Archive for the ‘property’ Category

Towards a productive libertarian approach on climate, energy and environmental issues

February 10th, 2010 No comments

[This is a work in progress and largely taken from previous posts, but readers might find some value in it in the meanwhile.]

1. Heated but vacuous climate wars

On environmental issues in general and climate in particular, find me someone (like George Will) ranting about “Malthusians” or “environazis” or somesuch, and I’ll show you someone who doesn’t understand – or refuses to acknowledge – the difference between:

(1) wealth-creating markets based on private property and/or voluntary interactions/contracts protected by law, and

(2) the tragedy of the commons situations that result when there are NO property rights (atmosphere, oceans), when the pressures of developed markets swamp indigenous hunter-gather community rules, in many cases where governments formally own and purport to manage “public” resources, and when governments absolve purportedly “private” actors from liability for harms to others (such as via grants of “limited liability“).

So what’s the deal? Here’s a perfect opportunity for skeptics to educate the supposedly market ignorant, but they refuse, preferring to focus instead on why concerned scientists must be wrong, how concerns by a broad swath of society about climate have become a matter of an irrational, deluded “religious” faith, or that those raising their concerns are “misanthropes” or worse.

Such pigheadedness is met by those on the left likewise see libertarians and small-government conservatives as deluded and/or deliberate pawns of evil Earth-destroying corporations.

Both sides, it seems, prefer to fight – and to see themselves as right and the “others” as evil – rather than to reason.

While we should not regret that we cannot really constrain human nature very well, at least libertarian and others who profess to love markets ought to be paying attention to the inadequate institutional framework that is not only poisoning the political atmosphere, but posing risks to important globally and regionally shared open-access commons like the atmosphere and oceans (which are probably are in much more immediate and grave threat than the climate). And they also ought to recognize that there are important economic interests that profit from the current flawed institutional framework and have quite deliberately encouraged the current culture war.

2. Why the reflexive libertarian disengagement?

I have on numerous occasions tried to point out, to posters on the Mises Blog who have addressed climate issues, the stunning unproductivity of the approach that they have taken — that of focussing on science and dismissing motivations and preferences, rather than exploring root causes and middle ground, and have continued to scratch my head at the obstinacy and apparent lack of vision.

The following seem to be the chief factors at work in the general libertarian resistance to any government action on climate change:

– Many libertarians, as CEI’s Chris Horner has stated,  see “global warming [as] the bottomless well of excuses for the relentless growth of Big Government.”  Even libertarians who agree that is AGW is a serious problem are worried, for good reason, that government approaches to climate change will be a train wreck – in other words, that the government “cure” will be worse than the problem.

– Libertarians have in general drifted quite far from environmentalists (though there remain many productive free-market environmentalists/conservationists). Even though libertarians and environmentalists still share a mistrust of big government, environmentalists, on the one hand, generally have come to believe that MORE government is the answer, despite all of the problems associated with the socialized ownership of resources and/or inefficient bureaucratic management (witness the crashing of many managed fisheries in the US), the manipulation of such management to benefit bureaucratic interests, special interests and insiders (wildfire fighting budgets, fossil fuel and hard rock mining, etc.) and the resultant and inescapable politicization of all disputes due to the absence of private markets. On the other hand, many libertarians  reflexively favor business over “concerned citizens”, while other libertarians see that government “solutions” themselves tend to snowball into costly problems that work in favor of big business and create pressures for more government intervention. Thus, libertarians often see environmentalists as simply another group fighting to expand government, and are hostile as a result.

– Libertarians are as subject to reflexive, partisan position-taking as any one else. Because they are reflexively opposed to government action, they find it easier to operate from a position of skepticism in trying to bat down AGW scientific and economic arguments (and to slam the motives of those arguing that AGW must be addressed by government) than to open-mindedly review the evidence or consider ways that libertarian aims can be advanced by using the pressure from “enviro” goals.

This reflexive hostility – at times quite startingly vehement – is a shame (but human), because it blunts the libertarian message in explaining what libertarians understand very well – that environmental problems arise when property rights over resources are not clearly defined or enforceable, and when governments (mis)manage resources, and that there are various private steps and changes in government policy that would undo the previous government actions that are at the root of environmentalists’ frustrations.The reflexive hostility is also a shame because it has the effect, in my mind rather clearly, of rendering libertarians largely blind to the ways that large energy, power and certain manufacturing corporations continue to benefit from (and invest heavily in maintaining) the existing regulatory structure, in ways that shift large costs and risks to unconsenting third parties.

– There are some libertarians and others who profess to love free markets at AEI, CEI, Cato, IER, Master Resource and similar institutions that are partly in pay of fossil fuel interests, and so find it in their personal interests to challenge both climate science and policy proposals that would impose costs on their funders.

I felt particularly struck by the commonness of a refrain we are hearing from various pundits who prefer to question the good will or sanity of environmentalists over the harder work of engaging in a good faith examination and discussion of the underlying institutional problem of ALL “environmental” disputes:  namely, a lack of property rights and/or a means to enforce them. 

3. The whys of climate concerns and calls for “clean” energy

I want to get started with a list of policy changes that I think libertarians can and should be championing in response to the climate policy proposals of others.

The incessant calls for – and criticism of – government climate change policies and government subsidies and mandates for “green/clean power” both ignore root causes and potential common ground.  As a result, both sides of the debate are largely talking past each other, one talking about why there is a pressing need for government policy to address climate change concerns, while the other is concerned chiefly about the likelihood of heavy-handed mis-regulation and wasted resources. This leaves the middle ground unexplored.

There are plenty of root causes for the calls for legislative and regulatory mandates in favor of climate policies and clean / green / renewable power, such as:

  • concerns about apparent ongoing climate change, warnings by scientific bodies and apprehensions of increasing risk as China, India and other developing economies rapidly scale up their CO2, methane and other emissions,
  • the political deals in favor of environmentally dirty coal and older power plants under the Clean Air Act,
  • the enduring role of the federal and state governments in owning vast coal and oil & gas fields and relying on the royalties (which it does not share with citizens, but go into the General Pork Pool, with a relatively meager cut to states),
  • the unwillingness of state courts, in the face of the political power of the energy and power industries, to protect persons and private property from pollution and environmental disruption created by federally-licensed energy development and power projects,
  • the deep involvement of the government in developing, encouraging and regulating nuclear power, and
  • the frustration of consumer demand for green energy, and the inefficient and inaccurate pricing and supply of electricity, resulting from the grant by states of public utility monopolies and the regulation of the pricing and investments by utilities, which greatly restricts the freedom of power markets, from the ability of consumers to choose their provider, to the freedom of utilities to determine what infrastructure to invest in, to even simple information as to the cost of power as it varies by time of day and season, and the amount of electricity that consumers use by time of day or appliance.

4. Is a small-government, libertarian climate/green agenda possible and desirable?

So what is a good libertarian to suggest? This seems rather straight-forward, once one doffs his partisan, do-battle-with-evil-green-fascist-commies armor and puts on his thinking cap.

From my earlier comment to Stephan Kinsella:

As Rob Bradley once reluctantly acknowledged to me, in the halcyon days before he banned me from the “free-market” Master Resource blog, “a free-market approach is not about “do nothing” but implementing a whole new energy approach to remove myriad regulation and subsidies that have built up over a century or more.” But unfortunately the wheels of this principled concern have never hit the ground at MR [my persistence in pointing this out it, and in questioning whether his blog was a front for fossil fuel interests, apparently earned me the boot].

As I have noted in a litany of posts at my blog, pro-freedom regulatory changes might include:

Other policy changes could also be put on the table, such as:

  • an insistence that government resource management be improved by requiring that half of all royalties from mineral and fossil fuel development be rebated to citizens (with a slice to the administering agency), and
  • reducing understandable NIMBY problems by (i) encouraging project planners to proactively compensate persons in affected areas and (ii) reducing fears of corporate abuses, by providing that corporate executives have personal liability for environmental torts (in recognition of the fact that the profound risk-shifting that limited liability corporations are capable of that often elicits strong public opposition and fuels regulatory pressure).

5. Other libertarian discussants

A fair number of libertarian commenters on climate appear to accept mainstream sciences, though there remain natural policy disagreements. Ron Bailey, science correspondence at Reason and Jonathan Adler, a resources law prof at Case Western, Lynne Kiesling at Knowledge Problem blog, and David Zetland, who blogs on water issues, come to mind.

I`m not the only one – other libertarian climate proposals are here:

  • Jonathan Adler at Case Western (2000); he has other useful commentary here, here,
  • 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;
  • Iain Murray of CEI; and
  • Cato’s Jerry Taylor is a frequent commentator and Indur Goklany has advanced a specific climate change-targeted proposal.
  •  AEI’s Steven Hayward and Ken Green together have provided a number of detailed analyses (though with a distinct tendency to go lightly on fossil fuels).

Several libertarians recently urged constructive libertarian approaches to climate change:

There have been several open disputes, which indicate a shift from dismissal of science to a discussion of policy; the below exchanges of view are worthy of note:

  • The Cato Institute dedicated its entire August 2008 monthly issue of Cato Unbound, its online forum, to discussing policy responses to ongoing climate change.  The issue, entitled “Keeping Our Cool: What to Do about Global Warming“, contains essays from and several rounds of discussion between Jim Manzi, statistician and CEO of Applied Predictive Technologies, Cato Institute author Indur Goklany; climate scientist Joseph J. Romm, a Senior Fellow at the Center for American Progress; and Michael Shellenberger and Ted Nordhaus, the co-founders of The Breakthrough Institute.  My extended comments are here.
  • Reason Foundation, posted an exchange on Climate Change and Property Rights June 12th, 2008 (involving Reason’s Shikha Dalmia, Case Western Reserve University law professor Jonathan H. Adler, and author Indur Goklany); discussed by Ron Bailey of ReasonOnline here; here`s my take.
  • Debate at Reason, October 2007, Ron Bailey, Science Correspondent at Reason, Fred L. Smith, Jr., President and Founder of CEI, and Lynne Kiesling, Senior Lecturer in Economics at Northwestern University, and former director of economic policy at the Reason Foundation.
  • Reason Foundation, Global Warming and Potential Policy Solutions September 7th, 2006 (Reason’s Shikha Dalmia, George Mason University Department of Economics Chair Don Boudreaux, and the International Policy Network’s Julian Morris).


Finally, I have collected here some Austrian-based papers on environmental issues that are worthy of note:

Environmental Markets?  Links to Austrians

Ones such paper is the following: Terry L. Anderson and J. Bishop Grewell, Property Rights Solutions for the Global Commons: Bottom-Up or Top-Down?

More insights on what’s wrong with Haiti and how it can be fixed

January 22nd, 2010 No comments

What needs to be done? Simply, an end to corrupt rule and heavy taxes and regulatory burdens, central planning and intrusive foreign aid “development” schemes (that feed local elites and foreign contractors), and free and open trade with foreign nations.

Further to my prior post, here are some additional resources on Haiti:

Walter Williams, Only Haiti can end its deeper tragedy (Columbia Daily Tribune, January 20, 2010)

Jonathan Finegold Catalán, Haiti: Two Hundred Tragic Years (Economic Thought, Jan 19th, 2010)

Garrett Glass, A solution in Haiti: Try Freedom (Digital Freedom Network, Mar 3, 2004)

Regarding the issue of past responsibility of other countries, I also thought this reader comment to David S. Landes piece, Slaves and Slaughter; Haiti’s horrible history (TNR, March 10, 1986) to be telling:

What the professor of economics fails to discuss was the fact that
European and American countries almost completely cut off trade with
Haiti in the aftermath of its revolution, given its status as a nation
governed by freed blacks in an era of pervasive slavery. International
isolation was what ultimately crushed Haiti’s export economy

Further insightful academic resources can be found at The Digital Library Of The Commons (Indiana U.), by searching through titles for Haiti. Here are a couple:

Smucker, Glenn R.; White, T. Anderson; Bannister, Michael, Land Tenure and the Adoption of Agricultural Technology in Haiti, 2002

White, T. Anderson; Gregersen, Hans M., Policy Lessons from Natural Resources Projects in Haiti: A Framework for Reform, 1994 


As a bonus, readers might be interested in this paper, written by a seventh grader, that was the Junior Division Winner of the National
History Day’s 2000 student research paper competition; the paper lucidly describes many of the US responses to and repercussions of the Haitian slave rebellion:

Jim Thomson, The Haitian Revolution and the Forging of America (The History Teacher, 2000)

[Update] Some food for thought on who (US/UN/others/Haitians) and what is responsible for making and keeping Haiti poor

January 19th, 2010 No comments

[Note: Richard Ebeling`s piece on the Jan. 19 Mises Daily page (“Real Economic Reform for a Hurting Haiti“) is the most thoughtful libertarian take so far.]

I found these four pieces (two post-quake, two before) interesting.

Haiti Didn’t Become a Poor Nation All on Its Own — The U.S’s Hidden Role in the Disaster  (Carl Lindskoog, AlterNet, January 15, 2010)

Exporting Misery to Haiti: How Rice, Pigs, and US Policy Undermined the Haitian Economy (James Ridgeway, Reader Supported News, Jan.18)

Haiti: the land where children eat mud (Caitlin Moran, Times Online, May 17, 2009) (a fairly graphic report, with references to international debt, starting with France)

Of course, there is plenty of blame to be shared by Haiti`s rulers, as poor Haitians obviously desperately need what most of us take
for granted (and what Dominicans on the other half of the island have):
property rights and some semblance of rule of law.  Most of the country is a government-“owned” commons (that is,
unprotected), and the state of property rights protection of the rest
of the land is extremely poor. Apparently the nation faces a widespread tragedy of the commons situation.

See this very insightful analysis:  Apocalypso: Haiti’s Chosen Poverty (Joe Katzman, WindsofChange.Net, January 7, 2005).

It is heart-warming to see the current level of interest in the US and elsewhere in helping the Haitians. But the very real question is, how can the tragedy of the commons be ended in Haiti?

Avatar at Home? Those pesky Somali pirates have hampered the pillage of East African seas, leading to higher fish catches by locals

January 12th, 2010 1 comment

As a follow-up to my earlier posts (note: link fixed) on how the rape of East African fisheries ($200-300 million per year) & ocean dumping by Western nations led to the rise of Somali piracy, I just ran across this interesting recent report by AP (“Kenya fishermen see upside to pirates: more fish“) on how the presence of the pirates has boosted local fisheries.

Nice Post by David Henderson on "Avatar", property, corporatism & right of natives to live as they please

January 12th, 2010 No comments

David R. Henderson has a nice post up at, titled “In Defense of Avatar”, in which he takes issue with reviews of Avatar by Reihan Salam and Edward Hudgins. (My earlier comments on Stephan Kinsella`s review of Avatar are here.)

I would just note that Henderson has presumed that the Avatar natives – non-humans – have “rights” that we are obliged to respect.. I think that history tells us that, even for humans in other civilizations, “property rights” are respected only when it suits the purposes of both sides (viz., can be protected by the side claiming them, as I`ve noted on several occasions, most recently here).

A few excerpts:

I don’t think Avatar is an attack on capitalism. One could leave
the movie and have no idea, based on just the movie, about James Cameron’s
view of capitalism. And while it did have some clichés (most movies
do), I didn’t find it loaded. So what is Avatar? In fact, Avatar
is a powerful antiwar movie – and a defense of property rights. For that reason,
I found it easy to identify with those whose way of life was being destroyed
by military might. …

“But here’s the crucial question, a question that neither Salam nor Hudgins
addresses: Do savages, noble or otherwise, have rights?

If given a choice between high-tech, with all its creature comforts, and the
jungle life of Tarzan, I, like Salam and Hudgins, will take high-tech every
time. But that’s not what the movie’s about. It’s about people from a high-tech
civilization using technology to make war on people from a more primitive society
so that they can steal their stuff. That’s a very different choice. I would
choose not to kill them and take their property. What would Salam or Hudgins
choose? They don’t make their answers clear, although they show zero sympathy
for the victims of the attack. …

To the extent that it makes any statement about capitalism, Avatar
is a defense of capitalism. Capitalism is based on property rights and
voluntary exchange. The Na’vi had property rights in the crucial tree and various
other properties surrounding it. Did they own it as individuals or as community
tribal property? We can’t be sure, but probably the latter. They had refused
to sell the property to the outsiders. There was nothing the outsiders could
give them that would make it worth their while. What should we, if we are good
capitalists, conclude? That, just as in the Kelo case, the people currently
sitting on the land value it more than the outsiders. The land is already in
its highest-valued use. Hudgins and Salam could argue that that’s implausible.
Surely there would be some finite price that the Na’vi would take in return
for the Unobtainium. Maybe, maybe not. But once the Na’vi have made it clear
that they’re unwilling to exchange it, that should be the end of things, shouldn’t

Hudgins argues that James Cameron is claiming, “That’s capitalism for
you.” As noted earlier, it’s not clear that Cameron is so arguing. But
if that’s what Cameron believes, shouldn’t Hudgins’s response be, “No,
that’s corporatism for you.” …

Read through everything Hudgins has written on Kelo
and you won’t find a wisp of discussion about how low-tech or high-tech, savage
or civilized, Mrs. Dery is. And that’s because it doesn’t matter. People
in high-tech societies have rights. So do savages. It would be nice if Hudgins
showed even one tenth of the concern for the “savages” over whom
the “non-savages” of the U.S. military and CIA roll as he shows for
an old woman who lives (or used to live) in a house. …


Avatar is an eloquent defense of the right of people in other civilizations
to live as they please.

Thoughts of an envirofacist avatar on "Avatar"; or Resources, Property Rights, Corporations & Government-Enabled Theft

December 22nd, 2009 1 comment

My pal Stephan Kinsella has a remarkably enviro-friendly post (“Avatar Is Great and Libertarian”) up regarding the new movie “Avatar”; his remarks and others on the thread prompted me to leave a few comments, which I copy below (in furtherance of my nefarious and/or insanely misguided agenda .

Many thanks to Stephan for aiding and abetting this. Ive added a bit of emphasis, fixed a typo or two, and a few additional comments, in brackets.

Published: December 22, 2009 2:38 PM


Stephan, I welcome you to the dark, enviro-facist side!

– “you have to fight for and use might to protect your rights”

I see you are starting to buy into my real-world view of property rights, that “principles” and force are just two different ways we seek to protect what we consider ours, with the first being most efficacious within a community [and recourse to the later perhaps being necessary]. As I noted on a previous thread of yours,

“The deep roots of “property” are not in principle but in simple competition, physical defense of assets valuable enough to make the effort worthwhile, and in the grudging recognition by others – more willingly offered by those who share bonds of community – that yielding to others’ claims may be more productive than challenging them. This is as true for rest of creation as it is for man. While we have developed property to a very sophisticated degree, at its core property remains very much about the Darwinian struggle to survive and prosper, violence, theft and calculations as to when challenging control over an asset is not worth the effort.”

Sounds like this struggle over resources is at the core of Avatar, along with a boatload of Western guilt over our historical theft of land and assets from indigenous peoples, whom of course have also been involved for eons in bloody battles for resources with other tribes.

Far from being simply a dead relic of the past, however, the often violent struggle to take resources from indigenous peoples continues in many places, though out of sight from most of us (not simply those who are trying hard not to see) – oil & gas, minerals, timber, ranching, soybeans, oil palms, World Bank-funded dams and roads, fisheries – you name it, a violent conflict that the natives are losing to kleptocratic governments & elites can be found.

Western corporations are often in the thick of such conflicts, but even where not, modern technology (and growing consumer markets) provide the key tools and incentives for such conflicts, in which natives may be more or less hapless. Local governments typically either “nationalize” the resource or turn a blind eye, with the result that resource exploitation frequently takes on the appearance of a tragedy of the commons.

Western liberals sometimes exacerbate these problems – not simply by seeing “greed” and capitalism as the problem, and not kleptocratic regimes (often supported by the West and by aid money) or the lack of enforceable property rights – but also by demanding misguided policies such as “biofuels” incentives, which lie behind tropical forest destruction in much of SE Asia.

Libertarians should be familiar with these problems, which are a large part of the dynamics in petroleum-cursed nations and elsewhere. Such problems are also linked generally to “aid” efforts and to other centrally-directed development schemes. Elinor Ostrom was awarded the Nobel Prize in part for her work in showing that local communities, if their rights are respected, can generally do a good job of managing their own resources [and how government efforts frequently go astray].

I’ve commented on these issues a number of times, but here are a couple of links for those who might care to scratch the surface:

Stephan, if youve made it this far, let me remind you of our conversations about corporations [most recently here], which have very unfortunately been inescapably tainted with statism from the get-go, in ways that play out negatively both abroad and at home. Ive devoted a fair amount of time to examining the entanglement of corporations and government:

  • Our state governments were wrong to get into competition with each other to grant corporate status to investor-owned enterprises, in exchange for fees and later taxes. Corporate status freed owners from down-side risk, by limiting liability to the amount of capital contributed. This incentivized investors to encourage corporations to embark on risky activities that shifted costs to innocent third parties; the concentration of wealth in corporations (that now have unlimited lives and purposes, subject to survival in the market); the corruption of the court system that once protected third parties from damages caused by others (by replacing strict liability with balancing tests); and the ensuing battle over legislatures and courts to check corporate abuses.What happens abroad at the “Avatar” is pretty basic, but the same nonsense, with taxpayers, investors and consumers playing the role of victim, can be seen at home. Has anybody seen the jaw-droppingly appalling report that the WSJ has run on “Fixing Global Finance”, based on their “Future of Finance Initiative”, in which they cheerlead a bunch of financial firms in their efforts to abandon free markets and to structure global regulation and regulators, to be staffed by a revolving door of themselves? [I think Im being fair to see this as posing a threat to markets and freedom at least as great as what others see in the more multi-faceted climate change muddle.] Even Paul Volker was appalled, not at their willingness to create more regulation, but at their unwillingness to confront the moral hazard problems (tied to regulation of public corporations and the financial sector) that lie at the core of the financial meltdown. [Volker seems to overlooked the crucial role of government in driving and feeding the moral hazard problems.]Heres the link, for those of you who missed it:


Property rights, corporations and government-complicit theft? Hmm. [Sounds familiar. Maybe some of those who want to battle corporate excesses might not be so crazy after all, even if they neglect to understand the risks of negative consequences of seeking help from government. And maybe someday libertarians will get a little more serious about addressing the festering concatenation of corporate-linked problems that are generating so much rot at the core of our government and public company/financial company sector.]


Oh, I almost forgot to remind everyone for the need for group holiday cheer (as alternative to productive engagement on a libertarian, Austrian-based climate agenda):


Sophomoric optimism?

October 15th, 2007 6 comments

Jon Bostwick agrees on another post that “Man is clever but not wise (“homo sapiens” is a misnomer)”, but further comments (emphasis added):

“True. But humanity is wise. Men create cultures, economies and law.

“Man’s flaw is that he is over confident of his own intelligence. He tries to control things he doesn’t understand, like culture, economies, and law.

You have just made an excellent case for why government involvement will not improve the environment. Because governments, like man, are not wise.” 

This is too simple, as well as self-contradictory. Humanity is wise because he collectively (but non-deliberately?) creates “cultures, economies and law” (let’s not forget governments), but individuals are foolish when they seek to use institutions to achieve particular purposes?

Our states are merely one subset of the wide universe of formal and informal institutions through which we cooperate with one another.  States are not a market, to be sure, but then neither are corporations, and there is a spectrum of ownership types between the two.  We can study all of these institutions and use that knowledge to direct how we make use of them.  Such study has informed, for example, the deliberate shifts in policy that have led to the ongoing (yet incomplete) privatization of the former USSR and of China. 

A study of institutions governing common pool resources by guru Elinor Ostrom makes the following point:

 “Whether people are able to self-organize and manage CPRs also depends on the broader social setting within which they work. National governments can help or hinder local self-organization. “Higher” levels of government can facilitate the assembly of users of a CPR in organizational meetings, provide information that helps identify the problem and possible solutions, and legitimize and help enforce agreements reached by local users. National governments can at times, however, hinder local self-organization by defending rights that lead to overuse or maintaining that the state has ultimate control over resources without actually monitoring and enforcing existing regulations.

“Participants are more likely to adopt effective rules in macro-regimes that facilitate their efforts than in regimes that ignore resource problems entirely or that presume that central authorities must make all decisions.If local authority is not formally recognized by larger regimes, it is difficult for users to establish enforceable rules.

Elinor Ostrom et al., Revisiting the Commons: Local Lessons, Global Challenges, Science, 04/09/99

Was von Mises foolish to suggest we can use the state to reform our institutions?

“It is true that where a considerable part of the costs incurred are external costs from the point of view of the acting individuals or firms, the economic calculation established by them is manifestly defective and their results deceptive. But this is not the outcome of alleged deficiencies inherent in the system of private ownership of the means of production. It is on the contrary a consequence of loopholes left in this system. It could be removed by a reform of the laws concerning liability for damages inflicted and by rescinding the institutional barriers preventing the full operation of private ownership.

And Cordato, for suggesting that Austrians take particular policy approaches to environmental issues?

“For 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. … For Austrians, whose goal is to resolve conflicts, the focus is on clarifying titles to property and rights enforcement.

Sorry, but I cannot believe that we are condemned always to repeat all mistakes, despite our rather constant human nature.  Rather, as Yandle notes, our very history as a species is about our success in evolving, devising and adopting ways to manage shared problems.

This is a message of profound optimism, not cynicism — said the fool.

Ron Bailey of Reason congratulates Al Gore

October 15th, 2007 No comments

[updated] A great new post by libertarian Ron Bailey of Reason here:

Congratulations to Al Gore
But be wary of the man’s proposed solutions for global warming.
Ronald Bailey | October 12, 2007

1.  Here are some excerpts (emphasis added), followed by a copy of my comments over at Reason:

[Gore is] wrong to characterize global warming as a moral and spiritual problem. Man-made global warming is not some kind of environmental sin. It’s just another commons problem that has emerged as human civilization continues to develop. Most environmental problems arise in what are called open-access commons. That is, people pollute air and rivers, overfish lakes and oceans, cut down rainforests, and so forth because no one owns those natural resources and therefore no one has an interest in protecting them.

The point is clearest in the case of tropical forests and fisheries. No one owns the forests or fisheries, so anyone may exploit them. No one has an incentive to leave any trees or fish behind because, if they do, someone else will harvest them and get the benefits for themselves. In other words, those who immediately benefit from exploiting the resource do not bear the long-run costs of its ultimate destruction. This mismatch between benefits and costs is a recipe for disaster. Similarly, no one owns the global atmosphere, so there is no incentive for anyone to protect it from various pollutants, including greenhouse gases that tend to raise average global temperatures.

Generally, humanity has solved environmental problems caused by open-access situations by either privatizing the relevant commons or regulating it.  …

As a skeptic of government action, I had hoped that the scientific evidence would lead to the conclusion that global warming would not be much of a problem, so that humanity could avoid the messy and highly politicized process of deciding what to do about it. Although people of good will can still disagree about the scientific evidence for climate change, I now believe that Gore has got it basically right. The balance of the evidence shows that global warming could well be a significant problem over the course of this century.

Yale economist William Nordhaus … calculates that the optimal policy would impose a carbon tax of $34 per metric ton carbon in 2010, with the tax increases gradually reaching $42 per ton in 2015, $90 per ton in 2050, and $207 per ton of carbon in 2100. A $20 per metric ton carbon tax will raise coal prices by $10 per ton, which is about a 40 percent increase over the current price of $25 per ton. A $10 per ton carbon tax translates into a 4 cent per gallon increase in gasoline. A $300 per ton carbon tax would raise gasoline prices by $1.20 per gallon. Following this optimal trajectory would cost $2.2 trillion and reduce climate change damage by $5.2 trillion over the next century. …

Man-made global warming is an economic and technical problem of the sort that humanity has solved many times. For example, forests are expanding in rich countries because they have well-developed private property rights. Also in rich countries, regulations have helped once polluted rivers and lakes to become clean and have drastically cut air pollution. One of the keys to solving environmental problems is economic growth and wealth. …

In any case, global warming is not the result of environmental sin; it is the result of human progress creating another commons problem. … I have no doubt that man-made global warming is an economic and technical problem that an inventive humanity will solve over the course of the 21st century.

Still, congratulations are in order to Al Gore for being recognized by the Nobel committee for his persistence in trying to get humanity to pay attention to this new commons problem.

2.  Here is a digest of my comments to Ron:

Basically, a great post, but I’ve got a few small quibbles.

1.  You were right last year when you said that “In the end, the debate over global warming and its obverse, humanity’s energy future, is a moral issue.”

2.  I share your understanding of the economics and institutional problem and agree that a straightforward explanation of these is important for very many.

3.  However, you forget what evolutionary psychology, Ostrom and Yandle have explained to us so well about how our innate moral sense drives and underpins mankind’s success as a species by enhancing our ability to cooperate and to overcome commons issues.

Our long history of developed rules and institutions (informal and formal now overlapping) are based on our moral sense and the effectiveness of these rules depends critically on our moral investment in accepting their legitimacy – witness our views on murder, theft, lying and “not playing by the rules” – and in voluntarily complying with them.

Our moral sense reinforces our judgments about when rules/institutions are not working and the need to develop new ones in response to changing circumstances and new problems.  When we see a problem that we think requires change, it is unavoidable that we respond to the status quo, the behavior of people within it and the need for change with a moral sense. 

This is simply a part of our evolutionary endowment.  (Of course, other parts of our endowment accentuate our suspicions of smooth talkers and help us catch free riders and looters and to guard against threats from outsiders.)

4.  Accordingly, while it’s unclear how deliberate Gore’s talk of “a moral and spiritual challenge” and “lifting the global consciousness” is or whether this is a productive approach for some people, I think it is fairly clear that, in order to build consensus for a solution to the climate commons problem (and other difficult commons problems) and to ensure that any agreed solutions are actually implemented, we will need to bring our moral senses to bear.

In other words, it is RIGHT to worry about climate change, but no meaningful/effective “solution” can be reached or implemented unless it is FAIR and the parties involved have sufficient TRUST (backed by information) in each other.

5.  You have understated the AGW problem, especially in light of the inertia both in our energy systems and in the climate, the long duration of CO2 and other GHGS, and the rapidity with which the climate is already changing – faster than even this year’s IPCC reports:

6.  It is surprising that in referring to Nordhaus you have not indicated the ways in which it seems clear that Nordhaus has understated the costs and risks of climate change and the utility of acting sooner rather than later, as noted by Weitzman, Sterner & Persson, Quiggin and others, or that by “revenue recycling” as noted by McKitrick we can substantially reduce the costs of carbon abatement policies.

7.  You fail to note that while there are real costs to our economies to build climate change institutions, once established in principle any resulting carbon pricing reflects real costs and is not a “cost” to the economy.

8.  It is a puzzle that you did not note that the most powerful way to call forth the investment and behavior changes that would help us to “find a cheap, low-carbon source of energy” and to limit GHG emissions would be to find ways that would effectively price GHG emissions.

9.  Finally, one further comment on this:

“One of the keys to solving environmental problems is economic growth and wealth.  … So keep in mind that anything that unduly retards economic growth also retards ultimate environmental clean-up, including global warming.”

Not sure what you’re driving at here.

As far as developing countries go, efforts by Western nations to address climate change are actually net subsidies to them (by dampening Western demand for fossil fuels) and are providing incentives and investment for growth.

And as for Western economies, at least in principle internalizing externalities by enclosing commons (that have provided value which has not been factored into GDP) doesn’t retard economic growth, but enables it by forestalling the destruction of resources, permitting greater wealth-generating private transactions and reducing inefficiency.

Environmental Markets? Links to Austrians

October 2nd, 2007 3 comments

Here’s a partial list of useful articles, alphabetically by author:

Terry L. Anderson and J. Bishop Grewell
Property Rights Solutions for the Global Commons: Bottom-Up or Top-Down?’y+F.+73+pdf

H. Barnett and Bruce Yandle
The End of the Externality Revolution

Walter Block 
Environmentalism and Economic Freedom: the Case for Private Property Rights

Robert W. McGee and Walter E. Block
Pollution Trading Permits as a Form of Market Socialism and the Search for a Real Market Solution to Environmental Pollution
John Bratland
Toward a Calculational Theory and Policy of Intergenerational Sustainability

Roy E. Cordato
Toward An Austrian Theory of Environmental Economics

The Common Law Approach to Pollution Prevention; a Roundtable Discussion (1997) ( Hope Babcock, Elizabeth Brubaker, David Schoenbrod, Bruce Yandle, Michael Krauss )

Peter J. Hill

Market-Based Environmentalism and the Free Market; they’re Not the Same

Murray N. Rothbard 
Law, Property Rights, and Air Pollution

Fred L. Smith Jr 
The Bankruptcy of Collectivist Environmental Policy

Fred L. Smith, Jr. 
Eco-Socialism: Threat to Liberty around the World

Robert J. Smith 
Resolving the Tragedy of the Commons by Creating Private Property Rights in Wildlife

Ludwig von Mises 
“The Limits of Property Rights and the Problems of External Costs and External Economies”, in Human Action

Bruce Yandle
Coase, Pigou, and Environmental Rights

Bruce Yandle
The Commons: Tragedy or Triumph?

Too Many or Too Few People? Does the market provide an answer?

September 27th, 2007 2 comments

[My very first post on this LvMI-hosted blog. Also, I see this was my first “Avatar”-related piece.]

Dan McLaughlin asks the first of these interesting questions on the Mises blog,  The second question is mine, and I addressed it briefly in the blog responses to Dan.

I take the liberty of posting that response here (revised slightly and with a few further comments and emphasis):

Too many or too few? Good question, Dan. I agree with you that the population question is like any other aspect of the social order: best addressed by the market and by free societies.

There are just a few small problems – even within the developed world (and very clearly outside of it), there are many important resources that are unowned and thus not fully priced in the “market” economy.

Unowned resources include almost all of Nature.  Primary productivity (the amount of vegetation produced from photosynthesis) has changed little, so as we use technology and our organizational abilities to divert more and more of it to feed us, this is an inevitable cost to other species, either directly or in the form of altered environments that support less life (and less diversity of life).

In altering our environments to suit us, we are of course no different from other life forms that compete for resources to live and propagate, but with our technical and organizational abilities, mankind has clearly triumphed over the rest of nature (except perhaps evolving microbes, to whom we represent an increasingly large and relatively untapped food source). But at what cost?

Through the centuries we have wiped out many wild systems of food and other resources – because they were never owned, and because our improving technology enabled us to race each other to take the resources before others (or from others, in the case of many native peoples). Not only Jared Diamond`s “guns, germs and steel”, but also forms of social organization have played deciding roles in the competition between human societies for survival, growth and dominance.  In this regard, societies that recognize and protect property rights internally and utilize free markets have proven clearly superior in the competition with other societies to obtain and utilize available resources.

But our struggle has been not only to capture resources and to use them before others do, but also to manage and protect them effectively.  Evolving ownership systems have been a key means of limiting wasteful “tragedy of the commons” struggles (see Yandle; von Mises), but even where ownership systems have been implemented, we have generally replaced complex natural systems with simpler systems designed solely to feed us (and particularly so where, due to higher consumptive demand, we have replaced common property systems with private property systems (Ostrom)).

Meanwhile, virtually all of the natural world – the world’s oceans, atmosphere, tropical reefs, tropical forests and other great commons – remain unowned and thus unmanaged and unregulated (or indigenous occupants have been forced aside).  For example, the great cod fishery off of the Grand Banks that fed Europe for centuries has now disappeared, and other fishery stocks worldwide are crashing – to be “replaced” by “farmed” fish that are fed to a substantial degree by catching and grinding up fish stocks that humans prefer not to consume directly, and in part by fish firms that are established by destroying the mangroves that are estuaries to various fisheries.  The same is true of the replacement of vast tracts of tropical forests with soybeans or oil palm plantations, with the rapid increase in atmospheric CO2 (and attendant risks to climate) and with the correspondly geolologically rapid increases in ocean acidification (and threats to plankton, corals and shellfish).

While populations in the developed economies are now relatively stable, demand from our markets (as well as the burgeoning developing markets) continues to strip out unowned (or mismanaged “public”) resources from the oceans or undeveloped countries, aided by kleptocratic elites who are happy to steal from the peoples they supposedly represent in order to line their own pockets.  

As Dan points out, property rights failures in poorer nations contribute to population growth there by delaying the demographic transitions that we have experienced.  Developed economies face similar problems with respect to “public”, state-owned lands, for which rent-seeking by and sweet deals to insiders are enduring problems and sources of politcal conflict (as markets cannot work to allocate resources).

Dan states that the stunningly rapid growth of human populations from the Renaissance to the present (6+ billion now expected to nearly double again soon) “actually represents the rise of capitalism and capital development … [and]  shows … the stunning capacity of freedom to provide for the whole world.”  While partly correct, this misses completely the question of our massive impact, within a very short period of geological time, on the environment in which we evolved over millions of years, the fact this has occurred because clear and enforceable property rights have not been created in many of the resources that have been consumed, and the corollary fact that we continue to lack the ability to manage our impact on our endowment of natural resources.

The market clearly does NOT send accurate pricing signals with respect to goods that are unowned or ineffectively owned; these goods are either unpriced or underpriced, so the effect is overconsumption until the point that the resource is greatly degraded, at which point attention is turned to the next unowned resource. Thus, human populations are responding to rather imperfect market signals.  And where resources are unowned, individuals and groups with differing values and desires cannot adjust or realize those desires by means of private, market transactions.  As a result, we are seeing a recourse to the public and political arenas – and the inevitable discordant debates – as various parties seek to use either moral suasion or the levers of government (locally, nationally and internationally) to advance what they consider to be their own interests.  (Of course, in a “tragedy of the commons” situation, all resource users share an interest is the future availability of a resource; the difficulty is in the prisoners’ dilemma negotiations at the primary user level about how to allocate short-term pain in the interest of long-term gains, compounded in the case of multinational resources by rent-seeking with each national participant.)

A cynic may say that our ongoing assault on nature is only “natural”, presents no moral or philosophical issues and that we hardly owe any responsibilities to “nature” or even “future generations” –  so let’s just all keep on partying, consuming for today, and patting ourselves on the back at how marvelous our market systems are.  And that we should keep on hurling invective at those evil “enviros” who want to crash the party and drag us all back to the Stone Age.

Perhaps I suffer from a want of sufficient cynicism.