TT's Lost in Tokyo — by TokyoTom

 More later.  We need to go back to the past.

[snark meter – medium] 

John Baden, a former logger and oilman, has long been a pillar of the “free-market” environmentalists.  He founded and leads the Foundation for Research on Economics & the Environment (FREE) and founded and headed the Property and Environment Research Center (PERC), both based in Bozeman, Montana. http://en.wikipedia.org/wiki/John_A._Baden; http://en.wikipedia.org/wiki/Property_and_Environment_Research_Center. 

But don’t let his Mont Pelerin Society (http://www.montpelerin.org/home.cfm) membership fool you; John is very green on the outside and, with so much green, might he not be more than a little pink on the inside?

He recently summarized advice he had given (on request) to policy advisers for a Democratic presidential candidate and a Republican one.  Allow me to quote freely (emphasis added):

“Both parties need help—but in opposite directions. Republicans need sensitivity to Green issues, Democrats sensibility regarding incentives.”

“We are … eager to help all candidates develop sound policies, ones we believe will foster responsible liberty, environmental quality, and modest prosperity. Over the decades, we’ve made compelling, well-respected arguments against the Green tradition of greater bureaucratic powers, increased federal control, and heightening paranoia over environmental issues. …

“From the Civil War until the first Earth Day in 1970, the West’s politics, culture, and economy were oriented toward the exploitation of its natural resources. But the extractive sector no longer drives the Western economy and hasn’t for several decades. Today’s economic drivers are amenities, services, and symbolic manipulation, not the traditional material stuff of wood, wheat, water, and minerals. …

“Here’s the reality some politicians ignore at their peril: we’ve high-graded our best, most accessible resources. The richest ores, finest timber, and best dam sites have been developed. The easy fruit has been picked and the Western economy can no longer rely on the extractive sector. No ghost dance will bring them back.

“Ray Rasker notes that since 1970, “Montana has added over 150,000 new jobs, and not one of the new net jobs has been in mining, oil and gas, farming, ranching, or the woods products industry.” The extractive industries are notoriously unstable, and commodity prices always undulate. The timber industry, for example, has largely abandoned the West for the Southeast and foreign countries. …

“Now, increased opportunities in the West are created by high-tech enterprises and services. The service sector includes professional occupations in law, health care, software, data processing, education, and finance. Although they are not the traditional Western jobs, these occupations, like those in extractive industries, depend upon open space and natural resources.

“Why? Because professionals seek locations rich in environmental amenities, e.g., wilderness, open space, fish and wildlife, and recreational opportunities. Data indicates the West’s roadless public lands, wilderness areas, free-flowing rivers, national parks and forests, open ranges, and healthy wildlife habitats generate much of our economic growth. Folks don’t move here by accident nor do they do so to maximize income—quality of life trumps.

“The GOP and the Democrats compete for well-off and well-educated voters, those David Brooks describes in Bobos in Paradise: The New Upper Class and How They Got There, and the Democrats are clearly winning. This is no accident; the nation has become immensely wealthy, and with wealth and education comes heightened environmental sensitivity. When Americans become wealthy most think, or at least posture, Green.

“President Clinton capitalized on these demographic realties when he set aside 40 million acres of National Forest as roadless areas. Many fiscal conservatives and the vast majority of Westerners applauded the decision, even those who disliked Clinton.

“These roadless areas were undisturbed for good reason; most have low economic value. Without explicit or implicit subsidies, resource extraction on these lands is infeasible. Federal lands are political lands where heavy subsidies are the norm. Traditional politics have ignored or discounted the full costs of exploitation. Citizens now demand more honest accounting of both economic and environmental costs.

“A candidate who hopes to capture the West’s electoral votes should not take seriously any campaign policy that ignores links between ecology and economics. Westerners are Greener, more sophisticated, and better informed than 30 years ago. Few are dependent on traditional resource exploitation. A good candidate will discern the implications and propose appropriate policies.“

http://www.free-eco.org/articleDisplay.php?id=573 

Inquiring minds want to know:

– are only those in the American West “Greener, more sophisticated, and better informed than 30 years ago”, or is this true across all developed and emerging economies?

– does “heightened environmental sensitivity” come with “wealth and education”?  Or is such “heightened environmental sensitivity” simply a ploy by the educated wealthy to use the tools of the state to restrict access by brave captains of the extractive industry to the public lands of the West (the better to go fly fishing)?

– outside of the struggle for control over “public lands” in the West, are there any other areas where voters oppose policies that “ignore links between ecology and economics”?

– if “heightened environmental sensitivity” does come with “wealth and education”, what do we make of the concern that enviros, scientists, industry leaders, and politicians around the world all express concern about climate change and the pressure of economic activity on unowned commons like the atmosphere, oceans and tropical forests/wildlife?  More uninformed nonsense, led by evil man-haters?

By not stridently demanding privatization of public lands, John Baden sounds like an “incrementalist” rather than a pure libertarian, and by urging policies that favor recognition of the relatively higher values in environmental amenities than in extractive industries, he sounds very much like an environmentalist statist.  

Does it help us to better understand him, or the problems that concern him, if we call him a misanthropic “watermelon”?

Warning:  If you are an Austrian, you have just been gravely polluted by reading this.  Seek help immediately, and recite the “Corrigan Creed” (or as some may have it, the “Reisman Rule”) at least five times.

(If you missed it, the Corrigan Creed is here: http://mises.org/Community/blogs/tokyotom/archive/2007/12/17/holiday-joy-quot-watermelons-quot-roasting-on-an-open-pyre.aspx.)

“Not all externalities are crimes, and as long as CO2 does not make clear victims, it should be left as an externality for people to adapt to ….”

In response to this statement on a recent thread (http://blog.mises.org/archives/007152.asp#comments), I observed, in the context of the impact of man’s activities on the climate, that:

But Mises, Yandle and others speak of transition points, that are reached when demand pressure grows as a result of social changes (including new forms of organization) or technological advances (which might also enable greater protection), when open-access resources fall first under common property regimes and then later under private property rights.

I think we are at one of those points now. (emphasis added)

When another remarked that a transition might seem to involve “mob rule”, I noted that Mises had expressly acknowledged the need for transitions and implied that the state could be used to address them, and briefly quoted Mises.  I take this opportunity quote more extensively Mises’ view on externalities, evolving property rights and the state (emphasis added):

“Property rights as they are circumscribed by laws and protected by courts and the police, are the outgrowth of an age-long evolution. … The legal concepts of property do not fully take account of the social function of private property. There are certain inadequacies and incongruities which are reflected in the determination of the market phenomena.

“Carried through consistently, the right of property would entitle the proprietor to claim all the advantages which the good’s employment may generate on the one hand and would burden him with all the disadvantages resulting from its employment on the other hand. Then the proprietor alone would be fully responsible for the outcome. In dealing with his property he would take into account all the expected results of his action, those considered favorable as well as those considered unfavorable. But if some of the consequences of his action are outside of the sphere of the benefits he is entitled to reap and of the drawbacks that are put to his debit, he will not bother in his planning about all the effects of his action. He will disregard those benefits which do not increase his own satisfaction and those costs which do not burden him. His conduct will deviate from the line which it would have followed if the laws were better adjusted to the economic objectives of private ownership. He will embark upon certain projects only because the laws release him from responsibility for some of the costs incurred. He will abstain from other projects merely because the laws prevent him from harvesting all the advantages derivable.

“The laws concerning liability and indemnification for damages caused were and still are in some respects deficient. By and large the principle is accepted that everybody is liable to damages which his actions have inflicted upon other people. But there were loopholes left which the legislators were slow to fill. In some cases this tardiness was intentional because the imperfections agreed with the plans of the authorities. When in the past in many countries the owners of factories and railroads were not held liable for the damages which the conduct of their enterprises inflicted on the property and health of neighbors, patrons, employees, and other people through smoke, soot, noise, water pollution, and accidents caused by defective or inappropriate equipment, the idea was that one should not undermine the progress of industrialization and the development of transportation facilities. The same doctrines which prompted and still are prompting many governments to encourage investment in factories and railroads through subsidies, tax exemption, tariffs, and cheap credit were at work in the emergence of a legal state of affairs in which the liability of such enterprises was either formally or practically abated.”

“Whether the proprietor’s relief from responsibility for some of the disadvantages resulting from his conduct of affairs is the outcome of a deliberate policy on the part of governments and legislators or whether it is an unintentional effect of the traditional working of laws, it is at any rate a datum which the actors must take into account. They are faced with the problem of external costs. Then some people choose certain modes of want-satisfaction merely on account of the fact that a part of the costs incurred are debited not to them but to other people.

“The extreme instance is provided by the case of no-man’s property referred to above. If land is not owned by anybody, although legal formalism may call it public property, it is utilized without any regard to the disadvantages resulting. Those who are in a position to appropriate to themselves the returns–lumber and game of the forests, fish of the water areas, and mineral deposits of the subsoil–do not bother about the later effects of their mode of exploitation. For them the erosion of the soil, the depletion of the exhaustible resources and other impairments of the future utilization are external costs not entering into their calculation of input and output. They cut down the trees without any regard for fresh shoots or reforestation. In hunting and fishing they do not shrink from methods preventing the repopulation of the hunting and fishing grounds. In the early days of human civilization, when soil of a quality not inferior to that of the utilized pieces was still abundant, people did not find any fault with such predatory methods. When their effects appeared in a decrease in the net returns, the ploughman abandoned his farm and moved to another place. It was only when a country was more densely settled and unoccupied first class land was no longer available for appropriation, that people began to consider such predatory methods wasteful. At that time they consolidated the institution of private property in land. They started with arable land and then, step by step, included pastures, forests, and fisheries. The newly settled colonial countries overseas, especially the vast spaces of the United States, whose marvelous agricultural potentialities were almost untouched when the first colonists from Europe arrived, passed through the same stages. Until the last decades of the nineteenth century there was always a geographic zone open to newcomers–the frontier. Neither the existence of the frontier nor its passing was peculiar to America. What characterizes American conditions is the fact that at the time the frontier disappeared ideological and institutional factors impeded the adjustment of the methods of land utilization to the change in the data. …

“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

Ludwig von Mises, Part IV (Das Handeln in der Marktwirtschaft), Chapter 10 (Kapitel: Die Daten der Marktlage), Sec. VI (Die Grenzen des Sondereigentums und das Problem der external costs und external economies), Nationalökonomie: Theorie des Handelns und Wirtschaftens (Geneva: Editions Union, 1940). The quote provided is from Mises’s expanded English translation, Chapter XXIII: “The Data of the Market,” Sec. 6: “The Limits of Property Rights and the Problems of External Costs and External Economies,” Human Action: A Treatise on Economics (New Haven: Yale University Press, 1949).

By the way, it has has elsewhere been noted on LvMI that with this essay, Mises explained how environmental problems arise from the lack of clear, appropriate and enforceable property rights some decades before bioethicist Garrett Hardin in his famous 1968 essay,  “The Tragedy of the Commons”.  http://mises.org/daily/1373.  But we should not ignore that Mises pointed not only at the problem of externalities, but also at the transitions that societies make, deliberately or through changes in customs, to reduce externalities.