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Source link: http://archive.mises.org/12971/pollution-and-government-failure-in-china/

Pollution and Government Failure in China

June 15, 2010 by

The smog and pollution in China provide us with a valuable lesson: the standard libertarian paradigm of property rights needs to be extended to the environment. First-use homesteading must be the basis of environmental rights, which are currently socialized property. FULL ARTICLE by Eric M. Staib


jmorris84 June 15, 2010 at 8:56 am

Was hoping that this article would go into more depth and detail about the title but instead it just kind of brushed over it.

ABR June 15, 2010 at 10:09 am

“Thus, where the benefits of pollution to a company outweigh its cost to affected individuals, as demonstrated by their willingness to buy or lease the necessary rights at market prices or simply continue to violate property and pay ongoing damages, such pollution will occur.”

Eric, I infer that you are not in favour of injunctions? Is that correct? The problem with paying damages is that the person suffering an injury has a subjective valuation of the injury. A court cannot adequately assess the damage from the perspective of the injured party.

Whereas the threat of an injunction allows both parties to apply their subjective valuations. The injured party can say: unless you pay me this much, I won’t allow you to pollute. The polluter can say: it’s profitable for me to pollute and pay the injured parties so long as the amount is < X.

I recall Kinsella employing a similar device w.r.t. injury. For example, if I poke out someone's eye, I owe the injured party my eye, unless we can agree to some other form of compensation. I, as the aggressor, can determine how much my eye is worth; that is, how much I'm willing to pay to keep it.

Another question: where do you see the application of the first-in principle to pollution? Presumably, low levels of pollution are sufficiently trivial so as to be exempt from damages or injunctions. Are the first polluters then exempt, meaning that it is subequent polluters that cross a threshold who are now liable?

Dave Albin June 15, 2010 at 12:46 pm

There will always be situations where private-property owners don’t reach an agreement, and one owner may continue to use aggression on the other one. This may call for an aggressive reaction. There are cases where reactive force are justified.

Jake_nonphixion June 15, 2010 at 10:01 pm

I’m interested in where private courts would be granted the authority to enforce their decisions. In what way could they bind the parties to their agreement?

Inquisitor June 15, 2010 at 10:18 pm

In the first instance they’d be hired by the parties delegating the protection of their rights to them. For appeals, these would most likely be designated beforehand, i.e. a list of courts perhaps your own would be willing to submit to appeals if it were needed. They could enforce their decisions once 2/3 courts decided one way or the other 1) through force 2) social sanctions (e.g. lowering credit rating, blacklisting the individual etc.) Quite sophisticated compared to the current monopoly provision of the good in question…

Terry June 16, 2010 at 1:46 am

I am with JMorris84 on this one. Having lived in China now for 15 years plus 12 years in HK, I am obviously a stake holder here in regard to environmental pollution. I am not so sure you even know that much about the court/legal systems here in China who always tend traditionally towards compromise and “harmony” and diminish adversarial positions rather than strict adherence to the law (an old cultural trait and communist party priority as well). China also has probably the most advanced body of environmental law in the world on its books as a result of study and cherry picking the best of the world’s environmental laws. The problem has always been enforcement as China is not the monolithic state that it is popularly perceived as in the outside world.

Without addressing the theoretical parts of your article, some statements are patently unsubstantiated suppositions on your part.

“The Chinese state’s arrogation of all pollution litigation to its own courts is a clear collectivization of environmental property rights”

Can you name a country in the world that doesn’t aggregate all pollution litigation to its own courts? Are the great majority of peoples in those countries actually aware of environmental property rights? And what really do you mean by collectivization here?

“The state’s subsequent, systematic refusal to enforce property owners’ claims against pollution damages to the serviceability of their air and the appearances of their structures’ outward surfaces, then, constitutes a redistribution of these collectivized rights to “dirty” industries and other heavy polluters.”
Do you have evidence of this or is this theory? Certainly in the area of easier to establish water pollution, chemical spills pollution etc. much has been done in this area here in China with plants being closed down and individuals receiving compensation (yes even here in China!!). Most “dirty” industries and heavy polluters operate without the permission of the larger state, and therefore operate in remote economically less developed areas where they often do have the cooperation and protection of local governments do to the economic benefits (employment/taxes etc.) they provide to previously impoverished territories, and the larger state with its laws have real difficulties in enforcing standards in such locales.

On another note, the smog you saw in Shanghai and in Beijing where I live is almost 80% attributable to the rapid growth in private car ownership rather than to polluting industries. Yes the fuel is dirtier due to state monopoly and emission standards are not as rigorous (though those are being improved).

“Indeed, it is theoretically indisputable that the recent decades of environmental cost externalization have contributed to the attractiveness of China for foreign investors in high-polluting markets.”

That is pretty much BS and comes from a anti-globalization/anti multinational bias, given that foreign investors are held to much higher standards both by the Chinese government and by their own internal guidelines due to greater awareness of the negative consequences of polluting both as “guests” in China and in their original domiciles. The government also does not allow foreign investment in high-polluting industries by foreign entities which is unfortunate in a way as foreign players always maintain the highest environmental standards in the market here.

Ok…now I do theoretically agree with much of what you say later in the article though you do make many blanket statements that are not true to support your theories.

“The Chinese courts, predictably, have consistently redistributed air property from poor, nonpolluting firms and individuals to rich industrialists. The industrialists, in turn, provide the political class with a global reputation for promoting economic growth — as well as higher tax income, bribes, and campaign donations.”

um, 1) in China there is no such thing as ‘campaign donations’. 2)there is no sense of air property whatsoever and I challenge you to find more than 3 people who might have a friggin idea what you mean here. 3) poor firms are the biggest polluters in this country not the “rich” industrialists actually.

Sorry Eric, I really feel that in reaction to seeing the particulate air pollution here in China that you decided to write a wonderful piece of libertarian theorizing in a most difficult arena (environmental property rights) and then assumed “facts” to support your overall theory.

While old enough to be your father, I am also a long time student of Austrian economics, am a philosophical anarchist, and I do wrestle with these issues as they are applied to the world in which I live, but I feel that you really have to study China further before making such broad statements as these. While I am philosophically against statism, much good can be said about the progress China has been making on environmental issues, about the rise of Clean Tech here, the leading edge in developing electric vehicles, the growing enforcement of environmental laws etc. China has a long way to go in terms of environmentally responsible economic development but the most pressing need is education and awareness (i.e. showing small industries the benefits of installing that scrubber, the long term ROI/advantages of less wasteful energy consumption etc.) and there is a lot of grass roots as well as (ugh) state supported education in these areas.

The fundamental things that are lacking on a practical level in China is the total lack of awareness of environmental rights as it relates to property rights and the woefully insufficient legal enforcement regime in terms of free market protectors (litigators?) in a country which produces way too few law graduates and those that they do are ill equipped in this arena. This will happen in time, but China really is still a developing nation and one major truism that does exist for China – “where there is a will, there is a way” and right now the will is starting to generate in reaction to the negative environmental conditions that have resulted from the rapid and yes reckless unleashing of free market forces in what was a stifling centrally planned economy.

Anthony June 16, 2010 at 9:57 pm

Great comment, Terry.

I have often been disappointed with the quality of the arguments in articles about environmental issues… Given that the environment is a key issue for many people it is particularly important that we are careful with our arguments on this topic.

William Barnes April 15, 2011 at 12:54 am

Me too Anthony. I’m searching for links to share with my marxist environmentalist friends and I’m not finding the clear hard hitting stuff Id thought I’d find. Like an article on the history of the federal highway system and the environmental fallout from that, or how consumer rights are restricted in our corporatist system, so they can’t retaliate as well against polluters as they would in a true free market.

Jack Roberts June 16, 2010 at 4:12 pm

Property rights on air is something new and if implemented in the current system, would surely cause more harm than good. But environmental pollution of your property is generally illegal.

Dave Doctor June 16, 2010 at 9:07 pm

In Rothbard’s For a New Liberty I learned that soon after factories sprang up, nearby residents and farmers sued over the damage from air pollution. Hearing this, I realized it is justifiable to object to air pollution generated by a neighbor and a neighbor’s car, and I experience auto exhaust pollution first-hand during my walk to work.

So I created a spoof product to illustrate how drivers would react if they were the first to know how much pollution they emitted while driving.

Check out http://www.monoxitube.com. See the About Us page for a Rothbard reference.

TokyoTom June 22, 2010 at 10:58 pm

Eric, a nice and useful try, but like Terry says it seems you’ve let your theory run ahead of you a bit.

For those interested in China, I note I’ve done a bit of blogging on China and “Kuznets curve” issues: http://mises.org/Community/blogs/tokyotom/search.aspx?q=kuznets

I look forward to seeing more from you.


tungsten watches July 23, 2010 at 4:23 am

American economic development in China, but China is the biggest developing country, now the economy is booming, but the American economy development, but not yet appear backwards, so the phenomena of China can take much experience is coming from, but we should recognize that China’s development process also appeared a lot of problems, such as production is a serious problem in this way, the economic growth.

smog check October 7, 2010 at 11:00 am

The issue with China is bigger than smog and pollution.

smog check October 26, 2010 at 9:29 pm


My suggestion to you is this: writer simpler and write to point.
We have smog checks for
vehicles in California. This is what China should starting doing to
protect the environment.

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