Private Property and the Tragedy of the Commons

Brought to you by the Missoulian, the paper of record for Missoula, Mont. Appears that a former pulp mill just outside town is a prime candidate for listing as a Superfund Site. And if it’s not a prime candidate for Superfund, it is a prime candidate for creating 3-eyed fish. From the “life imitates the Simpsons” department:

Potentially dangerous levels of dioxins, heavy metals and other hazardous chemicals turned up in a U.S. Environmental Protection Agency review of the former Smurfit-Stone Container Corp. pulp mill in Frenchtown.

Nice, huh? I love the smell of dioxins in the morning. Here though is the important part that I want to discuss with you:

The first pulp mill started operating south of Frenchtown in 1957. By the time it closed in 2010, it had expanded to a 100-acre industrial complex bordering 900 acres of settling, sludge and wastewater ponds in the Clark Fork’s floodplain. At its peak in 1993, the mill processed about 1,900 tons of pulp a day into linerboard for cardboard boxes.

Final owner Smurfit-Stone went bankrupt in 2009. The company recovered in 2010, but closed the Frenchtown mill as part of a nationwide restructuring. MLR Investments bought the mill, and then sold it to Green Investment Group Inc. in May 2011.

What I want you to pay attention to, besides the awesome size of this pulp plant, is that this was a private operation, on private land, run by a private corporation. More after this caveat:

I appreciate private property, and I like the free enterprise system. The two together – private property and private enterprise – have done more to lift humanity out of despair and poverty and misery than all the combined efforts of the world’s governments ever. There is no system that is more fair, more productive, more ennobling and enabling than private property and private enterprise. But…

Awhile back I started an argument with Mr. Jonathan Alder, which you can read here. Mr. Alder is a hugely reasonable and thoughtful proponent of privatizing public resources in order to conserve them. It is a compelling argument, made by many, increasing in attractiveness (particularly given the U.S. budget deficit), and difficult to argue against.

Except by me. You see, this line of reasoning, that privatization could/would avert the Tragedy of the Commons, is a pet peeve of mine. Hardin was wrong to suggest it, and others are wrong to recommend it as a policy solution. And here in little Missoula, Mont. we find a perfect example.

That Smurfit-Stone property is decimated. It’s done. All the buildings are dead. If we’re lucky, the U.S. government will step in and spend hundreds of millions of your tax dollars to clean it up, tear it all down, and build an open space park on top of it. As I argued earlier in that Alder piece I link to above, there is no indication, none whatsoever, that those who hold private interests in property are able to plan for the long term any better, with any more foresight, than can the government. The Tragedy of the Commons is not averted simply by transferring ownership. Ownership is not the issue. True, Mr. Alder as well as others making his argument say that the incentives for long-term conservation are more strongly prevalent under a private property rights regime than under common ownership. My rebuttal is that the facts, the evidence from the world, do not weigh kindly upon this claim.

Now, to be fair, the Smurfit-Stone factory isn’t the perfect example, but it is very, very close. This is a factory, on land, that could have been protected, maintained, managed, and sold in the future for economic gain, as Mr. Alder and others argue would happen if private companies/individuals owned, say, forests, or range lands, or parks. But there was no long-term planning with this site, and no long-term gains. Because in business, you take short-term gains when you’re patient, and immediate gains when you’re like most of us. You don’t conserve for the long-term. There is no long-term on a balance sheet.

I keep promising to develop this line of reasoning more thoroughly. Eventually I will write an essay on this subject and try to have it published. But for now, on a Friday evening, after two glasses of Cabernet, you’ll have to settle for what I am able to offer, and I love you all for that.

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