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Scott Sumner misses government role in "sh*t happens"; epitomizes discussions of BP/offshore oil development

June 9th, 2010 No comments

Another BP post!

1. Over on his The Money Illusion blog, Chicago-school economist Scott Sumner has a curiously uninsightful post up on the BP oil spill: “Stuff Happens“. Perhaps some of my friendly enviro-hater readers here might like it, but I didn’t. I left the following comments (still pending approval as I copy them here) (emphasis added):

Scott, what you’re rather glaringly missing with your cost-benefit analysis – which blithely ignores the real face of “externalities” – is the institutional setting, which can be summed up as a tragedy of the government-owned and (rather expensively) mis-managed comonns.

Ed Dolan is exactly right about incentives problems facing BP and regulators, none of whom really directly own the downside risks, which instead are borne by fishermen, oystermen, shrimpers, the tourist industry, those who value wildlife and a clean environment, and those who consume what harvesters catch. Some of these are very marginalized communities, but all face tremendous difficulties organizing and expressing their interests effectively with respect to resources on which their very livelihoods may depend, but in which they have no ownership rights.

On the other hand, the oil industry are very powerful actors, very well organized and represented in the corridors of power and influence (remember Cheney’s secret energy meetings, and that BP was one of Obama’s largest donors?), and are adept at shifting risks to others (though self-damage is possible when catastrophic losses occur). As Ed Dolan rightly notes, this is built into their very nature as a result of the government grant of limited (zero) liability to shareholders, who have disincentives to monitoring too closely or to questioning whether profits come at the expense of others who – because of government ownership – have no effective voice regarding losses they bear.

It’s hard to feel much sympathy for either the oil cos or government in theis Avatar-like situation, but I don’t mean to castigate either as “evil”. Rather, we simply need to take a close look at the problems of Moral Hazard that our government interventions – from grants of limited liability, to government resource ownership and concomitant inept and occasionally management – have been fuelling.

Answers lie not in gross CBA analysis, but in letting resources users own the rights to manage and harvest wild resources (which would give them direct claims agains polluters), AND to determine when and where seabed resources are developed. (NOAA’s successful experiments with “catch rights” need to be vastly scaled up.) We would still have oil & gas development, but the fishermen would do a vastly better job of policing the oil companies – who would have to face other resource users with full incentives and abilities to protect their livelihoods. (Obversely, oil companies would also be better managers if they had control over the very valuable fish harvest rights in particular blocks, and would manage to in a way that would reflect such value.

Sincerely,

Tom

Austrian-leaning Ed Dolan, whose recent post on Moral Hazard and agency issues I have just noted, joins in on the comment thread. 

Sadly, Sumner is not alone in paying little attention to those who are at the short-end of the messy oil stick.

2. Liberal blogger Matt Yglesias has a useful blog post up in response to Scott; unfortunately his comment thread has fallen into blind, clear-sighted partisan bickering.

3. I see Richard Posner now has a similar blind piece of blather up at the Washington Post: “From the oil spill to the financial crisis, why we don’t plan for the worst”; more on Posner perhap’s later.

4. Sadly/fortunately, for those of you who haven’t seen or (or could use a little further diversion) this litle one-minute “BP kittens ” YouTube video does a better job than virtually all discussions I’ve seen in noting relevant agency and institutional failure issues.

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Who’s at the short end of the stick when Government "Play[s] Fast and Loose with Civilization" in the Gulf of Mexico?

June 8th, 2010 No comments

Another BP post! [links updated] I have just stumbled across  by Jeffrey Tucker’s May 27, 2010 post on the Mises Economics Blog regarding the Obama administration’s decision, in response to the BP mess in the Gulf, to suspend consideration of applications to drill in the Arctic.

1.  I was inspired to leave a few comments, which I copy here [a link or two added; my apologies for the bolding, but I’ve been out-witted by the html]:

TokyoTom June 8, 2010 at 5:14 am

“But what strikes me as just how willy nilly the state acts toward the goods and services that fuel civilization itself.” “rarely been more obvious, day to day, that the machinery of the state, while pretending to be the caretaker of mother earth, only destroys hope for real human beings.”

Jeffrey, how true – but how ironic and sad that, like Lew, you only look at the potential impact on US consumers (and businesses) of Obama’s (much, much, MUCH delayed) action to suspend consideration of applications to drill in the Arctic (and now elsewhere on the OCS), but ignore the PRESENT and very real impact of incompetent and corrupt government management on all of the people who live in, on and draw their LIVELIHOODS from the Gulf of Mexico commons that are now being despoiled by the BP spill. I mean, aren’t losses to fishermen and others in the Gulf region staring us in the face?

See, e.g., the reports here on marginalized fishermen http://twitter.com/Tokyo_Tom/status/15689063688 http://twitter.com/Tokyo_Tom/status/15689222932And it’s a shame that, rather than float ideas on how to end the Tragedy of the Government-Owned/-Managed Commons – such as expanding fishermen’s rights to manage Gulf resources – you see fit to suggest that the real solution lies in more Avatar-like Drill, Baby, Drill! resource exploitation under the current and obviously flawed rules. As for the rest of you, generally my disappointment with shallow, partisan thinking continues. Perhaps a cut and paste from a recent post will serve? http://tokyotom.freecapitalists.org/2010/06/04/bp-39-oil-spills-inconvenient-quot-ecosystems-quot-reason-tv-rants-quot-dying-oceans-quot/

I continue to scratch my head on the knee-jerk reactions by Austrian-libertarians on problems regarding management of common resources: are not our physical and electronic communities commons? Don’t commons support many people directly, and us all indirectly? Aren’t there huge and obvious commons-related problems that stem from government ownership and “management” of resources – be they federal lands, the seas, our fiat currency, or our financial institutions and publicly-listed companies? Don’t we all know that government gets in the way, frustrating the ability of people with differing preferences to search for and reach mutual accommodations, and instead putting them at loggerheads in zero-sum situations? The unbecoming reflexive hostility indicates that even those who think they have their thinking caps on cannot see past the partisan conflict that government itself generates. Kind regards, your resident Austrian misanthrope, Tom

2. For those who want to put their thinking caps on, I note that I have a number of posts on managing commons resources – see my posts on Nobel-Prizewinner Elinor Ostrom for starts – and on fisheries and on federally-owned oil and gas resources like the OCS and ANWR. They might provide a little grist for the mill.

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As BP's oil spills into one of those inconvenient "ecosystems", now even Reason TV rants about "dying oceans"

June 4th, 2010 No comments

Another BP post!

I continue to scratch my head on the knee-jerk reactions by Austrian-libertarians on problems regarding management of common resources: are not our physical and electronic communities commons? Don’t commons support many people directly, and us all indirectly? Aren’t there huge and obvious commons-related problems that stem from government ownership and “management” of resources – be they federal lands, the seas, our fiat currency, or our financial institutions and publicly-listed companies?

Don’t we all know that government gets in the way, frustrating the ability of people with differing preferences to search for and reach mutual accommodations, and instead putting them at loggerheads in zero-sum situations?

The unbecoming reflexive hostility  indicates that even those who think they have their thinking caps on cannot see past the partisan conflict that government itself generates.

But I dither.  Allow me to gather here for interested readers some scraps of information regarding the state of our oceans.

1.  From my initial response to Lew Rockwell‘s “Feel Sorry for BP? ” post:

Lew: “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.”

Me: Seems to me your “facts” about the damage done by Exxon Valdez to the “environment” – including the small segments used by by man – and recovery/compensation are basically counterfactual:

http://en.wikipedia.org/wiki/Exxon_Valdez_oil_spill

http://www.alternet.org/environment/22260

Further, it seems you don’t have any real clue as to the escalating damage that man is doing to our shared ocean “commons”. These two TED talks might help open your eyes:

http://www.ted.com/talks/jeremy_jackson.html

http://www.ted.com/talks/sylvia_earle_s_ted_prize_wish_to_protect_our_oceans.html

2.  While I think this understates the size of the BP spill, it is still a useful explanation for how the spill trauma differs from natural oil seeps:
The Oil Drum | Natural Oil Seeps and the Deepwater Horizon Disaster: A Comparison of Magnitudes http://bit.ly/9KZGm4
3.  Those radical enviros over Reason.tv seem to share my concerns; they have put up a new video on June 2 with the alarmist title: “How To Save A Dying Ocean“.  It was written, produced and hosted by Ted Balaker. Nick Gillespie cross-posted it to Big Government.com, where there is another comment thread. In both places, readers/viewers seem not to have noticed that environmentalists are now solid supporters of privatizing fisheries.
Here’s a chunk of the description:

The Gulf of Mexico continues to gush oil just as a whaling controversy threatens to land Australia and Japan in international court for killing protected species. Meanwhile, another less-publicized but arguably more cataclysmic oceanic disaster continues to worsen.

Overfishing threatens to destroy most of the world’s fisheries within a matter of decades. …

“Everything in the ocean from the great whales to dolphins to plankton is being jeopardized,” Psihoyos tells Reason.tV. “We’re raping and harvesting the ocean unsustainably.”

Overfishing “could mean the end of certain species,” agrees UC-Santa Barbara’s Costello. He points out that about a third of the world’s fisheries have already collapsed, and many more are heading toward the same fate. Costello says the world’s fisheries are in such bad shape because of the same reason public restrooms are typically foul places: “Nobody owns them. Nobody has the incentive to keep them up.”

One proven solution is a system called “catch share,” in which fishermen have the right to a certain share of the total catch of a type of fish. This form of ownership gives fishermen an incentive to make sure fish populations grow, and according to Costello’s worldwide research, it’s the only thing that seems to work.

Environmentalists are often suspicious of the profit motive, but from Alaska to New Zealand, market forces have been harnessed not for plunder but for preservation. Fishermen like the system because they make money, and environmentalists like it because it supports sustainable practices. Expanding the catch share system may well be the best way to save a dying ocean.

Here’s the video – which is worth a look:
[View:http://www.youtube.com/watch?v=MI80VVpTGkQ&feature=player_embedded:550:0]

4.  I note that I have already posted extensively on oceans/fisheries management; for interested readers here are links to some of those posts:

http://mises.org/Community/blogs/tokyotom/search.aspx?q=ocean

http://mises.org/Community/blogs/tokyotom/search.aspx?q=fisheries

http://mises.org/Community/blogs/tokyotom/search.aspx?q=whale

5. Finally, one wonders whether, if fishermen in the Gulf of Mexico had clear “catch rights” or similar property rights, and had control over oil gas exploration and development decisions, they would not have done a good deal better in overseeing BP, and whether BP would not have been quite a bit more careful.( Likewise – if BP owned the Gulf, and received revenues from permitting fish harvests!)

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Avatar, tragedy of the socialized commons and crashing salmon stocks; how the dirty hands of government destroy wild resources

February 17th, 2010 No comments

It’s a sad, sad story, now being played out practically wherever wild salmon stocks once were abundant. (This version refers to the Pacific Northwest, particularly to events in British Columbia).

First, national governments wrest control over salmon fisheries from native peoples, and eliminate low-level, community-based management systems.

With new socialized ownership, it becomes eternal “open season” on salmon and newcomers (whites or whatnot) go hog wild, resulting in the classic “tragedy of the commons” race to catch salmon before others do, without regard to others or to future harvests.

The state steps in to regulate take, banning nets at river mouths — smart fishermen take their nets to sea. Governments find themselves compelled to further regulate seasons and fishing gear, as fishermen who have no ownership stake in the resource look for ways to beat restrictions and to beat out competitors for unowned fish. Natives who don’t join in the race are left with ever slimmer takes.

As no one owns the salmon and has no legal rights that can be enforced against upstream users, governments build dams to benefit farmers (and nuclear bomb production sites and industry), and developers and loggers begin to trash streams and rivers. Reacting to howls from interested citizens, states begin to pass laws limiting the rights of property owners to use and manage their properties.

Governments get into the salmon hatchery business as salmon stocks start to plummet, and endangered species protection laws get passed. Loggers, developers, farmers and industries with cheap hydropower vent anger over “capitalism-hating” enviros and legislators, even as governments eager to please favored constituencies (farmers over natives, naturally) divert water in summer from dams to farmers, leading to large fish kills in lower and warmer rivers.

As fish stocks continue to fall, enterprising businesses get licenses from regional governments to “farm” salmon by raising them in pens (using ocean water flows, and catching and grinding up five pounds of other fish to raise one pound of salmon). Farms begin to proliferate – and begin to be seen by fishermen as externality-generating machines: farmed salmon become plagued with sea lice, which spreads to migrating wild populations, concentrations of salmon pollute neighboring waters, wild salmon populations begin to fall drastically, and other “feed stocks” of salmon are adversely affected.

Alarmed local people and adversely affected fishermen and natives organize, try to get consumers to stop buying farmed salmon, and go, hat in hand, to petition (1) governments to stop licensing new “farms” and (2) farms to adopt much more expensive methods that would seal of the farms from the wild environment. Salmon farming companies assert that they have rights to pollute, and no legal responsibility for damages suffered by others – that licensing regimes eliminated common-law rights to sue for nuisance, etc. Farmers tell governments to be “fair” and that governments should “co-invest” to subsidize any new farming methods.

Predictably, as wild salmon dwindle and temperatures rise, no one seems to wonder what things would be like if governments stopped trying to “manage” the salmon and playing the middleman, but found some way to recognize property/harvesting rights and to enforce basic common law rights against nuisance, and stepped out of the way.

I made some of these points in an email I sent today to some parties at interest:

Ladies/Gentlemen:
 
I sent the following note to WildSalmonCircle.com when I joined their mailing list; some of you might be interested:
  
Yes, one of your chief enemies are the salmon farmers, but the
real reason for the problem is that the government – and not the First
Nation or any other fishermen – owns the wild salmon.
 
As a result, the First Nations, commercial and sports fisherment
and other supporters of wild slmon and natural ecosystems have NO
direct rights to protect the wild salmon and are largely relegated to
feebly petitioning government (and the farming companies, whose
managers are obliged to care first and foremost for profits generated
for owners), and have little or no ability to directly sue the
salmon-farming interlopers whose pollution is damaging your livelihood
and the greater Northwest ecosystem.
 
This is exactly the problem we see with many other
government-owned/managed resources – in Canada, the US, China, the
Amazon, developing countries – and it’s why Elinor Ostrom was given the
2009 Nobel Prize in Economics
. Solutions regarding common resources lie
in resource users having recognized rights and an ability to bargain
with others in the community. Where governments own resources, then
they deny to those whose livelihoods and ways of life are at stake a
voice in their own present and future. (In the case of salmon, this has
deep, “Avatar”-like roots in the historical pushing aside of native
rights
and resource management practices in favor of new,
Western-dominated governments.)
 
So, to First Nations and fishermen, I say – sue the farmers
directly for nuisance pollution – assert your rights! Don’t leave them
simply as another interest group petitioning government.
But also start pushing for direct, recognized property rights
in the wild salmon, which would end the “tragedy of the
commons” resulting from a free-for-all ocean take. Ending ocean take
and replacing it with traditional river-mouth-based harvests will
better protect the wild resource and give you stronger rights to make
claims on those upstream who poison and damage habitat. And take a page
out of the book of Target US, and organize a CONSUMER BOYCOTT OF ALL
FARMED SALMON. And work to eliminate all legislative grants to insiders of immunity to lawsuits for activities that damage the economic interests of others (i.e., that produce “nuisances”).
Sincerely,
 
Tom
 

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?

Resources on Elinor Ostrom

January 15th, 2010 No comments

[Note: This is a work in progress]

Elinor Ostrom is the guru of CPR regimes; anyone interested should look into her fascinating and highly-regarded work, particularly
her seminal and extensively researched Governing the Commons (1990). Here is a review.

A profile of Ostrom, who is a member of the National Academies of Science and and Editor of its Proceedings, is here:
http://www.pubmedcentral.nih.gov/articlerender.fcgi?artid=1748208

Her work can be found here: http://scholar.google.co.jp/scholar?q=Ostrom,+Elinor&hl=en&btnG=Search

here: http://de.scientificcommons.org/elinor_ostrom

and here: http://dlc.dlib.indiana.edu/dlc/browse?value=Ostrom%2C+Elinor&type=author

[She is a member of the American Academy of Arts and Sciences, the National Academy of Sciences, and the American Philosophical Society,
and a recipient of a number of prestigious awards. Her other books include Rules, Games, and Common-Pool Resources (1994); The Commons in the New Millennium: Challenges and Adaptations (2003); The Samaritan’s Dilemma: The Political Economy of Development Aid (2005); Understanding Institutional Diversity (2005); and Understanding Knowledge as a Commons: From Theory to Practice (2007).]

Here is one link to get readers started:

Elinor Ostrom et al.,
Revisiting the Commons: Local Lessons, Global Challenges, Science 9
April 1999: http://conservationcommons.org/media/document/docu-wyycyz.pdf

Here is one general bibliography on commons research: http://www.indiana.edu/~workshop/wsl/tragedy.htm

1.  Here are the statements from the 2009 Nobel Prize committee:

a.  From the press release:

Elinor Ostrom has demonstrated how common property can be successfully managed by user associations. Oliver Williamson has
developed a theory where business firms serve as structures for
conflict resolution. Over the last three decades these seminal
contributions have advanced economic governance research from the
fringe to the forefront of scientific attention.

Economic transactions take place not
only in markets, but also within firms, associations, households, and
agencies. Whereas economic theory has comprehensively illuminated the
virtues and limitations of markets, it has traditionally paid less
attention to other institutional arrangements. The research of Elinor
Ostrom and Oliver Williamson demonstrates that economic analysis can
shed light on most forms of social organization.

Elinor Ostrom has challenged
the conventional wisdom that common property is poorly managed and
should be either regulated by central authorities or privatized.

Based on numerous studies of user-managed fish stocks, pastures, woods,
lakes, and groundwater basins, Ostrom concludes that the outcomes are,
more often than not, better than predicted by standard theories. She
observes that resource users frequently develop sophisticated
mechanisms for decision-making and rule enforcement to handle conflicts
of interest, and she characterizes the rules that promote successful
outcomes.

b.  The background explanation is useful and contains a pointed criticism of many centrally-directed approaches to common pool resources (emphasis added):

If we want to halt the degradation of our natural environment and prevent a repetition of the many collapses
of natural-resource stocks experienced in the past, we should learn
from the successes and failures of common-property regimes. Ostrom’s
work teaches us novel lessons about the deep mechanisms that sustain
cooperation in human societies.

It has frequently been suggested that common ownership entails excessive resource utilization, and that it is
advisable to reduce utilization either by imposing government
regulations, such as taxes or quotas, or by privatizing the resource.
The
theoretical argument is simple: each user weighs private benefits
against private costs, thereby neglecting the negative impact on others.

However, based on numerous empirical studies of natural-resource management, Elinor Ostrom has concluded that common
property is often surprisingly well managed. Thus, the standard
theoretical argument against common property is overly simplistic.
It neglects the fact that users themselves can both create and enforce rules that mitigate overexploitation.
The standard argument also neglects the practical difficulties associated with privatization and government regulation. …

There are many …. examples which indicate that user-management of local resources has been more
successful than management by outsiders. …

[T]he main lesson is that common
property is often managed on the basis of rules and procedures that
have evolved over long periods of time.
As a result they are more
adequate and subtle than outsiders – both politicians and social
scientists – have tended to realize. Beyond showing that
self-governance can be feasible and successful, Ostrom also elucidates
the key features of successful governance. One instance is that active
participation of users in creating and enforcing rules appears to be
essential. Rules that are imposed from the outside or unilaterally
dictated by powerful insiders have less legitimacy and are more likely
to be violated. Likewise, monitoring and enforcement work better when
conducted by insiders than by outsiders. These principles are in stark
contrast to the common view that monitoring and sanctioning are the
responsibility of the state and should be conducted by public employees.

2.   Miscellaneous recent materials

On December 16, Spiegel Online ran the following interview with Elinor Ostrom

NPR’s Planet Money: Podcast: Elinor Ostrom Checks In (October 23, 2009)

Lecture at Cornell University: “Collective Action and the Commons: What Have We Learned?” (September 17, 2009)

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3.  These following earlier posts:

Elinor Ostrom? Austrians praise the Nobel laureate’s work on how human communities successfully manage resource conflicts

by TokyoTom

Elinor Ostrom awarded the Nobel prize in economics? Who? no doubt some
of you are wondering. Well, sharp-eyed readers will have noted that I
have referred to her any number of times (which I will reprise later,
as this post has gotten too lengthy). I excerpt below some of the
praise Elinor Ostrom has…

Positive
sum games: Get yer Elinor Ostrom here! A reprise of posts on rolling up
our sleeves to address real problems that “markets” (& govt.) now
aggravate

by TokyoTom

I excerpt below, in chronological order, portions of my prior posts
here that refer to Elinor Ostrom (the political scientist who recently
was awarded the Nobel prize in economics) and are indebted to her
thinking. Perhaps items 3 and 10 are most accessible for readers in a
hurry to find links to her…

Elinor Ostrom: Another Nobel Laureate jumps the climate shark (Proceed at Own Risk)

by TokyoTom

On December 16, Spiegel Online ran the following interview with Elinor
Ostrom , whose 2009 Nobel prize in economics (shared with Oliver
Williamson ), was widely applauded by Austrian economists (and whose
work I have referred to any number of time previously ). Der Spiegel
asked some good questions,…

Tragedy of the panicked enviro III: learning from Elinor Ostrom about cooperative action

by TokyoTom

This is the second follow-up to my post ” Grist and the tragedy of the
panicked enviro “, where I try to clarify the institutional frameworks
for understanding and addressing resource problems, in response to
confusion in comments by others. T Worstall Posted 5:27 pm 27 Aug 2009
TokyoTom makes…

John Quiggin plays Pin-the-tail-on-the-Donkey with “Libertarians and delusionism”

by TokyoTom

John Quiggin , a left-leaning Australian economist and professor at the
University of Queensland, has noted my recent post on the penchant for
bloggers and readers at the Mises Blog to attack climate science – are
” almost universally committed to delusional views on climate science
“, as he…

Not Climate Change Welfare, But Capitalism and Free Markets

by TokyoTom

… is what poor countries need. So corrrectly argues Keith Lockitch of
the Ayn Rand Institute , in a new article that responds to the
agreement, by the delegates of industrialized nations at the December
climate change conference in Bali, to activate an “adaptation fund”
that would help…

Libertarians to lefty-enviros: without community-based property rights, sustainable fisheries are impossible

by TokyoTom

Readers from RealClimate , thanks for your visit. Here`s my comment
with embedded links: #188 / 245: Neal & Jim, thanks for the
references to the successful experiments in Iceland, NZ and the Alaskan
pollock fishery to replace the tragedy of the government commons with
property rights approaches…

Ron Bailey of Reason congratulates Al Gore

by TokyoTom

[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
http://www.reason.com/news/show/122960.html 1. Here are some excerpts
(emphasis added), followed by a copy…

Using the State to solve common resource problems?

by TokyoTom

How exactly do you transfer commons into private ownership in a fair
way, even for easily divided up stuff like land? That’s the trillion
dollar question that someone asked me on a recent thread (
http://blog.mises.org/archives/007152.asp#comments ) regarding my
suggestion that better definition…

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…
Categories: Uncategorized Tags:

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.

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

TokyoTom

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.”

http://tokyotom.freecapitalists.org/2009/12/21/quot-property-quot-weird-thoughts-evolution-society-quot-property-rights-quot-quot-intellectual-property-quot-principles-structure-justify/

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:

http://mises.org/Community/blogs/tokyotom/archive/2007/09/28/too-many-or-too-few-people-does-the-market-provide-an-answer.aspx

http://mises.org/Community/blogs/tokyotom/archive/2007/12/16/bison-markets-the-tragedy-of-the-commons-and-the-indian-war.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/11/26/theft-and-the-tragedy-of-the-commons-mother-jones-ponders-quot-conservation-indigenous-people-s-enemy-no-1-quot.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/05/24/capitalism-the-destructive-exploitation-of-the-amazon-and-the-tragedy-of-the-government-owned-commons.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/01/07/somali-piracy-flows-from-the-greater-and-continuing-western-theft-and-abuse-of-somali-marine-resources.aspx

http://mises.org/Community/blogs/tokyotom/archive/2008/06/02/environmental-damage-as-theft-report-by-prominent-enviros-quot-highlights-the-need-for-secure-ownership-of-wildlife-resources-by-poor-people-quot.aspx

http://mises.org/Community/blogs/tokyotom/archive/2007/10/12/libertarian-reticience-other-than-to-bash-enviros.aspx

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: http://mises.org/Community/blogs/tokyotom/search.aspx?q=limited

  • 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:
    http://online.wsj.com/public/page/future-of-finance-121409.html

 

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):

http://mises.org/Community/blogs/tokyotom/archive/2007/12/16/holiday-joy-quot-watermelons-quot-roasting-on-an-open-pyre.aspx

 

Bruce Yandle on the tragedy of the commons, evolution of cooperation & property, and the struggle against government theft

November 20th, 2009 No comments

[I note that this is one of my earlier Avatar-themed posts. 2010/02/15]

I’ve often referred to Bruce Yandle, a “free-market environmentalist” who is dean emeritus and Distinguished Professor of Economics Emeritus at Clemson University’s College of Business & Behavior Sciences, Distinguished Adjunct Professor of Economics at the Mercatus Center, a faculty member with George Mason University’s Capitol Hill Campus, and a Senior Fellow at PERC – the Property and Environment Research Center (a free-market environmentalism think tank which has great links to his many works).

I’d like to draw attention attention to one short paper by Yandle which I find insightful in providing a perspective on the evolution of prperty rights and problems with resource management which arise from government owenership, even as he has short-shrifted the importance of community property mechanisms, which Nobel Prize-winner Elinor Ostrom has so extensively researched and documented (as I keep noting).

Yandle’s paper, The Commons: Tragedy or Triumph?, was published by the Foundation for Economic Education in its April 1999 online edition of Freeman. Here are few portions (emphasis added):

The feeder is a commons, but not just for hummingbirds. Bees are
attracted to it as well, and oddly enough, they can drive off the
larger hummingbirds. So even if the dominant bird is able to deflect
competition from other members of the species, that is not enough to
protect the nectar, and the defense itself is costly in energy burned.
The feeder contents are never secure.

Hummingbirds have no way to stake a claim to the feeder. So far as
we can tell, hummingbird communities have no constitution that reflects
socially evolved rules for establishing a social order. Most likely, a
long process of adaptation and selection has generated a hummingbird
capable of living in a world where nourishment is a common-access
resource, a commons. Hummingbirds live a life of flight, engaging in a
constant search for nourishment to feed their high-energy lives and, at
times, fighting for temporary control over valuable resources.

Human Commons

We all know the tragedy of the commons story. Wonderfully written
by Garrett Hardin in 1968, the highly stylized rendering is about a
pasture devoid of rules, customs, or norms for sharing.[1]
It is open to all comers. In this never-never-land, shepherds logically
add sheep to their flocks as long as doing so adds an increment of gain
for the particular flock. Uncoordinated in their effort, and unaware of
the effects of their individual actions on others, the unconcerned
shepherds collectively destroy the pasture. What could be a story of
plenty, if only the shepherds understood, turns into a story of
poverty. The passive shepherds are like hummingbirds. [Yandle has this wrong; Hardin posits competing shepherds who don’t talk w/ each other,and so look after only their narrow self-interests.]

As Hardin artistically puts it: “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. Ruin is the destination toward which
all men rush, each pursuing his own best interest in a society that
believes in freedom of the commons.”

Garrett Hardin’s words beautifully bundle aspects of an endless
human struggle to form communities, accumulate wealth, and improve
well-being. With that phrase—tragedy of the commons—the essence of the
challenge hits us squarely between the eyes: When there are no property
rights—formal or informal—that limit use of a scarce natural resource,
human action leads inevitably to untimely resource depletion and
destruction.

But people are not hummingbirds. People can build institutions that
take the edge off frantic commons behavior. People have unwritten and
written constitutions that help to establish social order. People can
and do accumulate wealth. People communicate, invent lines of kinship,
and develop customs, traditions, and rules of law that limit
anti-social behavior. People define, enforce, and trade property
rights. People can and do avoid the tragedy of the commons. Indeed,
instead of living with tragedies, people triumph over the commons. But
the triumphs are never perfect or complete. There is always another
commons to manage.

The Ascent of Man

I wish to put forward the notion that encounters with the commons
form the fundamental stimulus that yields, instead of tragedy, what we
today call civilization.
The ascent of man from a primitive existence
with no wealth accumulation to life as we know it is fundamentally a
story about triumph over, not tragedy of, the commons. Let me explain.

Our very existence as human beings is defined by evolved
institutions for avoiding tragedies. We have names, which serve the
economic purpose of identifying us as parties to contracts and
agreements. Those names, first and last, form webs of communication
that reduce the social cost of assigning responsibilities and
liabilities. They enhance truth-telling and promise-keeping; they raise
the cost of engaging in anti-social behavior. They limit a tragedy of
the commons.

We have abstract symbols of ownership—deeds, titles, and
contracts—that define spheres of autonomous behavior. We speak of our
homes, our cars, our clothes, our families, and our pasture. Even
language has evolved to provide a possessive form that accommodates
triumph over the commons.

We write and observe contracts, wills, and marriage agreements that
define relationships, identify turf, and conserve wealth. We accept
evolved bodies of law and law-enforcement activities to assure the
integrity of our agreements. We carry papers that enable us to acquire
property, extinguish debt, cross borders, drive vehicles, and
communicate effectively with strangers. And we have locks, keys, walls,
fences, brands, and encryption devices, all this in an effort to avoid
a tragedy of the commons.

Property rights define who we are and what we have. Property rights
guard others from our unwanted advances and prevent us from
contributing to a tragedy of their commons.

Avoiding a tragedy of the commons is costly. The benefits must be large. …

The tragedy is found where for reasons having to do with power,
intolerance, or cost, human beings have not yet defined private
property rights. Or, as we shall see, where evolving property rights
encouraged by man the institution builder have been destroyed.
What was
once a triumph can become a tragedy. …

What about fisheries? How can we avoid a tragedy of the commons
there? Long before the Europeans arrived on the scene in the Pacific
Northwest, Native Americans had figured it out. Small tribes in what is
now Washington State had salmon fishing rights.
Don Leal tells us that
“in some cases, the tribe owned the rights; in others, families or
individuals or a combination owned the rights.”[5]

And what happened when the Europeans arrived? You guessed it. Leal
tells the story this way: “Instead of recognizing the well-defined and
enforced fishing rights, the U.S. government allowed newcomers to place
nets across the mouth of the Columbia. This quickly depleted salmon
runs, so traps and weirs were banned—only to be replaced by purse seine
boats powered by internal combustion engines. The race to catch salmon
moved to open waters. Ironically, from the country where private
property is considered sacrosanct came a socialistic legal system
driven by politics and military power.”[6]

What had been private property was turned into a commons. What had been
an institution-builder triumph became a political tragedy. …

For centuries before anyone in the United States thought much about
environmental quality, our common law defined and protected the
environmental rights of ordinary people.[10]
Enforced by judges in courts across the land, common law protected the
right of downstream property owners to receive water and air in
undiminished quality for reasonable use.
At common law, rivers could
not be treated as open sewers if doing so imposed costs on downstream
rightholders. Industrial plants could not blow smoke and emissions onto
the land and property of ordinary people. The record is filled with
cases, here and in Canada, decided under English common-law traditions:
where farmers sued industrial plants and won; where citizens of one
state sued polluters in another state, and won; and where common-law
judges ordered polluters to clean up or shut down. There are also cases
where this did not happen, where judges turned away from
property-rights enforcement and behaved as policy makers. But when the
judges got it wrong, their decisions affected a small number of people,
not an entire nation. [I note Walter Block disagrees strongly and views this change in common law as leading to the rampant pollution that set the stage for federal legislation.] This, of course, changed with the advent of
legislation.

Prior to the passage of federal pollution-control statutes, every
major city in the United States had taken steps to define public
property rights to air quality. Many states, including California, had
taken a river-basin approach to the management of water quality, this
in addition to the use of common law. Multi-state compacts were
forming. By the 1960s, environmental quality was improving rapidly in
many locations. The property rights institution builders were on their
way to avoiding a tragedy of the commons. Common law was converting the
commons to private property.

This was changed with the passage of federal legislation that
effectively nationalized air and water quality in the United States.
What was becoming private property was made public property, almost a
commons. The new system of command-and-control regulation allowed
polluters to operate legally if they had a permit. With permits in
hand, new polluters could enter already crowded river basins. The new
regime provided political access to industries and municipalities that
hoped to postpone the day of reckoning in common law courts.

This work sheds light on mankind’s struggle to avoid the tragedy of
the commons. It tells us that at very low levels of income, what might
be called stage one, human beings cannot afford to do much about
property-rights enforcement and the commons. They live in a world where
custom and tradition sustain them. As incomes rise and losses from the
commons expand, stage two is entered. Fences go up, and rules are set
for protecting the commons. Finally, in stage three, markets evolve
along with rules of law that define spheres of private and public
action. Private rights replace public control, and the triumph replaces
the tragedy of the commons.

[Yandle ignores government mismanagement here, and how Western markets and Westernized leaders have seamrollered native institutions.]

Life for mankind began on a commons where tragedies were
commonplace and the incentive to improve was powerful. Out of the
struggle to survive and accumulate wealth evolved markets, property
rights, and the rule of law—a triumph on the commons.

But just as bees compete with hummingbirds in the struggle to
control access to nectar, institution builders who seek to support
markets and property rights compete with others who seek to
redistribute wealth. Actions to redistribute wealth blunt the incentive
to protect property rights and create wealth. This converts triumph to
tragedy.

A few more comments to John Quiggin on climate, libertarian principles and the enclosure of the commons

November 4th, 2009 No comments

I note first that I am reminded by a pithy comment from someone else that, despite the length of my previous post addressing John Quiggin`s post on libertarian delusion, sometimes less is more.

Writes commenter “ABOM”, in a comment made elsewhere and linked back in to Quiggin`s thread (done for the purported reason that Quiggin was deleting some of ABOM`s comments) (emphasis added):

I found it ironic that JQ (an economist) was using a scientific
hypothesis (climate change) as a litmus test to determine whether
Austrians were “serious” economists.
JQ (1) assumes he knows about
climate science
(he doesn’t) (2) assumes anyone who questions climate
science is mad
(they may not be) (3) thinks anyone who questions the
govt’s solutions to the “problem” is also mad
(even if you accept the
science, govt may not be the answer – raising interest rates to their
‘natural’ level and a simple “depression” in consumption may be a
simpler solution) (4) isn’t allowing an open debate (he keeps censoring
me for some bizarre reason) and (5) to top it off accuses Austrians of
being part time scientists – when he is the King of Part Time Amateur
Science …

Being verbose, this and a review of Quiggin`s post prompts me to write more.

I`m not sure I agree with ABOM`s initial comment; while Quiggin might be implicitly using Austrian`s behavior regarding climate change to question whether they are “serious” economists, more straightforwardly he`s questioning why on climate they seem not to care to show it.

I failed to address the following points from John:

1.   ” it seems clear that, if mainstream climate science is correct,
neither anarcho-capitalism nor paleolibertarianism can be sustained.
The problem with anarcho-capitalism and other views where property
rights are supposed to emerge, and be defended, spontaneously, and
without a state is obvious. If states do not create systems of rights
to carbon emissions, the only alternatives are to do nothing, and let
global ecosystems collapse, or to posit that every person on the planet
has right to coerce any other person not to emit CO2 into the
atmosphere.”

First, the alternatives to states creating systems of rights
to carbon emissions (or imposing carbon taxes, funding energy alternatives etc.) are NOT simply to do nothing, or to assume that all individuals will be left to try to coerce everyone else. While I agree that an-caps typically do not stress the desirability of undoing statist actions that feed into the climate problem, of course this is something which can and should be done, as I have tried to point out. And there are many voluntary and organized responses now underway that address climate change: organizations that cater to people (and firms) who want to track and lower their carbon footprint or buy offsets, firms that are competing to monitor and control their carbon footprint, both to lower costs and to stay ahead of competitors in the marketplace for consumer favor, voluntary corporate-oriented carbon trading/offset programs underway, insurance companies and others projecting and publicizing risks, etc.

Ancaps and other libertarians may be wrong, but they essentially conclude that the large information and transaction costs that society faces in dealing with climate change cannot be overcome by fiat, which clearly is not simple. Using government typically brings a whole host of problems. Viz., the knowledge problem, rent-seeking and -farming, bureaucratic mal-incentives, & enforcement.

    2.   “For paleolibertarians, the fact that property rights must
    be produced by a new global agreement, rather than being the inherited
    ‘peculiar institutions’ of particular societies seems equally
    problematic.”

    Yes. But there`s also  the problem of justice in the original
    allocation. Why should the new property rights in the atmosphere be allocated to corporations, as opposed to citizens?

    3.   “For more moderate libertarians, who accept in principle that
    property rights are derived from the state, I think the problem is more
    that the creation of a large new class of property rights brings them
    face to face with features of their model that are generally buried in
    a near-mythical past.

    “To start with, there’s the problem of justice in the original
    allocation. Until now, people [in] developed countries have been
    appropriating the assimilative capacity of the atmosphere as if there
    was always “enough and as good” left over. Now that it’s obvious this
    isn’t true, we need to go back and start from scratch, and this process
    may involve offsetting compensation which effectively reassigns some
    existing property rights.”

    I don`t think moderate libertarians so much “accept in principle that
    property rights are derived from the state,” as they recognize that the state has codified, circumscribed and enforces such rights. Right now, there are simply NO “existing property rights” regarding climate, other than the shared right to exhaust CO2 (and other GHGs) into the atmosphere, and to engage in other activities that alter albedo. Starting from scratch in the sense you use it, especially the “compensation” aspect, means governments taking property from some and giving it to others

    4.   “Then there is the problem that the emissions rights we are talking
    about are, typically time-limited and conditional. But if rights
    created now by modern states have this property, it seems reasonable to
    suppose that this has always been true, and therefore that existing
    property rights may also be subject to state claims of eminent domain.”

    “Property rights” are essentially a portfolio of formal and informal institutions that communities have devised, over long periods of trial and error. Most such “rights” – whether informal or state-recognized – are time-limited and conditional. That states have always and continue to alter, and take, property rights tells us nothing about the justice or efficacy of such actions – and you might have noticed that Elinor Ostrom and the progressives (some of whom I quoted in my prior post) who want to “take back the commons” argue very strongly about both.

    Where our fisheries are collapsing, they are doing so chiefly because our governments have trampled native rights or community-developed practices in favor of bureaucratic management and the resulting tragedy of the commons. While the solution in such cases appears to be the re-creation of property rights that give fishermen a stake in preserving the resource they rely upon, such situations are hardly akin to the worldwide creation of CO2 emission rights, which present much more severe difficulties in allocating and enforcing.