to the firm and stockholders. Moreover, many of the decisions he made, in good faith or not, resulted in huge business losses for investors, not to mention employees who purchased large blocks of Enron stock.
These matters are better suited for civil, not criminal court. Historically, this has been the venue where issues like this were argued and—at least to a point—resolved. By muscling into this legal realm, U.S. attorneys not only are criminalizing acts that are not traditionally criminal, but they also ensure that the people who should be receiving real justice are left out.
There is no doubt that there will be cheering when Lay's guilty verdict is announced and he is sentenced to what effectively will be a life term in prison. Americans have become people who enjoy watching others suffer—particularly watching leaders fall from grace—and perhaps one should remember that business executives have wives and children who also will have loved ones incarcerated for many years.
While U.S. attorneys are not providing bread and circuses to the masses, they are giving the public the next best thing: public humiliation of wealthy executives and their families, many of whom have committed the crime of being successful. Others, apparently, have committed the crime of not being successful enough.
In the fall of 1990, I flew from Atlanta to San Diego, with our flight hugging the border of the United States and Mexico as we moved across the southwest deserts of New Mexico annd Arizona. The farther west we flew, the more I saw some strange sights, those being great, circular fields of green crops located next to desert sands.
Then I saw the strangest sight of all: the place where the Colorado River simply stops flowing. As we flew past the northern end of the Gulf of California, I could see that the Colorado River did not reach its former terminus, disappearing, instead, into the soil a few miles above the gulf’s northern beaches.
That was more than a decade ago, and the pressure on the Colorado River to provide water for development in the western USA has grown immensely since then. A river that nearly 15 years ago was reduced to less than a trickle where there once was a mighty flow cannot be expected to fulfill the demands of people who are creating the kinds of land developments that one would expect to see in a place with average rainfall that measures nearly three digits, not in a desert.
In a recent New York Times article, writers Kirk Johnson and Dean E. Murphy write that there exists a real possibility that a long cycle of drought could drastically alter how westerners live and work. Not surprisingly, as one might expect of mainstream journalists from the nation’s "newspaper of record," the reporters demonstrate at best only a partial understanding of what is happening and what can be done about it.
They write:
At five years and counting, the drought that has parched much of the West is getting much harder to shrug off as a blip.Those who worry most about the future of the West - politicians, scientists, business leaders, city planners and environmentalists - are increasingly realizing that a world of eternally blue skies and meager mountain snowpacks may not be a passing phenomenon but rather the return of a harsh climatic norm.Continuing research into drought cycles over the last 800 years bears this out, strongly suggesting that the relatively wet weather across much of the West during the 20th century was a fluke. In other words, scientists who study tree rings and ocean temperatures say, the development of the modern urbanized West - one of the biggest growth spurts in the nation's history - may have been based on a colossal miscalculation.That shift is shaking many assumptions about how the West is run. Arizona, California, Colorado, Nevada, New Mexico, Utah and Wyoming, the states that depend on the Colorado River, are preparing for the possibility of water shortages for the first time since the Hoover Dam was built in the 1930's to control the river's flow. The top water official of the Bush administration, Bennett W. Raley, said recently that the federal government might step in if the states could not decide among themselves how to cope with dwindling supplies, a threat that riled local officials but underscored the growing urgency.
While the Times portrays the federal government as the ultimate savior in this growing mess, history tells us otherwise. The American West faces severe water shortages because of U.S. Government policies of this past century; the solution is not for the government to further assert itself, but rather to end the water socialism that it has imposed. The command system of economics that has led nations like North Korea and Cuba into ruin has also created the crisis in the West.
What the Times does not tell us is that water in the western states has been distributed politically, and that agricultural interests have held sway. Unlike the riparian system that governed water rights in the eastern USA, the West has developed under a "first user" principle that has operated on the principle of "use it or lose it" allocations, which is a sure recipe for waste. In other words, the use and distribution of water in the West ultimately is an economic issue, something that the Times’ reporters have missed.
As Johnson and Murphy point out, the first users in the western system are agricultural interests, and they are allocated water at subsidized prices that would not be available even in eastern states where there was much more water. At $5 to $15 for an acre-foot (enough water to cover an acre of ground with a foot of water), farmers are able to grow water-intensive crops such as alfalfa, cotton, and rice. (Even with the water subsidies, rice is also subsidized on the price end, as the cost of growing rice is greater than the price that can be obtained for it on the free market.)
Paul Milgrom and John Roberts point out that these subsidies create situations that can only be called an economic version of the Theater of the Absurd:
Water rights for farmers vary considerably throughout the state of California, depending on the source of the water. Some farmers have inherited extremely valuable water rights to have huge quantities of cheap water delivered to them. Water for farming from the federal Bureau of Reclamation sells for $10 to $15 per acre-foot, and the cheapest subsidized water sells for as little as $3.50 per acre-foot, even though it may cost $100 to pump the water to the farmers…Meanwhile, households in Palo Alto pay about $65 for the same quantity of water, and some urban water users pay as much as $230. The most desperate nonagricultural communities along the Pacific coast of California have gone as far as to build desalination plants to obtain potable water from the ocean at a cost of approximately $3,000 per acre-foot. (Since this was written, it is now possible to desalinate ocean water at about $1,000 an acre-foot.)
How much of the cheap water is used? One agricultural use alone, irrigating pastures for grazing cows and sheep, used 5.3 million acre-feet of water in 1986. This is enough water to cover the District of Columbia to a depth of 1,250 feet! …Yet the industry of raising cattle and sheep on irrigated pasture in California had gross revenues for that year of less than $100 million. Plainly, devoting so much water to such a low-value use is possible only because the water used to irrigate pastures is sold so cheaply.Milgrom, Paul and John Roberts, Economics, Organization and Management, Upper Saddle River, New Jersey: Prentice Hall, 1992, 298-99.
Government policies ensure that the water will be wasted, since those who have the water rights, as noted earlier, must "use it or lose it." Furthermore, they have been prohibited from selling those rights to other farmers or urban users. (The "reasoning" behind such regulations is that the government wishes to "preserve" the farm culture of Central California.)
Thus, we have taxpayers being forced to subsidize both the inputs into the crops and the crops themselves, all in the name of producing "cheap food" for consumers. However, such obvious waste cannot go on indefinitely, since government can only provide subsidies, not create new sources of water.
While much rhetoric is spewed out extolling the "public" uses of water, it is clear that California and the American West in general would have benefited from private ownership and distribution of water. No private firm would distribute a precious commodity like water in a desert in the way that the Bureau of Reclamation has done it. While the subsidized farms in the West are private, the federal government owns the main input that is needed for their crops: water. Thus, the term "private enterprise" here is meaningless, since the farms are wards of the state.
As the Times article demonstrates, however, this ridiculous saga may very well come to an end precisely because the government cannot create that which does not exist. Under a private system of ownership – or even a semi-private one in which those with water rights would be permitted to sell them to whomever they would choose – the water would go to users willing to pay for them.
However, one might object, would that mean the end of some farms in California and elsewhere in the West? Yes, that is exactly what that means. The government has engaged in egregiously wasteful policies in order to politically distribute water, and those policies have created the current crisis. One can be assured that if people actually had to pay market prices for water, and that water were privately owned in that region, it is doubtful that we would have seen the kind of wasteful development that has treated the western landscape as though it were a rain forest, not a desert.
To put it in a way that Austrians would understand, government policies have resulted in malinvested resources and development that cannot be sustained. As in Austrian Business Cycle Theory, which stresses that recovery cannot begin until the malinvested capital has been liquidated, the American West cannot begin to see true "sustainable" development until new policies are implemented.
Yes, the reality of less water will change much of how things are done in the West, and for many who lose jobs or a way of life, those changes will be very painful. Unfortunately, had private enterprise prevailed in water from the beginning, we would not be faced with the prospect of almost certain depopulation of the West and the elimination of many farms and ranches.
Being that water is politically distributed in the West, it will be difficult for members of Congress and the unelected bureaucrats who have created this crisis in the first place to be willing to make the necessary changes. However, changes will occur whether or not the government acts to get itself out of the water business. That is because government can only create hot air, not water itself.
"The science and evidence in Roland Emmerich's anticipated blockbuster Independence Day may be flawed and the posited scenario may be impossible as far as we know, but the movie has the potential to do a lot of good. It will raise awareness of the possibility that a race of hostile aliens may someday attempt to exterminate humanity. What's more, it may convince the White House to address this pressing issue."
Is there any chance that a paragraph like that would have made it onto the editorial page of a major newspaper in anticipation of Roland Emmerich's mid-nineties blockbuster? Doubtful. And yet Emmerich's The Day After Tomorrow has generated a lot of publicity and a lot of "dialogue" by positing a doomsday scenario that is only slightly more realistic than the alien invasion scenario that was the centerpiece of Independence Day (or the giant nuclear lizard that wreaked havoc in Emmerich's update of Godzilla).
Lots of people have spilled ink—including the New York Times—about the disaster flick The Day After Tomorrow (Peter Klein links to Bjorn Lomborg's review in the Blog). The NYT tells us that even though the science in the movie is seriously flawed, it has the virtue of elevating the dialogue about global warming and its impact on human civilization. Noble though it may be, should we take this claim seriously?
Presumably, the film will get us to devote more resources to research on climate change. Maybe we'll adopt the Kyoto protocol. Maybe people will make radical lifestyle changes that will reverse the trend toward a hotter planet. Unfortunately, important economic principles get in the way: specifically, nothing is free. These changes come at a cost.
What the film's more radical supporters are proposing is nothing less than the destruction of commercial society. We can dismiss them out of hand because it is easy to show that the socialist reforms they propose will spread poverty, disease, and destitution the whole world 'round. But what about well-intentioned, minor changes? Shouldn't these be implemented to insure ourselves against the remote possibility of environmental disaster?
Absolutely not. Again, there are no free lunches. Implementing Kyoto would be expensive—$150 billion annually, writes Bjorn Lomborg, all to push minor global warming back by six years. For that price, others have noted, we could provide clean water for the entire world's population. Moreover, as Brad Edmonds points out, environmental quality is a normal good. As people get richer, they demand cleaner natural environments. American Airlines' American Way magazine makes this point in an article about eco-friendly developments that are rapidly gaining popularity among the super-rich.
Do we all want to breathe clean air? Yes. Do we all want to live in places with lots of green space? A lot of us do. Do we get our jollies by dumping sewage and toxic chemicals in streams and rivers? Do any of us want to see the earth destroyed by climate-induced natural disasters? I really doubt it. The fact of the matter is, though, that the probabilities of cataclysmic disasters like those we see in movies like The Day After Tomorrow and Independence Day are very, very low.
For the sake of argument, let's suppose that we have a pile of cash that we can sacrifice for some noble cause. For concreteness, suppose it's the capitalized value of a stream of $150 billion cash flows over 100 years (the calculations are left to the reader as an exercise—it's a ton of money). Spending these resources in anticipation of global warming-induced falling skies is quite like spending resources in anticipation of an alien invasion.
To the extent that we want to change things, we have far more pressing concerns. Diarrhea—easily preventable, easily treatable—kills more children than any other disease on earth. Official injunctions against DDT brought about a resurgence of malaria in poor countries and are responsible for millions of deaths. European resistance to genetically-modified foods condemns millions in Africa, India, and elsewhere to poverty and starvation. And so on.
How can we know what threats society's resources should be used to combat and what issues should be addressed? This is not a small issue. In fact, it is the core economic problem that scarcity itself gives rise to. It can be solved only through market means. It is the market, not the state, that provides mechanisms (risk premiums, prices, profit and loss) to check ideological extremes. Political institutions are not in a position to make realistic evaluations of risk; instead, they are buffeted about by the latest fads.
To the extent that something in the world needs to be "fixed," our resources are better spent developing the institutions of capitalism—private property rights, capital, and well-functioning markets—than on shot-in-the-dark attempts to prevent ultra-low probability (and ultra-overrated) "disasters."
Perhaps you have heard that the bureaucrats running the Milwaukee Metropolitan Sewerage District recently dumped 4.6 billion gallons of raw sewage into Lake Michigan along the Wisconsin coast. What's more, they did it as a matter of policy.
That you probably haven't heard about this scandal says much about the sycophantic relationship between the public sector and the so-called free press in this first decade of the 21st centuryA search on the invaluable Google News site under the terms "Milwaukee" and "raw sewage" recently yielded only 32 articles, most all of them from regional news sources., showing that press coverage is lacking in other areas than simply its coverage of Iraq. It also indicates much about the degree to which the public sector is held to a lower standard than the private sector, a relation which is true, to varying degrees, throughout the United States, but especially in that birthplace of the Progressive Era, the Peoples Republic of Wisconsin.
I know about this scandal because of a recent trip to that state. You can't walk along the lake there without covering your nose and wondering if you are endangering your health. The beaches along the lakefront—always a popular destination during Memorial Day weekend—were closed. From what I could tell, the locals are mad as hell about the situation and are completely unable to do anything about it, so entrenched are the perpetrators of this crime.From MSNBC, May 23, 2004: "The sewage dumpings come at a time when residents of the Milwaukee area are gearing up for summer. Many people who were at the lakefront Saturday voiced concerns about the lake water. 'It's pitiful,' said Danny Anaya, 19, after fishing near the grounds of Summerfest. 'You can see brown stuff and diapers floating around.'" 'I think the dumping is criminal," said Craig Stocks, 51, of Caledonia as he stepped out of Lake Michigan near South Shore Park. He had just cleaned his sailboat and said he would immediately wash his hands. He plans to sail this summer but will try to stay out of the water. 'I'm not going to swim in it,' he said. 'If I fell in and swallowed the water, I'd worry about getting dysentery.' "
How could this happen? The answer is a textbook case that could have fit well as an appendix to Ludwig von Mises's Bureaucracy.
Several years ago, MMSD officials decided to upgrade its sewer system by creating a deep tunnel that would feed raw sewage with rain water to its water treatment facilities. This $3 billion project took several years to complete and was touted as the answer to an existing sewage system that was so old that it had become an environmental and health hazard.
The risk in choosing a single "deep tunnel" system combining both types of wastewater lie in deciding what to do when excessive rainwater stressed the system. Many thought that a dual system of piping that separated rain from waste water was a safer, if more expensive, solution in an area of the country known for heavy spring rains. Instead, the city decided on the deep tunnel with the understanding that whenever the system reached capacity, it would dump the overflow into the lake.
Although this was a policy that would probably have resulted in criminal penalties if ever adopted by a private firm, in hindsight, this was probably a tough call. One had to balance the possibility of overflow with the short-term savings of the deep tunnel (even though both options cost in the billions of dollars). These decisions are much more likely to be made correctly when those who are making them stand to experience benefit or harm as a result. And as should be no surprise to readers of Mises.org, this is much more likely when such decisions are made in the private sector. Mises writes about this phenomenon in Bureaucracy (1983, pp. 50-52):
Bureaucratic management is management bound to comply with detailed rules and regulations fixed by the authority of a superior body. The task of the bureaucrat is to perform what these rules and regulations order him to do. His discretion to act according to his own best conviction is seriously restricted by them.. . . The objectives of public administration cannot be measured in money terms and cannot be checked by accountancy methods. . . . Within a business concern such things can be left without hesitation to the discretion of the responsible local manager. He will not spend more than necessary because it is, as it were, his money; if he wastes the concern's money, he jeopardizes the branch's profit and thereby indirectly hurts his own interests. But it is another matter with the local chief of a government agency. In spending more money he can, very often at least, improve the result of his conduct of affairs. Thrift must be imposed on him by regimentation.. . . In public administration there is no market price for achievements. This makes it indispensable to operate public offices according to principles entirely different from those applied under the profit motive. . . . Bureaucratic management is management of affairs which cannot be checked by economic calculation.
So, where does this leave the city of Milwaukee? Currently, there is much finger pointing going on.From the Milwaukee Journal Sentinel, May 29th, 2004: "Sen. Alberta Darling (R-River Hills), a frequent critic of MMSD, said it was shocking how quiet environmental groups have been about dumping, particularly in contrast with their activism on a host of other issues at the statehouse. 'They must have a very narrow agenda,' Darling said. 'It would sure help to have the environmental groups exert pressure on us and MMSD to ensure accountability.' " There are plans to appoint a commission to study the scandal and learn whatever is necessary so that it does not happen again. Members of the state legislature are planning hearings. These responses amount to predictable nonsense meant to convey the message to an angry public that the system can still work if only, yet again, it can be tweaked in the right way.
But unfortunately, the system can be tweaked indefinitely, and to no avail, as long as the incentive structure facing decision makers is not changed. The likelihood of anyone being held criminally responsible currently seems quite low. No one has been fired. More tellingly, lawyers have not exactly been lining up at the trial bar to file cases against the perpetrators of this crime like they did shortly after the oil spill of the Exxon Valdez in the 1980s.
Remember that? Back in 1989, a drunken ship captain named Joseph Hazelwood literally fell asleep at the helm of his oil tanker as it ran aground on Bligh Reef in Alaska's Prince William Sound, causing about 11 million gallons of oil to spill into the water. Exxon was found guilty of negligence and a $5 billion verdict was issued against it. Though the area harmed by the oil spill has largely recovered, some adverse effects still linger.
The incident shows how private sector actors are held responsible for their actions. This is as it should be. One of the great benefits of private property is that owners are held liable when property is used to damage others. This promotes more responsible use of property and causes it to be used in ways that are socially optimal.
There are other contrasts as well. Eleven million gallons of oil spilled into a body of water connected to an ocean is small potatoes compared to 4.6 billion gallons of raw sewage dumped into a great lake. This makes the dichotomy between the reactions to the Exxon Valdez and the smelly mess in Milwaukee so glaring. (Do environmentalists only condemn private sector perpetrators of ecological damage?) And while the costs of Exxon's oil spill can easily be assigned to the firm's shareholders, the costs of MMSD's poor stewardship must be socialized among the taxpayers.
Currently, Milwaukee residents are being told that the long term solution to its sewage problem lies in switching to the dual piping system, another multi-billion dollar project on top of the relatively new deep tunnel system. Whether this system is implemented (as seems likely) or not, taxpayers will continue to pay by either enduring disgusting lake breezes or in increased taxes in order to finance the improvements.
But they will pay. As someone with familial roots in the Milwaukee area going back over 150 years, I find the situation scandalous and discouraging, but hardly surprising. The city of Milwaukee has long been dominated by left-liberal political machines that have ruined what was once a great city and have, over the last several decades, caused an exodus to outlying suburbs and other states that pose lesser threats to disposable incomes.
When I visit Milwaukee today, I am struck by the extent to which it is living on the fumes of past accomplishments. Unfortunately, those fumes have long turned sour. Much stinks in Milwaukee, and it isn't just coming from the lakefront.
Do Future Generations Have Rights?Mises Review 9, No. 3 (Fall 2003)A POVERTY OF REASON: SUSTAINABLE DEVELOPMENT AND ECONOMIC GROWTH I cite the title as it is given on the cover. The title page omits "and Economic Growth."Wilfred BeckermanThe Independent Institute, 2002, xiii + 94 pgs.
Wilfred Beckerman is an outstanding economist of a type probably more common in Britain than America. Like Anthony de Jasay, Amartya Sen, and I.M.D. Little, Beckerman is thoroughly at home in philosophy; and in A Poverty of Reason, he makes insightful remarks about the rights of future generations, equality, and the so-called "precautionary principle."
Some environmentalists are outright enemies of humanity, who favor a drastic reduction in human population, if not the elimination altogether of our species. Once at a conference, I was seated at dinner next to that eminent Luddite, Kirkpatrick Sale. I mentioned that a critic had accused him of wishing to return to the Stone Age. To my surprise, he said that this was just what he wanted.
More moderate environmentalists do not propose to crawl on all fours, and Beckerman here analyzes the views of those who seek the seemingly reasonable goal of "sustainable development." They do not propose to do away with economic growth altogether; but must not the rights of future generations be guaranteed? We must leave to them an environment at least as good as that which we have enjoyed. In particular, we must make sure that vital resources remain available, act to contain global warming, and endeavor to prevent "biodiversity" from unacceptable reduction.
But will not the free market take care of all such issues? Owners of private property have every incentive to conserve their resources rather than squander them for immediate gain. Further, most people wish to provide for their children; insuring the welfare of future generations requires no collective action beyond this.
For proponents of sustainable development, the free market is not enough. People will indeed endeavor to conserve what they own; but they will do so guided by an economic principle. For actors on the market, maximizing expected utility is the be-all and end-all.
Is this not unfair to future generations? People will make provision for their children and grandchildren but will rarely seek to conserve their resources beyond what is needed to do this. So long as people can leave something to their heirs, the pursuit of profit will impel them to wasteful use of scarce resources. Must not the government protect the rights of future generations, in order to prevent this catastrophe?
Beckerman identifies a fundamental failing in this line of thought. Let us grant that the present generation ought not to squander all its resources and leave nothing for distant future generations. It does not follow that these future generations have an enforceable right that resources be conserved at a certain rate. To introduce here the language of rights, our author maintains, is to assume without basis that whatever moral claims future generations have on the present bind us absolutely, or close to it. Why not instead view obligations to the future as one item to be weighed against other things?
Our author goes further. He maintains that ascribing rights to those who do not yet exist makes no sense. "More generally it is difficult to see how future generations can be said to have any rights because properties, such as being green or wealthy or having rights, can be predicated only of some subject that exists. ... If I were to say ‘X has a fantastic collection of CDs,’ and you were to ask me who is X, and I were to reply, ‘Well actually, there isn’t any X,’ you would think I had taken leave of my senses. And you would be right ... unborn people cannot have anything. They cannot have two legs or long hair or a taste for Mozart" (pp. 67–68).But past people do not now exist, but you can violate the rights of someone now dead. Suppose, e.g., that you dispose of someone’s estate contrary to the directions of his will: have you not violated his rights? Beckerman seems to me on the correct lines, but his argument needs more careful statement than he gives it here.
One might object, "Is not Beckerman simply playing with words? Let us grant him his point: might we still not have a binding moral obligation to preserve a sustainable environment for future generations? Where has his semantic wordplay gotten him?"
We can, as the objection supposes, speak of binding moral obligations without reference to rights, but Beckerman’s point nevertheless helps us grasp an essential issue. The language of rights at once takes us into the realm of absolute claims; and if we grasp that we need not — or cannot, if Beckerman is right — ascribe rights to future generations, we can begin to think clearly about our obligations to them. Beckerman has freed us from the prison of a false assumption.
Beckerman’s point about rights can be used, in a way that he does not consider, to strengthen his case against sustainability advocates. Future persons may not have rights, but presently existing people do have them. If so, then efforts by even moderate environmentalists to restrict property rights may be illegitimate on their face. Beckerman very effectively demonstrates that environmentalist arguments fail on their own terms. But even if these arguments were cogent, this would not suffice to justify compelling property owners to restrict their consumption. The issue of rights would first have to be addressed.
Beckerman has exposed a hidden assumption that lies behind the environmentalist case, but this is not his greatest contribution. He challenges head-on a key premise of much contemporary moral philosophy. The sustainability advocates maintain that each future generation should be provided with an equally good environment to the one we now have. With great daring, Beckerman asks, what is so good about equality?
Arguments for equality often hide behind feelings of sympathy many people have for the impoverished. Environmentalists paint a bleak picture of a future in which essential fuels are exhausted and people confront catastrophically high temperatures. Is it not unfair, they inquire, to subject people to such conditions?
If it is unfair, what is wrong is that people should not be subjected to bad conditions: equality has nothing to do with the case. Harry Frankfurt has brilliantly elucidated the essential point: "The egalitarian condemnation of inequality as inherently bad loses much of its force ... when we recognize that those who are doing worse than others may nevertheless be doing rather well ... what is of genuine moral concern is whether people have good lives, and not how their lives compare with the lives of others" (pp. 72–73).
Beckerman applies this fundamental insight to sustainability, with devastating results. So long as those in future generations are expected to prosper, why does it matter morally if their environment is not in all respects equally good with our own?
If we nevertheless insist on equality, matters take a surprising turn. Those who will live in the future are likely to benefit from continued economic growth. If they turn out to be more prosperous than we, do they not, by the criterion of equality, owe us recompense for their superior good fortune? Of course, they cannot pay us, since they do not now exist. But we can do our best to achieve equality by refusing to conserve our resources. The poorer environment that results for our successors balances their superior prosperity and thus helps to achieve equality.
Beckerman states the reductio in this way: "But suppose future generations were expected to be richer than we are for reasons that are outside our control. ... But if we regard natural inequalities as unjust, we would be morally obliged to take some action ... to reduce our poverty compared with future generations by, say, slowing down future growth (e.g., by investing less or using up more of the earth’s supposedly scarce resources)" (p. 71).
Beckerman’s argument reduces to ruins the case for sustainable development, since this is based precisely on the claim that future generations are entitled to an equally good environment to our own. But what if environmentalists, chastened by Beckerman’s attack, withdraw to less demanding claims? Even if future generations are not entitled to an equal environment, is it not common sense to conserve scarce fuels and counteract global warming?
Our author addresses these issues in detail, but I should like instead to look at another fundamental point he raises that applies more generally. Many environmentalists show themselves well aware of the fact that their predictions of disaster are controversial. But they claim to have an argument that their pessimistic views should prevail. If the optimists are in the right, and we follow their advice, we shall have somewhat higher growth rates than otherwise. But if the environmentalists are right, and we ignore them, disaster threatens. Should we not then err on their side?
This is the so-called precautionary principle: "Where there are threats of serious or irreversible damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation" (p. 41, quoting a Ministerial Declaration of the UN Economic Conference for Europe).
To pose the issue this way, Beckerman shows, rests on a false assumption. Why must the decision be made immediately? If "scientific certainty" is not available, why not wait until we have a clearer idea of what will happen? Why now install costly measures designed to curb global warming, if in a few years we may find out that our efforts are futile or that global warming is not so bad?
To think that possible environmental disaster requires immediate response is falsely to assume that we risk disaster by waiting for a short time before acting. But this does not follow, even if the environmentalists turn out to be right in their predictions. So far as climate change is concerned, "delaying action by several years makes a negligible difference" (p. 47).
But what happens if we allow for this point? Suppose, e.g., that after several further years of research, we still face conflicting views about global warming. Should we then follow the pessimists, lest catastrophe follow?
Not necessarily. Beckerman points out that the principle of avoiding disaster can be carried too far. We should indeed be cautious, but the benefits of economic development should never be ignored. The precautionary principle "is just a pompous way of saying that one should consider the case for making some investments now in order to minimize the danger of some unpleasant event taking place later. But nobody in their senses would make investments to avoid every remote possibility since that would leave precious little time for the enjoyment of life" (pp. 44–45).
I have stressed in this review general principles rather than the particular details of Beckerman’s analysis of fuels, climate change, and biodiversity. I am happy to assure readers that he finds little cause for alarm in any of these areas.
Hurricane Isabel roared onto eastern North Carolina shores in mid-day, September 18, 2003, continuing on into Virginia and north from there. While Isabel was no Hurricane Hugo, the monster storm that demolished Charleston, S.C. back in 1989, it washed up the usual economic fallacies.
Among them is the idea that all prices should be the same after as before the storm. Thus were potential gougers given stern warnings long before the hurricane hit. It is apparently very difficult for people to understand how prices assist in rationing in light of changes in supply, which is why price flexibility is never more needed than in a natural disaster.
But let's leave that one aside and focus on the biggest fallacy of all: the idea that destruction of all sorts is actually a wonderful thing. To listen to mainstream economists, including Wall Street analysts, what destruction Isabel wrought is really a bonanza for the economy.
A several-times-repeated CBS Marketwatch statement declared just the other day, "The approaching Hurricane Isabel is likely to destroy property and claim lives, but it'll probably be a positive for the nation's economy." The report continued, "The storm … will disrupt commerce, industry and travel for a few days—or even months in some cases." But never fear. Isabel "is likely to actually increase overall economic activity in the coming weeks as individuals and businesses repair and restore their damaged property."
In a similar vein, MSNBC wrote: "It's time to look at the bright side of hurricanes," quoting a government researcher as follows: "A lotta money gets spent and it flows through the community and reinvigorates the community for years." The story also quoted a Miami Herald columnist: "It's a boon to roofing contractors and to plywood, drywall and window manufacturers."
In other words, positive economic activity is only a hurricane away. By this logic, Hugo was the best thing that ever happened to Charleston. Maybe, if we are really desperate to improve the local economies of our cities and towns, what all of us ought to do is bulldoze our property to the ground. Think of all the jobs that will be created when it becomes necessary to rebuild our houses, workplaces, downtowns, shopping malls and other centers of commerce from scratch.
Seriously, folks, its time to dig out Frederic Bastiat and Henry Hazlitt for his first lesson in Real Economics 10: the Broken Window Fallacy.
Back in 1946 Hazlitt wrote, with characteristic clarity:
A young hoodlum … heaves a brick through the window of a baker's shop. A crowd gathers … After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has its bright side. It will make business for some glazier. As they begin to think of this they elaborate on it. How much does a new plate glass window cost? A hundred dollars? That will be quite a sum. After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $100 more to spend with other merchants, and these in turn will have $100 more to spend with still other merchants, and so on ad infinitum. The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be … that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.Henry Hazlitt, Economics in One Lesson [1946] (New York: Harper & Row, 1962), pp. 17-18.
Hazlitt went on to point out the error here. The error consists in looking only at the baker's loss and the glazier's gain. It is true enough that the broken window meant an immediate economic benefit for the glazier, and by extension, with all those with whom the glazier does business down the road.
However, the baker is out $100 for the repair of the window. That is $100 he could not spend on a new suit. In other words, that is $100 that does not go into the hands of the tailor with whom the baker would have chosen to do business had he not had to spend the money to have his front window repaired.
"The glazier's gain of business," Hazlitt concludes, "is merely the tailor's loss of business."Ibid., p. 18. And that, we might add, is $100 the tailor does not have to spend with other businesses. In other words, no real economic gain has been achieved.
The crowd has considered only what was seen—the broken window and the transaction through which the window was repaired. They did not consider the potential third party, the tailor, because circumstances did not allow him to enter the picture. "They will see the new window in the next day or two. They will never see the extra suit … They see only what is visible to the eye."
This applies straightforwardly to Hurricane Isabel's effects on the economy. Let us suppose Hurricane Isabel does x million dollars in property damage (as of this writing no actual figure is available, of course). Those who look only at those property owners who must have their property repaired and look at the immediate benefits to the construction and related industries, will not see the new computers that some North Carolinians and Virginians had planned to purchase but now cannot.
They will not see the losses to the computer industry, therefore. They will not see the new automobiles other North Carolinians and Virginians had planned on purchasing but now cannot. They will not see the losses to the automobile industry, therefore. They will not see the vacations that will not be taken during the upcoming Christmas season and the consequent loss to the tourist industries in Florida and elsewhere. They will not see the many other economic losses to those with whom North Carolinians and Virginians affected directly by Hurricane Isabel would have otherwise chosen to spend their money.
This is the difference Bastiat spoke of, between what is seen and what is not seen. Mainstream economists, convinced that theirs is an empirical science exclusively, can tabulate extensive data on what is seen but totally ignore what is not seen. What is not seen is what the people affected by natural disasters such as hurricanes would have done with their resources, whether to spend in the present or save or invest for the future. How economists respond to the effects of disasters on the economy is an object lesson in the kinds of fallacies and sophisms gripping mainstream economics.
Perhaps the best thing about Hurricane Isabel was something we did see, however. That was the shutting down and boarding up of Rome on the Potomac long enough to allow the storm to pass overhead. Unfortunately, it didn't last. I wonder what short-term and long-term economic benefits would accrue from shutting down Rome on the Potomac for an extended period: say, 30 days.
Maybe we should hope for the economic benefits of more Hurricane Isabels after all, so long as their path takes them straight up the Potomac River.
Like those who were of age the day John F. Kennedy was assassinated, most people can remember intimate details of what they were doing when they first heard that the space shuttle Challenger had exploded. To compound the tragedy, millions of schoolchildren across the country watched the whole thing in shocked amazement.
The "teacher in space" program that NASA hoped would be a public relations boon to the shuttle program exploded with the shuttle as teacher Christa McCauliffe of New Hampshire was among the seven astronauts who perished when the shuttle disintegrated miles above the earth. While NASA went on to record many more space flights after the Challenger disaster, the program once again was shocked into reality when Columbia blew up in flames just minutes before landing, killing all seven astronauts aboard.
In writing about the latest NASA disaster in the Free Market, I pointed out the problems and depressing realities about socialist space travel. What I did not say was something that is even more depressing: the roots of both disasters were planted in the government's environmental policies. Environmentalism not only killed 14 U.S. astronauts, but it killed them in a most horrible and public way.
As recent news reports have pointed out, the wreck of the Columbia was almost certainly due to a chunk of insulating foam coming loose and hitting some heat-protecting tiles, scattering them and leaving the spacecraft vulnerable to the intense heat it would experience upon re-entry into the earth's atmosphere.
That is all that the mainstream news—and NASA—have been willing to report. What they have not said is that the particular foam that was in use at the time was an environmental substitute replacing a material that had worked well. However, the previous foam used to insulate the Columbia's external fuel tanks contained Freon, which is a chlorofluorocarbon (CFC) that the EPA banned because of the ozone depletion scare.
As Steven Milloy reports, NASA could have sought an exemption. Freon, after all, is inert and nontoxic, and its connection to ozone depletion is tenuous at best. However, having been burned by the EPA once before (as I will point out), NASA succumbed to what Milloy calls "PC foam." He writes, "PC foam was an immediate problem. The first mission with PC foam resulted in 11 times more damaged thermal tiles on Columbia than the previous mission with Freon-based foam."Milloy also points out that the EPA in fact did exempt NASA from the CFC reduction in 2001, but that NASA decided to continue using its “environmental-friendly” foam.
Furthermore, the damage was obvious—and quite severe. Milloy writes that following the 1997 Columbia mission, "more than 100 tiles were damaged beyond repair, well over the normal count of 40."
I now examine the Challenger explosion, which occurred the week after the Super Bowl in January 1986. As nearly everyone familiar with the catastrophe knows, a set of O-rings that was supposed to keep hot gases trapped in the rocket carrying the shuttle failed, the fuel quickly leaking out and igniting into a fireball shortly after takeoff.
It was an unusually cold morning at Cape Canaveral, too cold for the O-rings to perform properly. That is well-known. What most people do not know is that the material used to make the O-rings was a substitute to replace a product that the Environmental Protection Agency had banned because it contained asbestos.
The original O-rings used between the rocket joints came from an over-the-counter putty that had been used safely and effectively for a long time. However, in its war against the use of asbestos anywhere, anytime, the EPA forbade NASA from using that product at all after the space agency had sought an exemption. The EPA, not surprisingly, refused that request, something that would ultimately lead to the next disaster 17 years later. The new product, not surprisingly, failed and we know the rest of the story.
In normal situations, this would be a scandal of epic proportions. A government agency requires the use of unsafe materials that lead to the very public deaths of 14 individuals. Had a private firm permitted these kinds of unsafe working conditions, the situation would be worthy of a New York Times investigative report. Instead, all we hear is silence, interspersed with "the show must go on" comments about the future of the space shuttle program. Even the news reports on the foam disaster have ignored the reason why NASA used such an unsafe product; in fact, mainstream reporters are not even asking the pertinent questions.
Countless writers on these pages and elsewhere have pointed out the high costs—and low benefits—of environmental laws and regulations. Environmentalism has become a sacrosanct religion of which no questions can even be asked.
Yet, we see once again that applied environmentalism can be disastrous. Granted, we are talking about the lives of "only" 14 people, compared to the hundreds of thousands that have died of malaria following the banning of DDT, which once effectively killed the mosquitoes that carry the disease.
Whether we speak of 14 astronauts, or 14,000 people in a remote African nation, however, we speak of the same thing: death by environmentalism. The verdict is in; environmentalism is not only hazardous to our health, it threatens our very lives.