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We Are Destroying the Earth and Government Must Do Something
by Sandy Ikeda
People often complain that mankind is destroying the earth: that
insatiable consumption and relentless production have laid waste to
irreplaceable swaths of our planet, and that these activities have
to stop or someday it will all be gone.
Which raises the question: What does it means to "destroy"
When you burn a log, the log is destroyed but heat, light,
smoke, and ashes remain. It's in that sense that physics
tells us that matter is neither created nor destroyed.
Similarly, cutting down a forest destroys the forest but in
its place are houses and furniture and suburbs.
The real question is: Is it worth it?
What people usually mean when they say mankind is destroying the
earth is that human action causes a change they don't like.
It sounds odd to say that my wife, by eating a piece of toast for
breakfast, is "destroying" the toast. But if I wanted that
toast for myself, I might well regard her action as
destructive. Same action, but the interpretation depends on
purpose and context.
When a missile obliterates a building and kills the people in
it, it may serve a political purpose even though the friends and
family of those killed and the owners of the building are
harmed. The perpetrator's gain is the victim's loss. In
the political realm, one person's gain is necessarily another
person's loss. You rob Peter to pay Paul; you kill Jack to
appease Jill. It's a "zero-sum game."
In the economic realm, however, a thing is destroyed to the
extent that it loses its usefulness to somebody for doing
something. Someone may want to bulldoze my lovely home just
for fun. If she pays me enough I may let her do it and be
glad she did. When not physically coerced, a trade won't
happen unless each side expects to gain. If it does happen,
and if the people who traded are right, then all do in fact
gain. Each is better off than before. The trade has created
something-value. If they are wrong, they destroy value and
suffer a loss, which gives them an incentive to avoid making
In free markets, gains manifest themselves in profit, either
monetary or psychic. (In the short run, of course, you can
sustain a monetary loss if you think there's a worthwhile
nonmonetary aspect to the trade that will preserve the
profit.) Now, the free market is not perfect, despite what
some economics professors say about the benefits of so-called
"perfect competition." People don't have complete or perfect
knowledge and so they make mistakes. They trade when they
shouldn't, or they don't trade when they should. Fortunately,
profits and losses serve as feedback to guide their decisions.
There's another source of market imperfection. People may
be capable of making good decisions but they don't trade, or trade
too much, because the property rights to the things they would like
to trade aren't well-defined or aren't effectively enforced.
In such cases their actions or inactions create costs they don't
bear or benefits they don't receive. The result is that their
decisions end up destroying value.
If I free-ride off the oceans, if for example I don't pay for
dumping garbage into it, then the oceans will become more polluted
than they should be. If there is a cleaner, more efficient
source of energy than fossil fuels, but no one can profitably use
it because the state prevents anyone from doing so (for example by
prohibitions or excessive taxation), then again the value that
would have been created will never appear.
Our esthetic sense of beauty is part of what makes us
human. If we wish to protect a lake or a valley from
development because we think it beautiful, how do we do that?
To some extent it's possible to do what the Nature Conservancy does, and
purchase the land that we want to protect. But that's not
always possible, especially when the land is controlled not by
private persons but by the state, which makes special deals with
crony capitalists in so-called public-private developments.
In any case, even the free market is not perfect. Economic
development and material well-being mean that some beautiful
landscapes and irreplaceable resources will be changed in ways not
everyone will approve.
Remember, though, that economics teaches us that an
action is always taken by someone for something. There
are no disembodied costs, benefits, and values. In a world of
scarcity, John believes saving rain forests is more important than
saving the whales. Mary believes the opposite. If we
are to get past disagreements on esthetics-essentially differences
of opinion-that can turn into violent conflict, we need to find
some way to settle our differences peacefully, some way to
transform them into value-creating interactions.
Imperfect though it may be, the free market has so far been the
most effective method we know of for doing that.
"Government Versus the Environment" by Russell Madden:
"The Problem of Environmental Protection" by Dwight R. Lee:
"Economists and Scarcity" by Steven Horwitz:
"Remembering Julian Simon" by Paul Cleveland and Erin
Sandy Ikeda is an associate professor of economics at
Purchase College, SUNY, and the author of The Dynamics of
the Mixed Economy: Toward a Theory of