In the Absence of Private Property Rights; D. Lee

Unfortunately, this is not true for maintain ing a healthy economy. The productivity and cooperation essential to economic progress depend on things that are not only easily neglected, but also commonly denounced. Private property is a good example. Instead of recognizing private property as the foun dation of economic cooperation and progress, people commonly see it .as the source of economic problems actually caused by the lack of well-defined and enforced pri vate-property rights. Pollution and Private Property Pollution is widely blamed on capitalism, with its emphasis on profits and private prop erty. According to this view, private property Dwight Lee is Ramsey Professor ofEconomics in the Terry Business School at the University of Georgia. 46 rights should be restricted to. prevent firms and individuals from putting their private gain ahead of the public's interest in a clean envi ronment. But pollution is actually a problem caused by too little reliance on property rights, not too much. Pollution problems should teach us how much we benefit from private property by.illustrating the inevitable breakdown in social cooperation in its absence.

Pollution problems would not exist if we could divide up the atmosphere, rivers, and oceans into separate units owned and con trolled as private property. There would still be pollution, but not excessive pollution. If I wanted to discharge pollutants into the air that belonged to others, they would prevent me from doing so unless I paid them a price that covered the cost my pollution imposed on them. So I would pollute only as long as the value I realized from discharging an addition al unit of pollutant was at least as great as the cost to others. Private property and the market prices that result would motivate people to take into consideration the environmental concerns of others. Pollution problems exist because without private property in air sheds and waterways there are no market prices to make polluters mindful of the cost of their polluting activi ties. The result is that people pollute exces sively; pollution continues even though the benefits from additional pollution are less than the costs.

Although we cannot easily imagine treating the atmosphere and waterways as private property, the lack of cooperation that under lies pollution problems would extend to all aspects of human action if private property were absent. Instead of seeing pollution prob lems as an indictment of private property, these problems should give us an appreciation of the wonderful advantages we realize from private property. And once the power of pri vate property to promote cooperation is real ized, one can see how pollution policy can be improved through the creative establishment of private property. Instead of having political authorities dic tate how, and how much, polluters have to reduce their discharges (as they do now), it would be far better to create a form of private property in the use of the environment for waste disposal. This private property would take the form of transferable pollution permits specifying how much their owners could legally pollute. These permits would establish the total allowable pollution, but not how much each polluter reduces his discharges or how he does so. With transferable permits, market prices would emerge that force pol luters to consider much of the cost of their discharges. Those who could reduce dis charges cheaply would reduce a lot, releasing permits to be used by those facing higher cleanup costs. The result would be a pattern of pollution reduction that yields any given level of environmental quality at far less cost than the command-and-control approach that dom inates current policy. (A more detailed discus sion of the advantages of such a market-based approach to pollution control has to await a future column.) Private Property and Patience Another common misconception is that the profits from private property motivate people to ignore the long-run consequences of their actions. Actually, the lack of private property is the biggest threat to future concerns. Con sider the captain of a whaling ship who has a whale in the cross hairs of his harpoon. The captain is about to pull the trigger when his first officer points out that the whale is preg nant and if they let it live there will be two 47 whales within a few months. Will the captain save the whale on hearing this information?

Not likely. He will correctly conclude that since he has no property right in the whale, if he doesn't kill it today someone else soon will. Being patient and allowing the whale to give birth requires an immediate sacrifice, without permitting him to benefit from that sacrifice in the future. If somehow whales were privately owned, it would then pay the captain to take the future value of the whale and her offspring into consideration, since that future value would be his opportunity cost of killing the whale today. It is no wonder that many species of wild animals are overexploited, and in some cases threatened with extinction. The situation is very different with domestic animals that are privately owned. There is no worry that chick ens, pigs, cows, or goats will be driven to extinction. The future value of these animals is fully considered by owners who can profit from maintaining them. Indeed, the more of these animals we kill, the more of them we have. In the United States alone, approxi mately 25 million chickens are killed and eaten every day. It has been said that the dif ference between chicken hawks and people is that when chicken hawks eat more chickens there are fewer chickens, but when people eat more chickens there are more chickens. The more fundamental difference is that people establish private property rights and, as a result, take the future into consideration; chicken hawks don't.

Unfortunately, legislation such as the Endangered Species Act attempts to protect species by undermining private property rights, thereby reducing the motivation of land owners to provide suitable habitat for wildlife, endangered or not. Private property allows us to solve prob lems by taking into consideration the pre sent and future concerns of others. Unfortu nately, people with good intentions but little economic understanding often call for solv ing problems stemming from inadequate private property by subverting rights to pri vate property with political restrictions and mandates. 0 CroakingFrogs by Brian Doherty I t's the kind of story that doesn't often get reported in the media-even though it is largely the media's creation. In February, Inte rior Secretary Bruce Babbitt made a stirring call for an extra $8.1 million in other people's money-your money and mine-for fiscal 2000 to research yet another potentially earth shaking environmental crisis: declining and deformed frogs.