Economic Thought

One of the most pressing issues of our times is the environment. Global warming, deforestation, so on and so forth. It is widely held by the Left that this is the fault of corporations exploiting the plant genetic resources of the third world and overproducing, for the consumption of the Western bourgeois. In general, the only retort that the right has been able to muster has been to question global warming.

Now I don’t know whether global warming is true or not but that is certainly not the question: deforestation threatens to destroy the livelihoods of millions of human beings, in the rainforests and jungles of the world, from Borneo to Amazon. The very same principles of deforestation, though, occur all over the world; from Asia to Southern America.

Let’s examine exactly how the process occurs. A logging company wants to sell timber to a furniture company. They go to the respective Government of the country they plan to extract the resources from, and they probably pay a hefty bribe – it doesn’t matter either way, they get the rights from the Government to log the land, or they buy the land outright to be deforested. Anyone with a basic belief in Liberty will soon be able to spot the slight problem with the argument that this is a fault of the free market.

That land was not the Government’s to give away.

The local natives who live on that land and have to put up with the destruction of their natural habitat by Governments and logging corporations are right to wonder what right the Government had to sell their land away. The people of Borneo have been living off the land in the form of rice paddies and other forms of agriculture for hundreds and hundreds of years. You might call them savages, and perhaps, savages they may be (although it was fashionable to them to resist by force of arms the coercive taxation schemes of petty despots and monarchs long before the American revolution), but it was their property, and it was not the State’s to sell, and not the Corporation’s to deforest.

It is the basic right of homesteading: that because land is scarce, property rights come from the use of that land for productive purposes. If someone takes over some land and puts it to use it becomes their property. Homesteading is basically the cornerstone of Western civilisation and laissez-faire Liberalism.

How would you like it if you spent eighty years growing a really nice tree in your back garden only for the State to sell your back garden to a logging corporation who swiftly fells the tree. Why, you ask, did this happen? “For the benefit of national development of the economy and the greater good?” The real truth is that Governments never benefit the national development of an economy when they abuse property rights. And if it were the case that the Government could “benefit the development of the national economy” by taking people’s property and selling it to environment-destroying Corporations – whose to say they can only sell land? Why can’t they come and confiscate your computer, or your books, or your bed, or your football posters – they are, after all, your property, which you have a sovereign right to own.

And economically, you might claim that a system of enforced land property rights would be intolerable – it would vastly increase the costs of production, after all, and make timber and anything related to wood much much more expensive. This theory is problematic. The Government owns the land and it rents it out or sells it to corporations at whatever price it thinks is right – yet, you and I know for sure that in every system in human history where the Government has rationed scarce resources, there has at some point or another been a shortage.

If we consider the concept of long run supply and short run supply, usually this is not as devastating as I am going to claim it will be, because the system can be changed and the good that is in a shortage can be produced more. Of course, this isn’t an argument for price and wage controls – the Government can never have the full market information to correctly set prices without achieving some kind of horrific market distortion. Nonetheless, in this area, it’s even worse: why?

Because the amount of land on the Earth can not grow. We can not produce a hundred square acres more of forestry every day like we could produce a hundred more radios a day. Yes, ok, land can be reclaimed from the sea and trees can be planted, but there is every indication that at the current rate that forested land is being rationed by the Government to logging corporations, we will be out of trees far sooner than the effects of any large-scale tree planting. Make no mistake, if there is a shortage in trees because they have been incorrectly rationed, there will be no more trees. And then prices will skyrocket, far higher than under any other alternative. That, unfortunately, though, is the predictable future for this planet.

If we want our children to inherit sustainable forests, we must enforce a free market in land: the people who live and work on the land must be given ownership rights rather than the Government. Only then will the correct market rationing exist and as close as possible to an equilibrium can occur in the amount of trees planted compared to the amount of trees chopped down. A tribe who have worked on and lived off a hundred square acre plot of land are not going to chop it all down in an instant. That is not their way. And even if it was, who’s to say that the land would be the Government’s to seize? Is the State obliged to seize all “strategic resources?”

And any land not used by locals can be sold off to the Government to the highest bidder. Whether this is greenpeace or a logging corporation is irrelevant. No logging corporation will immediately use up all its resources if it understands that the price of future land is going to be much higher. In conclusion, a sustainable system of logging and forestry management is impossible only when the Government controls and rations the land upon which trees, or any other natural resource, are found.