[Note: Hope the obvious snark isn`t too confusing; some simple thoughts on an alternative view are at bottom.]

An obviously deluded Bill Gates apparently:

• has become a global warming/carbon cultist and/or
• has been suckered by carbon-trading swindlers or modern-day sellers of snake oil serums, and/or
• has a plan to get even more rich by cornering the market on climate moderation services, in part through abusively seeking patents on techniques to geo-engineer the stratosphere.

An article at “Science“, the propaganda arm of the American Association for the Advancement of Science, revealed on January 26 that Gates has been funding “atmospheric scientist” Ken Caldeira and others over the past three years, out of his own pocket and to the tune of $4.5 million. Caldeira was recently in the news in connection with Steven Levitt’s and Stephen Dubner’s latest Freakonomics book, which showed that even in the unlikely even that it turns out that puny mankind actually influences the climate, that wizbang mankind has a simple and easy solution. Gates, it turns out, is co-conspirator in Intellectual Ventures, the venture started by genius Nathan Myhrvold, whom is also prominently referred to in Freakonomics. Apparently, Intellectual Ventures has already been busy filing patent applications.

It`s not entirely clear what Gates, Myhrvold, Caldeira, Levitt and Dubner are up to, but since faithful readers at LvMI all know that climate change simply isn`t happening, whatever it is, it can`t be any good, can it? Sure, Gates and Myhvold are privately funding science, but aren`t they really simply creaming information off of the public investment in climate research, while seeking monopoly gains through crackpot geoengineering schemes that they hope their elite friends in our Big Brother government will fund via a massive, coercive use of tax dollars? And isn`t this exactly the reason why Levitt and Dubner, as front men, have been softening up the public for this type of soaking?

[If there`s going to be any large-scale geoengineering, LvMI readers all hope it will be conducted in a purely private manner, as suggested by our own thinking men, who have been in the forefront on intelligent schemes for man to cool the planet (by the atmospheric use of atom bombs to induce a mild nuclear winter).]

Here are a few excerpts for time-pressed readers, including some insightful remarks in the comments by a reader who is up to Gates`s tricks, and some possible further misdirection by Caldeira:

Billionaire philanthropist Bill Gates has been supporting a wide array of research on geoengineering since 2007, ScienceInsider has learned. The world’s richest man has provided at least $4.5 million of his own money over 3 years for the study of methods that could alter the stratosphere to reflect solar energy, techniques to filter carbon dioxide directly from the atmosphere, and brighten ocean clouds. …

Caldeira and physicist David Keith of the University of Calgary in Canada have been in charge of deciding how to dispense the money ….

Recipients of the funding include Armand Neukermans, an inventor based in Silicon Valley who is working with colleagues to design spray systems for the marine clouds, and students and scientists working for Keith and Caldeira. Funding has also helped support scientific meetings in geoengineering in Cambridge, Massachusetts, and Edinburgh, Scotland, and aeronautics research related to altering the stratosphere.

There are other grantees, Keith says, but he declined to identify them or say why. “This is like a little private funding agency,” he says, though he says they plan to release more information.

Gates has shown interest in geoengineering research before. He is an investor in Intellectual Ventures, a Seattle, Washington–area firm that pursues inventions and has applied for patents on techniques to geoengineer the stratosphere. Along with officials from that organization, Gates applied for a patent in 2008 to sap hurricanes of their strength by mixing surface and deep ocean water.

What’s his ultimate goal? Gates “views geoengineering as a way to buy time but it’s not a solution to the problem” of climate change, says spokesperson John Pinette. “Bill views this as an important avenue for research—among many others, including new forms of clean energy.” (Pinette works for BCG3, a think-tank type firm Gates started last year which has no apparent role thus far in supporting geoengineering.) “Scientific and technological advances are making it possible to solve big, complicated problems like never before,” writes Gates on the Web site of the Gates Foundation, which is also not involved in the geoengineering work.

Here’s an insightful comment by a level-headed reader:

Briefly, Obama succeeded in getting China and India to agree that they need not simply to improve efficiency as they grow, but to make verifiable cuts in emissions.

This is a major accomplishment, as it addresses the chief reason why Clinton and Bush refused to submit the Kyoto Protocol to the Senate. It also clearly indicates that these and other developing nations view the climate threat very seriously, and that Obama has done an effective job in gaining the trust and confidence of their leaders.

As this provides assurance that any action by the US will be reciprocated to some degree by China and others, and thus may actually be meaningful rather than simply driving jobs from our economy to theirs, this may be the hand-writing on the wall for the passage of climate legislation by Congress (though the acrimony over health care, economic woes and the mid-term elections may weigh in the opposition direction).

But by coming in on the penuitimate day, working directly with China, India, South Africa and Brazil, and then leaving behind a bare-bones “Accord” that didn`t fit into the prior negotiation framework, Obama ruffled the feathers of smaller nations, and left poorer and island nations (which wanted to see firm mitigation and funding commitments) and indigenous groups (which hoped to be acknowledge as the recipients of offsets funnding that would help them preserve their forests) very upset.

Further, logistics for thousands of accredited NGOs and other observers who had planned side events were apparently very screwed up, so many people were apparently locked out in the cold for a day or two and are now steaming.

The result will no doubt be revitailzed pressure on political leaders over the coming year, in preparation for a climate summit in Mexico City in 2010.

Robert Stavins, Director of the Harvard Environmental Economics Program, has here the most useful and readable summary that I`ve seen.

I note that in September, Stavins participated in a debate with AEI`s Steven Hayward in the Wall Street Journal on the question of whether countries cut carbon emissions without hurting economic growth. Stavins provides links to the discussions here.

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 puts it – though these are not words fairly put into my mouth.  Like me, though, Quiggin wonders why wonders why libertarians focus on climate science at the near-exclusion of policy discussions, since (1) he sees “plenty of political opportunities to use climate change to attack subsidies and other existing interventions” and (2) he supposes that the environmental movement`s widespread shift “from profound suspicion
of markets to enthusiastic support for market-based policies such as
carbon taxes and cap and trade” seems like a big win for libertarians.

Quiggin previously commented on “Libertarians and global warming” last June; this seems to be a follow up.

Quiggins posits that Austrians/libertarians exhibit a “near-universal rejection of mainstream climate science,” and asserts that:

we can draw one of only three conclusions
(a) Austrians/libertarians are characterized by delusional belief in
their own intellectual superiority, to the point where they think they
can produce an analysis of complex scientific problems superior to that
of actual scientists, in their spare time and with limited or no
scientific training in the relevant disciplines, reaching a startling
degree of unanimity for self-described “sceptics”
(b) Austrians/libertarians don’t understand their own theory and
falsely believe that, if mainstream climate science is right, their own
views must be wrong
(c) Austrians/libertarians do understand their own theory and correctly
believe that, if mainstream climate science is right, their own views
must be wrong

John concludes:

“Overall, though I, think that acceptance of the reality of climate
change would be good for libertarianism as a political movement. It
would kill off the most extreme and unappealing kinds of a priori
logic-chopping, while promoting an appreciation of Hayekian arguments
about the power of market mechanisms. And the very fact of uncertainty
about climate change is a reminder of the fatality of conceits of
perfect knowledge.”

While John asks a good question and reveals some appreciation of markets, it`s clear that he is still pretty much groping in the dark when it comes to understanding libertarians` concerns about climate policy, indeed, even as to libertarian aims and concerns generally. He also overlooks various cognitive/psychological factors that appear to be at play. Naturally, I appreciate the opportunity for discussion.

1. Before addressing his three possible conclusions, let me note that while “market-based policies such as
carbon taxes and cap and trade” may seem to John “like a big win for libertarians”, this is most definitely NOT the case for most libertarians in the context of climate change, as these “market-based policies” represent an enormous expansion of government that libertarians feel very strongly, based on past experience, will be profoundly porky, counterproductive and costly. In the face of the fight for favor in Washington and the choice of opaque cap-and-trade over a more open rebated carbon tax and other deregulatory options, there is good reason to believe that libertarians are right.

2. Regarding conclusion (a), let me first note that John reveals the self-same “conceit of perfect knowledge” that he accuses Austrians/libertarians of having: the “acceptance of reality of climate change” would undoubtedly be good for everyone, but just what is that reality, and how can a layman of any stripe confirm himself that climate is changing and that man is responsible? The very fact that this “reality” is nearly impossible to confirm personally (even over the course of a lifetime) means that even those whom John considers as having “accepted reality” have basically just adopted a frame of reference, on the basis of the consistency of the AGW frame with other previously established mental frames, a reliance on authority, peer-group acceptance, etc.

“Reality” in this case inevitably, for most people, has very large personal and social components; accordingly, both “acceptance” and “skepticism” of it may look like a group belief, which may help to explain why it is possible to perceive “a startling
degree of unanimity” of views on climate science, the contents of such views varying by group.

As for Austrians/libertarians, while I don`t think it is fair to conclude they (we) are characterized by delusional belief in
their own intellectual superiority, but that many do have a belief, not so much in the superiority of their intellect, but in the correctness of their views on political science and economics (this is common in other groups, of course). This may affect their views on climate science, for several reasons that I have noted to John previously, and may be related for some of them to his conclusions (b) and (c).

3. Concerning conclusions (b) and (c), these are both over-generalizations; libertarians are a heterogenous bunch. But if I may generalize myself, to me there appears no conflict whatsoever between Austrian views, which are primarily about interpersonal relations and the role of government, and climate science. “Mainstream science” has nothing to do with these views, so if Austrians are wrong about “mainstream climate science”, this does not imply that any Austrian views
must be wrong. So Quiggins` (c) is wrong.

Quiggins`(b) – that Austrians may not understand their own theory and
may falsely believe that, if mainstream climate science is right, their own
views must be wrong – may be right for some Austrians, but certainly not generally. Rather, what I suspect is going on is much more ordinary, as I previously noted to Quiggin as a comment on his related June post; that I need to repeat myself indicates that maybe John is having cognitive difficulties of his own (emphasis added):

John, thanks for this piece. As a libertarian who believes that
climate change IS a problem, I share some of your puzzlement and have
done considerable commenting
on this issue [see this long list]. Allow me to offer a few thoughts on various factors at
work in the general libertarian resistance to taking government action
on climate change:

– As Chris Horner noted in your linked
piece, many libertarians see “global warming [as] the bottomless well
of excuses for the relentless growth of Big Government.”  Even those 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.
Even though they still share a mistrust of big government,
environmentalists generally believe that MORE
government is the answer, while ignoring all of the problems associated
with inefficient bureaucratic management (witness the crashing of many
managed fisheries in the US), the manipulation of such managment 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. Libertarians see that socialized property
rights regimes can be just as “tragedy of the commons” ruinous as cases
where community or private solutions have not yet developed, and have
concluded that, without privatization, government involvement
inevitably expands. 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. This 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 also when governments
(mis)manage resources.

I`ve discussed a number of times how we all easily fall into partisan cognitive traps, as summarized here.

A related piece of the dynamic is that some libertarians may feel that if they agree that AGW may be a problem, that this will be taken – wrongly – by others in the political arena as a conclusion that the libertarian message is no longer relevant.

4. Some support for these points can be seen in Edwin Dolan`s 2006 paper, “Science, Public Policy and Global Warming: Rethinking the Market Liberal Position” (Cato), in which Dolan suggests that many libertarian climate skeptics are acting quite as
if they are “conservatives” of the type condemned by Friedrich Hayek. 
Dolan cites Hayek’s 1960 essay, “Why I am Not a Conservative” (1960),
in which Hayek identified the following traits that distinguish
conservatism from market liberalism:

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

Further support is provided by Jonathan Adler, a libertarian law professor at Case Western who focusses on resource issues, and who has concluded that climate change is a serious concern, and that man is contributing to it. His February 2008 post, “Climate Change, Cumulative Evidence, and Ideology” (and the comment thread) is instructive:

“Almost every time I post something on climate
change policy, the comment thread quickly devolves into a debate over
the existence of antrhopogenic global warming at all. (See, for
instance, this post
on “conservative” approaches to climate change policy.) I have largely
refused to engage in these discussions because I find them quite
unproductive. The same arguments are repeated ad nauseum, and no one is
convinced (if anyone even listens to what the other side is saying). …

“Given my strong libertarian leanings, it would certainly be
ideologically convenient if the evidence for a human contribution to
climate change were less strong. Alas, I believe the preponderance of
evidence strongly supports the claim that anthropogenic emissions are
having an effect on the global climate, and that effect will increase
as greenhouse gases accumulate in the atmosphere. While I reject most
apocalyptic scenarios as unfounded or unduly speculative, I am
convinced that the human contribution to climate change will cause or
exacerbate significant problems in at least some parts of the world.
For instance, even a relatively modest warming over the coming decades
is very likely to have a meaningful effect on the timing and
distribution of precipitation and evaporation rates, which will, in
turn, have a substantial impact on freshwater supplies. That we do not
know with any precision the when, where, and how much does not change
the fact that we are quite certain that such changes will occur.

“So-called climate “skeptics” make many valid points about the
weakness or unreliability of many individual arguments and studies on
climate. They also point out how policy advocates routinely exaggerate
the implications of various studies or the likely consequences of even
the most robust climate predictions. Economists and others have also
done important work questioning whether climate risks justify extreme
mitigation measures. But none of this changes the fact that the
cumulative evidence for a human contribution to present and future
climate changes, when taken as a whole, is quite strong. In this
regard, I think it is worth quoting something Ilya wrote below about
the nature of evidence in his post about 12 Angry Men”:

People
often dismiss individual arguments and evidence against their preferred
position without considering the cumulative weight of the other side’s
points. It’s a very easy fallacy to fall into. But the beginning of
wisdom is to at least be aware of the problem.

“The “divide
and conquer” strategy of dissecting each piece of evidence
independently can make for effective advocacy, but it is not a good way
to find the truth”

I  noted the following in response to Adler:

I think that there are many Austrians who understand WHY there might
be a climate change problem to which man contributes, as the atmosphere
is an open-access resource, in which there are no clear or
enforceable property rights that rein in externalities or that give
parties with differing preferences an ability to engage in meaingful
transactions that reflect those preferences. 

But, flawed human beings that we are, we have difficulty truly
keeping our minds open (subconscious dismissal of inconsistent data is
a cognitive rule) and we easily fall into tribal modes of conflict that
provide us with great satisfaction in disagreeing with those evil
“others” while circling the wagons (and counting coup) with our
brothers in arms.

Sadly, this is very much in evidence in the thread to your own post.

5. I have pulled together a post that indicates that a number of libertarians are trying to engage in good faith on climate change, and which may also serve as a good introduction for interested readers to libertarian thinking on environmental issues.

6. Finally, let me note that many of the problems that concern libertarians also concern progressives, chief of these being the negative effects of state actions on communities, development and on open-access (and hitherto local, indigenous-managed) commons.  This is the same concern that the Nobel Prize committee expressed when extending the prize in Economics to Elinor Ostrom, signalling their desire for a change in international aid policy.

You might find these remarks by Nicholas Hildyard, Larry Lohmann, Sarah Sexton and Simon Fairlie in “Reclaiming the Commons” (1995) to be pertinent; domestic cap-and-trade is an enclosure of the atmospheric commons, for the benefit of firms receiving grants of permits and costs flowing regressively to energy consumers, and internationally represents a vast expansion of state authority and bureaucracies, with attendant enclosure of local resources:

The creation of empires and states, business conglomerates and
civic dictatorships — whether in pre-colonial times or in the modern
era — has only been possible through dismantling the commons and
harnessing the fragments, deprived of their old significance, to build
up new economic and social patterns that are responsive to the
interests of a dominant minority. The modern nation state has been
built only by stripping power and control from commons regimes and
creating structures of governance from which the great mass of humanity
(particularly women) are excluded. Likewise, the market economy has
expanded primarily by enabling state and commercial interests to gain
control of territory that has traditionally been used and cherished by
others, and by transforming that territory – together with the people
themselves – into expendable “resources” for exploitation. By enclosing
forests, the state and private enterprise have torn them out of fabrics
of peasant subsistence; by providing local leaders with an outside
power base, unaccountable to local people, they have undermined village
checks and balances; by stimulating demand for cash goods, they have
impelled villagers to seek an ever wider range of things to sell. Such
a policy was as determinedly pursued by the courts of Aztec Mexico, the
feudal lords of West Africa, and the factory owners of Lancashire and
the British Rail as it is today by the International Monetary Fund or
Coca-Cola Inc.

Only in this way has it been possible to convert peasants into
labour for a global economy, replace traditional with modern
agriculture, and free up the commons for the industrial economy.
Similarly, only by atomizing tasks and separating workers from the
moral authority, crafts and natural surroundings created by their
communities has it been possible to transform them into modern,
universal individuals susceptible to “management”. In short, only by
deliberately taking apart local cultures and reassembling them in new
forms has it been possible to open them up to global trade.[FN L.
Lohmann, ‘Resisting Green Globalism’ in W. Sachs (ed), Global Ecology:
Conflicts and Contradictions, Zed Books, London and New Jersey, 1993.]

To achieve that “condition of economic progress”, millions have
been marginalized as a calculated act of policy, their commons
dismantled and degraded, their cultures denigrated and devalued and
their own worth reduced to their value as labour. Seen from this
perspective, many of the processes that now go under the rubric of
“nation-building”, “economic growth”, and “progress” are first ad
foremost processes of expropriation, exclusion, denial and
dispossession. In a word, of “enclosure”.

Because history’s best-known examples of enclosure involved the
fencing in of common pasture, enclosure is often reduced to a synonym
for “expropriation”. But enclosure involves more than land and fences,
and implies more than simply privatization or takeover by the state. It
is a compound process which affects nature and culture, home and
market, production and consumption, germination and harvest, birth,
sickness and death. It is a process to which no aspect of life or
culture is immune. ..,

Enclosure tears people and their lands, forests, crafts,
technologies and cosmologies out of the cultural framework in which
they are embedded and tries to force them into a new framework which
reflects and reinforces the values and interests of newly-dominant
groups. Any pieces which will not fit into the new framework are
devalued and discarded. In the modern age, the architecture of this new
framework is determined by market forces, science, state and corporate
bureaucracies, patriarchal forms of social organization, and ideologies
of environmental and social management.

Land, for example, once it is integrated into a framework of
fences, roads and property laws, is “disembedded” from local fabrics of
self-reliance and redefined as “property” or “real estate”. Forests are
divided into rigidly defined precincts – mining concessions, logging
concessions, wildlife corridors and national parks – and transformed
from providers of water, game, wood and vegetables into scarce
exploitable economic resources. Today they are on the point of being
enclosed still further as the dominant industrial culture seeks to
convert them into yet another set of components of the industrial
system, redefining them as “sinks” to absorb industrial carbon dioxide
and as pools of “biodiversity”. Air is being enclosed as economists
seek to transform it into a marketable “waste sink”; and genetic
material by subjecting it to laws which convert it into the
“intellectual property” of private interests.

People too are enclosed as they are fitted into a new society where
they must sell their labour, learn clock-time and accustom themselves
to a life of production and consumption; groups of people are redefined
as “populations’, quantifiable entities whose size must be adjusted to
take pressure off resources required for the global economy. …

enclosure transforms the environment into a “resource” for national or
global production – into so many chips that can be cashed in as
commodities, handed out as political favours and otherwise used to
accrue power. …

Enclosure thus cordons off those aspects of the environment that are
deemed “useful” to the encloser — whether grass for sheep in 16th
century England or stands of timber for logging in modern-say Sarawak
— and defines them, and them alone, as valuable. A street becomes a
conduit for vehicles; a wetland, a field to be drained; flowing water,
a wasted asset to be harnessed for energy or agriculture. Instead of
being a source of multiple benefits, the environment becomes a
one-dimensional asset to be exploited for a single purpose – that
purpose reflecting the interests of the encloser, and the priorities of
the wider political economy in which the encloser operates….

Enclosure opens the way for the bureaucratization and enclosure of
knowledge itself. It accords power to those who master the language of
the new professionals and who are versed in its etiquette and its
social nuances, which are inaccessible to those who have not been to
school or to university, who do not have professional qualifications,
who cannot operate computers, who cannot fathom the apparent mysteries
of a cost-benefit analysis, or who refuse to adopt the forceful tones
of an increasingly “masculine” world.

In that respect, as Illich notes, “enclosure is as much in the
interest of professionals and of state bureaucrats as it is in the
interests of capitalists.” For as local ways of knowing and doing are
devalued or appropriated, and as vernacular forms of governance are
eroded, so state and professional bodies are able to insert themselves
within the commons, taking over areas of life that were previously
under the control of individuals, households and the community.
Enclosure “allows the bureaucrat to define the local community as
impotent to provide for its own survival.”[FN I Illich, ‘Silence is a
Commons’, The Coevolution Quarterly, Winter 1983.] It invites the
professional to come to the “rescue” of those whose own knowledge is
deemed inferior to that of the encloser.

Enclosure is thus a change in the networks of power which enmesh
the environment, production, distribution, the political process,
knowledge, research and the law. It reduces the control of local people
over community affairs. Whether female or male, a person’s influence
and ability to make a living depends increasingly on becoming absorbed
into the new policy created by enclosure, on accepting — willingly or
unwillingly — a new role as a consumer, a worker, a client or an
administrator, on playing the game according to new rules. The way is
thus cleared for cajoling people into the mainstream, be it through
programmes to bring women “into development”, to entice smallholders
“into the market” or to foster paid employment.[FN P. Simmons, ‘Women
in Development’, The Ecologist, Vol. 22, No.1, 1992, pp.16-21.]

Those who remain on the margins of the new mainstream, either by
choice or because that is where society has pushed them, are not only
deemed to have little value: they are perceived as a threat. Thus it is
the landless, the poor, the dispossessed who are blamed for forest
destruction; their poverty which is held responsible for
“overpopulation”; their protests which are classed as subversive and a
threat to political stability. And because they are perceived as a
threat, they become objects to be controlled, the legitimate subjects
of yet further enclosure. …

People who would oppose dams, logging, the redevelopment of their
neighbourhoods or the pollution of their rivers are often left few
means of expressing or arguing their case unless they are prepared to
engage in a debate framed by the languages of cost-benefit analysis,
reductionist science, utilitarianism, male domination — and,
increasingly, English. Not only are these languages in which many local
objection — such as that which holds ancestral community rights to a
particular place to have precedence over the imperatives of “national
development” — appear disreputable. They are also languages whose use
allows enclosers to eavesdrop on, “correct” and dominate the
conversations of the enclosed. …

Because they hold themselves to be speaking a universal language,
the modern enclosers who work for development agencies and governments
feel no qualms in presuming to speak for the enclosed. They assume
reflexively that they understand their predicament as well as or better
than the enclosed do themselves. It is this tacit assumption that
legitimizes enclosure in the encloser’s mind – and it is an assumption
that cannot be countered simply by transferring what are
conventionbally assumed to be the trappings of power from one group to
another….

A space for the commons cannot be created by economists,
development planners, legislators, “empowerment” specialists or other
paternalistic outsiders. To place the future in the hands of such
individuals would be to maintain the webs of power that are currently
stifling commons regimes. One cannot legislate the commons into
existence; nor can the commons be reclaimed simply by adopting “green
techniques” such as organic agriculture, alternative energy strategies
or better public transport — necessary and desirable though such
techniques often are. Rather, commons regimes emerge through ordinary
people’s day-to-day resistance to enclosure, and through their efforts
to regain livelihoods and the mutual support, responsibility and trust
that sustain the commons.

That is not to say that one can ignore policy-makers or
policy-making. The depredations of transnational corporations,
international bureaucracies and national governments cannot be allowed
to go unchallenged. But movements for social change have a
responsibility to ensure that in seeking solutions, they do not remove
the initiative from those who are defending their commons or attempting
to regenerate common regimes — a responsibility they should take
seriously.

Might there be good reason NOT to rush into a vast expansion of government world-wide?

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 own work.

1.   Too Many or Too Few People? Does the market provide an answer?, Sep 28 2007:

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 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
correspondingly 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
contributes 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.

2.    Using the State to solve common resource problems?, Oct 12 2007:

How exactly do you transfer commons into private ownership in a fair way, even for easily divided up stuff like land?

Libertarians do not insist that open-access resources (or common
property resources/CPR) be divided up by creating individual property
rights; cooperative ownership  via formal agreements or informally
developed practices and customs (such those developed by Maine
lobstermen, English angling clubs, indigenous peoples and Wikipedia and
online communities) may work better at solving the prisoners’ dilemma
issues and are just as acceptable.

But technological advances and greater demand often swamp CPR
regimes, so such regimes remain vulnerable if they are not accorded
legal protection. My understanding of the UK enclosures in this regard
is that they were actually a legislative theft of common property by
the powerful.

Can states play positive roles in solving problems? At least
internally, it is rather clear that the answer is that the state works
best by allowing, and providing judicial mechanisms to enforce, private
transactions, and works least well when it tries to specify detailed
and rigid “solutions” itself – since the government itself never has
perfect information, often plays favorites and once a regulatory regime
is put in place, parties have no ability to work out their differences
directly with each other, but are forever in the position of trying to
influence the state and in adversarial positions vis-a-vis each other. 
But states can also play a positive role by disseminating information
and by acting to facilitate deals between various resources users,
particularly in cross-border/multi-state problems.

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

[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

Technology seems to provide us ability to create property rights regimes in ocean fisheries.

The
stickiest problems are those where the resource is located in a country
where we cannot ourselves create or enforce legal rights and in the
atmosphere, which no one owns and to which all have access. 
Unfortunately, many libertarians don’t even want to acknowledge, much
less discuss, these problems. Since they are not confined to any one
country, clearly we need to coordinate with others – for which
purposes our state apparatus cannot be avoided.

Reaching any kind of effective solution for problems of this type
will require much more focussed attention and bridge-building (abroad
and at home), and if libertarians do not want to be part of the
discussion, clearly they will have little influence on the results.

3.    Sophomoric optimism?, Oct 16 2007:

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 http://conservationcommons.org/media/document/docu-wyycyz.pdf

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.”

http://mises.org/humanaction/chap23sec6.asp

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.

http://mises.org/daily/1760

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.   http://www.fee.org/publications/the-freeman/article.asp?aid=4064

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

4.    Ron Bailey of Reason congratulates Al Gore , Oct 15 2007:

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.”
http://www.reason.com/blog/show/113924.html

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.
Ostrom: http://conservationcommons.org/media/document/docu-wyycyz.pdf
Yandle: http://www.fee.org/publications/the-freeman/article.asp?aid=4064

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 the 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.    Not Climate Change Welfare, But Capitalism and Free Markets, Jan 22 2008:

[F]ar from “forc[ing] rich countries to become poor”,
figuring out how to manage a global commons like the atmosphere, while
it may have the effect of imposing a cost on the release of carbon, is
basically aimed at privatising externalities, with the intention of
increasing the efficiency of private transactions and net wealth.  Climate
change is, of course, just one of a broad range of pervasive problems
that occur when markets encounter resources that are not clearly or
effectively owned or managed.  http://mises.org/Community/blogs/tokyotom/archive/2007/09/28/too-many-or-too-few-people-does-the-market-provide-an-answer.aspx

3.  Most importantly, while Lockitch correctly diagnoses the illness
– poor countries need to “embrace free markets and private property
rights and attract the investment of profit-seeking entrepreneurs to
create wealth and drive economic growth” – he simply fails to address what wealthy nations SHOULD be doing, if anything, to assist the cure.  This,
of course, is the main dodge, because Lockitch fails to own up to the
true difficulties involved in trying to help the developing nations. 

Trying to build “soft” infrastructure in the form of rule of
law and property rights (ending kleptocracy and theft of “public”
resources) is tremendously difficult – perhaps a problem that is even
more difficult than the wealthy nations deciding how to share the pain
of GHG reductions (as I noted in comments to a post on Amazonian deforestation here: http://sciencepolicy.colorado.edu/prometheus/archives/climate_change/001043lahsen_and_nobre_20.html)  Heck,
the wealthy nations have a hard enough time doing the easiest things to
speed development of poorer nations, which is simply to open import
markets by removing domestic tariffs, import restrictions and subsidies. 
Rather, it seems that the richer nations have to feed their more
powerful elites first, while hamstringing competition from poorer
nations in products for which they should be able to exploit a
comparative advantage.  If Lockitch was truly interested in
helping the poor of developing nations, you’d think he’d note how
enduring rent-seeking at home serves to keep the poorer nations down.

And if the wealthy nations should do something to help
poorer nations, which seems implicit in Lockitch’s analysis (if not
conventional aid, then aid to build soft, governance infrastructure),
then can’t some of those efforts easily dovetail with efforts to
establish carbon pricing in the wealthy countries?  Why couldn’t aid
budgets be funded by carbon taxes at home, for example?  And can’t
demand for “carbon credits” help to establish incentives to improve
governance infrastructure in poorer nations?  In other words,
“mitigation” (efforts to limit climate change) in developed
nations need not conflict with any efforts to help poorer
nations “adapt” to climate change or otherwise become wealthier.

4.  Lockitch asserts that the concern of enviros for the world’s
poor is “feigned”, but this is a cheap and unproductive ad hominem –
and one that can easily be turned around.  While some enviros may not
understand the institutional sicknesses that hinder development, this
illness has been fed much more by governments and corporations at home
than by enviros, many of who have been involved in the long,
hard effort to build local infrastructure and to protect traditional
private and community property rights. 

On the other hand, just what is it that evidences that
Lockitch himself – or other skeptics – have any “real” concern for the
world’s poor?  Does the wheel of this concern ever hit the road, or is
it simply spinning noisily, to welcoming nods from  domestic special
interests who benefit from the continuation of climate externalities?

A key insight of Austrian economics relating to the environment is that man does not harm the environment per se, but that social
welfare or efficiency problems arise because of interpersonal conflict
associated with irresolvable inefficiencies – inefficiencies that
cannot find a solution in the entrepreneurial workings of the market
process because of institutional defects associated with the
lack of clearly defined or well enforced property rights.  (See Roy
Cordato, http://mises.org/daily/1760). 
It is both ironic and disappointing that many Austrians and others
similarly minded, rather than focussing on the difficult task of
conflict resolution in the case of the climate, seem to prefer the
emotional rush of conflict itself over analysis and bridge- and
consensus-building.  But this is nothing new (and is certainly
tempting, given our tribal nature)(http://mises.org/Community/blogs/tokyotom/archive/2007/12/17/holiday-joy-quot-watermelons-quot-roasting-on-an-open-pyre.aspx). 

No one owns the world’s atmosphere, so all are entitled to
their opinions about managing it.  And clearly the world continues to
struggle with the rapid exploitation of other unowned, “public” or
poorly defined or protected physical resources, in the face of growing
populations, growing markets and technological advances that lower the
costs of access to the commons.  I suggest that rather than ad
hominems, we would be better served by frankly acknowledging problems
of this nature and starting to build shared understandings.  The writings of Elinor Ostrom are a good place to start:  http://www.conservationcommons.org/media/document/docu-7e8akm.pdf

In honestly engaging on these issues, it is perfectly
appropriate – nay, essential – to be aware of the self-interests of
various participants and to caution against the problems of
rent-seeking, “rent-farming” by politicians, and frequently unaligned
incentives of bureaucracies.

5.  Finally, this is a quibble, but Lockitch is wrong to assert thay developing nations need to “industrialize”.  What they need to do is to better govern themselves by protecting investments, markets and human rights, and then getting out of the way of their people. 
What results will be these countries’ own path, which will naturally
differ from Western industrialization (leapfrogging it in some ways).

6.   Rob Bradley cheers on coal, but are all those who want to better manage commons and environmental impacts “Malthusian” idiots, or only in the case of coal?, Feb 5 2009:

Rob Bradley has a new post up at MasterResource, cheering on big (and now “clean”) coal, which has apparently received assurances from the Obama administration – after being bad-mouthed by NASA scientist Jim Hansen, Steven Chu and Obama himself – that, despite pressures from the “Malthusian anti-energy crusade” regarding climate change impacts, the recent massive TVA fly-ash spill and opposition to destructive mountaintop removal practices in Appalachia, coal will remain profitable during Obama’s term and central to US energy supplies.  Hooray!

But I wasn’t quite clear on all of Rob’s message, so I asked him a few questions in the comment thread:

Rob, are the John Badens, Terry Andersons, Bruce Yandles, Elinor Ostroms
and others who want to find ways to manage our commons better – by
improving ownership, incentives and pricing signals – also part of a[n
evil] “Malthusian crusade”?

I just wanna make sure I know who to hate.

As for that big fly-ash breach/spill in
Tennessee, I’m glad that you didn’t point out how this was a result of
government ownership of TVA, with the added benefit that costs will be
borne not only by direct and indirect victims, but by taxpayers as
well. No sense in pointing out how government is so often in the way,
particularly if it detracts from our “we hate enviros!” message. Last
thing we ever want to do is to reach a shared understanding with
enviros of the institutional underpinnings of problems, since that
means our funders might lose some of their fairly purchased,
government-given special privileges.

While it’s clear that “free-market” Rob cares little about whether the coal industry continues
commercial activities that shift the environmental costs and risks
(including potential costs arising from GHG emissions) to others,
I forgot to ask Rob whether, as a hearty cheerleader for those poor
coal underdogs, he also supports their position that the government
should subsidize their change in business model by (a) having Uncle Sam pay the bulk of capital costs for IGCC (integrated gas combined cycle plant) [something like $1 billion for the first one with CCS], (b) giving them a further break (reduced royalties) on the sweet deals they already have
for stripping coal from public lands and (c) – now that the federal
government is getting into the busy of running the financial sector –
making sure that power producers that want to use coal have easy access
to credit, by twisting the arms of those uppity Wall Street financiers
who with their fancy new “Carbon Principles” and “Enhanced Due Diligence” seem a bit too reluctant to extend credit for coal-fired power plants.

Here’s hoping Rob weighs in further.  I want to make sure I’m not
messing up when I try to distinguish the “white hats” from the “black
hats”.   From what I can tell so far, seeking to manipulate government
policy for your own benefit is evil – as long as you’re not a coal
firm – and we call the evil ones “Malthusians”.  Right?

7.     More stupid from Tierney; this time on “Kuznets curve” and the dynamics of “wealthier and greener”, May 12 2009:

Tierney seems to believe that the Kuznets curve means that greater
wealth magically makes for a cleaner environment.  To the contrary, it
is the hard work of people, expressing their desires to protect their
own property and to realize other preferences regarding shared
resources, to increase wealth by finding means (property rights
institutions, litigation and government regulation) to end tragedy of
the commons-type situtations, who improve their environment.  That is, working to close externalities leads to both wealthier and greener societies.  

(I`ve remarked on the Kuznets curve before; interestingly, conservatives seem to misunderstand it more than liberals.)

So
I tried to offer a more libertarian understanding, which I`ve taken the
liberty of memorializing here (with typo correction and emphasis and
further links added):

Andrew, food for thought on enviro Kuznets:

http://mises.org/Community/blogs/tokyotom/search.aspx?q=kuznets
http://mises.org/Community/blogs/tokyotom/archive/2008/01/22/poor-countries-need-capitalism-not-climate-change-welfare.aspx
http://mises.org/Community/blogs/tokyotom/archive/2007/09/27/too-many-or-too-few-people-does-the-market-provide-an-answer.aspx

Unfortunately, Tierney simply fails to understand that the enviro
Kuznets curve does not tell us that problems relating to environmental
cost-shifting or to the over-exploitation of unowned commons are best
resolved by ignoring them and simply hoping for the best. Rather, it
affirms that as people become more wealthy, they care more about
protecting the environment and put more elbow grease into achieving
improvements – via improved property rights protection, improved
information disclosure, greater consumer pressure and even through
greater regulation (which is the path the West has largely followed),
and reaching agreements with others sharing the relevant resource).

In other words, the work relating to global, regional and various
national commons (atmosphere, seas, forests, water, etc.) is still
ahead of us. Libertarians can advocate for property rights (and
privatization of public lands) as ways to have a more efficient (and
just) path on the curve, or they provide implicit support for powerful
and dirty industries by standing by and waiting until citizen pressure
groups force government to act in heavy-handed ways.

April 22, 2009 at 2:11 pm

•  
  • Andrew. I suggest that you start with this short article by Yandle.

    I have plenty more links on my blog to him, Terry Anderson, Mises, Cordato, Block, Rothbard and others on Austrian approaches to environmental issues, fisheries, and climate. Ron Bailey (at Reason) has good posts on fisheries; leading enviro groups all agree that more privatization is desirable:http://mises.org/Community/blogs/tokyotom/archive/2009/01/15/for-crashing-fisheries-coalition-of-mainline-us-enviro-groups-calls-for-property-rights.aspx

    Commons remain commons either because government ownership
    prevents privatization (as in the Amazon, US public lands and most
    fisheries management) or because full privatization is difficult. There
    are many examples of the latter case that involve semi-privatization
    and commons management, like traditional forestries, fisheries and water rights. Elinor Ostrom is the expert on commons; I have plenty of links to her too. …

    
    
  • April 23, 2009 at 2:48 am

    People and firms invest all the time in doing
    things in response to incentives, both positive and negative; viz. they
    also try to reduce costs, including the costs their activities impose
    on others if those they injured have rights of recourse. The effort to
    reduce costs is one of the chief factors driving technological advances.

    Surely you`re not suggesting that the best way to encourage
    wealthier societies is to free people from responsibility for the
    damages they cause others? That`s hardly a Lockean or libertarian view.
    A “Laissez Faire approach” leaves government out, in favor of voluntary
    transactions and enforecment of property rights, including rights not
    to be injured. The regulatory state has in fact been a boon to the most
    powerful producers, by giving them rights to pollute, often
    grandfafthering dirty plants, while forcing the highest costs on more
    nimble and cleaner producers. If you^re interested in learning
    about libertarian approaches to the environment, again, I suggest you
    look at Rothbard, Cordato, Block and others, whom I link to on my blog.

    You seem to make reference to the enviro Kuznets curve, and how
    wealthier societies bring pollution dow, while completely missing the
    dynamics. Wealthier societies clean up because they insist on
    bringing an end to tragedy of the commons-type exploitation of
    resources. A society that focusses on property rights typically has a
    lower curve than societies that fail to enforce property rights (needed
    for Coasean bargaining) in favor of government regulatory approaches.
    Our own curve remains too high, because wealthier investors prefer to
    use regulation to shift costs to the rest of society.

8.   Libertarians to lefty-enviros: without community-based property rights, sustainable fisheries are impossible, May 11 2009:

Elinor Ostrom has
also been a leader in documenting the ways that a community of users
(NOT the dread and sloppily misused “soc-ial-ism”) may effectively
manage a shared resource.

Readers might be interested in the World Bank`s Oct 2008 report, “The Sunken Billions; The Economic Justification for Fisheries Reform”.

With support from the World Bank, PERC is in the middle of hosting a conference
on approaches to sustainable fisheries (and on ending the massive
over-harvesting and wasted subsidies and mal-investment under current
regulatory approaches).

I also urge readers to look at what the organization Defying Ocean’s End (co-founded by Conservation International, The Nature Conservancy, Natural Resources Defense Council, The Ocean Conservancy, Wildlife Conservation Society, The World Conservation Union, and World Wildlife Fund) has to say about protecting fish:

“Most of the solutions that have been
implemented or proposed to fix the world’s fisheries center on
command-and-control measures: regulators or courts telling fishermen
how to fish through the imposition of controls on effort (e.g., fishing
vessel length, engine horsepower, gear restrictions, etc.).
Prescriptions like these work against strong economic incentives for
maximizing catch, which are not addressed by such measures, and are of
course usually resisted by fishermen. Often, prescriptions create
incentives for “work-arounds” and set up a cat-and-mouse game between
fishermen and regulators – for example, if regulators impose a
restriction on vessel size, fishermen may purchase two vessels to
maintain high catch levels.

“As in most natural resource
problems, more effective solutions will address the fundamental drivers
of unsustainable fisheries. In this case, the key necessary reform will
be to designate secure catch privileges. It is important to understand
that such privileges can be allocated to different kinds of entities in
different ways, and indeed, they should be tailored to specific
fisheries and communities to fit with local customs, traditions,
values, and social structure.”

I`ve linked a number of my other posts on fisheries here.

9.   The tragedy of the panicked enviro II; understanding the “tragedy of the commons”, Aug 29 2009:

Sure,
the Western
world has managed to create many environmental problems, but we`ve
largely cleaned up our own messes, haven`t we?  While it by no means
excuses our own faults, far worse environmental problems have been
created and are still stewing in Russia and other state-directed
economies, and it`s no coincidence that the vast pollution being
created in China and India are tied to governement-owned enterprise and
an inability of injured people to sue for damages or to stop harmful
activities.  And the great waves of extinctions created as man spread
around the globe tens of thousands of years ago can hardly be laid at
the foot of either the Western world or of private property rights (nor
can the collapse of earlier civilizations).

The
“tragedy of the commons” is NOT a “simplistic market morality”, but a
description of cooperation problems and incentives relating to shared,
open-access resources.  The tragedy of the commons and problems of
cooperation – and theft – are not even limited to mankind, but permeate
nature.  This perceptive article by Bruce Yandle touches on competition
in nature, and links the ascendance of man to our evolution of
relatively enhanced cooperation:
http://www.thefreemanonline.org/featured/the-commons-tragedy-or-triumph/

The
“tragedy of the commons” paradigm is useful to analyze, but the
paradigm doesn`t “seek to moderate” anything, and is just as useful in
looking at the ways Western nations still contribute to environmental
problems around the world (as I point out here:
http://mises.org/Community/blogs/tokyotom/archive/2007/09/28/too-many-or-too-few-people-does-the-market-provide-an-answer.aspx) as it is in examining:

– environmental devastation in Haiti (which has little or no property rights, and vast free-for-all “government” holdings),

–
deforestation in Indonesia and the Amazon:
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,

– pollution in China: http://mises.org/Community/blogs/tokyotom/search.aspx?q=china, and

–
crashing fisheries around the world as a result of government of marine
resources (producing free-for-alls and fleet subsidies) and a
free-for-all for other unowned or unprotected resources:
http://mises.org/Community/blogs/tokyotom/search.aspx?q=fish.

You
say: “The rate of exploitation and the decline
of resources, water, energy, fisheries, soil, minerals, etc., all
occured under a free market, private property paradigm.”  This is
clearly demonstrably wrong, and draws entirely the wrong lessons. While
private property is certainly no panacea, neither are they what is
wrong.  Very often, is is governments that have been and are wrong,
though there is certainly some learning going on.

While
Garrett Hardin`s “The Tragedy of the Commons” certainly represents a
hypothetical situation, it is actually a very powerful analytical tool
for understanding and fashioning solutions to countless “real life”
problems. See Elinor Ostrom et al., Revisiting the Commons: Local Lessons, Global Challenges, Science, 04/09/99 http://conservationcommons.org/media/document/docu-wyycyz.pdf

“In real life,
corporations own, or vie to own, resources or access to them for the
purpose of extraction and profit and they seek to maximize profits
through economies of scale, that is industrial extraction methods,
drift netting, blowing up mountains, tossing mining waste into clear,
pristine lakes.“

What
you describe here is a conflict between preferences over how resources
are used.  Do you prefer a free-for-all, or a situation where those who
use a resource can protect it, negotiate with others who wish to see
other values preserved, and who are responsible for negative
consequences caused to others (not always a part of some property
rights systems), or perhaps a situation where governments make all
resource exploitation decisions?”

“The money is in the resource and when the resource is
exhausted they will move on to the next one.”

The
money is never in the “resource”, but in the ways that people can use
it or otherwise value it (and of course people also value pristine
environments).

10.  Tragedy of the panicked enviro III: learning from Elinor Ostrom about cooperative action, Aug 29 2009:

Let me add some further nuance to Mr. Worstall`s comment by saying
that Hardin`s fertile observations have fuelled extensive further
research on common property problems, with Elinor Ostrom being recognized as a leading light.

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

Ostrom
has refined Hardin`s work in the following way (quoting from a review
of Ostrom`s 1990 ground-breaking and extensively researched book, GOVERNING THE COMMONS, The Evolution of Institutions for Collective Action):

Ostrom uses the term “common pool resources” to denote natural
resources used by many individuals in common, such as fisheries,
groundwater basins, and irrigation systems. Such resources have long
been subject to overexploitation and misuse by individuals acting in
their own best interests. Conventional solutions typically involve
either centralized governmental regulation or privatization of the
resource. But, according to Ostrom, there is a third approach to
resolving the problem of the commons: the design of durable cooperative
institutions that are organized and governed by the resource users
themselves.

“The central question in this
study,” she writes, “is how a group of principals who are in an
interdependent situation can organize and govern themselves to obtain
continuing joint benefits when all face temptations to free-ride,
shirk, or otherwise act opportunistically.”

The
heart of this study is an in-depth analysis of several long-standing
and viable common property regimes, including Swiss grazing pastures,
Japanese forests, and irrigation systems in Spain and the Philippines.
Although Ostrom insists that each of these situations must be evaluated
on its own terms, she delineates a set of eight “design principles”
common to each of the cases. These include clearly defined boundaries,
monitors who are either resource users or accountable to them,
graduated sanctions, and mechanisms dominated by the users themselves
to resolve conflicts and to alter the rules. The challenge, she
observes, is to foster contingent self-commitment among the members ….

Throughout the book, she stresses the dangers of overly
generalized theories of collective action, particularly when used
“metaphorically” as the foundation for public policy. The three
dominant models — the tragedy of the commons, the prisoners’s dilemma,
and the logic of collective action — are all inadequate, she says, for
they are based on the free-rider problem where individual, rational,
resource users act against the best interest of the users collectively.
These models are not necessarily wrong, Ostrom states, rather the
conditions under which they hold are very particular. They apply only
when the many, independently acting individuals involved have high
discount rates and little mutual trust, no capacity to communicate or
to enter into binding agreements, and when they do not arrange for
monitoring and enforcing mechanisms to avoid overinvestment and overuse.

Ostrom
concludes that “if this study does nothing more than shatter the
convictions of many policy analysts that the only way to solve common
pool resource problems is for external authorities to impose full
private property rights or centralized regulation, it will have
accomplished one major purpose.”

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 and

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

One
thing worth noting is that the historical and ongoing records are rife
with examples – such as our crashing local fisheries – where government
intervention has done more harm than good.  In these cases and in
others, Ostrom introduces an analytical approach that is acceptable
widely across the political spectrum, even if differences in opinion
will remain.  See, for example, this discussion at libertarian-leaning
George Mason U:  http://www.theihs.org/bunnygame/

[Well, the Mises server just swallowed my first attempt at this post, so the reader will just have to suffer this sketchier one.]

I have been chasing both Gene Callahan and Bob Murphy to try to get them to spell out what they mean when they assert that there is an “objective moral order” in the universe; until recently Bob has been by far the most congenial, as well as evidencing more interest in discussing the subject, but he has just thrown in the towel for the time being, after conceding that “to say morality is objective doesn’t necessarily mean that ‘the same rules’ apply to everybody” and that he has no good answers my questions as to whether the objective moral order applies to all creatures and to all men regardless of age, gender and mental development.

On the other hand, I have agreed that man has an exquisite moral sense, and have argued that our moral sense and capacity are something that we acquired via the process of evolution, as an aid to intra-group cooperation and conflict with out-groups. Similar arguments have been made

– by Bruce Yandle,

– by Roy Rappaport (former head of the American Anthropology Assn.) in his book “Ritual and Religion in the Making of Humanity” (which I have discussed here) and

– by David Sloan Wilson in his book “Darwin`s Cathedral: Evolution, Religion, and the Nature of Society“.

However, Bob did point to a related post by Gene Callahan in which Gene essentially argued that the “objective” moral truths rules that are embedded in the structure of the universe apply only to those creatures able to perceive the rules. In other words, not to ants – and perhaps not to other life forms or to humans whose age and mental development leave them incapable of perceiving the rules. 

I have received no response from Gene on my posts here (perhaps he hasn`t yet perceived them), but he did start to provide a little meat in a rather long threadjack at a totally unrelated blog post by Bob (TokyoTom Moving the Goalposts? – regarding my comments on the rush to sell poorly-understood science in the political marketplace). 

Since it`s a topic of interest but I don`t wish to continue the threadjack (and it`s difficult to follow there, given unrelated comments, and contains largely irrelevant ad homs/replies), I take the liberty of excerpting relevant portions here, and I respond further below.

1.  From Bob`s thread (unedited, with emphasis added):

Gene:

As you assert, right and wrong are all just subjective opinion, so, if I can profit from these impacts, why should I care? By your own principles, the fate f those poor schucks in Sri Lanka should mean nothing to me.

TT:

Again you misunderstand my principles. But the glory of the world, of course, is that you get to base your behavior on your own principles (and objective truths as you perceive them), not mine, as well as on any moral pressure you might feel from the broader community in which you dwell.

Gene:

I am not saying you actually think it is merely a subjective matter whether or not millions die in a man-made tsunami, etc. In fact, you correctly think that such a thing is objectively wrong. For the third time, I will say that what I am saying in posts like this is not what I think your views are, but what by logic you ought to think, given your rejection of objective moral truths. I am pointing out that you’re position is inconsistent, and therefore incoherent: You claim not to believe in objective moral truth, and yet you make arguments that depend on the existence of what you deny.

TT:

– I have not so much “claim[ed] not to believe in objective moral truth” as to note that G.C. has singularly failed to explain what he means by his statement or to offer any support to for. Proof of this is not only in GC`s threads, but in the fact that Bob felt the need to re-open the subject himself.

– If I “make arguments that depend on the existence of what I deny”, then G.C. has failed to show it.

First, I have made it clear that not only to I believe that the material universe (of matter and energy) objectively exists, but that I believe that it has an underlying structure that we can strive to understand (and express mathematically) even as our understanding (and descriptions) of it will always be incomplete. Thus, an algorithm may or may not be an accurate description of the structure of the universe. In any case, the objective existence of a poorly-understood structure to the universe offers no support for the proposition that there is a moral order to the universe.

Further, G.C.　has argued that there is an object moral structure to the universe; I have argued that man has an exquisite inherited moral sense, and that we inherited this moral sense via evolution over eons because it provided benefits by allowing enhanced intra-group cooperation and reducing tragedies of the commons.

Accepting that man has a moral nature which is genetically based (but that is expressed differently in each individual and culture, and that is largely applied to in-group transactions but applied much more lightly in interactions with those outside our groups) does NOT depend on arguments that there is any universal moral order, applicable outside of man to all of Creation (or to such of Creation as may be conscious).

Sorry, but my arguments simply do NOT “depend on the existence of what I deny” – including arguments over whether or not G.C. has “behaved badly”, or arguments that man ought not to engage in actions that directly or indirectly harm others. Such things may be measured and tested based strictly on a study of human nature (which is objectively different from other animals and has an objective genetic base).

Gene:

“I have argued that man has an exquisite inherited moral sense, and that we inherited this moral sense via evolution over eons because it provided benefits by allowing enhanced intra-group cooperation and reducing tragedies of the commons.”

And so what? Either “enhanced intra-group cooperation” and “reducing tragedies of the commons” are objectively good things (and you’ve given up moral subjectivism), or you’ve gotten precisely nowhere.

Let’s say in the remote Amazon some group has evolved so that THEIR “exquisite moral sense” requires the smashing in of the infant’s skulls of whatever other tribe they meet. Then, through some fluke, they wind up in Tokyo and go on a skull-smashing rampage. Hey, well, that’s just the way their moral sense evolved, hey? You, by your own premises, are in absolutely no position to tell them what they are doing is wrong. In fact, since obviously my behaviour is a result of my evolutionary past, then if I am being “rude” to you, well, that’s just MY “exquisite moral sense,” isn’t it? Who are you to go saying my moral sense is wrong and yours is right, when clearly both are the product of the same evolutionary process!

So, although I realize that you do not understand that you pre-suppose that which you deny, you do. (In fact, we should suspect that anyone making such an error will pretty much always fail to recognize that they are making it, since no one can consciously embrace incoherence.)

2.  My further comments:

Ironically, it is Gene who is pre-supposing what my presuppositions and my objectives are. 

First, I can argue (though I haven`t made such a case) that it would be wrong if millions die in a man-made tsunami, without “think[ing] that such a thing is objectively wrong,” based on a moral code external to man. Rather, I can simply rely on my own values and those of the communities of which I am a member.

Likewise, I need not (and do not) make any arguments that either “enhanced intra-group cooperation” and “reducing tragedies of the commons” are “objectively good things”; I need merely to observe scientifically that man, like his cousin critters, has evolved, that he has a moral sense akin to, but more more highly developed than, patterns of reciprocal behavior in other animals (while more genetically identical communities of social insects cooperate even more closely), and to suppose that this moral sense of right and wrong and the related predilection towards the social development of norms and rules were evolutionarily ADVANTAGEOUS, by enhancing group cohesion while moderating internal frictions and behaviors that were costly to the group as a whole, better enabling the group to take advantage of resources in the environment and respond to challenges, including challenges by out-groups.

Gene suggests one must have “objective truths” to get somewhere, but that just tells us the HE has an agenda for man; rather than particularly trying to get SOMEWHERE I`m just applyng an evolutionary approach to figure out how we got HERE.

It`s a shame I lost my previous post on this, but I think it pretty clear that our “exquisite moral sense” is both highly developed and very two-faced (highly selective would be a more gentle expression): we act one way to members of our group (based on highly developed codes and bonding rituals that became religions as our groups grew larger), but generally act as if we have little or no obligations to outsiders, to whom we might very well be downright suspicious and hostile. Why would that be? Maybe because, like the chimpanzee bands that so famously disillusioned Jane Goodall, we`ve been engaged in murderous competition with rival bands from time immemorial.

While it`s possible to argue that man`s deliberate struggle through history has been one of extending the limits of those whom we need to be decent to from a small circle to all of mankind (or further, to pets, other animals, etc.) – and there have certainly been individuals who have made conscious efforts to do so – one may also see the “progress” in this direction as being the simple consequence of Darwinian struggles between different human groups and societies, with the societies that more successfully united their own peoples, seized opportunities and vanquished other groups (through a combination of defeat, elimination and inclusion). Religions and our moral sense have clear served as both weapons and tools in this process; the gods have served on both sides of most conflicts, at least until one won, frequently by putting the heathen to the sword. Thus, “moral progress” has frequently been bought by brutal blood-soaked violence in which the victors routinely failed to pay much attention to the morality of their own conduct toward the other – as has always been our nature.

Forced change can be seen in both in the US. Civil War in the case of slavery and in this anecdoctal quote regarding British attempts to stamp out the Hindi practice of ritual immolation of the wives of a deceased husband in India:

You say that it is your custom to burn widows. Very well. We also have a custom: when men burn a woman alive, we tie a rope around their necks and we hang them. Build your funeral pyre; beside it, my carpenters will build a gallows. You may follow your custom. And then we will follow ours.

Very seldom has such forced change been primarily motivated by a desire to bring about moral progress.

Persuasion and mass moral suasion can often work, as can be seen in the cases of ML King and the civil rights movement, as well as Ghandi`s efforts, particular when public opinion was mobilized. Gene has argued for this himself; while those arguing for change of course may feel united by religion and may employ appeals to the shared beliefs of others, no external “objective” moral order is needed for moral suasion to work.

Gene conjures up an Amazonian skull-smashing tribe at loose in Tokyo, but why look so far? The Japanese and the rest of the “modern” slaughters millions of unborn infants annually (and particularly females in China, India and the Middle East). The difference, of course, is that we are just doing it to ourselves, rather than having it inflicted on us by outsiders.

Gene is right to note that my rather cold-eyed observations about our remarkably self-serving moral sense might leave me in “absolutely no position to tell [Amazonian skull-smashers rampaging in Tokyo] what they are doing is wrong,” but so what? Gene is simply asking the wrong question. The Japanese do not need “objective” external moral standards to deal with such behavior; they need simply to STOP it. And make no doubt about; stop it they would FIRST, and then ask questions, and perhaps later, if time and a surviving Amazonian or two permits, they might attempt a discussion on moral issues. This of course is true of every community when faced with an attack; banding together in self-defense is virtually instinctive.

Gene might posit other, stickier situations, of which we face a bottomless pit. We have our tribal need for close groups, but have on large parts of the planet blessedly stilled the fraternal slaughter between rival societies. In larger societies, we face stresses between our attenuated bonds to others and our wish for close communities. On one front the religious bonds that united particular societies have frayed, but our urge for uniting bonds of ritual and belief remain, while on another we`ve managed to stir up more religious fundamentalism and distrust at home and abroad.

In all this, the desire for an objective set of universally binding moral rules that is floating around in the universe just waiting for everyone to become enlightened and to voluntarily submit to them is quite understandable, but obviously pie in the sky. I suggest that we try to work instead in understanding our own nature better and work at trying to persuade each other and to lessen tensions that may become murderous.

P.S. Gene`s error can be seen further in his comments about rude behavior. He thinks that taking a cultural, evolutionary view leaves one without a basis for criticism, so therefore I must unintentionally be relying on objective, external standards to criticize him. He`s got it precisely wrong – while clearly we ARE both “the product of the same evolutionary process”, my appeal is not to objective external standards, but to shared COMMUNITY standards (that can be objectively described). Further, by publicly arguing my position, I hope to marshal public support of the kind that he has himself usefully pointed out.

The questions are simply whether Gene and I actually share ANY communal bonds and obligations, what those obligations are, how they apply in this instance, and whether Gene cares what anyone else thinks.

What is ironic is to see someone like Gene who so clearly wants to see a better world take the position that “objective” moral standards permit such lack of concern for how he treats others and how such treatment is perceived. But an evolutionary thinker would simply see it as more evidence for the remarkable moral flexibility that the Creator has endowed us with.

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 most of the points I would wish to make. Except for this
one: you clearly do not understand what Hardin was saying about the
tragedy of the commons. For example, he made very clear that there are
two possible solutions to the degradation of an open access resource.
We can have social (socialist) regulations and limitations or we can
have private (capitalist) property solutions. Those are his
descriptions BTW. Which works best depends upon the society and the
resource. He emphatically did NOT say that pricvate property sultions
were the only ones possible. And nor does any economist say that
private property solutions are the only ones either possible or
desirable. Try reading some Ronald Coase on transaction costs to see
why.

TokyoTom
Posted 10:03 pm
27 Aug 2009

Let me add some further nuance to Mr. Worstall`s comment by saying
that Hardin`s fertile observations have fuelled extensive further
research on common property problems, with Elinor Ostrom being recognized as a leading light.

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

Ostrom
has refined Hardin`s work in the following way (quoting from a review
of Ostrom`s 1990 ground-breaking and extensively researched book, GOVERNING THE COMMONS, The Evolution of Institutions for Collective Action):

Ostrom uses the term “common pool resources” to denote natural
resources used by many individuals in common, such as fisheries,
groundwater basins, and irrigation systems. Such resources have long
been subject to overexploitation and misuse by individuals acting in
their own best interests. Conventional solutions typically involve
either centralized governmental regulation or privatization of the
resource. But, according to Ostrom, there is a third approach to
resolving the problem of the commons: the design of durable cooperative
institutions that are organized and governed by the resource users
themselves.

“The central question in this
study,” she writes, “is how a group of principals who are in an
interdependent situation can organize and govern themselves to obtain
continuing joint benefits when all face temptations to free-ride,
shirk, or otherwise act opportunistically.”

The
heart of this study is an in-depth analysis of several long-standing
and viable common property regimes, including Swiss grazing pastures,
Japanese forests, and irrigation systems in Spain and the Philippines.
Although Ostrom insists that each of these situations must be evaluated
on its own terms, she delineates a set of eight “design principles”
common to each of the cases. These include clearly defined boundaries,
monitors who are either resource users or accountable to them,
graduated sanctions, and mechanisms dominated by the users themselves
to resolve conflicts and to alter the rules. The challenge, she
observes, is to foster contingent self-commitment among the members ….

Throughout the book, she stresses the dangers of overly
generalized theories of collective action, particularly when used
“metaphorically” as the foundation for public policy. The three
dominant models — the tragedy of the commons, the prisoners’s dilemma,
and the logic of collective action — are all inadequate, she says, for
they are based on the free-rider problem where individual, rational,
resource users act against the best interest of the users collectively.
These models are not necessarily wrong, Ostrom states, rather the
conditions under which they hold are very particular. They apply only
when the many, independently acting individuals involved have high
discount rates and little mutual trust, no capacity to communicate or
to enter into binding agreements, and when they do not arrange for
monitoring and enforcing mechanisms to avoid overinvestment and overuse.

Ostrom
concludes that “if this study does nothing more than shatter the
convictions of many policy analysts that the only way to solve common
pool resource problems is for external authorities to impose full
private property rights or centralized regulation, it will have
accomplished one major purpose.”

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 and

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

One
thing worth noting is that the historical and ongoing records are rife
with examples – such as our crashing local fisheries – where government
intervention has done more harm than good.  In these cases and in
others, Ostrom introduces an analytical approach that is acceptable
widely across the political spectrum, even if differences in opinion
will remain.  See, for example, this discussion at libertarian-leaning
George Mason U:  http://www.theihs.org/bunnygame/

The incessant calls for – and criticism of – government-funded/mandated “green/clean power” pork 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 (concerns underscored by the May 19 MIT study), while the other is concerned chiefly about the likelihood of heavy-handed mis-regulation and wasted resources.  This leaves the middle ground unexplored.

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

• concerns about climate change,
• the political deal in favor of dirty coal under the Clean Air Act, 
• the enduring role of the federal and state governments in owning vast coal fields (the royalties from which it does not distribute to citizens but go into the General Pork Pool), 
• the unwillingness of state courts, in the face of the political power of the mining industry, to protect persons and private from pollution and environmental disruption created by mining,
• the deep involvement of the government in developing, encouraging and regulating nuclear power,

the most obvious and proximate root cause is something that attracts far too little attention – the frustration of consumer demand for green energy, and the inefficient and inaccurate pricing and supply of electricity.  It`s prettty clear that the grant of public utility monopolies and the regulation of the pricing and investments by utilities greatly restrict 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 power consumers use by time of day or appliance.

With freer markets, we would see much more competition, better pricing, much more cost-saving (and conservation), and more money flowing into green power. So why is so little attention being paid to all of the gains that could be achieved from less – and more rational – power regulation?

Allow me to provide a few quotes and links to those interested:

1.  Lew Rockwell, President of the Ludwig von Mises Institute, “The Real Cause of Blackouts” (July 27, 2006):

Now, if markets were in charge, a heat wave would not be looked at as a problem but as an opportunity. Entrepreneurs would be swarming to meet demand, just as they do in every other sector that is controlled by markets. The power companies would be praying for heat waves! …

Just who is in charge of getting electricity to residents? A public utility, which, in the absurd American lexicon, means “state-run” and “state-managed,” perhaps with a veneer of private trappings. If you look at the electrical grid on a map, it is organized by region. If you look at the jurisdiction of management, it is organized by political boundaries.

In other ways, the provision of power is organized precisely as a central planner of the old school might plan something: not according to economics but according to some textbook idea of how to be “organized.” It is “organized” the same way the Soviets organized grain production or the New Deal organized bridge building.

All of centralization and cartelization began nearly a century ago, as Robert Bradley points out in Energy: The Master Resource, when industry leaders obtained what was known as a regulatory covenant. They received franchise protection from market competition in exchange for which they agreed to price controls based on a cost-plus formula — a formula that survives to this day.

Then the economists got involved ex post and declared that electrical power is a “public good,” under the belief that private enterprise is not up to the job of providing the essentials of life.

What industry leaders received from this pact with the devil was a certain level of cartel-like protection, the same type that the English crown granted tea or the US government grants first-class postal mail. It is a government privilege that subjects them to regulation and immunizes companies from business failure. It’s great for a handful of producers, but not so great for everyone else.

There are many costs. Customers are not in charge. They are courted only for political reasons but they are not the first concern of the production process. Entrepreneurial development is hindered. Our current system of electrical provision is stuck in time. Meanwhile, sectors that provide DSL and other forms of internet and telecommunication services are expanded and advancing day by day — not with perfect results but at least with the desire to serve consumers. …

How New York and California consumers would adore a setting in which power companies were begging for their business …. Competition would lead to price reductions, innovation, and an ever greater variety of services — the same as we find in the computer industry.

What we are learning in our times is that no essential sector of life can be entrusted to the state. Energy is far too important to the very core of life to be administered by a bureaucracy that lacks the economic means to provide for the public. How it should be organized we can’t say in advance: it should be left to the markets. …

What we need today is full, radical, complete, uncompromised deregulation and privatization. We need competition. That doesn’t mean that we need two or more companies serving every market (though that was common up through the 1960s). What we need is the absence of legal barriers to enter the market.

2.  Lynne Kiesling, Senior Lecturer in Economics at Northwestern University and former director of economic policy at the Reason Foundation; participant in debate at Reason online “Carbon: Tax, Trade or Deregulate?“

3.  Paul Joskow, current President of the Alfred P Sloan Foundation and former head of theMIT Department of Economics (now on leave) and former director of the MIT Center for Energy and Environmental Policy Research; speech at the National Press Club in September 2008:

For almost 50 years this sector was stuck in an organizational and regulatory framework that may have been well matched to the electricity generation and transmission technology available in 1935, but was surely poorly matched to changes in technology, new technological opportunities, contemporary investment needs, or current economic and environmental challenges. Then in the early 1980s, electricity sector reformers began to stir, responding to concerns about the system of regulated vertically integrated monopolies inherited from the 1930s. The “good old days” of regulation represent a view to the past with rose colored glasses. The system of regulated vertically integrated monopoly was plagued by cost overruns associated with nuclear power plants, poor operating performance for both nuclear and large fossil-fueled plants, poor fuel procurement decisions, wide price differences between neighboring areas, excess generating capacity, inefficient dispatch and economy energy trading between generating companies, regulatory incentives to keep old inefficient plants operating rather than retiring them, too many small utilities to take advantage of economies of scale, institutional and technological barriers to using the transmission network to access lower cost power, productivity lags, and inefficient retail prices. The system …was unnecessarily costly and inefficient.

Reformers looked to the favorable experience with restructuring, competition, and regulatory reform in other sectors and with electricity in other countries to help to solve the problems associated with the fragmented electric power sector made up of over 100 vertically integrated geographic monopolies. Municipal distribution companies and large industrial customers were especially aggressive at promoting reforms focused on open transmission access, the creation of transparent organized regional competitive wholesale markets, and (in the case of large industrial customers) retail competition.

A large number of states initially embraced this restructuring, competition, and regulatory reform vision and began to implement it. In 2000 it looked like restructuring and competitive market reforms were going to sweep the U.S. electric power industry.

Then came the California electricity crisis, the collapse of Enron and a number of merchant generating companies, increased volatility to natural gas markets and associated volatility in wholesale electricity market prices, and a long march upward in fossil fuel prices ultimately resulting in rising retail electricity prices in both regulated and restructured states. Most of the states that were leaders in restructuring during the late 1990s, when natural gas prices were low and there was excess capacity, initiated reforms during a period when regulated prices for generation service were expected to be much higher than perceived comparable competitive wholesale market prices. The expectation was that over time retail prices would fall. This forecast was based on the assumption that low prices for natural gas in particular would continue and that a new system built on efficient CCGT technology would evolve. At that time, a major “problem” that many of these states had to cope with were the “stranded generation costs,” primarily associated with what were perceived to be costly nuclear power plants, that were expected to result from the introduction of real wholesale and retail competition. This was expected to be a “transition problem” because it was expected that competition would result in market prices that would fall to levels below the embedded costs of nuclear plants and older fossil plants that would have otherwise been used to calculated (higher) regulated retail prices.

However, as natural gas and coal prices continued to rise far above anyone’s expectations, many of these states soon found that competitive market prices were rising dramatically along with natural gas prices (which affect competitive wholesale electricity prices in most regions of the country) — arguably rising to levels above what regulated prices would have been today under the status quo ante (though this requires a difficult counterfactual analysis). This, of course does not mean that these electricity sector reforms were a failure. In states that adopted the restructuring, wholesale and retail competition model, retail prices now reflect marginal supply costs, as they should to give consumers the right price signals to use electricity wisely. Rather it means that regulated prices are or would have been too low to give consumers appropriate incentives to make wise consumption decisions.

In evaluating restructuring, competition and regulatory reform one must understand all of its efficiency and distributional properties, not just at short run price effects. From an efficiency perspective, the restructuring reforms implemented at the federal level and in some states have led to numerous cost reducing successes in the face of rising fossil fuel prices.  These include dramatic improvements in the performance of divested nuclear plants, significant improvements in the performance of fossil plants that now face market incentives, roughly 200,000 GW of new (mostly merchant) gas-fired generation has been added to the system between 1999 and 2004, while the risk of cost overruns, fuel price fluctuations, demand variations, and availability problems experienced by some of these plants were shifted to their owners through the market rather than borne by consumers through cost-of-service regulation. There is good empirical evidence that the expansion of the boundaries of RTOs (e.g. PJM) have led to significant changes in power flows and more efficient dispatch of power plants, while inefficiencies are observed at the boundaries of RTOs that have not agreed to be consolidated (e.g. NY/NE). Gradual improvements in wholesale market designs have increased the efficiency of these markets and have restored investment incentives. Moreover, retail prices now respond quickly to changes in wholesale market prices, providing consumers with the right price signals rather than the wrong price signals resulting from retail price regulation. And these price signals are properly differentiated by time and location to reflect marginal supply costs, rather than the depreciated original cost of generating plants built 50 years ago. Demand management programs linked to short-term supply and demand conditions are expanding quickly as well in the reform regions.

Of course, the full reform program has not been implemented in large areas of the South, the West, and portions of the Midwest. The partial electricity reform equilibrium that we appear to be in now will not serve the country well and is potentially quite unstable. We have a system that is 1/3 reformed and 2/3 stuck in the structural and regulatory paradigm of the 1935s or somewhere in between.

The problems created by an antiquated industry structure and incompatible mix of state and federal regulation have not gone away. They are lurking out there to undermine achieving the goals that I enumerated earlier. Absent a comprehensive national electricity policy framework this sector is and will perform poorly in meeting the four sets of goals that I discussed earlier.

Joskow has spelled out his specific proposals for reform, which I note here.

4.  Google, September 19, 2008 press release – “Partnering with GE on clean energy“:

Today we announced that we’re joining forces (PDF file) with GE to use technology, information and corporate resources to drive the changes necessary to empower consumers with better energy choices. We will focus on improving power generation, transmission and distribution – a combination of technologies that could be known as the “smart grid.” (It would be fair to refer to electricity technologies in common use today as a “grid of only average intelligence.”)

The existing U.S. infrastructure has not kept pace with the digital economy and the hundreds of technology opportunities that are ready for market. In fact, the way we generate and distribute electricity today is essentially the same as when Thomas Edison built the first power plant well over one hundred years ago. Americans should have the choice to drive more fuel efficient cars – or even electric cars – and manage their home energy use to reduce costs, and buy power from cleaner sources, or even generate their own power for sale to the grid.

We all receive an electricity bill once a month that encourages little except prompt payment. What if, instead, we had access to real-time information about home energy use? What if our flat screen TVs, electronic equipment, lights and appliances were programmed to automatically adjust to save money and cut energy use? What if we could push a button and switch the source of our homes’ electricity from fossil fuels to renewable energy? What if the car sitting in our garage ran on electricity – the equivalent of $1 per gallon gasoline – and was programmed to charge at night when electricity is cheapest?

This vision is what unites Google and GE. We’ll start by working together in Washington, D.C. to mount a major policy effort to enable large-scale deployment of renewable energy generation in the United States.[deregulation? mandates?] We’ll also work on development and deployment of the “smart” electricity grid that will empower consumers, utilities, and technology innovators to manage electricity more efficiently and lower their carbon footprint. Finally, we’ll collaborate on advanced energy technologies, including technologies to enable the large-scale integration of plug-in vehicles into the grid and new geothermal energy technologies known as enhanced geothermal systems (EGS).

As I have noted elsewhere, 

5.  Jerry Taylor, senior fellow at Cato Institute, “The Right Way to Fix the Grid“, August 19, 2003 (New York Post):

Yes, the need for more investment in the grid seems clear. The system was designed to handle a limited number of transactions, not the large interstate exchanges of electricity now common. Moreover, transmission capacity has been stagnant relative to the growth in power generation, stressing the system even more.

Why has the grid deteriorated?

* Transmission projects are considered, approved and paid for at the state level – but the benefits cross state lines. And state-level decision-makers understandably resist using ratepayer dollars to pay for investments that will mainly help out-of-staters.

* In much of the country, incumbent utilities and state politicians actively resist improving the grid. Vertically integrated companies (which own the generating plants, transmission lines and distribution networks within a service territory) often fear that a more robust transmission system would boost potential competition.

Many politicians also oppose grid improvements because new transmission capacity would make it easier for out-of- state customers to bid-away the cheap power from in-state consumers.

* Returns on transmission are regulated, so utilities have found that they can make more money by investing in virtually anything besides transmission infrastructure.

* With many regulatory fights still unresolved, and the potential for profit thus unclear, investors have delayed risking their money on the grid.

The solution now in vogue to solve these problems is to give the Federal Energy Regulatory Commission more authority over transmission investment. State regulation of transmission is, after all, an archaic relic of another era; and all who use the transmission system are vulnerable to the weakest links in it.

But forcing utilities to invest in transmission upgrades through increased federal regulation is too crude and blunt a policy hammer. It may get the job done to some degree, but running industries by federal dictate is less efficient than ensuring that proper incentives exist for the industry to operate efficiently on its own.

Instead, why not try deregulating the grid? Kill the cap on transmission profits. Jettison the state regulations that protect transmission companies from competition. Cease the endless political debate over how the transmission lines ought to be organized and managed and let grid owners discover for themselves how to most efficiently run their businesses – something market agents are more adept at learning than legislators or regulators.

Most analysts are convinced that the transmission system is a natural monopoly, and so recoil at the very thought of competition to the grid. But it already exists, in the form of natural-gas pipelines.

All new power plants, after all, are natural gas-fired. They can be located far from urban areas and their product shipped to urban areas via the electricity-transmission system, or they can be located in urban areas and their output shipped locally.

The competition between gas and electric transmission is no worse than the competition between cable and satellite television service providers.

Deregulation would also mean an end to rules that force grid owners to do business with anyone who wants access to their wires. Transmission providers should be allowed to negotiate the terms and conditions for both putting power into the lines and for taking it off.

Those who own the power lines, after all, have a greater incentive to ensure that their lines run safely than do the regulators who watch over them, particularly since they wouldn’t be able to rely on regulatory bodies to guarantee them a rate of return on their investments.

Deregulation can’t guarantee that blackouts would never again occur. But it would almost certainly lead to a faster flow of dollars into overdue investments in reliability and a far wiser use of such dollars than would the orders and mandates being contemplated in Washington.

More by Taylor on power regulation here and here.

Any Austrians who have read through this may be familiar with these words from Roy Cordato:

“by placing environmental problems within the context of personal and interpersonal plan formulation, we discover that they are not about the environment per se but about the resolution of human conflict. …

“Humans cannot harm the environment. Instead, they can change the environment in such a way that it harms others who might be planning to use it for conflicting purposes.”

“The focus of the Austrian approach to environmental economics is conflict resolution. The purpose of focusing on issues related to property rights is to describe the source of the conflict and to identify possible ways of resolving it.”

“Environmental problems are brought to light as striking at the heart of the efficiency problem as typically seen by Austrians, that is, they generate human conflict and disrupt inter- and intra-personal plan formulation and execution.” 

Do Austrians and others have their problem-solving caps on, focussed on aiding conflict resolution?  Or are they instead simply fighting over the wheel of government, in a way that ensures the continuing frustration of the concerns that many have about apparently very serious climate change risks? 

Last year around this time I criticized Reason science correspondent Ron Bailey, for a rather empty post trumpteting dark warnings of “green fascism” in the wake of last year`s grain shortages.  This year Ron is back, with a new post out (“Never Right But Never in Doubt“) in which he attempts to make light of the concerns that “Famine-monger Lester Brown” recently outlined in the May 2009 Scientific American Magazine (“Could Food Shortages Bring Down Civilization?“).  While Ron has dressed up his act a bit this time, the old reflexive enviro-bashing remains, along with an inclination to dodge the hard questions that Brown raises.  Instead, we are left to wonder, has Scientific American been taken over by the green fascists?

Disappointingly, Ron`s latest attempt to bring down Lester Brown also disappoints – not because Ron doesn`t have fair criticisms to make, but because he can never bring himself to engage on the fair concerns of Lester Brown and the editors of Scientific American on issues of population, unmanaged commons and the environment.  Instead of throwing light on the areas of institutional failure that underlay the concerns of “green fascists”, “famime-mongers” and neo-Malthusians, Ron likes rhetoric, and closes by calling Brown an “old charlatan”.

Does Brown deserve all of this rhetoric?  No, even while it is perfectly appropriate to disagree with some of his analysis.

Let me set the stage for my review of Ron`s latest piece by citing some of my comments on his prieceding post:

Ron, I’m surprised that you would go to the effort of spreading rather thin hype about “Green fascism” without bothering to explore from a libertarian perspective whether the Green fascists have grounds for concern, what the institutional underpinnings of environmental and “overpopulation” problems might be, or what our own connections to those problems are.

It’s rather simple, really: we see both cleaner environments and the demographic shift in relatively wealthy nations that protect property rights, as families and other economic actors are largely forced to bear their own costs, which provide incentives to keep both pollution and families under control.

Where populations are still growing rapidly – and environmental degradation continues apace – are societies that do not protect property rights, so that economic actors do not internalize all costs, and families to a significant degree face a free-for-all over resources that are not effectively owned or protected.

“Development” thus presents many aspects of a “tragedy of the commons”, a tragedy that we feed with our own consumer, commercial and industrial demand, which is sourced from assets that are not clearly owned, but are simply up for grabs – whether we are talking about the strip-mining of the oceans, the replacement of the Amazon and SE Asian tropical forests with soybeans and palm oil/biofuel plantations, or industrial and commercial enterprises that don’t bear the costs of their pollution (or of the power plants supplying their electricity).

The “Green fascists” see the destruction at the end of the chains of demand that we in the West pull and the destruction resulting from population growth that is unchecked by the pricing signals from effective ownership, and they are rightly concerned. That they fail to understand the institutional underpinnings is of course to be regretted, but it is a failure that can be remedied by a little education.

That you chose not to use your knowledge of the dynamics of “tragedy of the commons” to educate but instead to decry “Green fascists” is a similar failure, and one that I hope you will regret and try to remedy.

As it is, it seems as if you enjoy the emotional rewards of partisan struggle more than really exercising your noggin or making a contribution to directing attention to where solutions to where real problems might lie – in improved property tights protection and governance in the developing world.

Care to contribute, or just to raise an alarum about the evil greenies?

Regards,

Tom

In his latest post, Ron summarizes Brown as “argu[ing] that the world’s food economy is being undermined by a troika of growing environmental calamities: falling water tables, eroding soils, and rising temperatures.”  But even this miscasts Brown, who except for concerns about the over-pumping of the Ogallala aquifer in the high plains of the US Midwest, is clearly focussed mainly not on threats to agriculture in the developed nations, but in the developing ones.  Puzzlingly, Bailey largely agrees with some of the principal areas that Brown points to as reasons for concern, but brushes them off without real discussion or apparent justitication, mainly by telling us how things are no so bad in the developed nations.

First, regarding water, Brown mentions both obvious unstatainability of agriculture as is in places with rapidly falling water tables (particularly China and India) and where the melting of mountain glaciers means lower water supplies during the summer (including China).  Bailey shows off his understanding of the underlying dynamic of an unowned aquifer and the failure to price water correctly, but assumes, without aparent foundation, that water pricing policies will be adjusted without before any agricultural disruptions occur:

“It is true that water tables are falling in many parts of the world as farmers drain aquifers in India, China, and the United States. Part of the problem is that water for irrigation is often subsidized by governments who encourage farmers to waste it. However, the proper pricing of water will rectify that by encouraging farmers to transition to drip irrigation, switch from thirsty crops like rice to dryland ones like wheat, and help crop breeders to develop more drought-tolerant crop varieties.”

Who`s going to make sure that water subsidies will be ended and that water will be “properly priced”?  It doesn`t happen by magic, Ron.

Next, Ron attacks Brown on soil erosion – by conceding the point in developing nations but then presenting a red herring by switching focus to developed nations:

“To be sure, soil erosion is a problem for poor countries whose subsistence farmers have no secure property rights. However, one 1995 study concluded that soil erosion would reduce U.S. agriculture production by 3 percent over the next 100 years. “

The developing world is rife with problems of unsecure land tenure – heck, Zimbabwe is crashing as we speak for that very reason – but instead of enaging on this, we hear that everything is peachy in the US.

Finally, we turn to Brown`s fear of the effects of man-made global warming on agriculture.  Here, too, Bailey completely ignores the developing world in favor of looking only at the US.  Even in our case, Ron first notes that there is “an ongoing debate among experts”, but concedes that  some researchers have concluded that the impact of global warming on U.S. agriculture is “likely to be strongly negative.”  But by pointing to biotechnology research in making crops more heat and drought tolerant as a basis for optimism at home, Ron has essentially conceded that Brown (and the scientists and those funding them) have a basis for concern.

Further, Bailey notes that he agrees with Brown on two points:

“Brown is right about two things in his Scientific American article: the U.S. should stop subsidizing bioethanol production (turning food into fuel) and countries everywhere should stop banning food exports in a misguided effort to lower local prices.”

But rather welcoming Brown`s correct analysis on these points – notwithstanding Bailey`s prior warning that Brown and others were sure to call not for freer agricultural markets but for “green fascism”  –  Bailey can`t resist dissing Brown:  “Of course these policy prescriptions have been made by far more knowledgeable and trustworthy commentators than Brown.”

But despite this evidently weak dismissal of Brown`s concerns on the merits raised in the Scientific American article, Bailey somehow feels justified in completely dissing Brown.  Why?  While it is true that (1) advances in agronomy to date have expanded food supplies to meet the demands of a burgeoning world population (so Brown`s population “bomb” has yet to explode) and (2) Brown lost a famous bet with economist Julian Simon over future commodity prices, how are we doing on the institutional and environmental front in the developing world?  

– are we continuing to wipe out the ocean`s fisheries (which lies behind the Somali shift to piracy), to change ocean chemistry, and to replace important estuaries with shrimp farms?

– are we destroying “public” tropical forests (wrested from natives) and convert them to soybeans and oil palms, despite a long desire by the West to protect their inhabitants and wildlife?

– how sustainable is agriculture in China?

– aren`t we facing continued pressures from population in the developing world to convert wild lands to marginal agriculture?

– how are we doing with water supplies, water tenure and water pricing?

– aren`t we facing continued problems with insecure land tenure?

As I noted recently in comments on the Real Climate thread on tragedies of the common, where markets are unchecked by property rights (and consumer pressure, regulation, trade agreements), they are very effective machines of destruction.

It`s a lack of understanding of this that makes market conservatives right / enviros wrong on SMALL issues (such as Brown`s bet with Julian Simon on commodity prices), but wrong on the BIG ones. Those ranting about “neo-Malthusians seeking to destroy civilization” are simply ignoring or are blind to how consumer and other markets are destroying unowned, unmanaged Nature around the world.

These are the types of problems that have long troubled Lester Brown – and I think Ron Bailey as well.  In any case, Bailey should recognize all of them as problems that stem from a lack of clear and enforceable property rights, in some cases driven by government theft or incompetence.  So why does Bailey feel that the most constructive approach to persuasion is to abjure the elucidation of underlying problems, facilely dismiss concerns and to attack Brown`s motives, by calling him an “old charlatan”?

Disappointing.

But this is the type of engagement that we continue to see from “libertarians” and conservatives (such as Robert Bradley and George Will), who seem to reflexively regard enviros as the “enemy”, as opposed to the lack of property rights or the underlying statism that gives rise to the problems that bother the enviros.  Thus we see not a triumph of reason, but of partisan hostility and mudflinging, sometimes as a mask for support for status quo rent-seekers.

It`s all enough to make an inquiring mind ask, will the real charlatans please stand up?  Or sit down?  Or start living up to the principles they say they espouse?

[Snark Factor:  Ridiculously High]

In honor of Earth Day, yesterday Dr. George Reisman, Professor Emeritus of Economics at Pepperdine University and author of Capitalism: A Treatise on Economics, put up a fun little post that mocks the full-employment arguments made by President Obama on behalf of environmentalists and investors in the wind and solar power industries.

On the comment thread, I couldn`t resist expressing my appreciation, while introducing newer readers to the deeper challenge to which Dr. Reisman invites his readers:

I too have enjoyed another delightful article from Dr. Reisman; bravo!

But Dr. Reisman`s style does seem to present problems of
interpretation for some readers, whom do not seem to understand that
while Dr. Reisman appears to simply be bashing environmentalists or
environmentalism generally (by focussing on the most absurd arguments
that some of them offer), he is in fact challenging his readers to do
precisely what he has studiously avoided.

That is, far from simply pulling the wings off of flies as he might
seem to some, Dr. Reisman is actually suggesting that serious students
of economics and libertarian approaches to society should diligently:

• – seek to engage others productively and with sympathy, in a manner
  carefully designed to improve the functioning of markets and ancillary
  institutions that enhance plan formation across society;

  – note that there are many important, valuable open-access/unowed
  resources and government-owned resources – in which property rights and
  pricing mechanisms are working poorly at best;

  – acknowledge that while proposed “solutions” offered by
  environmentalists may be misguided, enviros have legitimate preferences
  as to how such resources should be protected, managed and distributed;
  and

  – recognize that the concerns of enviros frequently arise in
  response to government interventions have clearly benefitted powerful
  insiders, including wealthy investors and large enterprises, while
  shifting costs and risks more broadly.

  As a result, Dr. Reisman`s tongue-in-cheek posts are in fact searing
  indictments of the status quo and tbe fat cats who are using government
  to stifle open competition, consumer choice and innovation, while
  frequently generating large external costs. Unlike some who spoil the
  fun by engaging in the pedestrian task of spelling out the problems
  with the status quo that enviros are right to be dissatisfied with, Dr.
  Reisman treats his readers as adults by bracingly challenging them to
  use their thinking caps and to clear their own heads.

  For those for whom this task is too difficult, perhaps this piece by Lew Rockwell might be a good start:

  “Just who is in charge of getting electricity to residents? A
  public utility, which, in the absurd American lexicon, means
  “state-run” and “state-managed,” perhaps with a veneer of private
  trappings. If you look at the electrical grid on a map, it is organized
  by region. If you look at the jurisdiction of management, it is
  organized by political boundaries.

  “In other ways, the provision of power is organized precisely as
  a central planner of the old school might plan something: not according
  to economics but according to some textbook idea of how to be
  “organized.” It is “organized” the same way the Soviets organized grain
  production or the New Deal organized bridge building.

  “All of centralization and cartelization began nearly a century
  ago, as Robert Bradley points out in Energy: The Master Resource, when
  industry leaders obtained what was known as a regulatory covenant. They
  received franchise protection from market competition in exchange for
  which they agreed to price controls based on a cost-plus formula — a
  formula that survives to this day.

  “Then the economists got involved ex post and declared that
  electrical power is a “public good,” under the belief that private
  enterprise is not up to the job of providing the essentials of life.

  “What industry leaders received from this pact with the devil was
  a certain level of cartel-like protection, the same type that the
  English crown granted tea or the US government grants first-class
  postal mail. It is a government privilege that subjects them to
  regulation and immunizes companies from business failure. It’s great
  for a handful of producers, but not so great for everyone else.

  “There are many costs. Customers are not in charge. They are
  courted only for political reasons but they are not the first concern
  of the production process. Entrepreneurial development is hindered. Our
  current system of electrical provision is stuck in time. Meanwhile,
  sectors that provide DSL and other forms of internet and
  telecommunication services are expanded and advancing day by day — not
  with perfect results but at least with the desire to serve consumers.
  …

  “How New York and California consumers would adore a setting in
  which power companies were begging for their business and encouraging
  them to turn down their thermostats to the coldest point. Competition
  would lead to price reductions, innovation, and an ever greater variety
  of services — the same as we find in the computer industry.

  “What we are learning in our times is that no essential sector of
  life can be entrusted to the state. Energy is far too important to the
  very core of life to be administered by a bureaucracy that lacks the
  economic means to provide for the public. How it should be organized we
  can’t say in advance: it should be left to the markets. Whatever the
  result, you can bet the grid would not look like it does today, nor
  would its management be dependent on the whims of political
  jurisdiction.

  “What we need today is full, radical, complete, uncompromised
  deregulation and privatization. We need competition. That doesn’t mean
  that we need two or more companies serving every market (though that
  was common up through the 1960s). What we need is the absence of legal
  barriers to enter the market.“

  Thanks, again, Dr. Reisman, for challenging us, and not pandering to the dullest and laziest among us, the way Lew Rockwell does!

  Your admiring pupil (and fellow enviro-hater),

  TT

• Published: April 23, 2009 5:32 AM

For those who think that Dr. Reisman is being serious in his one-sided attack on enviros while ignoring the problems of ongoing rent-seeking by entrenched statist corporations, I would be pleased to refer to other posts in which he is clearly posting tongue-in-cheek and intends no rancor or imbalance.  A good example would be his light-hearted post in March 2007, Global Warming: Environmentalism’s Threat of Hell on Earth, in which Dr. Reisman appeared to seriously argue that

“there is a case for considering
the possible detonation, on uninhabited land north of 70° latitude,
say, of a limited number of hydrogen bombs. … This is certainly
something that should be seriously considered by everyone who is
concerned with global warming and who also desires to preserve modern
industrial civilization and retain and increase its amenities. If
there really is any possibility of global warming so great as to cause
major disturbances, this kind of solution should be studied and
perfected. Atomic testing should be resumed for the purpose of empirically testing its feasibility.“

While apparently serious, how could this possibly be a libertarian, nonstatist proposal?  The answer clearly MUST be – since Dr. Reisman is a lover of freedom and markets, and not of big government, goverment-run mega projects or statist corporate rent-seeking  – that Dr. Reisman was NOT being serious.  Instead, in his usual playful manner, he was simply inviting his readers to see through his words, and to productively engage those who are concerned with climate or other commons issues, on the basis of a cool consideration of libertarian and market principles.

Inquiring minds might like to note that I have remarked on Dr. Reisman`s  productive and insightful playfulness on a number of other occasions, on top of comments on his environment-related posts,  which have been fertilizing the LVMI pages since the 2005 Earth Day.

Q.E.D.

After decades of loathing nuclear power as the ugly, monstrous child of a big government Dr. Frankenstein, climate-change-fearing enviros like George Monbiot are finally coming around to the relative benefits of nuclear power.  This is a welcome change – as it is clear that coal has generated and continues to generate much greater environmental impacts (not only in extraction, but in acid rain, particulates, heavy metals, released radiation and fly waste) – but that doesn’t mean that libertarians or conservatives ought to support throwing any more taxpayer dollars at nuclear power.

Rather, as Jerry Taylor (a senior fellow at the Cato Institute and well-regarded energy/environment expert) argues (as noted in the excerpts below), we should push nuclear power off the federal dole, deregulate power markets, and – IF we decide that climate change risks merits a constraint on greenhouse gas emissions  – we should do that through pricing mechanisms rather than by having the federal government further involved in the business of trying to guess what technological approaches will be successful via massive subsidies for nuclear or other “clean” technologies.

I pretty much agree with Taylor in principle (including on tackling power market regulatory issues), but believe that he both (1) dodges the massive pollution costs imposed by and rent-seeking conducted by coal firms and coal-fired utilities and (2) understates the economic case for carbon pricing, as I have noted elsewhere.

For those interested, I’ve collected below a few pieces of analysis and debate from Jerry Taylor on nuclear power:

– at Cato.org on June 21, 2003:

The federal government has always maintained a unique public-private partnership with the nuclear industry, wherein the costs of nuclear power are shared by the public but the profits are enjoyed privately. In an attempt to resuscitate this dying industry, the current Senate energy bill proposes unprecedented federal support for nuclear power. …

But nuclear power was ultimately rejected by investors because it simply does not make economic sense. In truth, nuclear power has never made economic sense and exists purely as a creature of government.

In fact, a recent report by Scully Capital Services, an investment banking and financial services firm, commissioned by the Department of Energy (DOE), highlighted three federal subsidies and regulations — termed “show stoppers” — without which the industry would grind to a halt. These “show stoppers” include the Price Anderson Act, which limits the liability of the nuclear industry in case of a serious nuclear accident — leaving taxpayers on the hook for potentially hundreds of billions in compensation costs; federal disposal of nuclear waste in a permanent repository, which will save the industry billions at taxpayer expense; and licensing regulations, wherein the report recommends that the Nuclear Regulatory Commission further grease the skids of its quasi-judicial licensing process to preclude successful interventions from opponents.

But even these long-standing subsidies are not enough to convince investors, who for decades have treated nuclear power as the pariah of the energy industry. Nuclear generated electricity remains about twice as expensive as coal- or gas-fired electricity. Although the marginal costs of nuclear are lower, the capital costs are much higher. In light of this resounding cold shoulder from Wall Street, the federal government is opening the treasury wider than ever before.

– at NRO on Jan. 26, 2006:

Nuclear power is solar power for conservatives — an energy source with every merit in the world save for the most important — economic merit. Investors — not environmentalists — are the parties that have turned against nuclear and there’s no reason for government to second guess the businessmen …

– at a Rountable on Nuclear Power and Energy Independence at Reason Foundation on October 21, 2008: [worth reviewing in whole]

Nuclear energy is to the Right what solar energy is to the Left: Religious devotion in practice, a wonderful technology in theory, but an economic white elephant in fact …

But nuclear power plant construction costs are so high that it would take a very, very long time for nuclear facilities to pay for themselves if they only operated during high demand periods. Hence, nuclear power plants are only profitable in base-load markets. Gas-fired power plants, on the other hand, can be profitable in either market because not only are their upfront costs low but it is much easier to turn them off or on unlike nuclear.

Nuclear’s high up-front costs don’t just mean delayed profits, it also makes nuclear a more risky investment, especially since 20 states have scrapped policies that used to allow investors to charge rates that would guarantee their money back. This means that investors in new nuclear power plants are making a multi-billion dollar bet on disciplined construction schedules, accurate cost estimates, and the future economic health of the region. Bet wrong on any of the above and the company may well go bankrupt. Bet wrong on a gas-fired power plant, on the other hand, and corporate life will go on because there is less to lose given that the construction costs associated with gas-fired power plants are a small fraction of those associated with nuclear plants. …

Investors are also wary of nuclear plants because of the construction delays and cost over-runs that have historically plagued the industry. …  Nor have these construction delays had anything to do with regulatory obstruction or organized public opposition.

If nuclear power plants are so uneconomical, how then to explain the blizzard of permit applications for the construction and operation of new nuclear power plants that the Nuclear Regulatory Commission has received? Easy: These applications cost little and oblige utilities to do nothing. Industry analysts maintain that federal approvals will not translate into actual plants without a federal promise to private equity markets that, in case of default by power plants, the taxpayer will make good on the full sum of all bad nuclear loans.

Nuclear supporters often counter that construction costs would be a lot lower if regulators didn’t impose insanely demanding safety standards, byzantine and time-consuming permitting processes, or endless public hearings, any one of which could result in the plant being stopped in its tracks. Investors would also be more likely to invest, we’re told, if there were a high-level waste repository in place or more political support for nuclear power.

I would love to tell that story. I do, after all, work at the Cato Institute, and blaming government for economic problems is what keeps me in business. But what stops me is the fact that those complaints are not echoed by the nuclear power industry itself.

On the contrary, the industry in the early 1990s asked for – and got – exactly the sort of safety regulations, permit review process, and public comment regime now in place. Both public and political support for nuclear power is running so high than even a majority of Democrats in Congress are happy to not just tolerate nuclear power, but lavish even more subsidies upon it. And while Yucca Mountain may not be open now or ever, everyone seems reasonably content with the current on-site waste storage regime.

Indeed, if government were the reason why investors were saying “no” to their loan applications, I would expect that industry officials would be the first to say so. But they do not.

There’s another good reason why the industry is not protesting government intervention these days — the industry would not exist without it. Take away the 1.8¢ per kWh production tax credit available to the first 6,000 megawatts of new nuclear generation built prior to 2021, for instance, and Metcalf calculates that the levelized cost of new nuclear power plants jumps by 30 percent. Replace accelerated depreciation tax rules with regular depreciation rules and costs jump another 9 percent. Even zero taxation on nuclear power would increase costs by 6 percent because right now nuclear power enjoys a negative effective tax rate. Indeed, this jump by itself would make nuclear much more expensive than conventional coal, “clean” coal, and natural gas. Finally, repealing the $18 billion in federal loan guarantees recently promised the industry and eliminating regulations that relieve nuclear plant owners of the responsibility to pay third-parties to accept the risks associated with waste disposal would dampen market interest in nuclear power even further.

But the final nail in the coffin for the industry would be if the federal cap on the liability that nuclear power plant owners face in case of accidents (the Price-Anderson Act) were to be lifted.

Given all of this, how do France, India, China and Russia build cost-effective nuclear power plants? They don’t. Government officials in those countries, not private investors, decide what is built. …

Conservatives project nuclear power as the solution to greenhouse gas emissions. But they should resist that argument. If we slapped a carbon tax on the economy to “internalize” the costs associated with greenhouse gas emissions – the ideal way to address emissions if we find such policies necessary – then the “right” carbon tax would likely be about $2 per ton of emissions according to a survey of the academic literature by climate economist Richard Tol [As noted in the update further below, Taylor has subsequently moved from this low figure after reviewing Tol’s more recent work]. That’s not enough to make nuclear energy competitive against coal or natural gas according to calculations performed by the Electric Power Research Institute. In any case, if nuclear offers a cost-effective way to reduce greenhouse gas emissions, it should have to prove it by competing against alternatives in some future carbon-constrained market.  …

Those who favor nuclear power should adopt a policy of tough love. Getting this industry off the government dole would finally force it to innovate or die – at least in the United States. Welfare, after all, breeds sloth in both individual and corporate recipients. The Left’s distrust of nuclear power is not a sufficient rationale for the Right’s embrace of the same.

– follow-up discussion on Reason Foundation’s “Out of Control” blog, involving Jerry Taylor and co-essayists William Tucker and Shikha Dalmia (also moderator) and various blog commenters. 

    One interesting point made in the follow-up discussion was that while our regulatory scheme is much tougher on nuclear power over risks that so far have been speculative, Taylor ignores the much heavier health damages (on the order of 25,000 deaths per year) generated by coal.  Taylor’s response:  perhaps so, but coal’s extra environmental cost should be directly addressed by being tougher on coal, not by subsidizing nuclear power.

[Update:  On the carbon pricing issue, subsequent to the October 2008 Rountable referred to above, I pointed out to Jerry that his reference to Tol was dated (based on a 2005 study rather than on Tol’s more recent 2008 study.  Jerry reviewed and summarized Tol’s most recent study at Cato in December 2008;  in this, (1) Taylor notes Tol’s conclusions that (a) the social cost of carbon emissions
is positive, that (b) there is so much uncertainty regarding costs that “a
considerable risk premium is warranted,” and that, (c) consequently,
“greenhouse gas emission reduction today is justified,” and (2) Taylor concludes that “Given our skepticism about the underlying logic of discount rates of 1%
or less, any number between $3 per ton and $24 per ton seems
defensible.”  However, Taylor remains conerned that “the political and economic transaction costs associated with imposing a carbon tax … likely exceed the benefits,” and argues that “there may be less expensive ways of reducing harm.”]