How should we treat scarce resources, natural resources that none of us
can rightly claim as our private property? How do we justly share their
value among all of us, while rewarding the effort of those who labor to
extract them from the earth? How do we rightly share the huge value of
our most choice urban land among all of us?
We can always create more buildings, but we can't create land, so we must
treat it differently from that which we can create more of.
Henry George: Thou Shalt Not Steal
"Thou shalt not steal"; that is the law of God. What does it mean? Well,
it does not merely mean that you shall not pick pockets! It does not merely
mean that you shall not commit burglary or highway robbery! There are other
forms of stealing which it prohibits as well. It certainly means (if it has
any meaning) that we shall not take that to which we are not entitled, to
the detriment of others.
Now, here is a desert. Here is a caravan going along over the desert. Here
is a gang of robbers. They say: "Look! There is a rich caravan; let us go
and rob it, kill the men if necessary, take their goods from them, their
camels and horses, and walk off." But one of the robbers says: "Oh,
no; that is dangerous; besides, that would be stealing! Let us, instead
of doing that, go ahead to where there is a spring, the only spring at which
this caravan can get water in this desert. Let us put a wall around it and
call it ours, and when they come up we won’t let them have any water
until they have given us all the goods they have." That would be more gentlemanly,
more polite, and more respectable; but would it not be theft all the same? And is it not theft of the same kind when people go ahead in advance of population
and get land they have no use whatever for, and then, as people come into
the world and population increases, will not let this increasing population
use the land until they pay an exorbitant price?
That is the sort of theft on which our first families are founded.
Do that under the false code of morality which exists here today and people
will praise your forethought and your enterprise, and will say you have
made money because you are a very superior person, and that all can make
money if they will only work and be industrious! But is it not as clearly
a violation of the command: "Thou shalt not steal," as taking the money
out of a person’s pocket?
"Thou shalt not steal." That means, of course, that we ourselves must not
steal. But does it not also mean that we must not suffer anybody else to
steal if we can help it?
"Thou shalt not steal." Does it not also mean: "Thou shalt not suffer thyself
or anybody else to be stolen from?" If it does, then we, all of us, rich
and poor alike, are responsible for this social crime that produces poverty.
Not merely the people who monopolize the land — they are not to blame
above anyone else, but we who permit them to monopolize land are also parties
to the theft. ... read the whole
Henry George: The
Land Question (1881)
When there is famine among
savages it is because food enough is
not to be had. But this was not the case in Ireland. In any part of
Ireland, during the height of what was called the famine, there was
food enough for whoever had means to pay for it. The trouble was not
in the scarcity of food. There was, as a matter of fact, no real
scarcity of food, and the proof of it is that food did not command
scarcity prices. During all the so-called famine, food was constantly
exported from Ireland to England, which would not have been the case
had there been true famine in one country any more than in the other.
During all the so-called famine a practically unlimited supply of
American meat and grain could have been poured into Ireland, through
the existing mechanism of exchange, so quickly that the relief would
have been felt instantaneously. Our sending of supplies in a national
war-ship was a piece of vulgar ostentation, fitly paralleled by their
ostentatious distribution in British gunboats under the nominal
superintendence of a royal prince. Had we been bent on relief, not
display, we might have saved our government the expense of fitting up
its antiquated warship, the British gunboats their coal, the Lord
Mayor his dinner, and the Royal Prince his valuable time. A cable
draft, turned in Dublin into postal orders, would have afforded the
relief, not merely much more easily and cheaply, but in less time
than it took our war-ship to get ready to receive her cargo; for the
reason that so many of the Irish people were starving was, not that
the food was not to be had, but that they had not the means to buy
it. Had the Irish people had money or its equivalent, the bad seasons
might have come and gone without stinting any one of a full meal.
Their effect would merely have been to determine toward Ireland the
flow of more abundant harvests. ... read the whole article
Henry George: The Wages of
The very robbery that the masses
men thus suffer gives rise in advancing communities to a new robbery.
For the value that with the increase of population and social advance
attaches to land being suffered to go to individuals who have secured
ownership of the land, it prompts to a forestalling of and speculation
in land wherever there is any prospect of advancing population or of
coming improvement, thus producing an
artificial scarcity of the
natural element of life and labor, and a strangulation of
that shows itself in recurring spasms of industrial depression as
disastrous to the world as destructive wars. ... read
the whole article
The Most Rev. Dr Thomas Nulty, Roman Catholic Bishop of Meath
to the Land (1881)
The Price of Land a Monopoly
This privileged class not merely sells the use of God's gifts,
extorts for them a price which is most unjust and exorbitant; in
fact, they hardly ever sell them at less than scarcity or famine
prices. If a man wants to buy a suit of broadcloth, the price he will
be required to pay for it will amount to very little more than what
it cost to produce it -- and yet that suit of clothes may be a
requirement of such necessity or utility to him that he would
willingly pay three times the amount it actually cost rather than
submit to the inconvenience of doing without it. On the other hand,
the manufacturer would extort the last shilling he would be willing
to give for it, only that he knows there are scores of other
manufacturers ready to undersell him if he demanded much more than
the cost of its production. The price, therefore, of commodities of
all kinds that can be produced on a large scale, and to an indefinite
extent, will depend on the cost required to produce them, or at least
that part of them which is produced at the highest expense.
But there is a limited class of
commodities whose selling price
has no relation or dependence at all on the cost at which they have
been produced; for example, rare wines that grow only on soils of
limited extent; paintings by the old masters; statues at exquisite
beauty and finish by celebrated sculptors; rare books, bronzes and
medals, and provisions or articles of human food in cities during a
siege, and more generally in times of scarcity and famine -- these
commodities are limited in quantity, and it is physically impossible
in the circumstances existing to increase, multiply, or augment them
further. The seller of these commodities, not being afraid of
competition, can put any price he pleases on them short of the
purchasers' extreme estimate of the necessity, utility, or advantage
to themselves of such commodities.
Fabulous sums of money, therefore,
have been expended in the
purchase of such commodities -- sometimes to indulge a taste for the
fine arts; sometimes to satisfy a passion for the rare and the
beautiful; and, sometimes, too, to gratify a feeling of vanity or
ambition to be the sole proprietors of objects of antiquarian
interest and curiosity. On the other hand, enormous sums of money
have been paid in times of scarcity or during a siege for the
commonest necessaries of life, or, failing these, for substitutes
that have been requisitioned for human food, the use of which would
make one shudder in circumstances of less pressing necessity. Read the whole letter
Henry George: How to Help the
AN EPIDEMIC of what passes for
charity is sweeping over the land. ...
Yet there has been no disaster of
fire or flood, no convulsion of
nature, no destruction by public enemies. The seasons have kept their
order, we have had the former and the latter rain, and the earth has
not refused her increase. Granaries are filled to overflowing, and
commodities, even these we have tried to make dear by tariff, were
never before so cheap.
The scarcity that is distressing
and frightening the whole country
is a scarcity of employment. It is the unemployed for whom charity is
asked: not those who cannot or will not work, but those able to work
and anxious to work, who, through no fault of their own, cannot find
work. So clear, indeed, is it that of the great masses who are
suffering in this country to-day, by far the greater part are honest,
sober, and industrious, that the pharisees who preach that poverty is
due to laziness and thriftlessness, and the fanatics who attribute it
to drink, are for the moment silent.
Yet why is it that men able to
work and willing to work cannot
find work? It is not strange that the failure to work should bring
want, for it is only by work that human wants are satisfied. But to
say that widespread distress comes from widespread inability to find
employment no more explains the distress than to say that the man
died from want of breath explains a sudden death. The pressing
question, the real question, is, What causes the want of
What more unnatural than that alms
should be asked, not for the
maimed, the halt and the blind, the helpless widow and the tender
orphan, but for grown men, strong men, skilful men, men able to work
and anxious to work! What more unnatural than that labor -- the
producer of all food, all clothing, all shelter -- should not be
exchangeable for its full equivalent in food, clothing, and shelter;
that while the things it produces have value, labor, the giver of all
value, should seem valueless!
Here are men, having the natural
wants of man, having the natural
powers of man -- powers adapted and intended and more than sufficient
to supply those wants. To say that they are willing to use their
powers for the satisfaction of their wants, yet cannot do so, is to
say that there is a wrong. If it is not their fault, whose fault is
it? Wrong somewhere there must be. ...
Why should charity be offered the
unemployed? It is not alms they
ask. They are insulted and embittered and degraded by being forced to
accept as paupers what they would gladly earn as workers. What they
ask is not charity, but the opportunity to use their own labor in
satisfying their own wants. Why can they not have that? It is their
natural right. He who made food and clothing and shelter necessary to
man's life has also given to man, in the power of labor, the means of
maintaining that life; and when, without fault of their own, men
cannot exert that power, there is somewhere a wrong of the same kind
as denial of the right of property and denial of the right of life --
a wrong equivalent to robbery and murder on the grandest scale.
Charity can only palliate
present suffering a little at the risk
of fatal disease. For charity cannot right a wrong; only justice can
Yet this is to be expected. For the question of the unemployed
but a more than usually acute phase of the great labor question -- a
question of the distribution of wealth. ...
What do we mean when we say that it is scarcity of employment
which the masses are suffering? Not what we mean when we say of the
idle rich that they suffer from want of employment. There is no
scarcity of the need for work when so many are suffering for the want
of things that work produces, when all of us would like more, and all
but a very few of us could advantageously use more, of those things.
Nor do we mean that there is scarcity of ability to work or
willingness to work. Nor yet do we mean that there is scarcity of the
natural materials and forces necessary for work. 'They are as
abundant as they ever were or ever will be until the energy radiated
by the sun upon our globe loses its intensity. What we really mean by
"scarcity of employment " is such scarcity as would be brought about
were an ice sheet continued into the summer to shut out the farmer
from the fertile field he was anxious to cultivate; such a scarcity
as was brought about in Lancashire when our blockade of the Southern
ports raised suddenly and enormously the price of the staple that
English operatives were anxious to turn into cloth.
What answers to the ice sheet or the blockade? Need we ask? May
not be seen, from our greatest cities to our newest territories, in
the speculation which has everywhere been driving up the price of
land -- that is to say, the toll that the active factor in all
production must pay for permission to use the indispensable passive
If there are any who do not see the relation of these facts, it
because they have become accustomed to think of labor as deriving
employment from capital, instead of, which is the true and natural
relation, capital being the product and tool of labor. ...
So that, whether we begin at the right or the
wrong end, any analysis brings us at last to the conclusion that the
opportunities of finding employment and the rate of all wages depend
ultimately upon the freedom of access to land; the price that labor
must pay for its use.
"Scarcity of employment" is a comparatively new complaint in the
United States. In our earlier times it was never heard of or thought
of. There was "scarcity of employment " in Europe, but on this side
of the Atlantic the trouble -- so it was deemed by a certain class --
was "scarcity of labor." ...
Today, as the last census reports show, the majority of American
farmers are rack-rented tenants, or hold under mortgage, the first form
of tenancy; and the great majority of our people are landless men,
without right to employ their own labor and without stake in the land
they still foolishly speak of as their country. This is the reason why
the army of the unemployed has appeared among us, why by pauperism has
already become chronic, and why in the tramp we have in more dangerous
type the proletarian of ancient Rome.
These recurring spasms of business stagnation; these long-drawn
periods of industrial depression, common to the civilized world, do not
come from our treatment of money; are not caused and are not to be
cured by changes of tariffs. Protection is a robbery of labor, and what
is called free trade would give some temporary relief, but speculation
in land would only set in the stronger, and at last labor and capital
would again resist, by partial cessation, the blackmail demanded for
their employment in production, and the same round would be run again.
There is but one remedy, and that is what is now known as the
single-tax -- the abolition of all taxes upon labor and capital, and of
all taxes upon their processes and products, and the taking of economic
rent, the unearned increment which now goes to the mere appropriator,
for the payment of public expenses. Charity can merely demoralize and
pauperize, while that indirect form of charity, the attempt to
artificially "make work" by increasing public expenses and by charity
woodyards and sewing-rooms, is still more dangerous. If, in this sense,
work is to be made, it can be made more quickly by dynamite and
But there is no need for charity; no need for "making work." All
that is needed is to remove the restrictions that prevent the natural
demand for the products of work from availing itself of the natural
supply. Remove them today, and every unemployed man in the country
could find for himself employment tomorrow, and his "effective demand"
for the things he desires would infuse new life into every subdivision
of business and industry, even that of the dentist, the preacher, the
magazine writer, or the actor.
The country is suffering from "scarcity of employment." But let
anyone to-day attempt to employ his own labor or that of others,
whether in making two blades of grass grow where one grew before, or in
erecting a factory, and he will at once meet the speculator to demand
of him an unnatural price for the land he must use, and the
tax-gatherer to fine him for his act in employing labor as if he had
committed a crime. The common-sense way to cure "scarcity of
employment" is to take taxes off the products and processes of
employment and to impose in their stead the tax that would end
speculation in land. ... Read the entire
Charles B. Fillebrown: A Catechism
of Natural Taxation, from Principles of
Natural Taxation (1917)
Q8. How about fertility value?
A. On the surface of the globe are countless varieties of exhaustible fertility,
i.e. chemical constituency, differing in kind and degree, from the nitrogen,
hydrogen, oxygen, and carbon of the soil to the carbon of the coal, the
gold, and the diamond. Fertility as an attribute need not be predicated
of agricultural land alone. Economic fertility belongs equally to any other
land which yields to labor its product whether in food, mineral, or metal.
Land may be fertile in wheat, corn, and potatoes. It may be fertile in
cotton, in tobacco, or in rice. It may be fertile in diamonds, in gold,
silver, copper, lead, or iron. It may be fertile in oil, coal, or natural
gas, in a water power or water front. The value of artificial fertility
is an improvement value. The value of natural fertility of any kind is
a site value.
... read the whole article
Mason Gaffney: Full
Employment, Growth And Progress On A Small Planet:
Relieving Poverty While Healing The Earth
2. Effect of
artificial scarcity on marginal returns to labor and capital.
Underuse of better lands
forces labor and capital (which is mobile,
like labor) to resort to worse or “marginal” lands, thus
scattering and spreading out settlement, raising aggregate demands on
land, and wasting capital (George, 1879). This lowering of the “margin of production” lowers
the marginal productivity of labor and capital, and hence their economic
rewards, tilting the
distribution of income in favor of landowners, creating an illusion
of overpopulation (Malthus), and lack of investment outlets
Keynes, Hobson et al.).
That pattern was first recognized
in farming, but it is universal.
The underuse of central city lands
(large parts of which are
derelict) drives demand outwards to less accessible urban sites. From
there, the same force drives demand outwards to the inner suburbs;
from there, to further suburbs, and so on. “Urban sprawl”
is the generic name, but “scatter” and
“disintegration” express the point better. Farm and
wilderness defenders perceive the problem mainly at the edge of
cities, noting the loss of open land, but that is a lesser social and
economic loss than the destruction of urban values inside the edge.
One way of denying the basic
problem is to call it
“unbalanced growth,” as in Orange County, where people
recognize it as too many jobs relative to the housing supply. It is
not the “unbalance” that is the problem, though: how can
there be too many jobs? It is too little housing that is the problem,
driving demand eastwards up through Sta. Ana Canyon, with its awful
traffic bottleneck, to central Riverside County, where it meets
demand fleeing north from San Diego.
Now weave this pattern of
scattered settlement into the whole
system. It forces auto-dependency and
the need for fuels, pushing up their prices, and lowering the real
wages of those who have to consume them in larger quantities at
higher prices. Much of what looks like
self-indulgent consumption of
U.S. motorists is not joy-riding, but the forced consumption of
commutation, forced by scattered urban sprawl, the product of land
speculation. Auto-apologists get this backwards, of course,
joy-riding the cause and sprawl the effect.
In forestry, the places to grow
commercial timber are lands that
are “flat, wet, and warm,” as John Baden summarizes it. (He
might have added, “accessible.”) Failure to restock such
lands economically pushes demand onto lands that are steep, dry and
cold, creating the “forestry sprawl” from
which we suffer.
to put indigenous waters of
southern California to full
economical use creates the appearance of scarcity where there is
actually enough water. It drives demand northwards to the Owens
Valley and the Feather River, and eastward to the Colorado River, at
enormous social cost, much of it for energy. Those who issue doomsday
dessication scenarios, and deplore the loss of water to farming, also
seem to have no idea of how
a handful of giant landowners waste most
of our water on low-valued uses like pasture, hay, small grains and
rice, using primitive wasteful methods like flooding, or furrow
irrigation. Only 2-3% of our irrigated lands use basic
techniques like drip emitters. Those
who waste water in this way are
basically substituting water, a limited natural resource, for the
labor and capital others use to conserve water while growing
higher-valued crops (Gaffney, 1997; Kahrl).
One could go on through a long
list of natural resources, but once
one gets the idea, those with understanding and imagination can fill
in hundreds of details. ... read the whole article
Ted Gwartney: Estimating
Land value can be thought of as
the relationship between a desired
location and a potential user. The ingredients that constitute land
value are utility, scarcity and desirability. These factors must all
be present for land to have value.
Land that lacks utility and
scarcity also lacks value, since
utility arouses desire for use and has the power to give
satisfaction. The air we breathe has utility and is generally
considered important, since it sustains and nourishes life. However,
in the economic sense, air is not valuable because it hasn't been
appropriated and there is enough for everyone. Thus there is no
scarcity -- at least at the moment. This may not be true in the
future, however, as knowledge of air pollution and its effect on
human health make people aware that clean and breathable air may
become scarce and subsequently valuable.
By themselves, utility and
scarcity confer no value on land. User
desire backed up by the ability to pay value must also exist in order
to constitute effective demand. The potential user must be able to
participate in the market to satisfy their desire. ... Read
the whole article
Peter Barnes: Capitalism
3.0: Preface (pages ix.-xvi)
I began pondering this dilemma about ten years ago after retiring
from Working Assets, a business I cofounded in 1982. (Working Assets
offers telephone and credit card services which automatically donate
to nonprofit groups working for a better world.) My initial ruminations
focused on climate change caused by human emissions of heat-trapping
gases. Some analysts saw this as a “tragedy of the commons,” a
concept popularized forty years ago by biologist Garrett Hardin.
According to Hardin, people will always overuse a commons because
it’s in their self-interest to do so. I saw the problem instead
as a pair of tragedies: first a tragedy of the market, which has
no way of curbing its own excesses, and second a tragedy of government,
which fails to protect the atmosphere because polluting corporations
are powerful and future generations don’t vote.
This way of viewing the situation led to a hypothesis: if the commons
is a victim of market and government failures, rather than the cause
of its own destruction, the remedy might lie in strengthening the
commons. But how might that be done? According to prevailing wisdom,
commons are inherently difficult to manage because no one effectively
owns them. If Waste Management Inc. owned the atmosphere, it would
charge dumpers a fee, just as it does for terrestrial landfills.
But since no one has title to the atmosphere, dumping proceeds without
limit or cost.
There’s a reason, of course, why no one has title to the atmosphere.
For as long as anyone can remember there’s been more than enough
air to go around, and thus no point in owning any of it. But nowadays,
things are different. Our spacious skies aren’t empty anymore.
We’ve filled them with invisible gases that are altering the
climate patterns to which we and other species have adapted. In this
new context, the atmosphere is a scarce resource, and having someone
own it might not be a bad idea. ...
In retrospect, I realized the question I’d been asking since
early adulthood was: Is capitalism a brilliant solution to the problem
of scarcity, or is it itself modernity’s central problem? The
question has many layers, but explorations of each layer led me to
the same verdict. Although capitalism started as a brilliant solution,
it has become the central problem of our day. It was right for its
time, but times have changed.
When capitalism started, nature was abundant and capital was scarce;
it thus made sense to reward capital above all else. Today we’re
awash in capital and literally running out of nature. We’re
also losing many social arrangements that bind us together as communities
and enrich our lives in nonmonetary ways. This doesn’t mean
capitalism is doomed or useless, but it does mean we have to modify
it. We have to adapt it to the twenty-first century rather than the
eighteenth. ... read
the whole chapter
Peter Barnes: Capitalism
3.0 — Chapter 2: A Short History of Capitalism (pages 15-32)
Sometime around 1950, capitalism entered a new phase. Until then,
poverty was a widely shared American experience. Wages were low,
hours were long, and unemployment was a wolf at almost every door.
In the 1930s, it reached 25 percent.
This changed in the period following World War II. In 1958, economist
John Kenneth Galbraith wrote a best-seller called The Affluent Society
in which he noted that scarcity of goods was now a thing of the past
for a majority of Americans. “The ordinary individual has access
to amenities — foods, entertainment, personal transportation
and plumbing — in which not even the rich rejoiced a century
ago,” Galbraith observed. “So great has been the change
that many of the desires of the individual are no longer even evident
to him. They become so only as they are synthesized, elaborated,
and nurtured by advertising and salesmanship, and these, in turn,
have become among our most important and talented professions.”
This was a major phase change for capitalism. Before, people wanted
more goods than the economy could provide. Demand, in other words,
exceeded supply, and we lived in what might be called shortage capitalism.
We could also call it Capitalism 1.0.
After the change, we shifted into surplus capitalism, or what I
call Capitalism 2.0. In this version, there’s no limit to what
corporations can produce; their problem is finding buyers. A sizeable
chunk of GDP is spent to make people want this unneeded output. And
credit is lavishly extended so they can buy it.
This historic shift can be described another way. A century ago,
our chief scarcity was goods. It thus made sense to sacrifice other
things in pursuit of goods, and capitalism was masterful at doing
this. Today we’re waist-deep in thneeds, and our scarcities
are different. Among the middle classes, the top scarcities, I’d
say, are time, companionship, and community (see figure 2.2). Among
the poor, there remains a lack of goods, but that lack isn’t
due to a shortage of production capacity — it’s due to
the poor’s inability to pay. The critical scarcity here, in
other words, is income. ... read
the whole chapter
Peter Barnes: Capitalism
3.0 — Chapter 6: Trusteeship of Creation (pages 79-100)
It shouldn’t be thought that the commons is, or ought to be,
a money-free zone. In fact, an important subject for economists (and
the rest of us) to understand is commons rent.
By this I don’t mean the monthly check you send to a landlord.
In economics, rent has a more precise meaning: it’s money paid
because of scarcity. If you’re not an economist, that may sound
puzzling, but consider this. A city has available a million apartments.
In absolute terms, that means apartments aren’t scarce. But
the city is confined geographically and demand for apartments is
intense. In this economic sense, apartments are scarce. Now think
back to that check you pay your landlord, or the mortgage you pay
the bank. Part of it represents the landlord’s operating costs
or the bank’s cost of money, but part of it is pure rent — that
is, money paid for scarcity. That’s why New Yorkers and San
Franciscans write such large checks to landlords and banks, while
people in Nebraska don’t.
Rent rises when an increase in demand bumps into a limit in supply.
Rent due to such bumping isn’t good or bad; it just is.We can
(and should) debate the distribution of that rent, but the rent itself
arises automatically. And it’s important that it does so, because
this helps the larger economy allocate scarce resources efficiently.
Other methods of allocation are possible. We can distribute scarce
things on a first come, first served basis, or by lottery, political
power, seniority, or race. Experience has shown, though, that selling
scarce resources in open markets is usually the best approach, and
such selling inevitably creates rent.
Rent was of great interest to the early economists — Adam
Smith, David Ricardo, and John Stuart Mill, among others — because
it constituted most of the money earned by landowners, and land was
then a major cost of production. The supply of land, these economists
noted, is limited, but demand for it steadily increases. So, therefore,
does its rent. Thus, landowners benefit from what Mill called the
unearned increment — the rise in land value attributable not
to any effort of the owner, but purely to a socially created increase
in demand bumping into a limited supply of good land.
The underappreciated American economist Henry George went further.
Seeing both the riches and the miseries of the Gilded Age, he asked
a logical question: Why does poverty persist despite economic growth?
The answer, he believed, was the appropriation of rent by landowners.
Even as the economy grew, the property rights system and the scarcity
of land diverted almost all the gains to a landowning minority. Whereas
competition limited the gains of working people, nothing kept down
the landowners’ gains. As Mill had noted, the value of their
land just kept rising. To fix the problem, George advocated a steep
tax on land and the abolition of other taxes. His bestselling book
Progress and Poverty catapulted him to fame in the 1880s, but mainstream
economists never took him seriously.
By the twentieth century, economists had largely lost interest in
rent; it seemed a trivial factor in wealth production compared to
capital and labor. But the twenty-first century ecological crisis
brings rent back to center-stage. Now it’s not just land that’s
scarce, but clean water, undisturbed habitat, biological diversity,
waste absorption capacity, and entire ecosystems.
This brings us back to common property rights. The definition and
allocation of property rights are the primary factors in determining
who pays whom for what. If, in the case of pollution rights, pollution
rights are given free to past polluters, the rent from the polluted
ecosystem will also go to them. That’s because prices for pollution-laden
products will rise as pollution is limited (remember, if demand is
constant, a reduction in supply causes prices to go up), and those
higher prices will flow to producers (which is to say, polluters).
By contrast, if pollution rights are assigned to trusts representing
pollutees and future generations, and if these trusts then sell these
rights to polluters, the trusts rather than the polluters will capture
the commons rent. If the trusts split this money between per capita
dividends and expenditures on public goods, everyone benefits.
At this moment, based on pollution rights allocated so far, polluting
corporations are getting most of the commons rent. But the case for
trusts getting the rent in the future is compelling. If this is done,
consumers will pay commons rent not to corporations or government,
but to themselves as beneficiaries of commons trusts. Each citizen’s
dividend will be the same, but his payments will depend on his purchases
of pollution-laden products. The more he pollutes, the more rent
he’ll pay. High polluters will get back less than they put
in, while low polluters will get back more. The microeconomic incentives,
in other words, will be perfect. (See figure 6.1.)
What’s equally significant, though less obvious, is that the
macroeconomic incentives will be perfect too. That is, it will be
in everyone’s interest to reduce the total level of pollution.
Remember how rent for scarce things works: the lower the supply,
the higher the rent. Now, imagine you’re a trustee of an ecosystem,
and leaving aside (for the sake of argument) your responsibility
to preserve the asset for future generations, you want to increase
dividends. Do you raise the number of pollution permits you sell,
or lower it? The correct, if counterintuitive answer is: you lower
the number of permits. ... read
the whole chapter
Hanno Beck: Bathroom Policy
We were four college sophomores.
And we were not going to live in a dorm, no sir, we figured that we were
smart, mature fellows and so we arranged to rent a house. Each person
would have his own private bedroom and we would share the bathroom. Four
guys, one bathroom. That sounds reasonable, right? ...
Now let's talk about you and everyone on Earth. We don't have to share
a single bathroom. But we do all
share one planet.
Our planet's natural resources are a common heritage for all humanity,
just as the bathroom was a common resource for the four of us in college.
Look what happens to our planet.
- We see people or corporations like Edward, taking more than
their fair share of oil, fresh water, minerals, without compensating
the rest of us.
- We see people or corporations like Charlie, polluting the land,
water and air with toxic wastes, chemicals, carbon in the atmosphere,
making the world less safe, forcing others to clean up, and they are
not compensating the rest of us.
- We see people or corporations like Andrew, monopolizing resources
such as land -– an urban land speculator who holds an acre out
of use, anticipating a price rise, is displacing the rest of us, forcing
development out into the countryside. A single acre of downtown land
brought into use would save a dozen outside acres from premature sprawl
Those who take, monopolize, and pollute,
are imposing costs on the rest of us and on the economy in general. We
are forced to be less efficient, or forced to endure hardships, so that
the takers, monopolizers and polluters can benefit. That is not fair.
Is there a solution? Of course there is. It's a simple solution. To
respect our common interest in our planet's resources, those who take or monopolize or pollute more than their fair share
of our planet should compensate those of us who they are taking from. ... read the whole article