There is a fallacious argument commonly held and cited by pro-private-property advocates. The argument goes that interested parties having private property results in the reverse of the "tragedy of the commons," which holds that public resources are over-exploited because they belong to nobody, and thus are not worth protecting; if I do not grab the resource now, someone else will. The reverse argument is thus that if I alone hold the resources and their future value is also mine alone, then it is worth my while to protect them and not overexploit them.

Of course the main problem with this argument is that it assumes rational economic behavior by human beings, which over the last decade or so has been increasingly shown to be a false assumption. Economic models thus have to be rewritten to take into account that most of us do not act in our best interest, a lot of the time.

This is true in many arenas. There are many versions of the following experiment:

...the ultimatum game. You are given $100 to split between yourself and your game partner. Whatever division of the money you propose, if your partner accepts it, you each get to keep your share. If, however, your partner rejects it, neither of you gets any money.

How much should you offer? Why not suggest a $90-$10 split? If your game partner is a rational, self-interested money-maximizer -- the very embodiment of Homo economicus -- he isn't going to turn down a free 10 bucks, is he? He is. Research shows that proposals that offer much less than a $70-$30 split are usually rejected.

Meaning: humans are a social species, and no one lives in a bubble. Context is everything, even when it comes to financial gain.

Land-use is a different matter however. Private-property enthusiasts will assert that a rancher will happily overgraze public land he is leasing. But if his ranch is all private, he will manage it to ensure a healthier ecosystem, because this makes sense for the long term, right?

In practice this is not so. Certainly, the tragedy of the commons does hold here; public land is routinely overgrazed. But the opposite is not true, because ranchers routinely overgraze their own land, too, even though that is clearly bad for ranch productivity in the long term. Why does this happen?

It happens because decisions regarding land-use are much more complex than a simple formula for maximizing profits over the long term. First of all, ranchers behave as if their leased public land is private anyway; usually these leases have been in place for generations, and are essentially giveaways (often $1/acre), and thus the ranchers have a strong sense of entitlement to the land. Any attempt by the feds to change anything about how the leases currently work is met with outrage because the government is going to "ruin" the rancher. Nowhere is there any publicly stated acknowledgment that the rancher is getting a great deal.

Second, ranching practices (at least in the northwest) have been handed down for generations after being developed in a much wetter era. Economic theory predicting rational behavior makes the enormous assumption that the knowledge is available to make rational decisions. A few progressive ranchers in this area are waking up to the fact that the "drought" the west is suffering is here to stay, and are learning how to change their methods to keep the land healthy in the current environment. For many ranches, this can be as simple as changing grazing practices from using fences to using herders. But for those who do not have the cultural knowledge, this can be a daunting shift.

On top of this, any subsistence ranching or farming is concerned much more with maximizing profits in the immediate future, without worrying about the long term. The most obvious example of this is farms in the deforested tropics. Everyone knows the soil in tropical forests is extremely poor, and after just a couple years of farming, the nutrients are fully depleted and the farms are abandoned. Does this keep people from cutting down forests for subsistence farms? No, because when you are living hand-to-mouth, you are focused on getting through the current year. Economists call this "discounting" the long term effects of decisions, so that a benefit obtained years from now is worth much less than one obtained now. This is a rational position, but it is arguable that for most people (such as those who obtained adjustable-rate mortgages in the last few years) the future is discounted much more highly than is mathematically "rational."

Although the threats facing ranchers are not equally severe, the idea of having to quit production on a family ranch that has been working for generations is nothing less than disaster to those who face it. Their culture and tradition, and thus their entire sense of self, is wrapped up in that ranch. In Texas, for example, it is common for a "rancher" to keep a few cows on an overgrazed piece of family-owned land at a loss, while working a full time job in the city to actually make a living. It makes no financial sense to keep the ranch going, but it saves cultural face which is obviously much more important.

Finally, there is the obvious difference between individuals trying to make a living and corporations which need to maximize short-term profits at all costs. Our financial system seems to reward this corporate strategy, because the actual individual making a decision can jump ship before it is time to pay the piper for a bad one. They themselves do not own the resources they are exploiting, so making the resources privately owned (by the corporation) makes no difference to their protection. It is much easier for a corporation to run a ranch into the ground and then sell it off in parcels for development (although many private ranch owners do the same thing eventually) because a corporation has no cultural connection to the land.

The value of federal lands is that although they can be overexploited, there are mechanisms in place, such as regulation and public comment, to put a halt to their destruction. A hundred years ago, certainly the attitude was that the National Forests were there precisely for maximizing exploitation - after all, some private landowners might not want their land to be logged. Today, though, the ethic is different. Ecosystems have an inherent value to many more people than they once did, and this has changed forest service policy to include preservation as a mandate. Though the inertia to bring it about might be extreme, there is at least the possibility that public pressure can change federal land-use policy to better reflect the majority's conservation values. Naturally, those who make a living exploiting federal land view such policy changes as a "taking." But it is really a taking-back for the taxpayers who supplied that land for free in the first place.

Labels: economics, environment, humans