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Climate change damage and property rights: do Lockean principles require Western nations to compensate poorer ones?

June 13th, 2008 No comments

Dedicated libertarian law professor Jonathan Adler and longtime libertarian policy analyst Indur Goklany discuss the above issue at in a Roundtable entitled “Climate Change and Property Rights” hosted by Shikha Dalmia of the Reason Foundation and made available online last week.

[Update:  Ron Bailey discusses the Adler/Goklany debate here.]

As both Jon Adler and Indur Goklany are serious and even-handed, fortunately the discussion includes none of the cheap, sneering dismissals of the moral issues (as “climate welfare” such as I addressed earlier on these pages and more recently on the main blog, where an author dismisses as “absurd” and another poster labels “beautiful propaganda” my suggestion that Lockean views must be seriously considered when addressing claims that the use of the atmosphere should be shared) that tends to be the hallmark of shallow, reflexive and emotional engagement so frequently encountered here at Mises and elsewhere from purported libertarians with respect to climate change and other environmental issues.

Unfortunately, the exchange between Adler and Goklany is far too academic, and neither commentator makes any effort to seize common ground (and climate change concerns) to push for liberalization of agricultural trade or other institutional changes that would (i) materially improve wealth (and ability to adapt to climate change) in poorer nations and (ii) enhance needed mitigation and adaptation efforts at home.

Both Adler and Goklany appear to agree on the fundamental, Lockean-based principles underlying their discussion and would probably agree that, even though the nations that benefit most from climate change (and from the long period of GDP growth when GHG emissions have not been priced) have at least a moral obligation to be concerned about an uncompensated shifting of costs to other (largely poorer) nations, it is nigh impossible to build a legal case mandating compensation. 

I suppose both Adler and Goklany probably also agree that (1) climate change is likely to further bedevil the development problems in poorer nations, which are least capable of adapting to such changes, (2) development problems in such countries is largely related to the failure of governing elites to protect property rights and capital, and (3) traditional development aid has in large measure failed and instead served to benefit well-connected elites from both sides.

I am curious (4) what both Adler and Goklany think about proposals that do not amount to compensation, but recognize the interest that the West has in aiding growth and climate adaptation in the developing world, such as the proposal reported last Friday in Osaka by Treasury secretary Hank Paulson for the Group of 8 industrialized nations to back a special $10 billion fund to help developing countries fight global warming and (5) why they (and other libertarians) do not seem to see that climate change concerns in many way present golden opportunities to urge positive governmental changes, such as greater free trade (and roll back of domestic agricultural subsidies and import restrictions), greater freedom in domestic energy markets, the desirability of allowing accelerated depreciation and lowering capital gains taxes, etc.

Why are libertarians so reluctant to focus on a positive agenda that would actually do some good?

In note that, back in July 2000, Adler proposed a “no regrets” domestic deregulatory agenda when he was associated with CEI: “Greenhouse Policy Without Regrets: A Free Market Approach to the Uncertain Risks of Climate Change“; Jon has subsequently been rather quiet with respect to any specific climate change policy agenda.  Cato has just published an essay by Goklany, “What to Do about Climate Change“, in which Goklany essentially argues that a focus on mitigation (GHG reductions) is a relatively expensive and in effective way to combat climate change or advance well-being (particularly of the world’s most vulnerable populations), as compared with adaption efforts that would reduce vulnerabilities to climate-sensitive problems that could be exacerbated by climate change.

As I have previously noted, there are several libertarians who have recently been urging constructive libertarian approaches to climate change:

  • Edwin Dolan, in his Fall 2006 Cato Journal essay, Global Warming: Rethinking the Market Liberal Position, analyzes relevant Lockean considerations and cautions that market liberals appear to be hamstringing their own analytic strengths by falling into a reflexive and conservative mind-frames that benefit established economic interests.
  • Sheldon Richman of the Foundation for Economic Education also recommends Dolan’s essay and calls for less wishful thinking and greater engagement by libertarians in the December 8, 2006 edition of The Freeman:  The Goal Is Freedom: Global Warming and the Layman.
  • Gene Callahan makes a similar warning in his essay How a Free Society Could Solve Global Warming“, in the October 2007 issue of The Freeman.
  • Bruce Yandle, Professor Emeritus at Clemson University, Senior Fellow at PERC (the “free market” environmentalism think tank) and a respected thinker on common-law and free-market approaches to environmental problems, has in PERC’s Spring 2008 report specifically proposed a A No-Regrets Carbon Reduction Policy.

I further note that Shikha Dalmia of the Reason Foundation hosted a similar roundtable on climate change policy in October 2006.

The importance of being a drop in the climate bucket – Michael Pollan on personal responsibility

April 19th, 2008 No comments

The New York Times has dubbed its April 20 Magazine edition as “The Green Issue”. The subtitle?  “Some Bold Steps to Make Your Carbon Footprint Smaller”.

I’ve barely taken a look at the issue as a whole, but I have noticed that Michael Pollan, in a piece entitled Why Bother?, has attacked straight on the fundamental issue of why individual consumers – faced with a global issue on which their individual efforts are a drop in the bucket – ought to consider behaving in ways that reflect their personal concerns, even if it means some personal costs and lifestyle changes, instead of just throwing up their hands and waiting for government to take action.

While some might disagree with Pollan’s views on the seriousness of climate change or the role of industrial man in it, Austrians and libertarians ought to find much to agree with (if not embrace) in his argument for personal choice and the role such choices can play in the margin in effectuating broader cultural, social and technological changes.  After all, if one values the atmosphere and one’s climate, and thinks that human activities (release of GHGs and soot, and agricultural and forestry practices) are a factor, then what better way to drive the market and further changes than by acting as if the atmosphere and climate are valuable?

Such voluntary action is precisely what Lockean principles call us to.

Pollan is the author of rather well-received “In Defense of Food: An Eater’s Manifesto”.

Categories: AGW, Austrian, climate, Locke, Pollan, voluntary Tags:

Edwin Dolan: applying the Lockean framework to climate change

February 13th, 2008 2 comments

I would like to bring readers’ attention to Edwin G. Dolan’s “Science, Public Policy and Global Warming: Rethinking the Market Liberal Position“, from the Fall 2006 issue of The Cato Journal: www.cato.org/pubs/journal/cj26n3/cj26n3-3.pdf.  Dolan examines libertarian, “market liberal” reactions to climate change and walks through Lockean provisions that he believes require further consideration and elaboration by libertarians in the context of climate change.

FWIW, Dolan was the editor of the Austrian classic, The Foundations of Modern Austrian Economics (Kansas City: Sheed and Ward, 1976)(online here: http://www.econlib.org/LIBRARY/NPDBooks/Dolan/dlnFMAContents.html), and author of the classic pamphlet TANSTAAFL: An Economic Strategy for the Environmental Crisis (Holt, Rinehart and Winston, New York, 1971), which outlined Dolan’s chief perspective:

The fundamental principle on which this strategy is built may be expressed in a simple slogan—There Ain’t No Such Thing As A Free Lunch, the “TANSTAAFL principle,” for short. The TANSTAAFL principle is closely related to the fundamental theorem of ecological economics, that everything depends on everything else. Everything worthwhile has a cost. Whenever you think you are getting something for nothing, look again—someone, somewhere, somehow is paying for it. Behind every free lunch there is a hidden cost to be accounted for.

The task of ecological economics is to figure out how to restructure the economic system so that these hidden costs will be brought out into the open, with the ultimate aim that no one who benefits from the use of the environment will be able to escape without paying in full. The rest of this book is devoted to working out specific applications of this general strategy in order to deal with specific problems.

In the interest of assisting readers, I take the liberty of excerpting liberally from Dolan’s Cato article below.

First, Dolan suggests that many libertarian climate skeptics are acting quite as if they are “conservatives” of the type condemned by Friedrich Hayek.  Dolan cites Hayek’s 1960 essay, “Why I am Not a Conservative” (1960), in which Hayek identified the following traits that distinguish conservatism from market liberalism:

• Habitual resistance to change, hence the term “conservative.”
• Lack of understanding of spontaneous order as a guiding principle of economic life.
• Use of state authority to protect established privileges against the forces of economic change.
• Claim to superior wisdom based on self-arrogated superior quality in place of rational argument.
• A propensity to reject scientific knowledge because of dislike of the consequences that seem to follow from it.

Second, Dolan examines whether any of the above “conservative” traits are at work in libertarian positions on climate change.

… We need to address several questions. One issue is what the status is of the privileges and interests of those who are threatened by the possibility of climate change and of those who are threatened by proposed actions to mitigate it. Which of these has the greater claim to the sympathy of market liberals, when viewed in terms of the standards they apply in other areas of public policy? Another issue is what the values are that lie behind the positions taken by various parties to the debate. The issue of values may determine when market liberals can make principled alliances with one of the other corners of the triangle and when they want to make only tactical alliances. Still another issue is what manner of argument should be employed. For example, what is the proper attitude toward the purely scientific element in the global warming controversy? It will be worth taking a closer look at this last issue before proceeding further.

Hayek expresses himself so well on the role of science that it is worth quoting him at length:

Personally, I find that the most objectionable feature of the conservative attitude is its propensity to reject well-substantiated new knowledge because it dislikes some of the consequences which seem to follow from it—or, to put it bluntly, its obscurantism. I will not deny that scientists as much as others are given to fads and fashions and that we have much reason to be cautious in accepting the conclusions that they draw from their latest theories. But the reasons for our reluctance must themselves be rational and must be kept separate from our regret that the new theories upset our cherished beliefs. . . . By refusing to face the facts, the conservative only weakens his own position. Frequently the conclusions which rationalist presumption draws from new scientific insights do not at all follow from them. But only by actively taking part in the elaboration of the consequences of new discoveries do we learn whether or not they fit into our world picture and, if so, how. Should our moral beliefs really prove to be dependent on factual assumptions shown to be incorrect, it would hardly be moral to defend them by refusing to acknowledge facts [Hayek 1960: 404](emphasis added).

This passage raises obvious questions for the global warming debate. What lies behind the skepticism of market liberals regarding the propositions that the world is getting warmer at a rate that is unusually rapid in climate history, if not altogether unprecedented, and that this apparent trend is likely the joint product of natural cycles and human activity, rather than of the former acting alone? Are liberals correctly rejecting an inadequately grounded scientific fad? Or are they refusing to acknowledge facts for fear that doing so would upset their cherished beliefs?  …

Fortunately, the supposed dilemma is a false one. Liberals have long acclaimed the market as a way of adapting to change, and climate change should be no exception. … Also, market liberals should know well that effective environmental policy does not have to take the form of heavy-handed commandand-control measures. … The same kind of market-oriented policies should be possible in the case of climate change.

In short, if one takes into account both the market’s potential for adapting to change and market-based policy alternatives, there is no reason for market liberals to be anything but open-minded toward ongoing developments in climate science, whether those developments, as they unfold, reveal indications or counter-indications of global warming.

There could, instead, be another explanation for some market liberals’ apparent close-mindedness toward the global warming hypothesis. It could be that, when taking a position on issues of climatology, they are speaking not from perceived threats to their beliefs, but out of loyalty to conservative interests with whom they have struck some tactical alliance. For example, policies designed to reduce greenhouse gas emissions, no matter how carefully market-guided in their design, are likely to undermine the interests of politically powerful producers of carbon-based energy. Equally, they are likely to have a disproportionate impact on the United States relative to other, less carbon intensive, economies. It is understandable that a conservative member of Congress could be pledged to uphold the interests of energy industry workers or shareholders from his or her home constituency. It is also understandable that a U.S. negotiator at an international conference could work to increase the benefits for the United States of a proposed treaty while shifting the costs to other countries. What is harder to understand is why market liberals would see fit to support such positions, unless for the narrowest of tactical reasons. …

(emphasis added) 

Third, Dolan spends considerable time discussing how the Lockean framework of rights and duties applies to climate change, which he frames as follows:

In the case of global warming, the relevant unenclosed commons include the world air-shed, which, in one of its several competing uses, serves as a sink for greenhouse gasses, and the oceans, which serve as a sink for heat generated by the greenhouse effect and a catchment basin for melting ice. (We are still stipulating scientific certainty of these effects.) Whatever adverse impact the Midwestern power plant has on the Bangladeshi farmer are transmitted through the effects of greenhouse gas emissions on these common-property resources. What does a Lockean approach tell us about rights to make use of the global atmospheric and oceanic commons, and about how those rights might be established?

Dolan walks carefully through Locke’s three rights and three corresponding duties, which he summarizes as follows:

Rights:
• to property in one’s own person
• to property in the fruits of one’s own labor
• to property in land and natural resources taken from nature when mixed with one’s own labor

Duties:
• to abstain from harming others
• to abstain from taking property of others
• to leave enough and as good for others when taking from the common

His discussion here is quite useful.

Finally, Dolan summarizes his own analysis of “the proper market-liberal position on global warming,” that is, one “constructed on a sound Lockean respect for the persons and property of others”:

First, market liberals should keep arguments based on comparisons of costs and benefits in proper perspective. The fact that an action produces net benefits, even very large net benefits, does not shield the actor from liability if it also does harm. The relative magnitude of the costs and benefits, or their relative probabilities, is, in this regard, irrelevant. The duty not to harm people in their persons or property is not to be bypassed on the basis of any facile cost-benefit calculus. This is an essential part of what distinguishes the classical liberal tradition from other political theories that would invoke the power of the state to override individual rights in favor of some greater societal utility. This being said, cost-benefit calculations may in some other respects be relevant to the formulation of a market-liberal position on global warming. They may help choose between different mechanisms for implementing climate change policy. They may be relevant to the decision of whether to abstain from possibly harmful actions, or to risk possible harm while accepting a contingent duty of restitution. And they may be relevant to whether harm is better avoided by mitigation of climate change, or instead compensated through investments that help victims of climate change to adapt.

Second, the market-liberal position should be distinct from a conservative position that defends unjustly acquired privileges. Liberalism in America, in particular, grew up in a Lockean state of nature where it was really true, or at least seemed true, that homesteaders, loggers, grazers, and industrialists could take what they needed while leaving “enough and as good for others.” What the environmentalist side of the global warming debate is telling us is that we no longer live in such a world. It is not just that we can take no more from the commons; we have quite possibly already taken so much as to have breached our duty not to engross. To be sure, the science of just how much can safely be taken is not yet perfect. We may be way past the limit already or still a bit short of it. But to cry foul because those who have taken the most are now asked to bear a substantial share of the costs is not liberalism.

Third, market liberals should keep a clear head when it comes to the relationship between science and public policy. It is fine to be legitimately cautious when policies are urged on the basis of weakly established scientific fads. One should be vigilant against attempts to smuggle questionable economic or political assumptions into scientific analysis, as is sometimes done in the global warming debate, and also to possible biases in research produced by grant-seeking and public choice considerations. But at the same time, as Hayek warned, any reluctance to accept new scientific theories must itself be rational and must be kept separate from the regret that the new theories may upset cherished beliefs (let alone that they threaten the financial interests of useful allies). This is a fine line to walk, and I fear that the market-liberal camp may at times have overstepped it.

Fourth, market liberals should think about the implications of their principles not just for public policy, but for their personal conduct. It is fashionable in some conservative circles to ridicule environmentalism as a new religion that calls for a personal morality of abstinence (see, for example, Schlesinger 2005). Perhaps market liberals would not want to describe their beliefs as a religion, but all of the great thinkers to whom they pay homage make it clear that the duty not to harm others in their persons or property is not just an abstract guideline for public policy, but a specific imperative of personal morality.  To cede the moral high ground on environmental issues to the left is not just tactically foolish, it is unprincipled. To put it simply, a market liberal should not be ashamed to drive a Prius rather than a Humvee.

These broad outlines of a market-liberal position on global warming leave a great deal of room for debate and discussion. They leave open the whole area of how to design a policy to deal with global warming. Are the flaws of the Kyoto Protocol so serious that it is worse than doing nothing at all? Perhaps so—even its staunchest supporters acknowledge that it has many limitations. Should we act now, based on current scientific knowledge? Or should we wait, while firmly insisting on the principle of contingent liability, being prepared to make restitution should subsequent harm turn out to be greater than optimists think it will be? In formulating global warming policy, should each country act unilaterally, based on a duty to avoid harm regardless of what others do, or is it best to try to negotiate international agreements? If measures are to be taken, what role should be given to market-based mechanisms like tradable permits? How can such market-like devices, if used, be introduced in a way that respects existing property rights? How do such devices relate to Lockean principles regarding enclosure and management of residual unenclosed commons?

By addressing these and other questions, market liberals can make a uniquely valuable contribution to the global warming debate. If, however, they allow themselves to be perceived as ostriches whose only policy in the face of uncertainty is to hope for the best while ignoring the worst, and base their position on climate policy on arguments that they would disdain in any other context, they will end up making no useful contribution at all.

(emphasis added)

I hope others will take the time to look through Dolan’s framework, which I believe is useful as a call for constructive engagement by libertarians, even as it does not examine particular policy suggestions* or claim to be complete.  (For example, as Jeff Tucker has observed on another thread, Dolan’s article does not discuss the competency of the state to address climate change, if it is a problem.)

(h/t Donny with an A: http://mises.org/Community/members/Donny-with-an-A.aspx.  I note also that Sheldon Richman of the Foundation for Economic Education also recommends Dolan’s essay and calls for less wishful thinking and greater engagement by libertarians in the December 8, 2006 edition of The Freeman: The Goal Is Freedom: Global Warming and the Layman, http://www.fee.org/in_brief/default.asp?id=966.)

*  I note that Dolan has previously discussed pollution trading permits in the context of acid rain; his remarks were examined by Robert McGee and Walter Block in their “Pollution Trading Permits as a Form of Market Socialism and the Search for a Real Market Solution to Environmental Pollution,” Fordham Environmental Law Journal, vol. 16 (1994): 58  http://law.fordham.edu/publications/articles/100flspub4011.pdf.

Categories: Block, climate, Dolan, Hayek, libertarian, Locke, TANSTAAFL Tags: