I love our national parks as much as the next guy (probably more, having visited every major one and dozens of smaller ones, and loving every minute of nearly every visit), but can someone tell me why the federal government owns so much of our country? Some maps tell the story. See here and here. Now comes news from the Obama administration that there are plans to make more land off limits to economic uses. See here. I understand the temptation to think of nature as benign, aesthetically valuable, and like a piece of antiquity to be preserved, but I think we go too far when we sacrifice economic progress for desert plants, tall trees, fish, and other nonhuman things. Fundamentally the claims of favoring these things for some abstract goals of perservation are antihuman. They are also often ways for politicians to serve their own interests and those of favored constituents over the general welfare.
The examples of hypocrisy from politicians on this subject are innumerable. The Obama administration favors more solar power, but Senator Feinstein wants to make sure it doesn’t happen in “her” desert. See here. The Kennedy family favors non-fossil fuels for energy, but not if it spoils their view. See here. Everyone is in favor of less reliance on foreign oil, but we don’t drill off the coast of California, so Jennifer Aniston can avoid seeing oil platforms from her Malibu mansion, and in Alaska, so caribou are not offended by our presence and the tundra is “preserved.”
Would our world really be worse off if the federal government sold all federal lands, except a limited number of areas for national parks and essential military facilities? Is it really true that the government does a better job of balancing the tradeoff between economic returns from land and preservation of land? It is time to get the government out of the business of issuing mining permits, oil drilling permits, logging permits, and on and on. There used to be a time when corporate charters were passed out by the state in this way, and the result was a disaster of exploitation, bribery of public officials, and reduced economic efficiency. One of the most important legal innovations of the past century was getting the government out of the business of telling people what business organizations they could form.
In that spirit, we should sell nearly all of the 60% of this country owned by the federal government, and use the vast sums such sales would generate to pay down some of our massive debt. Private property is not a recipe for spoliation but our best hope to get everything we can from our resources, including recreation, preserving natural beauty, minerals, and everything else the Earth has to offer. It is time to put people, all people, not just the rich ones who can afford to visit the wild places, first.
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I’ll try to respond to Todd’s objections.
1. I don’t see “lots” of nongovernmental entities with longer time horizons. But since you picked Harvard, let’s take Harvard. Harvard’s endowment just halved by some estimates. Will their time horizons be unaffected? There’s nothing like owning the Mint. Nothing.
2. Your point is sound to the extent that the long time horizons alone might be insufficient to justify government ownership. Another issue is whether the costs and benefits can be internalized. My sense — and that’s all it is for now — is that the beneficiaries of public parks are too diffuse as a group. Naturally, I’m not counting the local tourist industries here. The beneficiaries I have in mind are the beneficiaries of the maintenance of a certain level of biodiversity within our sovereign territories. Who’s going to put a price tag on external benefits other than government?
3. This cuts both ways. If the government isn’t around in 100 years, then neither will be the national parks most likely. So netted out, I don’t think this argument really helps.
4. Straw men. The argument isn’t about whether the least efficient forms of government can do the job, but whether overall government can do a better job than the private sector at maintaining an efficient level of biodiversity. A better counterexample would be some developed democracy that doesn’t have any national parks. Is there one? If not, why not?
5. Where would the Sierra Club get the money to bid in land auctions? The logging industry? Seriously, the problem is that some projects (like maintaining biodiversity) have such long time horizons and such diffuse external benefits, that governmet is necessary. Funding university professors is another example.
To Geoffrey I would ask, how is it manifest that national parks are inefficient? Also, to clarify, I would never say that it could be done only by government. My point is that it seems too difficult for now, not that it can’t or shouldn’t be done in the future.
Is it true that national parks are there only to satisfy some minority interest group? That doesn’t seem correct to me. But like I said, the public choice story here seems interesting and complex. It can’t just be the local tourist business. Is it the park employees? Where are the levers, I wonder. Nevertheless I’m quite sure that put to a popular vote, national parks would win by a landslide. Look at how many people use the system, badly operated as it may be.
The answer to your question about the disconnect in time horizons between managers and shareholders is found in the accounting rules. There is some empirical research that shows that founder-managed firms outperform. That’s because founders are often big shareholders. Managers who get equity compensation through stock options often grow the company through acquisitions that will not increase free-cash flow, and yet will increase the value of their options. My 0.02 euros.
almost-Pareto = Kaldor-Hicks? = slightly pregnant
On that note, I will add that the point of the Coase Theorem was never about how allocative equilibrium could be achieved, but about how it was impossible.
Great post and comments. I disagree with Michael that we should condone government engaging in manifestly inefficient activities, but I don’t think conservation necessarily has to be inefficient, nor can it only be practiced by the government. This is particularly true if the ideal precondition for our government to act were actually met (a popular majority preference for conservation) which would suggest (but by no means guarantee) a potentially-huge consumer group. Justifying the enormous cost of government ownership because a small minority have a fashionable aesthetic preference (if this is the case and it may well be, of course, under government ownership), on the other hand, is not only inefficient but also unjust.
The time horizon point, at the very least (as Todd points out) as a relative matter between private and public ownership, doesn’t really change things. Many folks are fond of decrying the incentives for corporate managers to extract short-term gain at the expense of long, but in a reasonably-efficient market the disconnect between the two should be minimized, and I never understand why so many people casually throw around the claim that managers will systematically make inefficient decisions to take short-term profit at the expense of long.
Importantly, I think there is a huge category of Pareto-improving or almost-Pareto-improving (is that like being slightly pregnant?) behavior that is precluded by government ownership at huge cost: Uses that are prohibited by law but that would do little or no harm to the core conservation goal. The National Forest designation actually embodies this trade-off to some extent, but there are still win-win gains excluded by law. It is by no means clear that foregoing minimal impacts by virtue of an overly-broad law not responsive to market forces is better than the risk of over-use by non-government owners (if there is such a risk at all).
Finally, I would echo the comparative point–I just don’t see why we assume government will make better decisions, even on a non-economic dimension, than private actors.
Re: government time horizons. I see the argument, I just don’t buy it.
First, lots of nongovernmental entities have long time horizons. Harvard is older than our government.
Second, even if they don’t expect to survive forever, resources are always transferred on the demise of institutions, and we have to a theory about why markets wouldn’t efficiently price this information.
Third, at the length of time you are discussing, I’m not sure we can guarantee much. Can we be sure our government will be here in 100 years? That we will still be primarily carbon-based organisms? That we will still care about the environment as an aesthetic? I’m not sure we can know.
Fourth, is it true that the Soviet government or the Haitian government had ipso facto better time horizons than the alternatives? It just isn’t true that governments are better. If the claim is that our government is better, this seems specious as well. It is not at all clear that the government has sufficient resources to care for the lands under its dominion.
Fifth, why do you assume the private property won’t be based on long-lived preservation? Won’t the Nature Conservancy and Sierra Club bid in the land auctions? Are they really less caring about preservation than Congress and the bureaucrats at the Forrest Service? Privatization will lead, I expect, to some land being exploited for resources, some land to be exploited for tourism, some to be set aside for preservation, and so on. My point is simply that the market is more likely to capitalize on this heterogeneity than a monopolist, like the government.
Only the federal government can afford the time horizons needed to guarantee there will not be exploitation (i.e., overuse over some time horizon) of these lands. If that means that use is underefficient, I’m personally comfortable with the risk. There is really a difference in quality between the land in most national parks and the quality of the land in most state parks, even in places like California where the state parks are great.
What’s the public choice story here, I wonder? As I recall, Mackinac Island was actually the first national park, but was decommissioned. The history there is probably instructive.