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Source link: http://archive.mises.org/11154/sustainability-an-assault-on-economics/

Sustainability: An Assault on Economics

December 4, 2009 by

Ah, the greens. They’re not just treehuggers anymore. They’ve been browbeating us to recycle, eat soy, save energy, drive less, ride the bus, and a thousand other ways to “act local” for many years now. FULL ARTICLE by Tyler A. Watts

{ 54 comments }

Reilly December 7, 2009 at 12:46 am

“(2) the climate-change argument that there are large, though delayed, negative externalities to current patterns of resource use.”

I was looking forward to seeing this argument addressed, but Mr. Watts seems to only address the first one. Most polluting “externalities” could be internalized into the cost of business through a better understanding and implementation of private property rights, but CO2 is a particular problem. A passing comment doubting climate change does not address the issue that if climate change is happening then there is a huge externality that cannot be internalized through private property rights.

P.Palazzo December 7, 2009 at 4:35 pm

@JL Bryan: this is very pretty in theory, but in practice would it be viable to address all scarce natural resources in terms of private property?

For example: in the 19th-century US, it would have been perfectly acceptable for someone to buy up (and colonize and control and drive out Indians out of) anything in the western frontier. Was anyone ever interested in buying up buffalo herds to earn money from people shooting at them from passing trains? Of course not. It would not have been economically viable. Buffalo were saved from the brink of extinction because at some point there were too few of them, too far away from train tracks. Other species that became extinct were not as lucky. Oh well, I suppose if the market does not miss the Dodo then tough luck, right?

Another take on it: what do we make of diffuse interests? If there are say 500 factories causing air pollution over a given city of 1,000,000 people, would it be viable for every citizen in that city to sue individually each of the 500 companies for damaging their air quality? Any judiciary system would break down before coming even close to addressing all of the 500,000,000 lawsuits. Additionally, what would be the legal framework for such lawsuits? Can any one business be sued for contributing a negligible amount of pollution that compounds with so many other negligible amounts to form a huge amount of pollution? Obviously no one can buy “air quotas” in the way one could theoretically buy whales. Carbon “shares” are viable only because governments are expected to impose caps on emissions.

I am in favor of as little government intervention as possible in the economy. And I agree that often the environmental rhetoric among politicians (which is not the same as environmental research) serves political interests rather than the common good. However, negative externalities and diffuse interests are, I believe, areas where regulation is made necessary.

Libertarianism makes perfect sense in Adam Smith’s world: a world where in general anything which could be fenced, rounded up, or stockpiled was scarce AND fit for being an object of private property (including people), while anything which could not be viably controlled was by definition non-scarce (already at that time, however, timber was becoming an exception to the rule). This is not the case today. We have scarce resources, such as clean air, which are impossible to bring under private property rights UNLESS some form of government regulation kicks in, such as the creation of “carbon shares” AND emissions control (only with the latter will the trading of carbon shares become a viable economic activity).

Del Lindley December 7, 2009 at 9:39 pm

Simply saying that a situation is “unsustainable” is not enough–one needs to identify the source of the perceived unsustainability. ABCT, for example, is based on the principle that economic activity spurred by the expansion of circulation credit is inherently unsustainable due to the mismatch of consumer and producer time preferences. It is certainly fair for Austrian theorists (“econo-sustainists”) to decry sequential counter-cyclical credit expansions as unsustainable and wasteful. If the healing phase of the cycle is thereby shunted then the appearance of an unsustainable secular consumption growth is obtained. Unfortunately the “enviro-sustainists” are oblivious to these nuances as they are likely to be acquainted more with wealth’s transferal than with wealth’s creation, and consequently call imprudently for greater government intervention (and waste) to deal with the manifold set of proximate environmental and resource concerns. The extent to which this concern is authentically non-self-dealing can be expected to vary inversely with one’s rank within the enviro-sustainist hierarchy.

As currently deployed the enviro-sustainist movement is more than just an assault on economics—it is a clear and present danger to an already over-extended production structure. This is most clearly seen with respect to movement influence on the composition of new electric power generation. Through the distorting forces of state regulations, subsidies, and potential CO2 emission penalties the power production structure is being pushed away from efficient and plentiful fossil fuel resources (coal) and pulled towards inefficient and capital-intensive “renewable” resources. If we consider the Earth’s biosphere to have an energy budget, it would have three meaningful sources of “income”: 1) radiant energy from the Sun; 2) thermal energy from the cooling of the Earth’s core; and 3) tidal energy provided primarily by the Moon. But at the same time this metaphorical energy budget has a level of “savings” primarily in the form of 1) carbon-based fuels (oil, coal, and natural gas, thanks to Earth-bound processes); 2) fissile materials for fission reactors (uranium, thanks to stellar nucleosynthesis); 3) ocean-based deuterium for potential fusion reactors (thanks to big-bang nucleosynthesis).

In these terms enviro-sustainist’s credo is to “spend” more from our energy income and less from our energy savings. But to implement this approach we must replace any unused energy “savings” with our own personal savings, most likely in the form of capital-absorbing solar collectors and wind turbines. This approach thereby extends the energy production structure and creates new competition for scarce investment funds as it enhances the interest rate risk within consumer power prices. When it comes to betting on our short to intermediate term energy future, I’ll put my money on nature’s billion-year account of steady energy savings before I’ll trust the evanescent savings of modern man.

I note in passing that much of the content of this thread has dealt with the external costs of undesirable emissions. With respect to fossil fuel power generation, the primary “pollutant” is thought to be CO2. Given our arguably weak understanding of AGW and of the costs/benefits that any incremental warming/cooling may cause at any time and point on the Earth, it is entirely premature to base current public policy or skew the energy generation landscape on such hypothetical externalities.

TokyoTom December 20, 2009 at 3:45 am

Tyler, well-written, but allow me to point out that you`ve begged a whole lot of questions:

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

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