Wednesday, June 22, 2011

The Golden Rule and Public Property Rights... There's a connection

Equal sharing of natural wealth promotes justice and sustainability.

Natural phenomena emerge in the cosmos according to natural law. Moral precepts can be seen as natural laws of social interaction, while the emergence of civilization can be seen as a particular kind of natural phenomenon. But civilization in its current form is plagued by widespread extreme poverty and our society is threatening to produce a planetary ecological disaster. We are challenged by circumstances to create a sustainable and more just civilization. This will require a fuller respect of basic moral principles.

Civilizations thrive then collapse because they grow beyond what the natural environment can sustain. Economies boom then bust because they grow beyond what their resource bases can support. These sometimes wild swings may appear to be cyclical variations, but they actually reflect chaotic instabilities. The arc of civilization, the boom and bust of the business 'cycle' and the formation and collapse of real estate and financial bubbles are all the same phenomenon seen at different time scales and different magnitudes, and with different enabling factors becoming scarce at the point of collapse. A closer adherence to basic moral principles would mean a dampening of these gyrations. Respect of moral precepts would keep natural variations within limits that would ensure that they would not pose an existential threat to the integrity of the system.

If we recognize a basic human right to define overall limits to environmental impacts, then, as citizens of a democratic society, we must acknowledge a corresponding responsibility to create a government that brings about the limits in reality that the average opinion of the people says are most appropriate. But our governmental institutions are not functioning in a way that ensures that actual impacts are within limits acceptable to most people. So we must change our institutions. We must change the way that we participate in the political process.

Increasing social instabilities and dwindling resources present us with a great challenge. A change in our thinking about property rights could offer a solution. Since the advent of civilization, we have developed the concept of private property rights. Now, if we look closely at our fundamental rights and moral duty in relation to the natural environment and our social environment, we can see the concept of public property rights emerging. This concept is rooted in our innate sense that we have a right to use air and water and other natural resources. With public property rights respected, natural opportunities (natural wealth) will be shared equally. This concept of property rights implies that we also have a collective duty to define limits regarding the extent to which human beings will degrade, deplete and destroy these shared resources. A public-property-rights paradigm will emerge when we bring our actions in the political and economic realms more into alignment with basic moral principles. When we collectively resolve to only vote for lawmakers who support policies that will result in effective limits to adverse environmental impacts (limits consistent with the will of the people at large), then we will begin to carry out the duties that correspond to our public property claims. When we demand that economic externalities be accounted for and that fee proceeds related to that accounting be shared equally, we will begin to enjoy the benefits related to our shared claim to a right to enjoy the benefits of natural wealth.

As a kind of natural law, basic human rights must be respected. Society cannot hold together over the long term when basic rights are chronically and systematically neglected. When we carry out our collective duty to use our systems of governance and the political process to define effective limits to humans' environmental impacts, then our basic right to define these limits will be respected in practice.

We need to start accounting for economic externalities. Externalities are those side-effects of economic activity that are not reflected on the financial balance sheet of profit and loss, income and expense. Sometimes there are spillover effects produced by economic actors that actually benefit a community, but more often, externalities consist of negative side-effects of industrial and commercial activity. Externalities (also called 'market failure') can be seen as a way that producers (and consumers) foist environmental impact and depletion costs onto society and the larger community of life.

Pollution is a classic example of a negative externality. Resource degradation from excessive use or extraction of resources is another. Since these costs to society and to all life on Earth are not reflected in prices or in the cost of doing business, producers do not take into proper account the true costs of their actions. Corporations will pollute the air and water more and use up resources faster when the costs of doing so are hidden or partially hidden. In pursuit of higher profits, economic actors put effort into reducing costs that they can see on the balance sheet. When costs to society are not shown on profit-and-loss statements, businesses act as if those costs do not exist. Almost since we started carrying things (or since animals much like us started carrying things), we have traded based on what we could see as the costs and benefits of a transaction. But the effect of externalities is to prevent us from seeing clearly.

We know that natural resources are valuable—even indispensable—to industry and to society at large. Yet we allow industries to take and degrade natural wealth without any expectation that they will pay compensation for the damage done or value taken. A fee charged against those who take or degrade natural resource wealth is a tool that society can use to influence industrial and economic sectors, to ensure that sufficient effort is put into resource conservation and sustainable business practices. This fee mechanism can replace other, less efficient means of managing natural resources. A fee would reflect the environmental costs of human activity on the financial bottom line. Costs now hidden would become apparent. Fee proceeds should be shared equally to all the world's people.

Charging fees on the taking or degradation of natural resources could moderate particular kinds of human economic activity, with the aim of keeping overall impacts within limits that most people find acceptable. This could ensure that the basic human right to collectively decide such limits (a mere theoretical construct) is respected in practice and manifest in reality. The hope and expectation is that people would in fact choose to keep overall impacts within limits that the larger environment can sustain. Eternal vigilance by citizens will be required to ensure that a human population that has the ability to exceed what the Earth can sustain in reality does not go beyond those limits. It might be easy to persuade people that stricter limits on environmental impacts are preferable when it is understood that stricter limits will mean higher payments to the people by those who produce the adverse impacts. Higher fees charged to industries that pollute or deplete natural resources in pursuit of profit means higher payments to the people in the form of a natural wealth dividend. There is a happy coincidence of interests: What is good for the individual is also good for the community. Similarly, profit-seeking corporations will do things to save money and increase profit that will also benefit society and the larger environment.

Proceeds from environmental impact fees would be a monetary representation of the value of natural resource wealth. Equal sharing of these proceeds would buffer the downward slide of a shrinking economy, since the entire human population would continue to receive a modest income from shared natural resource wealth, independent of income from work, investments or family inheritance. A floor on the loss of human confidence that causes or contributes to business contractions would be created. Spending in support of basic needs would continue. Money will continue to flow to the most vital sectors of the economy. The part of the economy devoted to meeting basic needs would then be insulated from the worst vicissitudes of the business 'cycle'. With human-caused stresses on ecosystems and demands on natural resources kept sufficiently low through a fee mechanism, and with swings in the economic climate moderated, civilization becomes a more sustainable and more stable phenomenon.

The short answer for how to change institutions toward a public property rights paradigm of sustainability and moral responsibility would be to start voting green AND libertarian (or left-libertarian). A marriage of these threads from our political tradition would combine a good sense of the practical challenges and responsibilities of government (what government must do) with a principled understanding of the proper limits to government power (what government must refrain from doing). And the other short answer for how to make this change happen is to let people know it is possible. Let people (including candidates for public office) know that you want it to happen.

Government power has limits to its authority, as does individual power and autonomy. Political activities (such as voting) must be moral undertakings to have good results. If we understand that governments get their just powers from the consent of the governed, then any moral foundation for governmental powers requires that we only delegate powers to government that we legitimately have as individuals. If we do not have authority to initiate the use of force or coercion against a peaceful person, then we cannot delegate this power to governments. We cannot legitimately use government to regulate others’ private actions. We cannot legitimately vote for politicians who would do so, either. Principled limits to governmental power and authority must be respected.

It is quite fitting that we should stop trying to regulate private behaviors as a matter of principle. Such a change may be absolutely necessary from a practical standpoint, too. Perhaps only by freeing-up the attention and resources now devoted to fighting drug wars and other wars can we have sufficient attention and resources available to meet the great challenges facing the entire human community.

The new economy will make material consumption cost more on the financial bottom line. This will reflect more honestly the fact that 'materialism' costs much in terms of natural resources used. This new economy will spread material wealth more evenly across the human population, while improving the fluidity of the job market. (People will be more free to leave oppressive or disagreeable employment situations when their work income is not their sole source of income.) The new economy will limit pollution levels and rates of taking of natural resources so that they are within limits that most people agree are acceptable. We will have a more true democracy.

This change makes the chaotic thriving and collapse of civilizations (the large-scale version of the boom and bust of the business ‘cycle‘) into a less wildly-gyrating phenomenon: Still on the edge of chaos, perhaps (as are all living systems), but potentially a sustainable phenomenon.

Minimum Wage vs. Minimum Income

Biological Model for Politics and Economics


Matt Torley said...

"We know that natural resources are valuable—even indispensable—to industry and to society at large. Yet we allow industries to take and degrade natural resource wealth without any expectation that they will pay compensation for the damage done or value taken"

The key flaw here is that an unused resource has no actual value. A vein of iron ore only gains value when altered by human activity. This activity is itself a public good. By extracting and processing the ore, members of the community come together as an industry and convert potential value to actual value. They are then compensated by the rest of the community for this effort, while the net value of the community increases.
Negative externalities, when present, are judged against the value produced, and as long as the cumulative net change in value is positive, the externalities will be corrected or ignored by the community.

Central here is the simple point that value is an entirely subjective concept, existing only in the human mind. Therefore, relative valuation is the sole domain of human judgement, and subject to its whims and flaws, not an objective standard.

As judgement is imperfect, it is possible to, for example, value the effects of methamphetamine more highly than one's own life. Collective judgement may be more stable and/or rational than that of the individual, but it is no less imperfect.

John Champagne said...

Thank you for your comment.

Would you agree, then, that, by analogy, your bank account has no actual value, since you are not using the money in it? If this is a flawed analogy, where does it miss the mark?

What does 'no actual value' mean? Does it mean 'no value'?

We can think of plants in the rainforest or veins of ore in the ground as offering opportunities to present and future generations, either as a source of food and medicine in the case of plants or as material from which to make refined metals in the case of the ore. When opportunities are diminished, either because we make species extinct or because we deplete mineral resources, value is lost. I think it is an appropriate goal of a civilized society to limit depletion of resources and rates of taking of resources so that future generations are not seriously disadvantaged by being deprived of opportunities; or so that any curtailment of opportunities is not carried to an extent that most people feel is excessive. The public policy question is, 'What is an acceptable rate of taking or depletion of (this or that) natural resource?' A democratic society would aim for a rate that most people agree is appropriate (with an equal number saying we are not too strict in our limits as those who say we are not too lenient).

I agree with you that material goods are produced by human beings taking natural resources and mixing their labor with them to make them useful. But this is not to say that raw materials have no value.

Thanks again for sharing your thoughts.

Dave herbert said...

I like what you say. That is why I joined the Green Party as their aims and policies would fit well with yours. For example promoting a citizens income and limiting income disparity and a lot more. Check it out you may like the greens policy?

Anonymous said...

see "inheritance CAP" on youtube, it's the only means by which our goals can be reeled in to serve the future!

notetaker said...

First, "widespread extreme poverty" has been the norm of man since there was man. This idea that we can live comfortably and long is new and enabled by technology.

There are no "boom and bust" cycles if government doesn't intrude into a market. There can be slowdowns, but those are quickly adjusted by changing prices. There are always people looking for a good deal and an opportunity to profit. Government plays with your money and there's no incentive to get it right. No risk to take.

Societies don't run out of natural resources. When a resource becomes expensive, people look for substitutes. Recently we see large new streams of natural gas as a result of fracking technology. Now there may be problems with that, and if identified, the price rises and people go to work to fix them and make money in the process. Resource depletion in a free market has never been observed. Russia (not a free market) has seen depletion.

I could go on and refute the rest of your piece, but you could go to Khan Academy and take an econ 101 course and save us both a lot of time.