NEW ENVIRONMENTAL ECONOMICS BLOG

Lynne Kiesling

I am enjoying the relatively new Environmental Economics blog. It will be particularly useful in my Environmental Economics course in the fall, especially this post on cost-benefit analysis. It starts with a point that I always go out of my way to demonstrate graphically and mathematically: because of the existence of tradeoffs/opportunity costs, the optimal level of pollution is not zero.

A recommended read.

BILL GROSS AND SOLAR POWER

Lynne Kiesling

This Wired magazine article from July discusses Idealab/Internet impresario Bill Gross’s foray into rooftop solar power innovation. The article does a nice job of discussing the cost disadvantages of solar, some of the infrastructure cost savings from on-site solar that mitigate some of those cost disadvantages, government subsidies, etc.

MORE ON PROPERTY RIGHTS AS HUMAN RIGHTS

Lynne Kiesling

…this time from Ron Bailey at Reason. He’s discussing a Friends of the Earth report arguing that natural resources are an important part of the story in eradicating poverty in developing countries.

All too predictably, a good bit of the report consists of a tiresome standard-issue anti-globalization screed against “neoliberal” economic policies and evil “transnational corporations.” FOE notes that policy debates over how to alleviate poverty “tend to emphasize the monetary aspect of poverty, whereas many other factors—including access to and control over natural resources and land, employment, health, nutrition, education, access to services, conflict, political power and social inclusion—also play crucial roles.”

Of course, the reason that people might focus on the monetary aspect of poverty is that having a bit of ready cash tends to give one access to all those other good things, such as employment, education, and social inclusion. But never mind, let’s move on.

While I have not yet read the report, Ron says it contains interesting case studies. He enumerates them, seeing a pattern that the FOE authors did not: in every case, poverty persists and natural resources are excessively exploited due to ill-defined, nonexistent, or expropriated property rights.

He recommends Hernando de Soto’s work on ill-defined property rights in developing countries to the FOE; I second that recommendation, and would go even farther into the archive to recommend Adam Smith’s treatment of justice and beneficence in Theory of Moral Sentiments. From Book II, Chapter II, paragraph 2:

Death is the greatest evil which one man can inflict upon another, and excites the highest degree of resentment in those who are immediately connected with the slain. Murder, therefore, is the most atrocious of all crimes which affect individuals only, in the sight both of mankind, and of the person who has committed it. To be deprived of that which we are possessed of, is a greater evil than to be disappointed of what we have only the expectation. Breach of property, therefore, theft and robbery, which take from us what we are possessed of, are greater crimes than breach of contract, which only disappoints us of what we expected. The most sacred laws of justice, therefore, those whose violation seems to call loudest for vengeance and punishment, are the laws which guard the life and person of our neighbour; the next are those which guard his property and possessions; and last of all come those which guard what are called his personal rights, or what is due to him from the promises of others.

Note in particular that last sentence; Smith argues that right to be free from personal assault and intentional death is paramount, but that the next most important right is the right to be free from attack on property. Then come other personal rights. Interestingly, he goes into contract, which usually stipulates positive rights-rights to the performance of some action on the part of others.

In another section of ToMS Smith argues for the fairness of justice protecting private property rights. In addition to a moral and theoretical argument, Smith makes the pragmatic argument that it is only through the protection of private property that individuals can improve their well-being and standard of living. Thus even if we are ourselves poor right now, we should support legal enforcement of private property rights because that is the most effective way we have the means to work out of our poverty. If we support the expropriation of property belonging to those richer than us for our own benefit, then how can we be certain in our property if/when we become richer?

Property rights are at the core of human empowerment, the foundation of human, political, and women’s rights (some of the rights enumerated in the FOE list). Ignore, fail to enforce, or expropriate property rights and you undermine other rights.