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.
