Jane S. Shaw is a Senior Associate of PERC, a research center in Bozeman, Montana.
In 1990, the economist Robert Heilbroner expressed genuine surprise at the collapse of socialism. Writing in The New Yorker, he recalled that in the debates over central planning in the 1930s and 1940s, socialism seemed to have won. A half century later he realized that he had been wrong and that “Mises was right.”
Since Heilbroner has leaned toward socialism for most of his career, he deserves credit for admitting that he was so mistaken. Yet by the end of his revealing essay, Heilbroner was suggesting that perhaps socialism wasn’t dead, after all. He proposed “another way of looking at, or for, socialism.” He suggested that we think of socialism “not in terms of the specific improvements we would like it to embody but as the society that must emerge if humanity is to cope with the one transcendent challenge that faces it within a thinkable timespan.” That challenge, says Heilbroner, is “the ecological burden that economic growth is placing on the environment.”
Heilbroner’s characterization of environmental problems is as misinformed as his half century of wishful thinking about socialism. But this should not be surprising. Environmental issues frequently overwhelm intelligent thought and factual analysis.
For the past thirty years, the United States (and much of the developed world) has experienced the results of this basic misunderstanding, the view that economic growth poses an “ecological burden.” The nation has acted upon the premise that more production leads to more smokestacks puffing out more pollutants and more sewage pipes sending more heavy metals and other wastes into our streams, and that only government regulation can stop the process. This assumption has led to extensive federal intervention in normal activities, from manufacturing to logging and, ultimately, to absurd results.
• The federal government defines a “wetland” in such a way that it doesn’t have to be wet, as long as it has vegetation typical of wetlands. It regulates wetlands on the basis of the Clean Water Act, which does not mention the word wetland (the relevant provision was originally designed to prevent pollution into “navigable waters”). People have gone to jail for dumping a few loads of dirt on such “wetlands.”
• The Endangered Species Act has been interpreted so severely that people are now deliberately modifying the habitat of their land so that endangered species will not settle on it. Without the act they would have been pleased to have a bald eagle or red-cockaded woodpecker take roost.
• The government of Anchorage, Alaska, is adding 5,000 pounds of fish waste per day into its sewage water. Environmental Protection Agency regulations require that 30 percent of the organic material in sewage be removed before the sewage reaches the ocean; but in Anchorage, the sewage doesn’t have enough organic material. It must be added and then 30 percent must be removed.
• Strict controls on grazing practices have prevented the adoption of innovative range management. On private land, the Deseret Ranch in Utah, for example, stocks hundreds of cattle, while the Bureau of Land Management, which manages public land on the other side of the fence, can barely allow thirty animals on similar acreage.
• The EPA contends that a mobile home park in Aspen, Colorado, is built on an extremely dangerous mine waste site, and that residents face harm from lead poisoning, even though those who have lived there for years have blood lead levels below the national average. The EPA has made the park a Superfund site, and insists on a costly and disruptive cleanup. Other small mining towns similarly face a belligerent EPA.
How This Situation Arose
After World War II, as incomes rose, people’s attitudes toward the environment around them changed. “Postwar affluence had produced a generation reared in relative comfort, one now in search of `postmaterial’ values long deferred by their elders,” writes Christopher Bosso, attempting to explain the rise of environmentalism in the 1960s.
Against the backdrop of growing wealth and leisure, the 1962 publication of Silent Spring, an eloquent book by Rachel Carson, dropped like a bombshell. It aroused fears that the natural world was being damaged, perhaps destroyed, by human technology. In 1972 another book, The Limits to Growth, raised fears of famine, overpopulation, and resource depletion. The authors predicted that “the limits to growth on this planet will be reached sometime within the next one hundred years.” When energy prices skyrocketed after the OPEC oil embargo of 1973, the book’s predictions looked credible.
And, indeed, there were environmental problems. In many cities the air was dirty, and rivers were polluted and full of debris. The Cuyahoga River is said to have actually caught fire in 1969. The event became a symbol of the severity of pollution and galvanized many people to do something about it.
This determination to “do something” came at a time when Americans were looking to the federal government to solve just about any problem. The nation had just embarked on the War on Poverty, and the Apollo program to land a man on the moon was nearing its objective.
State and local governments, which had taken on some responsibility for environmental regulation, were not always aggressive in tightening environmental regulations, since they knew that residents did not necessarily want the goal of cleaner air and streams to override all other goals. But environmental activists considered these attitudes parochial, unenlightened, and political. They sought more control at the federal level, and they got it. Pollution control went off in a “bold new direction,” says textbook author Thomas Tietenberg, with a “massive attempt to control the injection of substances into our air.” That federal attempt is still going on.
The nationalization of pollution control did not eliminate environmental politics, of course, but changed its location. Today, local and state governments find themselves in battles with the Environmental Protection Agency as it threatens to cut off funds if they don’t meet the EPA’s standards. And congressmen from one state pit themselves against those of other states, with the industrialized “Rustbelt” states in the Northeast and Midwest voting to impose heavier controls on new plants built in “pristine” areas such as the growing “Sunbelt.”
A Basic Misunderstanding
All this has happened because most people don’t know that economic growth and environmental protection are closely and positively linked. Economists are well aware of this. A study by Gene Grossman and Alan Krueger of Princeton University suggests that at low levels of income, economic growth puts initial stress on the environment, but after a certain level of wealth is reached the environment begins to improve. They indicated, for example, air pollution begins to decline when per capita income reaches between $4,000 and $5,000 (in 1985 dollars).
Another indication of this link is the affluence of environmentalists. For example, members of environmental organizations tend to be among the more affluent Americans. A typical reader of Sierra, the magazine of the Sierra Club, earns twice the average American income.
In other words, as people become more affluent, they become more interested in protecting environmental amenities. That doesn’t in itself eliminate pollution, which will continue as long as the air and water are, to some extent, “free goods.” But in a system based on private property rights, several factors encourage people to limit pollution.
One factor is the common law, specifically the legal doctrines of public and private nuisance, trespass, wrongful bodily invasion, and riparian law. Although court suits are used less now, in the past when pollution was severe and when it affected a few people disproportionately (not the community as a whole), courts would provide protection, either through damages or injunctions against further pollution. People have a right against invasion of themselves or their property by harmful pollutants. This protection has never been perfect, but it has prevented or ended severe pollution.
Second, over the long run, the profit motive encourages owners to reduce pollution. Over the short term, they may be able to lower costs by letting waste out the smokestack, but that waste costs them money. Particulates in the air often are unburned fuel; by using that fuel rather than letting it go up the smokestack, companies can save money. Similarly, companies can save money by saving expensive chemicals or metals rather than losing them in the waste stream. So there is an inexorable tendency to reduce pollution.
These two reasons explain why the air in the United States was getting cleaner faster during the 1960s than in the 1970s, when the Clean Air Act was passed. And private property rights also encourage efficient use of raw materials.
In 1965, the production of 1,000 metal beverage cans required 164 pounds of metal (mostly steel). By 1990, this required only 35 pounds (mostly aluminum). And the trend is toward ever lighter cans for the simple reason that it is possible to save millions of dollars. Reducing the aluminum can’s metal by 1 percent will save about $20 million a year. The profit motive spurs both innovation and cost savings.
Another illustration of this trend toward efficiency is Mikhail Bernstam’s comparison of resource use in socialist and market economies. He found that the market-based economies used about one-third the amount of energy and steel, per unit of output, that the socialist countries used.
Partly due to the growth of incomes and the growing awareness of the environment, private conservation has been a hallmark of American society for more than 100 years. Late in the nineteenth century, for example, the National Audubon Society created a system of bird refuges around the country; early in the twentieth, the Sempervirens Club began saving California redwoods, in large part through private donations. In the 1930s, activist Rosalie Edge and a small group of friends bought a few hundred acres to create the Hawk Mountain Sanctuary in eastern Pennsylvania, to stop the slaughter of birds of prey. But this rich vein of history, of which these examples are mere nuggets, is little known.
The Situation Today: Hopeful or Disturbing?
In the late 1980s, Ocie Mills began to build a home for his son near Santa Rosa County, Florida. He poured clean fill dirt on the property. Although he had the approval of state officials, he had failed to obtain a permit from the federal government for filling a wetland. Mills and his son each served a 21-month prison sentence for failing to obtain a permit.
Criminals to some, they were to others victims of regulatory excess. And gradually, individuals such as the Mills were joined by hundreds, and then thousands, of people who had felt the encroachment of the federal government. These people formed grassroots groups around the country and became the nucleus of the modern property rights movement, a movement that has been called a revolution. The anger of these people who felt their rights had been trampled helped bring sweeping changes to Congress in the 1994 election.
The 1994 election was greeted by jubilant expressions of hope for a rollback of major regulations, repeal of some laws, and a general recognition that less government is better. And the new House of Representatives started out with substantial plans for regulatory reform. But these quickly fizzled. The reason is the same one that bothered Robert Heilbroner—the feeling that economic growth and environmental protection are incompatible without the strong arm of federal regulation. Environmental activists found that they could build on this idea and frighten people into thinking that the 1994 election had unleashed a destructive monster.
Unfortunately, the strong positive role of the private sector in protecting the environment is mostly unknown to Congress. Even Newt Gingrich, House Speaker and proponent of less government, appears to be completely unfamiliar with free-market environmentalism. The “moderate” Republicans, terrified at losing the moral high ground by being viewed as anti-environmental, have stopped the reform movement.
What is needed is a better understanding of environmental protection, and particularly its connection with economic growth and the institutions that promote economic growth. This educational process will take time, but the evidence is there to achieve that understanding. To borrow Heilbroner’s words, that is our “transcendent challenge.”
9. Gene M. Grossman and Alan B. Krueger, “Environmental Impacts of a North American Free Trade Agreement” (Discussion Paper in Economics, Woodrow Wilson School of Public and International Affairs, Princeton University, Princeton, N.J., February 1992), p. 5.