[unrev-II] Economics and the Garden of Eden

From: John \ (johnwerneken@netzero.net)
Date: Mon Jun 05 2000 - 23:01:44 PDT

  • Next message: Paul Fernhout: "Re: [unrev-II] Economics and the Garden of Eden"

    Thank you for your thought and time in replying, Paul.

    I have two general quibbles with your elaboration: (1) I do not agree that a
    theory that can be reduced to an absurd result under extreme conditions is
    necessarily wrong; (2) I am more concerned with how we decide, than with
    what we decide (means, not ends).

    As far as I know, all the software I use is capable of responding other than
    as expected (and probably other than as intended) under some conditions, but
    not under most conditions. Including our Apache boxes. That does not lead me
    to believe that the software is necessarily buggy software, although I could
    see coming to that conclusion.

    As far as our decision process goes, I am deeply suspicious of any
    environmental regulation. Virtually every one denies companies and their
    employees a right to produce goods and services and a right to earn an
    income. Lots of people need these goods, services, and incomes. The
    proponents tend to be people who are more satisfied with their private level
    of goods, services, and income. They are delighted to use public policy to
    legislate benefits for themselves that they do not already have, such as
    cleaner air or more park land, but are quite unwilling to compensate the
    losers with their own funds. Sounds like the war of the rich against the
    poor all over again, to me.

    And it also sounds like the inevitable result of any attempt to use
    democracy, so valuable in securing the civic rights of individuals, as a way
    of making economic decisions. This is simply because the voter has no
    feedback look that he or she can really see that forces any recognition of
    the cost of doing one thing and the cost of not doing another.

    >Message: 2
    > Date: Sun, 04 Jun 2000 12:05:24 -0400
    > From: Paul Fernhout <pdfernhout@kurtz-fernhout.com>
    >Subject: Economics and the Garden of Eden
    >John -
    >You make many good points, but there are a few that I think needs
    >John \"sb\" Werneken wrote:
    >> [Snip]
    >> There is a simple solution to the problem that some things are without
    >> ownership and hence tend to be treated poorly by the markets - such as
    >> species diversity, clean air, or unspoiled vistas. Give them owners. Then
    >> they will be given value in the market place and will be
    >conserved, as all
    >> valued properties are.
    >However, a big issue here is external costs.
    >If I own "clean air" and I sell the right to pollute, and other people
    >have a greater chance of getting lung cancer, I am passing on an
    >external cost to the community. It is unlikely under today's law that I
    >could be successfully sued for this because it is difficult to prove
    >damages. So it is profitable for me as the "air owner" to kill people

    As far as "clean air" goes, if I owned some, I would not want it sullied. I
    might sell the right to sully it to some limited extent, if the price were
    high enough. Others might bid to buy the right to simply have the air stay
    clean. As a limited and owned resource, my air would be valuable. Many
    potential polluters would find it cheaper to minimize their pollution than
    to buy air rights; pollution would decrease. Some people would even buy
    pollution sources and clean them up, in order to obtain valuable clean air.

    There would be more clean air, staying cleaner for a longer period. Just as
    there might be if we had a law, with two major differences:

    (1) In a buy/sell system, the mechanics of controlling the pollution would
    be decided by those in a position to gain by reducing pollution, increasing
    clean air, and lowering costs. This system is inherently more efficient,
    because of the rewards go directly to the successful decision-maker;

    (2) In a buy-sell system, we would find out what the statistical chance of
    cancer was worth to us. If it was worth a lot, the investment to reduce the
    pollution would increase (at the expense of whoever was gaining value by
    avoiding the cancer cases, which would be not just the potential cancer
    patient but also dependents, employers, insurers, care providers, etc.). If
    it was not worth so much, the market might choose a higher risk of it and
    less pollution control.

    I have seen EPA regulations reported as requiring @200,000,000 invested in
    order to eliminate enough pollution to statistically avoid one death. If
    life is priceless, why is it so rare that anyone would spend more that
    $1,000,000.00 to provide life-saving treatment? If $1,000,000.00 is more
    than we are actually willing to pay for a life when we have the chance, how
    does $200,000,000.00 become an acceptable cost?

    There are other areas where far less invested would produce far more gain in
    health, yet regulation often misses these entirely. Buy/sell would not.

    >Another issue is perceived value of cash vs. a non-cash resource, which
    >is often highly idiosyncratic to the owner and immediate needs.
    >Lets say developers want to pave the Amazon to build a large parking
    >lot. I own 100% of the worlds biodiversity rights. They approach me, and
    >say we'll give you $200,000 for the right to pave the Amazon. Imagine I
    >have a whiny child who want to go to Princeton. I need the cash right
    >now! Seems like a good deal. Who is hurt? Me? No! Maybe just future
    >generations who never get various medicines or can enjoy nature. But, it
    >is a profitable exchange in the light of the priorities of the resource
    >owner. Granted, maybe The Nature Conservancy http://www.tnc.org/ might
    >have offered me more money in the future, but I needed the cash now.
    >Plus, the remaining world's biodiversity is even more valuable since
    >there is less of it, so my remaining asset may actually increase in
    >Think this is a silly example? It's pretty much what is happening right
    >now as the remaining old growth forests in the USA are being cut down to
    >give antiquated timber mills a few more years of profit before those
    >mills are obsolete. You might argue timber companies might make more
    >money out of using the remaining forest for recreation or harvesting new
    >DNA, but they don't see that as their business, and they have an
    >existing physical plant and cultural system based on cutting down
    >forests. (By the way, the replacement monoculture "tree farms" with
    >nicely spaced rows bear little resemblance in biodiversity to the
    >original forest.)

    It is perfectly reasonable to view a hamburger in hand as more valuable than
    a steak in five years. That is why mortgages exist: people find a home today
    sufficiently valuable that they are willing to pay 2.5 to 3 times its
    purchase price (in time payments over 20-30 years) in order to obtain it

    When things are subsidized by the public - as is invariably the case with
    the more outrageous logging exploits, the Tsongas Forest in Alaska is a good
    example - something of value is devalued and hence wasted. The cure is not
    more regulation, but less subsidy.

    As far as biodiversity goes, I doubt that it would be without buyers. I
    think we'd find many natural communities to be worth far more, in cash, as
    communities, than their cash value as harvested commodities. But not all. I
    suspect the NW Salmon would bite it (as they have under the regulatory
    regime). Probably the cost of reorienting a region's land use would exceed
    the value of the fish. But perhaps not. We have not yet tried PAYING the
    land-users to use their land in more pro-fish ways. Perhaps with buy/sell
    we'd find some ways of changing land use at minimal cost (because at minimal
    inconvenience to the land user) that would nonetheless provide a big
    increase in quality fish habitat. We won't know, unless we try!

    >Another real example is the destruction of the "state" owned environment
    >in the old USSR by various factories. The government owned both the
    >environment and the factories -- it just decided to sacrifice one for
    >the other.
    >I don't see how replacing the state with an individual or corporation
    >will make things better. Even within a corporation, perceptions may
    >differ as to the value of a non-cash asset. For example, the Newton was
    >way ahead of it's time, but Apple decide to kill it because it wasn't
    >profitable to keep it up. Or for example, in the 1970's sci-fi movie
    >"Silent Running",
    > http://starriders.net/sfmovies/silent.htm
    >the Earth's remaining biodiversity is stored in habitat domes in "Pan
    >Am" space freighters, and the decision is made to blow up the domes and
    >return the freighters to commercial service (probably because that would
    >be more profitable in the short term). Everyone goes along with this
    >except one ecologist who resists.

    Russia is a classic example of what happens when everybody owns something -
    no body owns it and it is wasted and degraded accordingly. The Soviet State
    was the last organization on Earth to feel any ecological impulses, because
    it was totally shielded from competition and from feedback, by military

    Of course an individual or a corporation is better, given the rights to own
    and to sell. Then there are clear incentives for conserving value, clear
    ways of establishing precedence when values conflict, and a mechanism of
    competition to allow better methods to come to prominence. Evolution is a
    powerful tool!

    >I think preserving biodiversity for example takes social consensus, and
    >when necessary, enforcing laws related to the public well being and "the
    >seventh generation". Every fight to preserve biodiversity has been
    >difficult. Creating the National Parks system in the 1930s and
    >preserving places like Yellowstone was a huge political fight.

    Yellowstone and the great national parks were Teddy Roosevelt in 1901-1909,
    not FDR or the 1930's. And not much of a fight either. As head of the
    organization owning the land (federal government) he simply declared the
    parks created by executive order. Ownership at its best.

    >> Business is nothing but the desires of all individuals, expressed
    >> autonomously and honestly in their purchasing decisions.
    >Business reflects the desires of individuals to the extent they can pay
    >for goods and services. If you are a poor farmer in Ethiopia, "business"
    >cares not a bit about your desires. This is a fundamental problem with
    >markets. They reflect the interests of people with the money. That is
    >why they need to be tempered with morality and laws.

    The average family income in America is an un-Plutocratic 39,000.00. But
    still enough that wages and subsidies (social security, medicare,
    foodstamps) grant far more than the necessities of life to most of us. I
    imagine that by the third following generation from today, most places with
    decent governments (on the Germany to Hong Kong spectrum of governmental
    decency) will be able to say the same.

    I believe that there is and probably always will be, a social consensus to
    attempt to provide the necessities of life, through taxes if necessary and
    through work and charity when possible. (It's another conversation, but one
    of the big issues is not having the "if necessary" subsidies destroy the
    ability of either the poor to take advantage of work and charity, or of the
    better off, to provide work and charity).

    Beyond the necessities, I think if a man wants undeveloped natural land in
    his neighborhood, he or he and some partners should buy it. I don't think he
    and his fellow fairly well-to-do citizens should confiscate it by law from
    some rich business man, whose development of the land might mean jobs for
    hundreds and housing for thousands of people, all quite possibly less well
    off than the environmentalist.

    >There's a catchy song I heard on NPR once.
    >An example verse is something like:
    >"Someone owns the water, someone owns the soil,
    >someone owns the land, and someone owns the oil.
    >Someone owns the sky, someone owns the trees,
    >Someone owns my body but they can't own me."
    >The refrain goes something like:
    >"Everyone's a criminal unless you got the money, honey".
    >Anyone know who the songwriter / singer is?
    >> Government in contrast reflects the decisions of a smaller group.
    >In theory, Government should reflect a broad community that is governed.
    >In practice you may be right (especially given the lack of separation of
    >business and state Eric points out).

    Another song or actually a short ditty:

    Don't tax you!
    Don't tax me!
    Let's tax that feller, behind that tree!

    -Senator Russell Long, former Chair, U.S. Senate Finance (tax writing)

    >> [Your general sentiment of the value of capitalism and ownership.]
    >In general, I think you are right. A market system has been involved in
    >the production and availability of all sort of interesting goods and
    >services. People do tend to take better care of resources when they own
    >them. For example, it is often said that home owners take better care of
    >them and their communities than renters.
    >This also has to do with feedback mechanisms as you mentioned.
    >Christopher Alexander discusses this in his book "Notes on Synthesis of
    >Form" where he gives the example of living in a mud hut vs. living in a
    >skyscraper. The owner of the mud hut will patch a hole that causes a
    >draft. The inhabitant of a skyscraper does not have access or
    >understanding of the building's air circulation system. Further, the
    >architects who designed the skyscraper will probably never (or only
    >years later) get feedback on the problems with the ventilation design.
    >Both Christopher Alexander and Langdon Winner (in his book "Autonomous
    >Technology") make the point that technical systems should be readily
    >understood and adaptable by the inhabitants, so that they can be made
    >more responsive to the inhabitants needs and prevent the tyranny of the
    >infrastructure. Unfortunately, there is money to be made in supplying
    >difficult to understand technical systems with proprietary parts which
    >resist modification, because that keeps the "user" dependent on the
    >"supplier", with a resulting continuous revenue stream for the supplier.
    >As Eric points out, most bioengineering efforts for example work in this
    >direction -- "terminator" seeds or plant requiring heavy applications of
    >pesticides (i.e. "Roundup-ready Soybeans").

    I can repair a bicycle but not a modern car. But I'd rather have the car.
    Autonomous control of technology is at present a luxury of interest mostly
    to those both technically expert and well off.

    >The issue is taking things to extremes, the difficulty of assigning
    >external costs, and differences in perceived long term value of
    >resources of a scale we can't comprehend [like nature].

    When everything has a private owner, there are no "external costs". Those
    damaged without compensation can and do sue, and they collect, if they can
    convince a panel of laymen that they are correct as to damage and cause.

    >It used to be considered profitable to enslave people. That is rarely
    >overtly done now because it is now generally considered morally wrong.
    >In part this is also because it turns out you can get more work out of a
    >"free" person for less total cost than owning a slave, especially when
    >the free person is part of certain types of organizations with capital
    >for tools. Someday the same thing might be widely thought about
    >destruction of biodiversity. And again, this will be in part because
    >economically you can get more out of biodiversity than pavement or
    >What is economic to do? In part it depends on the laws. If it is illegal
    >to kill
    >or beat your slaves, it may be more profitable to employ them. If it is
    >illegal to destroy biodiversity, it may be more profitable to use it for
    >sightseeing, medical research, or attracting programmers to Seattle (the
    >most profitable use of old growth forest in the Pacific Northwest so far
    >-- too bad old-growth forest owners can't easily profit from it -- this
    >is the reverse situation of "external costs" I guess: "external

    The profits would not be external, if Bill Gates and Paul Allen had had to
    buy or lease some of the trees.

    >> "These people clearly did not have our relationship to the world,
    >> they were of it and not its masters.
    >You may not have meant to imply this, but I think it is a dangerous
    >assumption that we today are in any sense "masters" of nature. It is
    >more like (I think I encountered this idea in Geologist Preston Cloud's
    >book "Oasis in Space") humans have become a geological force. We can
    >destroy nature, but that doesn't not mean we can rebuild it.

    Yes here I agree with you. No ruler is master of life and death - only of
    death. Some things we assuredly can not create and would lose if we
    destroyed them. We can rebuild the White House, but not an extinct species.
    Though capability may be more advanced one day, it isn't now. Where the
    trend of loss is high, where probability of alternative more valuable use is
    good, and where the consequences of acting to stem the losses seem
    acceptable, perhaps here is a role for a Teddy Roosevelt approach, at least
    to "buy time" for the market to catch up and mature.

    But it may not be necessary even here. I see international investment and
    trade deals being conditioned by environmental stewardship actions. To some
    degree, those who have and want more, are beginning to be willing to
    actually pay those who have less, for using stewardship means deemed to be
    more appropriate.

    >And, I would argue (to boil down Manual De Landa's "War in the Age of
    >Intelligent Machines") the upcoming singularity involving intelligent
    >autonomous machines will may with some probability (small or large?)
    >leaves us with very little mastery of many things. Eric has a good point
    >in suggesting we turn our attentions to building "Edens", however the
    >inhabitants define "Edens". For me, that means creating decentralized
    >resilient self-replicating infrastructure for life support and economic
    >-Paul Fernhout
    >Kurtz-Fernhout Software

    I wholly approve of "creating decentralized resilient self-replicating
    infrastructure for life support and economic production". To some degree
    "decentralized" and "resilient" go together. One of the advantages of the
    private buy/sell idea over the centralized mandated thesis. And the
    "self-replicating infrastructure" may be getting a nod, with buy-in charges
    for newcomers to finance that replication. That introduces problems of
    equity regarding those who never bought in in the first place vs. newcomers
    of limited means....

    Obviously it is not simple. I apologize if my fairly short rant leaves the
    impression that I do think it is simple. I know it is not. And I recognize
    you as one who also sees it as not so simple.

    I think the DKR concept is an example of something as important as any
    biogenetic technology. So far software has mostly automated existing tasks,
    and more recently, software is making great strides in automating economic
    communication (whether stock trading or car buying). I think it may have the
    potential to allow people to learn work and make decisions in new ways, a
    third way that is not survivalist-individualist nor new age-collectivist.

    I take the other side sometimes on Slashdot, and rant against the

    I think my actual position though is fairly consistent. I see this marvelous
    "new economy" and I see so many people demonstrating the benefits they have
    received from two great trends in America: the trend of the individualist
    capitalist ethic, and the trend of the social investment in the community's
    future (particularly in education & in infrastructure). I hear a lot of
    voices denying the value of the capitalist tradition. I hear lots of other
    voices claiming that the "new economy" owes nothing to the society as a
    whole and in fact deserves to be left completely free of any restraint or
    impost, on the grounds that it was entirely self-created.

    I tend to take issue with both of those extreme views. I suspect that you
    would too.

    John Werneken

    >Developers of custom software and educational simulations
    >Creators of the Garden with Insight(TM) garden simulator

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