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Why?
****ing libertarians. I swear to God, you guys act the same every single time. EVERY time I post something about a societal trade off, you instantly, passionately and irrevocably identify yourself with one and only one side. Why? WHY? WHY do you do that? I thought this one might be harder for you. I mean, two picturesque resource extractors. I thought the salmon fishers might get some love from you. Two years they lost their entire livelihood and way of life! But no. Instead you write with a fanatic dedication to the potential costs to the farmers! Why?! What did you choose on? Seriously, it was "rippling back muscles of the fisher as he winches his nets out of the sea, man on his boat against the elements" versus "his thigh muscles flexing, the grower squats to take a handful of soil, surveying the new growth on his alfalfa before whistling for his dog". How the hell did you choose?
That is from Megan Very-Non-McArdle, and there are some related posts at the blog; commentary is here. The asterisks are from me.
These days, if a TV show is going to draw me in as a viewer, it has to be really, really good.
Posted by Tyler Cowen on June 29, 2007 at 09:35 PM in Philosophy | Permalink
Comments
Oh, Tyler, this is a no-brainer. The farmers were supported by VP Cheney, and he is The Man.
Anybody who can get torture legalized must be agreed with.
Posted by: Barkley Rosser at Jun 29, 2007 9:58:28 PM
You know, that is a reason I can understand. That was an excellent comment.
Posted by: Megan at Jun 29, 2007 10:21:34 PM
Huh?
Posted by: Steve Sailer at Jun 30, 2007 12:50:57 AM
Huh?
Posted by: Steve Sailer at Jun 30, 2007 12:51:40 AM
That was one of the worst cases of pseudo-intellectual posturing and empty position-avoidance statements I've ever seen in weblog comments. That was also one of the least libertarian self-professed libertarians chipping in with his/her bizarre forty-eighth party removed assignment of partial rights to water he or she has never seen.
The core point here is that authoritarians and managed-economy collectivists on the whole have distinct problems understanding the implications of market forces and economic management externalities. Free market economic interactions promote peace, not conflict -- it's difficult to achieve trade for mutual benefit where you're risking your life in an attempt to murder potential trade partners, for instance.
Meh. The whole thing just boggles my mind.
Posted by: apotheon at Jun 30, 2007 1:42:22 AM
I do consider myself a libertarian. Yet, I share Megan's frustration with libertarians.
lets admit it: us libertarians have answers to every social problem known to man. We have a brilliant 17th century method (which supposedly modern civilization was built on) and we use it to diagnose and treat complex problems. We have rational answers, damn it.
Posted by: thehova at Jun 30, 2007 2:07:57 AM
I don't know what libertarians hang out on Megan's blog, but whoever they are, they appear to have completely missed the standard liberatrian solution to such quandries: place the resource under private ownership.
The Coase theorem guarantees that, as long as property rights are well-defined, the market will find an efficient allocation of resources even in the presence of externalities. It doesn't matter who owns the rights. Give the river to a farmer; if the fishermen can make more money with the next mega-gallon than he can, they will pay him to use it and it will get used for fishing. Give the river to a fisherman; if the farmers can make more money with the next mega-gallon of water than he can, they will pay him to use it and it will get used for farming. Give it to the first homeless guy you meet on the street; he will dole out water to the farmers and the fishermen in whatever ratio maximizes their profits and, and thus his.
Asking a scientist or bureaucrat to compute the objectively optimal allocation is a fool's task, because the objectively optimal allocation isn't just a question of multi-factor crop yield functions or salmon life-cycle models. It's a question of how every person on the planet, not just the local farmers and fishermen, relatively value the outputs that can be produced from one use of the river versus another (or another, or another). And amazingly, we have an algorithm for solving that incredibly complex optimization problem: it's called the price mechanism.
Posted by: David Wright at Jun 30, 2007 2:47:07 AM
"the market will find an efficient allocation of resources even in the presence of externalities. It doesn't matter who owns the rights."
Russian oligarchs love you
Posted by: Marius at Jun 30, 2007 7:09:06 AM
****ing bloggers!
Posted by: Albert at Jun 30, 2007 9:49:05 AM
David, the Coase theorem guarantees no such thing. Transaction costs, transaction costs, transaction costs.
Otherwise, you are right: the ostensible libertarians on Megan's blog have missed several very obvious responses to the problem. And Megan seems to have a very unsophisticated view of government, one in which intervention by politicians on behalf of a special interest constituency is abnormal and in which bureaucrats are hard-working, unbiased, thoroughly informed angels whose decision-making process is the only way such conflicts can be resolved and to criticize them is to be in favor of a Hobbesian world. It seems to have completely escaped her attention that the source of the conflict was the result of previous bureaucratic decision-making, and the the manner in which they "resolved" it guaranteed not balance but ongoing conflict.
Posted by: Eric H at Jun 30, 2007 10:54:31 AM
I have to admit Marius has a very important point there. Markets, when not at least _slightly_ regulated, usually go the sour way of conglomerate/monopoly... it's human nature, even more powerful than the "invisible hand." Or did I just insult the agnotheists/atheists by defaming their god?
Posted by: Neal at Jun 30, 2007 11:34:43 AM
Give the river to a farmer; if the fishermen can make more money with the next mega-gallon than he can, they will pay him to use it and it will get used for fishing.
I love this. Let the fox guard the henhouse; once he is full, he will certainly allow other animals to come feed.
What world do you live in, and how do I get there?
Posted by: fustercluck at Jun 30, 2007 11:51:55 AM
Anyone care to guess who's the deep pockets for the environazis?
If said deep pockets were to legislate itself out of being deep pockets, it'd be a different ballgame, because the environazis would have to use their own money - ohhh, putting the risk where it belongs???? Isn't that what you guys talk about here?
Posted by: Sandy P at Jun 30, 2007 12:07:05 PM
megan non-m is boring.
Posted by: josh at Jun 30, 2007 12:10:06 PM
There are a subset of libertarians that annoy me in the same way that most Democratic politicians annoy me. They let their sympathies run only in certain ideological directions. Just as many liberal Democrats only express sympathies with those victims of some sort of unfairness that will then generate the big-government solution, so some libertarians only express sympathies for those victims of some sort of unfairness that generates the less government solution.
Without giving away too much information, I have a friend who had to fight some major government injustice that would have greatly harmed him and his family. That same friend has had some health issues, and his insurer always tries to find some excuse to drop his coverage. I sympathize with him on both counts, even if those sympathies might lead me to favor solutions that run in opposing ideological directions.
Now, as Megan Non-M says in her post: "Regulators are there to balance interests."
After a few beers I say: "Hey, isn't that what markets are for?"
I'm assuming Megan Non-M is smart enough to reply with something like: "Yeah, cutie, if we could have them, but the transactions costs are too high to have markets here. That's why we have the regulators trying to do it."
Then I say something like: "Yeah, you little vixen, I guess that's what cost-benefit analysis is for, to most closely approximate the answer the free market would have generated if it could function."
Then she says: "Yeah, stud, it's just a shame that evil political toads come in and ruin it all."
And I say: "Hey, gorgeous, you have to ask yourself whether that's a systemic issue, which then lowers the optimal scope of regulation. Also consider that some of the worst water policies, even worse than those delivered by the lack of proper regulation, are the federal government's water subsidies to farmers. So that sort of impairs the goal of regulation filling in the gaps where the market can't function. Maybe you and your smart friends should consider developing ways to develop more transparent and tradeable water property rights."
Then she says:"Can we stop talking about sex?"
Posted by: Keith at Jun 30, 2007 12:38:42 PM
Keith finally mentions a non-trivial issue lurking in this that was not mentioned in any of the news
reports I saw or any of this commentary, much of pretty incomprehensible, if self-righteous.
So, I think that there is some irrigation infrastructure that was built by the government, paid for
by taxpayers, for the use of the farmers, with the water coming out of it having been traditionally
offered at way below market rates. To the extent there is government-built infrastructure on the
rivers, it hurts the fishers rather than helping them. So, to all those who just say, "let the free
market do it!" just exactly how are we going to parse out the costs and property rights in all this,
and how high will all the transactions costs be to straighten out the mess of the past subsidies that
way favored the farmers?
What Cheney was doing was giving back a government favor that had been given to one goup and then
withdrawn. Understandably the farmers were annoyed by this, but it is far from clear how a properly
functioning free market would even get set up here that would balance the interests without leftover
subsidies, either implicit or explicit.
I also love how all these westerners who claim to hate the government want free access to government-owned
land. Handouts, folks, that is what all these "Sagebrush" libertarians want, handouts.
Posted by: Barkley Rosser at Jun 30, 2007 1:10:27 PM
Eric H: Granted, Coase assumes negligable transaction costs. No one has pointed out any reason why transaction costs should be prohibitively high for trading water rights, though. Certainly for kilo-gallon users the transaction costs would be too high, but it's the giga-gallon users that count.
Marius: One can certainly criticize Russian oligarchs for how they aquired their holdings (bribery) and how they shut out competitors (murder), but there aren't many complaints about how they allocate them: pretty much they sell to the highest bidders. In cases where they don't (e.g. hand-outs to political favorites), the reason is that property rights are insecure (i.e. they fear re-appropriation), not that property rights are too secure.
Fustercluck: I don't understand. If the next mega-gallon can produce $100 worth of crops or $200 worth of fish, are you saying that a farmer who owned it would not sell it (for between $101 and $199) to the fisherman? Just out of spite? Or stupidity? That strains credulity.
Posted by: David Wright at Jun 30, 2007 2:39:41 PM
Fustercluck: I don't understand. If the next mega-gallon can produce $100 worth of crops or $200 worth of fish, are you saying that a farmer who owned it would not sell it (for between $101 and $199) to the fisherman? Just out of spite? Or stupidity? That strains credulity.
You don't know any stubborn people, then?
Posted by: RJ at Jun 30, 2007 10:31:37 PM
Fuster: He's talking about commercial fishermen, not sport anglers or natives who have a government-granted "right" to fish "because they're natives".
Markets are lousy at providing "my recreation should be free" and "because we're natives" demands with their satisfaction, yes.
RJ: I suggest the farmer is much more likely to be stubborn under the current set of conditions where has to fight the State simply giving "his" water away, than under a regime where the person wanting "his" water has to ask him for it, and pay.
Stubbornness seems, in my experience, to be born much more out of being otherwise-powerless than out of having control (or even an equal and acknowledged-to-be-equitable share) of the process.
(This all brackets the problem of who "owns" a river or watershed, which is tricky - which is one reason Governments tend to do it. At least when the State owns the water, everyone is treated equitably as supplicants...)
Posted by: Sigivald at Jul 1, 2007 12:13:47 AM
I'm aware of the scenario, Sigvald.
I think you touched on one issue, that being who would 'own' the water rights. David's claim that "it doesn't matter who owns the rights" strikes me as an odd statement. Even more odd than the notion that whomever does own the rights would have access to data to signal when marginal returns occur and when it would make sense to sell/lease those rights to another party.
Just strikes me as utopian and not at all realistic.
Posted by: fustercluck at Jul 1, 2007 12:58:07 AM
No, David, he describes the problem in three steps: traditional (Pigou) approach, the problem illustrated anew (without transaction costs), and then the problem *with* transaction costs (starts in section VI). It is unfortunate that most people are only taught or only seem to retain the second part and none of the highly lucid discussion following the development. What has come to be called the Coase Theorem is no panacea. I highly recommend David Friedman's treatment in Law's Order (webbed here), Chapter 4.
Posted by: Eric H at Jul 1, 2007 11:29:19 AM
There are really two parts of the "Coase Theorem" that are relevant here. The Coase Theorem does say
that property rights are well defined and also says that transactions costs are low. But, as we have
seen, there is a serious problem about the property rights to rivers (with at least two competing principles
in law available for strictly private allocations, with the riparian almost certainly favoring the fishers
over the farmers, whereas past government practices have tended to do the opposite). Part of the problem
of high transactons costs involves straightening out this mess. Presumably, if one straightened all that
out, the transactions costs of setting up a not-too badly functioning market might not be too excessive.
Posted by: Barkley Rosser at Jul 1, 2007 1:26:24 PM
To the extent that libertarians sided automatically with the farmers, they have betrayed one of their core principles. Either decision by the government was going to take property from one person and deliver it to another. In the case of the fishermen, their property was taken decades ago. Now, with political winds blowing the other way, the fishermen were prepared to reclaim the property, but the farmers had a political ace up the sleave and stopped the reclamation.
A nice impasse, now, with no easy solutions. Libertarians should have been focussed on the fact that government prevented the establishment of property rights in the first place, and is now responsible for this mess. I have to agree with Megan on this one, I don't know how "libertarians" knew who to side with, I can only guess that they sided with the side that stood to lose the property today.
Posted by: Yancey Ward at Jul 1, 2007 2:47:09 PM
Keith: I am not usually so fresh with people I have just met.
Posted by: Megan at Jul 1, 2007 6:44:41 PM
Fustercluck: It's not surprising that the Coase theorem should "strike you as an odd statement". The irrelevence of the distribution of resources is quite a counter-intuitive result. It wasn't well-understood until the 1960s. It is, however, quite well-founded and now well-accepted. Perhaps the fact that even Barkley Rosser, usually a reliable apologist for non-market solutions, accepts the principal, and even makes a guarded endorsement of the practice, will help you to overcome your skepticism. Or perhaps you could look it up in an econ text.
As regards your objection that a functioning market in water rights would require participants to know either other's marginal products, that's not correct. Presumably you are willing to accept that our farmer knows enough about his own business to make a good guess about how much he could earn from next mega-gallon of irrigation water. To decide whether to sell to the fisherman (or anyone else), he doesn't need to know any details of the other person's business. All he needs to know is whether that person is offering him more for that water than he could earn from it.
Posted by: David Wright at Jul 1, 2007 7:15:17 PM
