Mason Gaffney: Land as a Distinctive Factor of Production

• water whose natural source is in southern California (it is tenured, but underpriced);
• city streets for movement and parking space, even in New York;
• air and water used for waste disposal in populated areas;
• housing that is subject to rent controls;
• popular beaches and trails;
• oil and gas subject to field price controls; and so on.

But the most delightful distinction about Canadians is the strong and explicit recognition among almost everyone, even if he's an economist, who discusses this subject, that different resource endowments are the basis of inter-provincial differences. Equalisation in Canadian politics means sharing the economic rent. Everybody talks that way. Canadian economists even when they come to the States talk that way. Just as though rent were a permissible word in polite discourse. It's very refreshing. However there's a very selective attitude towards rent -- towards what rents are shareable, I should say.

• Rents from oil and gas are fair game.
• Forest revenues are fair game.
• Mineral revenues of other kinds are fair game.
• Water power is fair game.

But now how about the rents that are generated by the valuable lands of Montreal, or Toronto, or some of those other big and powerful cities in the east? They are not fair game. As a matter of fact, if you pore through the fine print of the equalization law, which I did on the airplane, you find the most interesting exception to what's included in the formula. I'll explain the formula to you in a moment if you are still awake. ...

The conclusion of all this is that the Canadian system is really better in terms of its Georgist implications because the payments to the provinces, with all the faults that I've described, are essentially based on population. Population is in the formula. And if you compare this with the way things are done in the States, population plays a very minor role in the formula for equalisation payments in the United States.

• Offshore Oil
• Tax All Natural Resources Uniformly and Comprehensively

Mason Gaffney:  Rent, Taxation, Dissipation and Federalism

This cuts to the heart of ancient and modern issues of land tenure, growth management, fiscal Federalism, tax methods, and spending priorities.

Because land is not produced, rents may be zero or less, and rise without limit. There is no competition from new production.

I premise resource rents are the joint product of three distinguishable factors:

• nature;
• complementary private activity; and
• public works and services, publicly financed.

I premise rent is the most basic and general source of taxable surplus, especially in an open economy in which other input costs and product prices are set at world levels in world markets.

Triffin's epigram says "Surpluses are either competed away or imputed away." Rent is what we call it when they are imputed away. He might have added, they may also be frittered away: that is what we seek to avoid. ...

Open access, tragedy of commons. Arthur Young, Scott Gordon, Garrett Hardin, et al. Simple cases like open range, fisheries, public parks and beaches, freeways: a principle easily perceived (although not usually by undergraduates). ...  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. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 1: Time to Upgrade (pages 3-14)

If you heard about the commons before you picked up this book, your impressions were probably shaped by a 1968 article called “The Tragedy of the Commons.” In that article, biologist Garrett Hardin used the metaphor of an unmanaged pasture to suggest a root cause of many planetary problems.

The rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another. . . . But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit — in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest. . . . Freedom in a commons brings ruin to all.

Hardin’s notion of tragedy was taken from philosopher Alfred North Whitehead, who in turn drew upon Aristotle. According to Whitehead, the essence of tragedy is “the remorseless working of things.” In Hardin’s view, commons are fated to self-destruct. There’s nothing humans can do in the context of the commons to halt this inexorable outcome.

Hardin was right about humanity’s unrelenting destruction of nature, but wrong about its cause and inexorability. He blamed the commons itself, when the true destroyer was, and remains, forces outside the commons. In Hardin’s hypothetical, the commons does nothing to protect itself against those forces. It’s completely unmanaged. But there’s no inherent reason why commons can’t be managed as commons.

Contrary to the picture painted by Hardin, medieval European commons (which included not only pastures but forests and streams) were far from unmanaged. They had rules barring access to outsiders and limiting use by villagers. For example, a rule that persists today in many Swiss villages is that villagers can’t graze in common pasture more animals than they can feed over winter on their own land. A managed commons, in other words, isn’t inherently self-destructive. The real danger to the commons is enclosure and trespass by outsiders. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 3: The Limits of Government (pages 33-48)

In his essay “The Tragedy of the Commons,” Garrett Hardin envisioned only two ways to save the commons: statism and privatism. Either a coercive government would have to stop humans from mindlessly destroying the planet, or private property owners, operating in a free market, would have to do the job. In the next two chapters I’ll show why neither of these approaches suffices.

In considering the potential of governmental remedies, let’s clarify what we mean. We’re not talking about tyranny; we’re talking about legitimate forms of government activity such as regulation, taxation, and public ownership. Can these traditional methods effectively preserve common wealth for our children? ... read the whole chapter