Environmental Ethics
and Public Policy
Ernest Partridge, Ph.D
www.igc.org/gadfly

 


 

A Dim View of Libertarianism

Ernest Partridge


IV
 

The Privatization Panacea



In colonial Philadelphia, firefighters were employed by private insurance companies which, of course, had financial incentives to minimize damage to their clients’ properties. Plaques with the insurance company’s insignia were placed on buildings, so that the fire fighters would know whether or not it was “their business” to put out the fires on the premises. (These plaques are often found today in antique shops). If the “wrong” plaque was on the building, well, that was just tough luck. Of course, with their attention confined to a single building, fire fighters were ill-disposed to prevent a spreading of the fire to adjacent “non-client” structures.

Occasionally, when the building’s insurance affiliation was in some doubt, competing fire companies would fight each other for the privilege of putting out the fire, resulting in more water aimed at fire fighters than at burning buildings.

Eventually, the absurdity and outright danger of this system led one prominent Philadelphia citizen to come up with the idea of a publicly funded and administered fire department.

His name was Benjamin Franklin: America’s first anti-free-enterprise commie pinko nut-case.

Franklin’s subversive left-wing ideas were extended to include libraries, post offices, and public schools, and, if we are to believe some of today’s self-described “conservatives,” it’s been downhill ever since.

Libertarians contend that virtually all economic and social institutions are better managed when privatized and unregulated. According to this theory, the greed (i.e., “profit motive”) of investing private individuals is, in virtually all cases, mystically transformed into the optimum public good. The exceptions are the police, the military, the courts and the legislatures which, they concede, are properly confined to “the public sector.”

However, today even these exceptions are succumbing to “creeping privatization,” as the hyphen in “military-industrial complex” dissolves, as members of Congress are clearly more beholden to their corporate sponsors (“contributors”) than to their constituents, and as “conservative” judges routinely rule that corporate “property rights” trump personal injury suits and civil liberties.

But is it just possible that old Ben Franklin had a point? Are we not all better off now that the fire department doesn’t look first for the insurance medallion on our homes before they turn on the hoses? Isn’t the function of the military to defend the country – all of us, rich and poor, male and female, white and “other” – from foreign enemies, rather than enrich the industries that supply the armed forces? And shouldn’t the members of Congress represent the public at large, and not the private corporations and individuals that finance their campaigns?

Libertarians and their right-wing political allies are not convinced as today in some wealthy neighborhoods even fire and police protection are being “re-privatized.”


Are there Public Goods and Public Services?

In the second essay of this series, I argued that there are public goods and that a “society” is more than the sum of its component individuals. As noted above, fire protection is clearly a public good, since fires are without conscience and completely oblivious to the concept of property or property boundaries. As further evidence of the existence of “public goods” consider a parable.

Two communities are situated on opposite banks of a great river: on the right bank is “Randville,” and on the left bank is “Rawlsburg.” Randville is populated entirely by libertarians – rugged individualists all, who shun “collective” activity and who assume full responsibility for their personal safety, welfare and property. “Rawlsburg” is comprised of individuals who are properly covetous of their personal rights, yet fully aware of the desirability of promoting public goods and of acting collectively in the face of common emergencies.

News arrives at both communities from (gulp!) a government bureau, that a great flood is approaching from upstream. The citizens of Randville immediately get to work piling sandbags around each of their individual dwellings. Across the river in Rawlsburg, brigades of citizens are hard at work building a levee around the entire town.

Come the flood, the puny separate efforts of the rugged Randville individualists prove to be futile, while the substantial communal levee surrounding Rawlsburg holds firm and the community is spared.

“Now hold on!,” the libertarian retorts. “Surely, faced with this common emergency, the folks at Randville would volunteer to build a levee. That’s just common sense. No need for coercion.”

Very well, but what about those Randvillians who say: “you guys go right ahead and build that levee. I’d rather stay at home – I have other priorities.” Surely the good libertarians wouldn’t want to force anyone to contribute to the common defense!

And so we have the well-known “free rider problem,” whereby an individual gains unearned and cost-free advantage from the labor of others. A profound injustice on the face of it. The solution? What else than to coerce a contribution to the common effort, either by labor or, failing that, cash assessments.

In other words, taxes.

So it comes to this: The only way for the Randvillians to deal with “the free riders” is to coerce labor on the levees, or assess taxes in lieu of labor. They must do so in behalf (are you ready for this?) of the “common good” of the community-as-a-whole. Just as the Rawlsburgers are doing across the river.

The free rider problem exemplifies a larger conundrum which we explored in the previous essays: the tragedy of the commons. One additional voluntary laborer at the levee will not save the town, so the rational egoist might just as well stay at home and let the other “suckers” do the work for him. (“Good for each, bad for all”). Yet he might willingly, even enthusiastically, pitch in if he appreciated that all citizens were required to do so, since this requirement might assure a successful defense of the town from the oncoming flood. (“Bad for each, good for all”). “Mutual coercion, mutually agreed upon,” Garret Hardin calls it. In other words, government. And if we must have government, then by all means let it be a democratic government, under rule of law, and protective of the rights of all citizens. The sort of thing that our founding fathers had in mind when they ratified the Constitution and the Bill of Rights.

To the contrary, the libertarian insists that government is “the enemy” – that the free market and the self-interested use of private property will, via Adam Smith’s “invisible hand,” invariably result in the best result for society at large.

The Randville and Rawlsburg example is a fictitious thought-experiment. If it seems far-fetched, then forget Randville and think New Orleans, August, 2005.

And consider next two cases that are quite real.

In April, 2003, California Governor Gray Davis requested $430 million in federal funds to reduce the fire hazard in the southern California forests. The request was ignored until, on October 24, President George Bush rejected it. A few hours later, “the old fire” broke out in the San Bernardino mountains, followed by several more fires in southern California, eventually consuming three quarter of a million acres and 3577 homes, and causing 22 fatalities.

This particular disaster struck close to home – precisely 150 feet close to my home, where the fire was stopped at my property line. “The Old Fire” almost surrounded the cluster of houses in our neighborhood, and only the combined, coordinated and professional effort of the US forest Service and the state and local firefighters saved our homes. Several days earlier the county Sheriff ordered us off the mountain while these “big government bureaucracies” did their work – magnificently.

Presumably, the method preferred by the libertarians would have been to de-fund the government fire-control agencies and then to leave it to each of us individual property owners to take a valiant stand by our individual homes, garden hoses in hand. Who can doubt that had we tried that, all our houses would have been reduced to ashes and many of us would have ended up as “crispy critters.”

In his 2000 debate with Al Gore, George Bush said "I think you can spend your money more wisely than the federal government can." In November, 2003, all of us San Bernardino mountaineers – democrats, republican, independents – were convinced, contrary to George Bush, that “the government” spent our money better than we could.

One final example: Had the December, 2004 tsunami occurred in the Pacific Ocean instead of the Indian Ocean, the death toll would have been much lower. This is because there is an international tsunami warning system in place in the Pacific, and following the earthquake that triggered it, populations around the Pacific rim would have had advance warning from several minutes to several hours. (In deep water, tsunami waves travel up to 500 mph, and much slower near shore causing the waves to rise to enormous heights). Because there is no such system in the Indian Ocean, the December 26 tsunami struck without warning.

An international tsunami warning system, and the scientific research and development behind it, is clearly beyond the resources or the incentives of private individuals, or even of corporations. Only governments are capable of such an undertaking. And governments are singularly authorized for such an undertaking, for public safety is not an exclusively private matter, it is, as they say “in the public interest.”

The role of government in protecting the lives and property of its citizens, one of the sole legitimate functions of government recognized by the libertarians, is universally acknowledged in civilized societies, as it was in the United States until, apparently, January 2001. No longer. The policy of the Bush administration was to cut funds to the Federal Emergency Management Agency, and put a political hack in charge, send the National Guard to Iraq, and slash the funding for the New Orleans levees. And if you don’t like it, private citizen, here’s a shovel and a sand bag, now get to work!

Just remember, regressives fully endorse Ronald Reagan’s proclamation: “government is not the solution, government is the problem.” And so, after our government has been drowned in Grover Norquist’s bathtub,
2 we will all be on our own in George Bush’s “ownership society.”

Well that’s just fine if you happen to be one of the fortunate one percent who has “invested” in the GOP campaign juggernaut, and are thus the beneficiary of Ronald Reagan’s and George Bush’s tax cuts and deregulation. If not, then you are out in the cold – or if you are poor and in New Orleans, stuck in the toxic soup.

So why did Michael Brown, the former horse-trader and subsequent Administrator of the Federal Emergency Management Agency, allow FEMA to fail so spectacularly? Simply because he was not appointed to manage emergencies. He was appointed to dismantle the Agency – one of many regressive hacks selected to “starve the beast” of government bureaucracy.

Michael Brown, Homeland Security Secretary Michael Chertoff, and their sort failed to function as public servants because, as true Randvillian libertarians, they believe that “there is no such entity as ‘the public.’” There are only individuals responsible for their own personal welfare. And so, when the storm approached, the sole responsibility of government, they believed, was to tell the citizens to “get out of town, now!” No further thought as to how these individuals were to manage their exit – and so the school buses and the army trucks remained idle as the waters rose. No thought about how those who are trapped in the city were to be fed, sheltered, and protected. That was their misfortune. They were “on their own.” Government? It’s “the problem,” not a solution.

In contrast, Rawlsburgers, who readily recognize the existence of public goods and public interest, know how to work together in the common interest. In the spirit of our founders and their Declaration, they establish and support an institution, government, to act in behalf of this public, “deriving its just powers from the consent of the governed.” Then they put government agencies in the hands of qualified and dedicated individuals, like Bill Clinton’s brilliant FEMA Administrator James Lee Witt, who anticipated disasters, prevented them whenever possible, and who planned and then implemented contingency plans when disaster struck. When the disaster was imminent and foreseeable, as was the case with Hurricane Katrina, rapid response facilities were assembled close to the affected area, prepared to take action at the earliest opportunity.

All this requires personnel, equipment and cash appropriations – personnel and equipment that Bush preferred to deploy in Iraq, and cash that Bush chose instead to give as tax “relief” to his super-wealthy sponsors.

Adaptability that is “reality based” – founded upon scientific information and practical experience – is the hallmark of intelligence, and of effective and just governance. But the Busheviks, openly contemptuous of “reality based” policies are immobilized by their Randvillian dogmas and by the dictates of their corporate “stockholders.” Thus they cannot adapt.

For proof, look to New Orleans and the Gulf coast.


Privatizing Nature.

The absurdity of uncompromising privatism and market fundamentalism is on full display when applied to environmental policy.

According to the libertarians, all environmental problems derive from common ownership of such natural resources as pasturage, fisheries, and even air, water and wildlife. The solution? Privatization of all such resources. Does this sound extreme? Consider the following from Robert J. Smith (my emphases):

“The problems of environmental degradation, pollution, overexploitation of natural resources, and depletion of wildlife all derive from their being treated as common property resources. Whenever we find an approach to the extension of private property rights in these areas, we find superior results.”1

The environmental devastation in the former communist countries, the libertarians argue, proves the rule: that which is the property of everyone (i.e., the state) is the responsibility of no one. In contrast, they argue, resources will be best protected when the costs of environmental degradation fall upon the property owner. Accordingly, when the environment and its resources are privately owned, there is no need to urge the owners to practice "good ecological citizenship" for abstract altruistic reasons or through the threat of government sanctions. Instead, the libertarian believes, self interest and economic incentives will suffice to motivate the property owner to maximize the long-term value of his property.


Pollution and Property Rights: But if privatization motivates the owner to protect the environmental quality of his own property, what is to keep him from polluting and degrading the property of others - especially in the absence of government regulation, which the libertarians detest? The answer, in a word, is the courts -- in libertarian theory, one of the few acceptable institutions of government. (As we will see in our essay on “The Inevitability of Government,” the “courts and torts” solution will not work)..

Recall that the right to property is one of the three inviolate "natural rights" of the libertarian. It follows that pollution is an invasion of one's property and even of one's person, and thus punishable as an illegal violation of personal property rights. Accordingly, would-be polluters are restrained by the threat of suit by the injured property owner. Furthermore, as Tibor Machan concludes, "any pollution which would most likely lead to harm being done to persons who have not consented to being put at risk of such harm would have to be legally prohibited.”
3

That, in brief, is how the libertarians propose to deal with nature and environmental quality. Let’s see now how it stands up to close scrutiny.


The Problem of the Irreducible Commons. Recall that in his classical 1968 essay, "The Tragedy of the Commons," Garrett Hardin describes an overstocked pasture used by several herdsmen, but owned by no one in particular (i.e., "in common"). The addition of one sheep to the commons enriches its owner at the expense of all the other herdsmen. So long as there is no collective regulation on the use of the commons, no initiative by an individual will save the commons as each herdsman "rationally" chooses to "get what he can, while he can." The result is inexorable: "ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons."

The strength of Hardin’s essay resides in its enormous scope of application. "The tragedy of the commons" explains the depletion of the Atlantic Grand Banks fisheries east of Canada and the United States. It also explains the pollution of common waterways and airsheds, the loss of biodiversity, uncontrolled population growth, and global warming. In all these cases and many more, a common resource is exploited and diminished as benefit to each individual exacts costs on unconsenting others. Good for each, bad for all.

The converse rule, “bad for each, good for all,” is exemplified by the payment of taxes for the support of social and governmental services. The libertarian, in disregard of this rule, regards taxation as “theft.” On the other hand, while fully aware that taxes can be levied unjustly and that tax revenues can be squandered, the progressive agrees with Justice Holmes: “taxation is the price we pay for civilization.”

The tragedy of the commons strikes at the very heart of libertarianism. It is the polar opposite of the cheerful optimism of "the invisible hand," whereby the self-serving "utility maximization" of each leads to advantages to all. In contrast, the tragedy of the commons is "the back of the invisible hand" -- the falling tide that grounds all boats -- whereby advantages sought by each systematically and inexorably work to the disadvantage of all. And as we argued in the preceding essays, the tragedy is unquestionably widespread and endemic to modern society. Gone is the Thatcherite social atomism. And gone with it is the impermeable boundary, essential to libertarian theory, between "my business" and "your business."

Hardin endorses the liberal remedy: "mutual coercion, mutually agreed upon" - which means, primarily, regulation and control by a legitimate democratic government. However, as we have seen, government interference is anathema to the libertarians. Instead, they propose privatization and legal compensation for damages. We will consider the latter remedy, "courts and torts," shortly. How plausible, then, is the privatization remedy?


The Privatization Remedy. In many cases, privatization is clearly the ideal remedy for the commons problem. When, in the American West, the common "open range" was fenced and privatized, the costs of over-exploitation fell upon the owners. (In the technical language of economics, the previous "externalities" were "internalized"). Accordingly, it then became economically prudent for the owners to protect their "land capital" to assure sustainable income. Recent Russian history confirms this conclusion: as the Soviet era came to a close, the peasants' private lots were consistently far more productive than were the collective farms.

The libertarian's error resides in their proposal that privatization, which is clearly the correct solution for some commons problems, is to be prescribed for all commons problems. Like Maslow's carpenter who believes that all problems can be solved with a hammer, libertarians insist that all commons problems can be fixed with the "hammer" of privatization. Accordingly, they propose the abolition of all national parks and the privatization of all public lands and utilities, including roads and airports -- everything, that is, except the military, the police and the courts. And in the Iraq war, many traditional functions of the military have been privatized. Presumably, this means that such universal "commonses" as the atmosphere and the oceans are to be carved up and sold to the highest bidder. Not even wildlife is to be allowed to remain free and unowned. Is this an unfair caricature of the libertarian position? Consider the argument of Robert J. Smith who suggests that the absence of privatization explains "why the buffalo nearly vanished, but not the Hereford; ... why the common salmon fisheries of the United States are overfished, but not the private salmon streams of Europe." His solution? "We should explore the possibilities of extending ownership of native game animals and wildlife to property owners."

Critics of libertarianism find no end of amusement pointing out the inadequacies of such a privatization scheme. How, for example, are we to "privatize" the whaling industry? Are we to "brand" the whales, to validate the ownership of each? And what if "my whale" feeds on "your” krill, which you purchased (from whom?) to feed "your” whales? What courts must we set up to assess damages? What agency will be set up to collect the facts germane to the case, and how is it to be financed? Furthermore, the privatization of oceanic resources suggests that "territories" of ocean will have to be established, which means the end of the centuries-old convention of non-sovereignty of the seas. What country will be the first to claim the North Atlantic, along with the Gulf Stream? If the United States, will Great Britain and Scandinavia then have to pay the US for the use of the Gulf Stream's climatic services? If, as many climate scientist fear, the Gulf Stream fails, leading to an ice age in Northern Europe, will the Europeans have standing to sue the “owners” of the Gulf Stream Will the nations of the world accede to this "sea grab" without protest? The military implications are awesome.

If we privatize wildlife, then will the owner of the wild insects that pollinate my orchard be entitled to charge me for this service? If someone's flock of migrating birds soils my clothing or pollutes my swimming pool, how am I to locate the responsible owner? The mind boggles.

There is worse to come: can we conceivably "privatize" the atmosphere, and with it the hydrological cycle? If so, then who is liable for El Nino or Hurricane Katrina? If I own a "piece" of the atmosphere, is this a defined space, or is it the migrating clouds and molecules within. How is the "owner" to make his claim?

Total privatization of nature is a fantasy -- a reductio ad absurdum, charitably supplied to the critics by the libertarians themselves. The atmosphere, the seas, wildlife, and innumerable ecological services both known and undiscovered, are now and will forever be the "common property" of mankind, not to mention the other species of the earth. And since "privatization" of land and resources can never be the total and final solution to the commons problem, there remains the libertarians' alternative proposal: legal compensation for invasion of property. If that is found to fail, then governmental regulation, endorsed by the progressives and detested by the libertarians, may be the only remaining solution to "the tragedy of the commons."


Progressivism vs. “The Ownership Society”

“The ownership society” – the privatization regime proposed by the libertarian -- is inherently unstable, unequal, and eventually oppressive. Wealth and power act to enhance wealth and power, ever loosening the constraint of checks and balances, as they proceed to absorb government and make it an instrument in behalf of wealth and power. The statistics tell it all: today, the average CEO of a Fortune 500 company earns in half a day, what his median worker earns in a year (a ratio of 500 to 1). Twenty years ago, the ratio was 40 to 1. Today, one percent of the US households own almost 40% of the nation’s wealth – twice that of the 1970s. With the coming abolition of taxes on estates, dividends and capital gains, that inequality can only accelerate, as Leona Helmsley’s maxim -- “taxes are for the little people” – achieves full realization.

Furthermore, the privatizers’ celebration of “competitive enterprise” is essentially hypocritical. As noted, capitalists hate competition, as they relentlessly strive to build monopolies and crush their competitors. All that stands in their way are anti-trust laws and the courts – which is to say, government.

But let us stop well short of the deep end. Privatization and free enterprise, constrained by popular government, are fine ideals, the applications of which have undoubtedly yielded great benefits to mankind. Moreover, government regulation can often be excessive and a damned nuisance to the private entrepreneur. Private enterprise should surely count for something. But not for everything. Adam Smith was right: “the invisible hand” of the market place can, without plan or intention, “promote ... the public interest.” But we put ourselves in great peril if we fail to acknowledge “the back of the invisible hand” – the tragedy of the commons – whereby the unregulated pursuit of self interest by the wealthy and powerful becomes parasitic upon, and eventually destroys, the well-ordered society of just laws, common consent, and an abundance of skilled and educated workers who produce and secure that wealth.

Both the radical anarchism of the libertarians and the communism of Lenin and Stalin share the attribute of uncompromising dogmatism: in both cases, these are doctrines which are assumed, apart from experience and common sense, to apply to the real world, fully formed and fully ready to be imposed upon that reality. These are dogmas for which the liberal’s pragmatism and corrective feedback have no part. Both libertarianism and communism err in proposing extreme, simplistic and doctrinaire prescriptions for conditions that are necessarily complex: communism by condemning all property, and libertarians by condemning all public governmental functions, other than that of the “watchmen” (police and military) and the courts.

The complex arena of human economic and social behavior has no place for such simplistic dogmas. Instead of dogma, the progressive is pragmatic, utilizing the wisdom acquired through experience and experimentation. By this method, the United States, throughout most of its prosperous history, has developed a society and an economy that is a splendid mix of private enterprise, civic association and public service. We Americans have learned how to progress through the trials, errors and successes of countless policy experiments, all leading to refinements and compromises amongst competing parties and interests, with the excesses of both government and private interests constrained by the rule of law and finely honed checks and balances.

All that came to an abrupt halt in 2001, as the Bush administration put aside these complexities, caveats and constraints. Comfortable in their assurance that they already had all the answers, all that remained for them was to serve their corporate sponsors, and, as GOP activist Grover Norquist crudely put it, drown the beast (namely our constitutional republic) in the bathtub.

With that demise we would see the end of Social Security, Medicare, the Food and Drug Administration, the Securities and Exchange Commission, the Environmental Protection Agency, public education, and publicly supported scientific research, to just begin a recitation of a very long list. Vouchers would drain support and funding from the public schools, and the impoverished social services would be forced to attach themselves to religious organizations in order to qualify for “faith-based” funding. The privatized replacements for the current government social services – the insurance companies, the HMOs, the private schools, etc. – would, of course, have as their prime objectives the enrichment of their stockholders and corporate officers, rather than service to the public. And oversight and reform of these private institutions would be out of reach of political institutions: elections, legislatures, and the courts.

This would be a very different country, virtually unimaginable to most American citizens today, but familiar to those who are acquainted with third world kleptocracies in Central America, Africa and Asia.

This would be a country that the public at large would not want. But when, to their great regret and sorrow they discover this, it might be too late to turn back.

The founders of our republic, let us never forget, recognized the inalienable rights to life, liberty and the pursuit of happiness (rather than simple “property”). Furthermore, they acknowledged that “to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed.” And among the six functions of government enumerated in the Preamble to our Constitution are, “to insure domestic tranquility” and “to promote the general welfare.”

This government – our government – is what the regressives wish to “drown in a bathtub!” They desire this, firm in the conviction that a disconnected aggregate of self-serving private individuals, in absolute control of their private property, will serve us better.

They believe this unproved dogma despite an abundance of practical historical evidence to the contrary. And they are endeavoring to impose this dogma in place of regulations and social programs that have been tested, implemented and proven through several twentieth century administrations, both Democratic and Republican. That century closed with unprecedented prosperity and a federal budget surplus that promised, at long last, escape from the burden of national debt. All that has been reversed by a regressive regime that, in a well-crafted perversion of language, chooses to describe itself as “conservative.”


No discussion of free markets and privatization can be complete without a careful examination of the impact of corporations on society. For if government assets and functions are to be privatized, as the libertarians propose, most of them will surely be taken over by large corporations. Furthermore corporations are now, and will remain long into the future, the major players in the “free market” as well as the predominant force in government.  We deal with this topic in the next essay.
 

5.    Corporations: Invaluable Servants, Ruthless Masters.
 



NOTES AND REFERENCES


1. Smith, Robert J., "Privatizing the Environment," Policy Review, Spring, 1982, p.  11.

2. “My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub.” Grover Norquist, Conservative Activist.

2. Tibor Machan, "Pollution and Political Theory," Regan (ed.), Earthbound: New Introductory Essays in Environmental Ethics, (New York: Random House), p. 97.


 


Dr. Ernest Partridge is a consultant, writer and lecturer in the field of Environmental Ethics and Public Policy. He has taught Philosophy at the University of California, and in Utah, Colorado and Wisconsin. He publishes the website, "The Online Gadfly" (www.igc.org/gadfly) and co-edits the progressive website, "The Crisis Papers" (www.crisispapers.org).  Dr. Partridge can be contacted at: gadfly@igc.org .