Friday, 16 February 2007

"The invisible hand of the market doesn't deliver a sustainable nation." True or false?

"The invisible hand of the market doesn't deliver a sustainable nation." So said Prime Minister Helen Clark on Tuesday in her Statement to Parliament setting out her priorities for the year ahead.

IS THAT TRUE? If we assume here that "sustainable" means something like, "good for the environment," is it really true to say that the invisible hand of the market doesn't deliver a good environment?

Well, no it's not. In fact, quite the reverse. As Czech president Vaclav Klaus pointed out earlier this week:
We know that there exists a huge correlation between the care we give to the environment on one side, and wealth and technological prowess on the other side. It's clear that the poorer the society is, the more brutally it behaves with respect to Nature, and vice versa. It's also true that there exist social systems that damage Nature - by eliminating private ownership and similar things - much more than the freer societies.
It's indisputably true that the wealthier the country and the better its respect for property rights, the better its environment. Think about the environmental basket-cases that were Soviet Eastern Europe -- those places where the market's invisible and benevolent hand had been absent for nearly a century when the Berlin Wall fell in 1990, and compare that to how Western Europe looked.

Message to Helen then from Vaclav Klaus: It is the invisible hand of the market that delivers wealth: The wealthier a country, the cleaner its environment. Nevil Gibson continues the lesson in the NBR:
The government’s commitment to sustainable energy policies pales by comparison with what is already being achieved in the [US, the] nation Labour’s supporters most like to hate. And it was done before Helen Clark embraced the green cause...
The answer is the opposite to Helen Clark’s claim that the market cannot deliver. In the US it clearly has, through the adoption of cleaner technologies and a vast amount of investment.
Gibson points out that while Helen Clark blathers, the US is already doing better than both talk-is-cheap NZ and regulation-happy Europe in Kyoto emissions growth, in using more efficient and cleaner fuels, and in "the actual achievements" of the US and its partners in the Asia Pacific Partnership on Clean Development and Climate, which is made of up countries that account for about half of the world’s population, economic output and energy use.
The partnership is based on market principles and has embarked on 100 projects that will deliver reduced greenhouse gases, cleaner air and less poverty in the industrialised areas of Asia.

In [bureaucrat Kurt] Volker’s words, ‘…the only way for these [developing] countries to minimise the increase in greenhouse gas emissions as their energy demand soars with economic growth is through the market application of cleaner technologies. We need to develop these technologies and bring them to the marketplaces of the developing world.’
Message to Helen, courtesy of Nevil Gibson: "[The invisible hand of the market offers] a far better and more realistic solution than believing a government’s ‘visible hand’ will best deliver a sustainable nation." Too right.

LET ME OFFER Helen two further examples from unlikely places. The first is from Sand County, Wisconsin (above), the home of the father of Deep Ecology, Aldo Leopold, and the base from which he wrote the founding text of Deep Ecology, his Sand County Almanac. The area around Leopold's estate are now run not by a government department, but by a private foundation. This is intentional. Leopold’s belief was that conservation had to be a voluntary proposition, that no other arrangement can work (and DoC's many conservation failures are testament to that too, aren't they).

As this article and interview notes, the Sand County Foundation "has become a world leader in free-market environmentalism, setting an example of sound science and voluntary private action well worth emulating." According to the Foundation, in this they are simply following Leopold's principles, when he said:
Conservation is a state of harmony between man and land. When both become poorer by reason of their coexistence, we don’t have conservation. When both are richer, we have conservation.
So contra Clark, Leopold himself seemed to believe that the visible hand of the state is not the way for serious conservationists to proceed, and that perhaps the invisible hand of the market provides better environmental outcomes. As the Leopold Foundation's president Brent Haglund affirms, in a further lesson for Helen:
Good habitat management doesn’t cost, it pays. Good habitat management that takes advantage of science can be a cost-effective means for improving wildlife and wildflower populations and communities.
THAT SAME LESSON has just been learned in Niger, Africa. As The Commons Blog points out, even the traditionally pro-bigger-government journalists at The New York Times have noticed "how property rights to trees growing on farmers' land have contributed to both economic growth, agricultural productivity and conservation in Niger at virtually no cost."
In this dust-choked region, long seen as an increasingly barren wasteland decaying into desert, millions of trees are flourishing, thanks in part to poor farmers whose simple methods cost little or nothing at all...
[D]etailed satellite images and on-the-ground inventories of trees, have found that Niger, a place of persistent hunger and deprivation, has recently added millions of new trees and is now far greener than it was 30 years ago.
These gains, moreover, have come at a time when the population of Niger has exploded, confounding the conventional wisdom that population growth leads to the loss of trees and accelerates land degradation, scientists studying Niger say...
What contributed to the success? Apparently greater rainfall and property rights! As the article elaborates:
Another change was the way trees were regarded by law. From colonial times, all trees in Niger had been regarded as the property of the state, which gave farmers little incentive to protect them. Trees were chopped for firewood or construction without regard to the environmental costs. Government foresters were supposed to make sure the trees were properly managed, but there were not enough of them to police a country nearly twice the size of Texas. But over time, farmers began to regard the trees in their fields as their property, and in recent years the government has recognized the benefits of that outlook by allowing individuals to own trees. Farmers make money from the trees by selling branches, pods, fruit and bark. Because those sales are more lucrative over time than simply chopping down the tree for firewood, the farmers preserve them.
As Sean Corrigan summarises at the Mises Blog, "no expensive and ill-used Western aid, no high tech inputs, no government planning, no Malthusian doom" -- indeed, beyond the protection of property rights, the visible hand of the State is entirely absent. And the result: "just a simple tale of human ingenuity, incentivised by the small matter of better property rights, overcoming an ecological disaster."

SO THE LESSON for Helen Clark from around the world is the same:
  • More market equals better environmental outcomes.
  • More secure property rights equals better environmental outcomes.
  • "The invisible hand of the market doesn't deliver a sustainable nation"? Don't believe a bloody word of it. The truth is entirely the reverse.
It shouldn't really be a surprise. After all, the science of economics is often defined as "the analysis of how finite resources are used to meet infinite wants"; you would think then that if sustainability really means anything, it must surely be the case that the science of economics has something to say about it.

Do you think there's a lesson here that Helen really wants to learn? Or that you might want to? Or even one that John Boy Key might care about? What do you think, customers?

LINKS: Vaclav Klaus: A great politician - Not PC
Who is the greenest of them all? - Nevil Gibson, NBR
Good habitat management doesn't cost, it pays: an exclusive interview with Brent Haglund, president of the Sand County Foundation - Heartland Institute
How property rights have greened the Sahel in Niger - Commons Blog
Human action in Niger - Mises Economics Blog
In Niger, Trees and Crops Turn Back the Desert - New York Times
John Key's tactics - Rodney Hide

RELATED ARTICLES: Conservation, Environment, Property Rights, Economics, Sustainability, Politics-World

1 comment:

  1. How does she define sustainability?

    Economic Sustainability?
    Environmental Sustainability?
    Social Sustainability?

    If you act for Environmental sustainability at the cost of the other two you end up with poorer people, or a troubled state, at which case they cannot afford (or do not care about the environment) therefore the environment suffers.

    Sustainability must be environmental, economic, and social. At which case, historically the richer nations have always done a better job of (just compare the USA to communist china etc - the USA wins on sustainability). Therefore there is strong anecdotal evidence that those with a higher degree of free market is more sustainable.

    Unfortunately when most people talk of sustainability - they focus on environmental solely. And don't think of the economic or social damage that their policy can cause (often having later unintended conseqences on the environment).


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