What I want to speak about today is ecology and economics, but before I do, in the spirit
of capitalism that we all adhere to here, I want to put in a commercial message.
That is for the Fraser Institute.
These blue cards are around somewhere.
I think they're over there.
If you fill one of these out, we will make you a gift of a free subscription to the Fraser
Forum, which is a monthly publication of the Fraser Institute.
and you'll get a full month's free subscription so please fill it out and if we run out of
these cards just give me your business card or put your name and address on a napkin or
something and we'll do it that way.
We are coming out with a book in a few weeks called Ecology or Economics and the Environment,
a Reconciliation and I'll also send you some information about that book.
I think it's no exaggeration to say that environmental problems are among the most important to Canadians nowadays.
Certainly there are newspapers waxing eloquent about this problem, they talk about oil spills and elephant extinction, greenhouse, ozone layer problems.
Public opinion polls have indicated that the environment is one of the most pressing issues on the minds of Canadians today.
One instance of this is that in the last year, CDC did 250-plus stories on the environment,
whereas last year's Hot Topic only got 121 stories, namely the Free Trade Agreement.
We happen to know these with this exactitude because the Fraser Institute has a media center
which monitors CDC to see if they're balanced in their news coverage, and I'll give you
Many people see ecology as polar opposites. They see on the one hand economic growth and
on the other hand preservation of the planet, and many people feel reasonably rich enough
so that we can now afford to take care of the planet. My goal, however, is to reconcile
This attempted reconciliation is impossible for some environmentalists.
They just use ecology as a stick with which to beat the free enterprise system.
One simple reply to them is that no matter how bad capitalism is with regard to the environment,
socialism is worse.
True, we've had Three Mile Island where no one died, and we've had Chernobyl where many
people died.
And as bad as the environment is here, and I understand there are cases of lakes and
rivers catching fire, it's much worse on the other side of the Iron Curtain.
So if you're just using it as a political stick, then I think the cases with the free
and the enterprise system, so-called that we have here, however imperfect it is.
But this week, reconciliation is also impossible for some right-wing people, some economists,
some libertarians, certainly for objectivists.
They're concerned only with the immediate bottom line.
Some of them joke about, well, we've got to pave over all greenery, you know, let not
a tree live after we get through with it.
One example of this, of course, is Ayn Rand, who said we should kiss the smokestacks.
And that's what she said, we should kiss the smokestacks and, you know, the tip of the
cigarette is sort of like a man's life or A is A or something like that.
I never could catch that, but she would say things, ah, that's it, okay, the spark in
his mind.
Well, you know, these are, as I see it, invasive activities.
The reconciliation that I'll be proposing, and that is proposed in this book, is that
economic means or means consistent with private property systems can be used to attain environmental
ends.
And not only can economics be used for this purpose, but I will argue that economics is
a better means toward the goal of saving the environment, or the use of economics and private
property is a better way of achieving environmental safety than are the means put forth by the
and the Green Party, which is mainly greater government involvement and more regulation.
I'm reminded in this regard of Roger Douglas. Roger Douglas is the head of the Labour government
in New Zealand. This would be the equivalent, roughly, of our NDP or maybe the left wing
of the Liberal Party. And yet, things were so bad that when he got in, campaigning on
on a Social Democratic Policy, that what he did in New Zealand was he out-privatized Margaret
Thatcher.
It's really amazing, not many people know this, but it would be as if Dave Barrett got
in here and started selling off Petrocan and privatizing the post office.
I mean, it's a little hard to believe, but that's what happened in New Zealand.
And then he was asked, well, how can you, an avowed socialist, adopt such a program?
And his answer deserves to be, I don't know, maybe put in the next year's calendar or something
like that.
Maybe not.
Later you hear it, you have to decide for yourself.
He says, well, I haven't given up on socialist ends, which are peace, prosperity, full employment,
you know, all those good things.
It's just that we're pursuing these ends with capitalist means.
Well, I mean, I'm a socialist too, I suppose. We're all socialists now, you know, because
the hell with the ends or the goals or the purposes. We want to know what you're doing.
And if what you're doing is dismantling the state, well, okay. I mean, if that's what
socialism is, you know, where do we sign up? So it is in this spirit that I offer my reconciliation.
I am a green-o, or a greenie, or whatever. If by green-o I mean having green goals, then
I'm going to use capitalist means toward attaining these goals.
Many people will question this. They'll say it seems like a paradox. Aren't economic growth
and ecological soundness supposed to be enemies? Aren't they incompatible? All I can say at
the outset is that there's no more of a contradiction in trying to use economic or profit property
How can we explain the supposed enmity between economics and the environment between capitalism
and ecologists?
Well, there are several groups that I would put forth for our consideration.
First, they're just innocent.
You know, innocent people, they're told that there's a contradiction, they're told long
I have a 12-year-old boy and a 10-year-old girl who are in school, and this is all they
hear when they do social studies.
They write letters about saving trees and loving trees, sort of perverted, hug a tree.
They're just little children, and that's what they tell them.
They write letters to their MLAs about how we shouldn't allow housing to be built because
And I think that there are lots of people like that.
They really don't know any better, and my wife tells me to shut up and not tell my kids
the truth because I'll get them in trouble, and you know, the teachers won't like them,
the fellow students won't like them, they'll be the only one taking this view, so it's
personally difficult for me to accept this, but that's the difficulty of parenthood.
And then there are the, what I call the pinko greenos.
These are the people that, I guess to borrow Ayn Rand's thinking, sort of have this death
wish.
They really want to commit suicide, but they don't want to go alone.
They want to bring us all with them.
And this sort of motivates their every political insight.
And you know, previously it was central planning or indicative planning or whatever it was,
planned obsolescence.
So they've got all sorts of great reasons why capitalism is no good and we have to have socialism.
But somehow they're sort of in disarray.
I mean, look what's happening with the Soviet Union in Perestroika and even China for a while.
It looked as if it was going that route.
And certainly Hungary, Czechoslovakia, Romania, East Germany.
You know, they celebrated their 40th anniversary and people are trying to leave like rats from a sinking ship.
So they've got to come up with a new schema.
You know, the old lemonade stand stuff just ain't working, Marxism. I mean, the only Marxists nowadays, there are no Marxists behind the iron curtain anymore.
They're all in universities in Canada, it seems, or maybe behind the pulpit in Canada and the United States and in Western Europe. That's where the Marxists are.
So, this too is going by the board, and you know, if you have this death wish and it animates your every thought, you say, well, you know, we can't push the Marxism crap.
And then there's a third category, and these are called the radical tree lovers, the nature
lovers, the human haters, you know, trees have rights.
Many rights as people, more rights than people. You know, who do you think you are cutting
down a tree? How would you like to be cut down? You know, that's the sort of, that's
the sort of, these are like not political ideological markers, but who are just adopting
the environmental stuff as a facade, as a veneer. These are the true, you know, tree
The Theory of Money and Credit The Theory of Money and Credit
I hope even within the environmental group people have just as good environmental credentials
as he. For example, Ducks Unlimited, Environmental Probe, and Nature Conservancy. What they
do is they say, yes, we've got to save the ducks, we've got to save the geese, we've
got to save these animals, the worms, whatever it is. So instead of asking the space to do
something, they say, well, we'll collect money privately, we'll go out and buy some
The Head of Environment Probe, Louis Solomon, wrote this magnificent article in the Wall Street Journal.
He said, what was it? I forget the title. Save the trees, privatize them.
That was in London newspaper, too.
London newspaper, too. Well, I mean, any of us could have written that.
That's a great title, and it's just a magnificent insight, and he's the head of environment probe.
My hypothesis is that the reason people blame capitalism for environmental depredations
is because they think that what we now have is capitalism.
And yet, as we all know, if we know anything in this room, is that what we now have is
It's not exactly capitalism. It's not even 99% of it. It's a mixed economy. In some ways, it's pretty free. I mean, the paperclip industry is okay, and rubber band industry is alright, but there are many industries that are regulated or crown corporations or what have you, and they're not free at all.
and there are many cases where government refuses to uphold its legitimate functions,
if you're a limited government libertarian, of protecting property against transgressors.
And I think this is the main cause of the problem, not the fact, of course, that there's
any intrinsic contradiction between the market and sound environmental situation.
There are two basic principles before I get into a consideration of a whole bunch of environmental
difficulties that I want to put forth for our consideration.
First is the absolute crucial importance of private property rights.
I mean, you cannot possibly overemphasize how important private property rights are to
the protection of the environment.
If we don't have private property rights that are well defined and, even more important,
fully protected, we will not have a sound environment.
And indeed, most of the problems that we have can be traced to the fact that either the
government refuses to allow private property rights or, in some cases, that it's a little
hard to see how we can apply the private property rights way of looking at things.
Certainly, with the case of owning oceans and owning air rights, it's a little hard
and a lot of research has to be done and I think it only can be done by people such as
in this room who have an appreciation of the importance of it.
I mean, if you hate the very idea, you're not going to be able to do much sound research
in this.
And the second one is the tragedy of the commons.
A typical example of the tragedy of the commons is we've all got our sheep grazing on the
And, you know, some public-spirited person, Gordon, over here, sees that the sheep are
nipping too close to the grass, so he takes his sheep miles away at his own cost in order
to preserve the grass comments, and he notices that everybody else grazes their sheep on
the places that his sheep used to be on.
And he says, hey, you know, what's the benefit of acting responsibly and public-spiritedly
when everyone else just takes advantage, so he stops.
Another way to illustrate the tragedy of the commons is to imagine five children aged ten
to twelve, and in one scenario they've each got some soda pop and they're drinking it
in whatever rate it is, a normal, optimal rate for drinking soda pop.
And in the next scenario you pour all the soda pop into one big bowl and you give five
straws out one to each and then you say, go get it, kids, and you practically watch as
and they bust the guts to get in as much as they possibly can because they realize that
if they slack off, someone else will grab it. Well, that's the tragedy of the commons,
that it reduces the natural intent that people have to cooperate with each other. You see,
we libertarians or we private enterprises know that there is explicit cooperation where
you specifically get together and say, well, let's have a chess game and, you know, you
have to sit there, I'll sit here, there are certain rules and we'll enjoy ourselves that
But we know that in addition to that is implicit cooperation, where we cooperate through prices
and profit rates and private property.
And it's in this sense that the tragedy of the commons just brings into disarray, because
we don't have private property, we have common ownership and the whole thing falls apart.
Well, this will be more clear when we consider the specifics, and the specifics that I've
I've got here are pollution and acid rain, species extinction, oil spills, garbage recycling,
hazardous waste, greenhouse, ozone layer, zero population growth, and maybe if we have
time, cigarette smoking.
I think that ought to cover most of the issues that are considered environmental difficulties
and if I've missed one, maybe we'll get to it in the question and answer period and
next time I give this speech I'll add that one to it because I'm trying to be as exhaustive
First, let's start with pollution and acid rain.
Up until the 1830s and 1840s, anytime there was a trespass, and in what we would now consider
an environmental trespass or a pollution, it was taken care of under the law of nuisance.
They reason quite adequately, quite logically, that if I take my garbage and I dump it on
Daniel's lawn and they catch me in the act, it's very clear what will happen.
The forces of law and order will grab me and say, you know, that's a violation of Daniel's
property rights and you just can't do that.
We're going to grant Daniel an injunction so that you don't do it again.
We're going to make you pay the damages and we'll put you in jail if you keep going.
But, if I were to burn it up first, pulverize it, burn it up, and instead of dumping eggshells
and orange peels and box tops on his lawn, I first burn them, and then I set the soot
and the ashes onto his lawn, they would see no difference.
They were quite sensible.
And they'd say, well, come on, you can't fool us, you're doing the same thing as in
the first place, and you're still a nuisance, and we're going to still do what we would
have done to you in the other case, in the present case.
But around 1830 or 1840, a more sophisticated knowledge of the law came to being. The judges
still said, yes, yes, this is a violation of property rights. We admit that, they would
say to the plaintiffs. But there's something more important in your stinking, sniveling,
greedy private property rights. And what is that? Well, we get a drum roll and, you know,
something flashing in neon. I guess they didn't have neon in those days. But what it was was
and the Public Good. The Public Good has to take precedence over greed and selfishness
and individualism, right? Right. So what we're going to do is we're not going to grant you
an injunction to stop the perpetrator. He can send smoke-walking onto your property,
he can ruin your laundry, he can set off sparks on your haystacks, and we're not going to
We're going to stop him. We're going to give him, in effect, carte blanche to do as he will with your property, not only with his property, but with your property.
And there are other reasons besides the public interest. There was this idea that there was the public good.
In other words, what we're going to do is we're going to give a license to the railroad to do it.
And since the railroad is running and it sets all sparks, well, that's just too bad.
We, the legislature, have given this railroad our imprimatur, and whatever they do is legitimate.
and there was another reason that if the smoke only went from person A to person B, that
would have a private remedy. But if the smoke went from person A to 50 other people, it
was now considered a public nuisance and you couldn't sue as an individual because, you
know, you're just one of many. So the proper place to go is the legislature and not the
court and they have to pass a law and needless to say they passed no such law because they
They were in effect bribed more fully by the perpetrators of this than by the defendants
or by the victims.
Well, that's the old story.
So what were the results of this?
The results of allowing manufacturers to get away with polluting other people's properties
were that they now had no incentive not to.
Suppose that you were public spirited and you were a free enterprise person and you
You were dedicated to the philosophy of liberty and freedom, and you said that it's wrong
to violate other people's property.
And what you're going to do is you're going to engage in research and development in smoke
prevention devices, you're going to install scrubbers in your smokestacks, you're going
to burn high-grade coal, which doesn't have much pollution, although it's more expensive,
Free enterprise works, but only if it's embedded in a legal system that upholds private property
rights.
Free enterprise doesn't work if we don't have private property rights, right?
It's too much to claim for the market system that it can work adequately, that people can
act responsibly if the incentives are all perverted.
And they were all perverted by the fact that the rights of the victims were not upheld.
so much for kissing smokestacks. Now, some people describe what I just called as an intolerable
situation as one of externality. And they call this a market failure. They really do.
They say this is a market failure because while the company takes into account all of
its sales, it gets the money for its product, it doesn't take into account all its costs.
And there are people who say this that are reputable, supposed advocates of the free
enterprise system, such as based at the University of Chicago.
If you read most economics textbooks and you look under the category called market failure,
you'll see externalities as a market failure.
I'm not kidding you.
People who you might think are real free enterprise advocates are saying things like this, that
this is a market failure.
But it's no such thing.
But it's no such thing. It's a failure of government or law to uphold property rights.
They see it as a fault of capitalism that the businessman can keep all of his revenues,
but is allowed to impose some of his costs, such as smoke, particle and removal, on other people.
This is absolute nonsense.
Acid rain, by the way, is just a special case of the more general pollution problem.
And then there are these Chicago-type economists, these supposed free enterprises, who say that
the solution to the problem is not to uphold property rights, but rather to have the government
set up an optimal level of pollution and then to sell, I'm not kidding you, I'm not making
this up, it sounds like I am, but I'm not. And what we have to do is say, well, in Toronto
we can have a hundred tons of pollution, and I don't know if it's a hundred or a thousand
or a million, whatever they decide, and there is no rationale behind any decision, it's
all arbitra. You know, we'll pick X, and X is the right amount of pollution, then what
What we'll do is we'll sell or auction off the rights to pollute.
Well I want to read a magnificent quote.
I wish I had written it and I suppose I could take credit for it so it would be a lie, but
I really meant to write this and he's beaten me to it.
He stole my ideas actually.
He's a thief.
I'll have to sue him.
It's Martin Anderson who is just utterly magnificent and this is in my introduction
If you took a bag of garbage and dropped it on your neighbor's lawn, we all know what
would happen.
Your neighbor would call the police and you would soon find out that the disposal of your
garbage is your responsibility and that it must be done in a way that does not violate
anyone else's property rights.
But if you took that same bag of garbage and burned it in the backyard incinerator, letting
the city ash drift over the neighborhood, the problem gets more complicated.
The violation of property rights is clear, but protecting them is more difficult. And
when the garbage is invisible to the naked eye as much air and water pollution is, the
problem often seems insurmountable. We have tried many remedies in the past. We have tried
to dissuade polluters with fines, with government programs whereby all pay to clean up the garbage
produced by the few, with a myriad of detailed regulations to control the degree of pollution.
Now, some even seriously propose that we should have economic incentives to charge polluters
a fee for polluting, and the more they pollute, the more they pay. But this is just like taxing
burglars as an economic incentive to deter people from stealing your property, and just
as unconscionable. I mean, man is really good. The only effective way to eliminate serious
pollution is to treat it exactly for what it is, garbage. Just as one does not have
have the right to drop a bag of garbage on his neighbor's lawn, so does one not have
the right to place any garbage in the air or in the water or in the earth if it in any
way violates the property rights of others. What we need are tougher, clearer environmental
laws that are enforced, not with economic incentives but with jail terms. What the strict
application of the idea of private property rights will do is to increase the cost of
garbage disposal. That increased cost will be reflected in a higher cost for the products
and the methods of production. But they didn't have to engage in those, they only did because
that was the way the economic incentives were set up. Had law and order prevailed from the
very beginning, the industry would have been led as if by an invisible hand, says Adam
Smith, toward those production techniques that do not specialize in heavy fallout and
pollutants.
So, for 150 years, or maybe for 130 years, we went merrily on polluting ourselves.
Then all of a sudden, certain people said, hey, look, things are getting pretty desperate.
One of the cartoons that I saw illustrates this very much.
It was a mother and a daughter in there eating in an outside restaurant.
Now, usually, you'd expect the mother to say to the little girl, hurry up, dear, eat your
They used to have pretty low smoke stacks and, you know, it would be clear where the smoke
is going.
So guess what these geniuses came up with?
Big smoke stacks, you know, 150 feet high so that, you know, the problem doesn't exist
anymore, right?
Who can see it?
It's like pushing it under the rug.
Well, I think that the best way is to get back to a regime of private property rights.
Now, you might conceivably have to make some compromises.
Maybe.
This is where we need some research.
You know, just how do you go back 150 years? How do you turn back the clock 150 years toward
a more just regime? Do you just say that no one can pollute any more and pretty much the
whole society gets wiped out? Do you grandfather it in? These are difficult problems. Or do
you compromise with this crazy selling of pollution rights temporarily? My own predilection
In a free society, you wouldn't have a situation where you had no pollution. Economists are
always enamored with the idea of optimizing things. Even in a free society, we wouldn't
aim for zero crime, because zero crime might take the entire GNP to solve. We want only
The optimal crime, which means that we devote only a certain amount to stopping criminals.
Well, it's the same here. We want optimal amounts of pollution. Now, in the free society,
the way the optimal amount of pollution would be determined is through voluntary contracts.
Namely, in the 1830s, I set up a steel mill in Cleveland somewhere, and I'd buy, you
know, ten square miles of property, and I'd keep a low smokestack, and we'd decide that
The buffalo was on the verge of extinction, not distinction, extinction, and the cow never
was.
I mean, if you look at it biologically, you can't find an answer, because these two animals
are indistinguishable.
I mean, they're both big and fat, they both smell, they both have horns, they both have
a tail, they both moo, they both give milk.
If you crash into one, you're in trouble.
So, if you just look at these two animals standing side by side, you'd find no inkling
of why one almost was on the verge of extinction and the other never was.
I mean, the idea that the cow is extinct is ludicrous.
Well, the reason for the explanation of it is the tragedy of the commons.
The cow is always owned privately.
The buffalo is always unowned.
We had all these communist songs like Home, Home on the Range and Don't Fence Me In.
When I was a kid I used to watch these western movies and you could always tell the good
guys because they had the white hat and the white horse and they wore two guns and the
bad guys had black horses, black hats and a mustache and only one gun.
So you know things were simple, only it was the wrong way around because the bad guys
and the Truth of Delicacies. And as a result, you'd see, you'd go out in the rain, you know, you'd take your helicopter and you'd look down in the 1850s or something, and you'd see just buffalo, thousands of buffalo just sort of lying there dead, similar to the way the elephants are now in Africa.
Whereas the cow, I mean, who goes into their lower 40 pasture with a machine gun and, you know, rap that cat and, you know, killing all their cows? No, it's ludicrous.
Because if you own the cow and you don't want to use the cow today, it'll be there tomorrow.
But the only way to get the buffalo is to kill it.
So obviously, what we have to do is to privatize the range.
And once we privatize the range, then there's no problem.
And now buffalo aren't extinct, they're a buffalo farm.
Anyone shoots those buffalo, they call the cop and they stop you from doing it.
There are no economic incentives to act in a nonsensical way.
Now, it's the same with hippopotamuses and elephants. Ignorant people, like the editors
of Time, Ms. Wigg, The Economist, you know, economic illiterates say that the reason for
the extinction of these animals is because of their tusks or their horns. You know, the
ivory is worth 100 pounds, and the elephant tusk, I think, 16 pounds of it, it's $400
There was this Daniel Arap Moore from Kenya or somewhere, Mozambique, who burned $3.6
million worth of ivory in order to publicize the danger of the ivory, or the danger to
the elephants.
And I was saying, well, you know, it's just a waste of $3.6 million, although with good
publicity, but still, the point is to privatize them.
And I made statements like, you know, elephants are just cows with big ears, and, you know,
I was seen as, you know, biologically illiterate or something, but I wasn't making a biological
point, I was making an economic point, that if they were just privatized, there would
be no problem.
You see, the reason the poachers are doing so well is because the villagers are the poachers.
The villagers hide them, protect them, because the way they consider them is just rats with
big ears.
Because, you know, here they've got some crops and all of a sudden the elephant comes slumping
and the law and you know that's the end of your crop now if they own the elephants and they own the crops and they could keep one from the other with big senses then they would see the elephant as a resource and they would protect the elephant but now they're not allowed to keep that ivory legally or the meat or the the elephant skin it's the same as with crocodiles I always say crocodiles and alligators confused they seem very similar to me but
The crocodiles, too, were on the verge of extinction, and nowadays we have in Florida
and Louisiana crocodile farms.
The leather there is worth about $20 for a four-foot long farm-fed alligator, and the
leather is worth $39 a linear foot and the meat is worth $20.
Now, I'm not into this, but some people like alligator meat, and what they eat is nutria,
which is ground-up swamp grass and croaker, which is a cheap fish, and then vitamin-fortified
dry food, and they have alligator farms. And while the alligator, or the clack-a-dall,
I forget which it is, was on the verge of extinction, now there are 75,000 alligators
in 89. This is triple what there was in 87. I guess the buggers breed pretty well. When
under the tender mercy care of farmers who have an economic incentive to make sure that
they breed and that they're not slaughtered.
Unfortunately, the people, many of the consumers, still think that the alligator or the crocodile
or whatever it is, is on the verge of extinction, so they're not buying handbags as quickly
as they might.
But you see, the alligator's skin, let's not talk about the meat, it's sort of yucky,
And at least the alligator skins the handbags and shoes was a curse for this animal when
it was unowned. And now that it's owned, it's not a curse. It's the reason that farmers
preserve them. I mean, the reason we preserve cows is because they need economic value.
You took the economic value away, then they'd be in trouble. Which leads me to the next
breed of animal. See, I guess I would divide animals into three kinds. There are, first,
And the animals that have some value for us. Well, if they're privatized, we have no problem.
Second are the animals that we really don't like too much, like anopheles, mosquitoes,
and, you know, causes of death and stuff. It'd be very hard to see how free enterprise
could keep them alive, but even in those, in the case of those species, we would, because
they might conceivably have some value for us in the future. Now, who would be so forward-looking
and the way forward looking is to keep alive mnemonic play grass and stuff like that.
Well, there are two groups that I can think of.
One is pharmaceutical companies, who might in 50 years or 100 years find some use for
them.
And the other is private university, biology departments and chemistry departments, who
would also have an economic advantage in having these breeds not be extinct so that their
students could learn from them.
Remember that Star Trek movie where the whales, there were no whales in our century, Star
Trek 4, there's a Trekkie there, and there were these super powerful beings, the Martians
or whoever, they were friends of whales and they discovered that there were no whales
so they were going to just kill the earth, the entire earth, and our Trekkies had to
go to a different century, namely back to the present to get them and bring them back
to the future.
You ought to be there to appreciate this. Well, this leads to the question of whales and seals and other sea life mammals that are now on the verge of extinction. How would the market handle them?
Well, the answer to me seems to be to privatize the ocean. You know, if it moves, privatize it. If it doesn't move, privatize it. Privatize everything. That's our motto here.
And, you know, when I address this to most audiences, they're sort of, they're draws,
not their draws, their jaws drop.
Maybe their jaws drop too, I don't know.
They say, well, you know, that's imbecilic, how can you privatize the oceans?
You know, it's watery, it moves, you know, you can't privatize it.
Well, I don't know, I mean, a species that can get up to the moon, that can do polio,
that can do all these other great things, can surely make sure that a bunch of fish
stay put where we tell them to, and, you know, don't, you know, swim around where they're
not supposed to.
We probably have the technology even now, and if we don't, surely in 50 or 100 years,
we'd have the electronic devices to, you know, make invisible electronic walls in the ocean
so that the whales stay where we tell them to, you know.
The Theory of Money and Credit The Theory of Money and Credit
I happen to be a human being-phobe. I like human beings. I wish them well. I'm prejudiced.
I happen to be one. And my hope is that eventually, and I'm sort of anticipating some of the zero
population growth stuff, my hope is that eventually, instead of six billion people, we'll have
60 trillion people on this earth, and I think we've got plenty of room for them. But if
The third group of animals with regard to extinction is groups like snail daughters and other animals
that are neither very good nor very bad, but sort of were indifferent to them.
And again, the same principles would apply. There are people that would have economic incentives to keep them alive, as well, even if there are species that are disappearing, there are also species that are continually coming into existence.
And we have to make a distinction. You know, the answer to this or that is not both, always, because both has cost.
Somebody has got to make a decision, a private decision, whether the monkey or the worm or
whatever it is, is worth preserving if it's extinct and it has no obvious value to people
right now.
Okay, that's it for extinct species.
We move right now onto oilfields.
The Exxon Valdez dropped 10 million gallons into the Alaska harbor.
This was a big deal in B.C. because we were closer, but I imagine that the greenos around
here, the pinko greenos, were very unhappy about that.
It's the third biggest oil spill in the history of the world.
The second biggest was the Amoco Cadiz off the coast of France, which dropped 68 million
gallons, and the biggest one was an offshore oil drilling rig off the coast of Yucatan
in 1979, which spewed forth 155 million gallons. And it's really pretty yucky. I mean, the
oil has the consistency of sort of black mayonnaise, and it just gets on everything. And I'm not
one of these right-wingers that say, well, you know, what's a little oil between friends?
Or they come up with these analogies that say, well, if you take the 10 million gallons
and all of these shores are being polluted. They won't be able to fish or swim or use
any recreation for quite a number of years, and it's just a violation of property rights.
So I don't think we have to welcome this and be indifferent to it and say it's a great
thing or anything. Now, let's get into the causes of this. The causes, as you can imagine,
were not capitalism, were not free enterprise, were not markets. The causes were government
government intervention, choir government intervention, no, not a drunken skipper, it's not the fault of the drunken skipper, some people say it was Exxon's fault because they didn't fire the drunken skipper, the point is that drunkenness has been made a handicap in the U.S., they were not allowed to fire him, they had no incentive to keep a drunken skipper or one airline has an economic incentive to keep a drunken pilot, it's because of these laws that require, you know, minorities have
have rights. Drunks have rights. They have a right to be behind the cocktail. Well, now
that's lunacy. And that's the proximate cause. But there's more to the story than just that,
that proximate cause. Other problems are that the law, the Admiralty law, as I understand
it right now, limits the... So even if we didn't have a drunken skipper, accidents occur. I
mean, we're human beings. There's got to be accidents. Human beings are the mistakes making
The Law of the Adultery Law is that the limitation of liability of the company is the value of
the boat and the cargo.
What kind of nonsense is that?
Surely the responsibility of the person that does that is not limited to the value of the
thinking boat and the cargo, but rather to the damage he does.
That would be a much more rational way of dealing with it.
Fishermen have no right to sue because we don't recognize, we, that is, our government,
shouldn't make that equation, our government, our blessed, you know, all-powerful, all-benevolent
government does not recognize fishermen's right to anything in the ocean because they
don't own it, so they can't sue.
So that's another problem with it.
But I think the ultimate cause of the problem is that the oceans are only common, they're
owned by no one.
There's this UN law of the sea treaty that's being brooded about, and I think Canada signed,
but happily the U.S. didn't, and the U.S. counts for more than Canada on this one and
on many other things, and they're saying that everybody, you know, some guy in a jungle
should have the run over end of the rights to the ocean as everyone else, even though
The Theory of Money and Credit
I'm supposed to speak for an hour and I've been speaking for 50 minutes and I've got
three or four topics more, so I'm not going to be able to cover everything with the thoroughness
that I'd like to, but I'd like to at least touch upon a few of these other topics.
So let me run through a few of them and maybe I won't reach them all and we can discuss
some of them in the after period, question and answer period.
The next one is recycling.
Now, this is another fetish. You know, everybody is saying, you know, you've got a Styrofoam
cup, you're evil, you know, you're, I don't know, you're an environmental pervert or something,
and you're using a plastic bag, and you're no good, you're not ecologically friendly
or something, and, you know, people are having campaigns about this, and again, guess who's
It's the capitalist, the greedy capitalist, who makes these plastic bags and these styrofoam
cups without any consideration of what will happen to them afterwards.
And not only is it the greedy capitalist, but there's an unholy alliance of the greedy
capitalist and the uncaring consumer, who buys these things, who goes to the shopping
mall and, you know, just puts the stuff in a plastic bag and, you know, doesn't think
about it.
This is the way the Greenos see the problem, and I agree with them. This is a problem, and people
are acting irresponsibly. I mean, granted that when you try to recycle this stuff or you try to put it
in the earth, it ruins the earth, I think we do have over optimal amount of money in styrofoam
and in plastics, but my explanation for this problem is not because of greedy capitalism and
Let's forget about the cost of disposing it. We'll do it. Not for free with your tax money, but we'll do it.
So you don't have to be concerned about disposing of it.
Now suppose that the economic situation were as follows.
It costs a penny to make a paper bag. It costs a penny to make a plastic bag.
It costs a penny to dispose of a paper bag.
And it costs five bucks to dispose of a plastic bag.
The consumer says to himself, well, if I take this paper bag, it will cost me a penny to
produce it, a penny to dispose of it for a grand total of two cents.
If I take the plastic bag, it will cost me a penny to buy it and five bucks to dispose
of it for a grand total of five-oh-one.
Now do I really value this plastic bag at 250 times as much as the paper bag?
You know, I'm not really that hopped up about having plastic, and the answer is no.
They would spin the plastic bag, they would take the paper bag, and the recycling problem
would be solved.
Because the only people that would be using plastic bags would be people for whom it really
is worth 250 times as much as the paper, namely hospitals or certain technical processes of
production.
I don't know who.
I'm an economist.
I'm not a manufacturer.
and I presume that there are certain people for whom the plastic is very important and
they would use it and they would be very softy with it than they are now.
So this whole problem is a sum total of the fact that the government not only monopolizes
garbage collection but dumping.
Land sales and garbage collection should be privatized.
Not only for the reason that it will save us bundles of money because they will do it
more efficiently, that goes without saying, but also because it will solve the ecological
and the Federal Crisis. When people say, well, McDonald's is evil, and I had this picture
of McDonald's with the styrofoam here and styrofoam there, and people won't eat there,
and they say that the market is irresponsible, it's because there is no market. It's because
of the mixed part of the mixed economy. It's not because of the laissez-faire part. Okay,
enough for recycling. Now we move on to hazardous waste. The most famous case of hazardous waste
This was the Love Canal situation. And again, this was really yucky. You know, people were
noticing that their worlds were green and, you know, sort of gooey, and then their arms
were falling off at the elbow. And, you know, I'm exaggerating a little bit, but it was
a real... I mean, if you were living in Love Canal and you thought it was due to capitalism,
it would turn you on to socialism forever. But the reality of the situation is that the
Hooker Chemical Company at one...
Oh, well. It's just a coincidence, I'm sure. Reminds me of this joke that there were three
people, you know, shooting up on the corner, heroin, and they were sharing needles, and
somebody came by and said, well, you can catch AIDS if you share needles? I said, no, no,
Well, don't worry about it, we're all using condoms. Well, I had to put in my quick dirty joke in there.
Now, the Hooker chemical company was involved in certain toxic waste, I forget what, and what it did is it buried it very carefully in concrete and barrels and, you know, 10 foot thick concrete and that was it.
And then the Hooker Company got expropriated. That property got expropriated by guess who?
It begins with a G. The government expropriated the Hooker chemical companies. By the way,
this article was in Reason, a magnificent article in Reason, where they discuss that.
Oh, okay. Well, it makes the rounds. And what happened is they expropriated this and gave
it over to a public school. And Hooker said, well, you know, in their bill of sale, be
Be careful, whatever you do, don't mess around. It's sort of like, you know, these horror
movies where somebody sells you something on the condition that you don't open the
third drawer ever. And, you know, you're opening the first drawer and the second and the fourth,
and, you know, one day you say, well, I wonder what, and then, you know, something springs
out. Well, they tell them, don't do it. So to make a long story short, guess what they
did? They did it. A public school was put in there and they, you know, they went, they
and the drill, they opened the chemicals and the chemicals got into the love canal and
started seeping around. And this again is a failure of capitalism. Well, I mean the
obvious answer is that we shouldn't be expropriating property and if we're going to expropriate
property and they tell us not to open the third drawer, then don't open the third drawer.
So I don't think too much of the hazardous waste case against the market. What about
The Greenhouse Effect Case Against the Market
Well, what is the greenhouse effect? The greenhouse effect, very briefly, from a non-scientific,
layman point of view, is that there are certain chemicals, carbon monoxide, carbon dioxide,
carbon something-ide, gets into the air and what it does is it keeps the sun in, it keeps
The problem with this, and the problem is that if the earth gets warmer, it'll melt the
The only problem with this is that there is no evidence for it.
Or at least the scientific community, the majority of opinion does not support the fact
that we have the greenhouse effect.
They look back on temperatures for the last hundred years and they see some ups and some
The Greenhouse Effect is complicated by the whole forestry situation, and the forestry
situation is a lot clearer than the greenhouse effect situation.
It is maintained by scientists, and I'm not competent to know whether this is true or not,
that the greenery, the trees, serve as the lungs of the earth.
They take in the carbon dioxide and they come out with oxygen.
Well, we'll stipulate that that's true. You know that joke about there was the economist,
the chemist, the physicist, and the engineer, and they were stuck on this desert island,
and they had a whole bunch of canned goods and no can opener. So all the physicists and
the chemists and the engineer, they're huddling and saying, well, you know, blah, blah, blah,
blah, equations and, you know, pulleys and, you know, should we throw the can against
the rock and all sorts of things. And then they turn to the economist and they say, well,
How can you contribute to our deliberation?
And the economist says, well, assume we have a can opener.
Well, let's assume that we have a greenhouse effect.
One of the saving graces of the forest is that they will help solve the greenhouse effect.
The only problem is that the forests are disappearing.
And there's a little story as to why the forests are disappearing, and I'll give you one guess
as to whose fault that is.
The reason, again, is the tragedy of the common.
See, what happens is that these costs are not privately owned.
The U.S. is a little better than Canada in the sense that the government only owns about
60% of the land in the U.S.
In Canada, the government owns about 90% or 89%.
And if you forget about the Northwest Territory and the Yukon, it's about 85%.
I've got these statistics in the book.
The problem is that what they do is they don't allow the private companies to own the forest where they would treat it as if they owned it and they would protect it and if they clear cut they would replant because if they didn't replant after clear cutting the value of the land would dissipate.
But rather what they do is they say, look, we'll give you a lease. Six months. Do what you will with this land for six months and that's your time horizon.
So what they do is they level it and they don't replant and the government tries to get them to replant and they're unsuccessful and when the governments run out of money the first thing that they stop is replanting because, you know, welfare rights are more important than replanting.
So we've got a lot of dissipation of the farm. In addition, what the government does in the few cases of private ownership in the U.S. is they build logging roads.
Thus making accessible to cutting trees that would never be accessible to cutting without
their subsidization of the cutting through these logging roads.
And in Brazil what they do is they subsidize private farmers to go in and cut down the
trees and start cattle farming, because they've got this perverted idea that they can't import
beef from Argentina, God forbid, because, you know, the Brazilian cultural nationalism
will be ruined by beef from some other country.
Does that sound familiar?
So, these are the reasons that the forests are now being dissipated, and then the governments
in the northern hemisphere are saying that the Brazilians are stupid and evil for not
preserving their forests, but this is hypocritical. If they're so worried about the forests, let
them, you know, preserve their own, let them privatize. And we get back to this environmental
and I think that really is a very important case in point.
Now I think I only have two more points, I'm running a little past my time, but I've got
the ozone layer, zero population growth and cigarette smoking, but I'm out of time, so
shall I just give another few minutes and then...
Okay. Okay. The natives aren't left with yet. Just the cigarette smokers. We'll get to them in a minute. We'll deal with those people.
Now, the ozone layer, it is alleged that chlorofluorocarbons, I want a little applause for being able to pronounce that.
I've been working on it. My pronunciation is getting better of these. I had a hard time in chemistry in college and now I'm back in it.
Right. It's a bit of a distraction or something.
It is alleged that the CFCs, in aerosol and foam products and air-conditioned refrigerators, act in such a way as to combine with oxygen as to either increase or decrease ozone.
and the scientific community is, again, not of the overwhelming opinion that there is any
ozone hole problem.
Another interesting point is that the people behind this ozone stuff are mainly DuPont.
DuPont is in favor of prohibiting freons and CFCs and things like that.
And it's also an interesting point, which I'm sure is completely coincidental and has
And nothing to do with this, that Dupont holds patents for the substitutes for Freon. Now I want the jury to just, you know, to just not consider this as at all relevant, but it might be of interest to someone to know just, you know, these backgrounds here.
But let's suppose that there really is a problem. Let's suppose, you know, you know, the economists
will assume they can't open it. Let's assume a problem. Let's assume that DuPont is innocent
and let's, you know, because it could be, it's not a logical contradiction to suppose
that there is a problem. Well, then we get back to the, to the old stamping grounds of
pollution. If it really is true that to use an aerosol can or an air conditioner or refrigerate
with Present Technology is to dissipate the ozone layer and to increase skin cancer, it
seems to me that this is a prima facie case of violation of property rights.
Now it's true it's hard to see who's going to own the air and we really need a lot of
thinking about that, but we don't have to own the air, we just have to own the rights
not to be aggressed against and I think it's not too much of an extension of rights violations
to assume that if it really did work this way, it would be a rights violation.
Maybe I'm being impure in this.
Maybe a rights violation is only with a gun, but I don't think so.
I think that if the allegation were true, we have no embarrassment about it philosophically.
We would just say, yes, this is a violation of property rights, and we stop it.
Period.
So again, I don't think that there's anything in the environmental challenge that makes
us reconsider our philosophy of freedom.
Not only is our philosophy of freedom right and just, it is also pragmatic.
Last but not least, oh no, not last, next to last but not least, is your population
growth.
People are saying, well, you know, there are too many people around here.
In China, they forbid people from having more than one child, and it's really disgraceful
what happens because people are biased toward having male children, and they find out they
have a female child, and they abort.
You wonder what's going to happen in 20 years in China when there are all these boys running
around and no girls.
It'll be a social prostitution and it'll be a social disarray.
There are some statistics that might convince you that we have no overpopulation problem.
One of them is that if we took everybody on the earth, all six billion people of us, and
put them into Ontario in the form of four people to a family, pardon me for using such
I don't mean to curse or, you know, to be obnoxious, but, okay, well, local mores, yes.
If we put everybody on the earth, all six billion of us, into the province of Ontario
in the form of four people to a house, where the house is the usual middle-class sized
house with a front yard and a back yard and two stories, I think it's 8200 square feet,
Everybody on earth would fit into Ontario. That's one instance to convince you of how
empty this planet is. Another one is if you just took all the people, and I think you
count them as three cubic feet, if you stuck them all into a cube, the cube would be one
mile, namely a mile up a mile wide, a mile deep, you can get everybody in it. It'd be
a little crowded, you know, there'd be some, you know, I'm not advocating that we do this,
You know, it would make the New York subway system look, you know, like empty, but, you
know, we'd all be living cheek by jowl here, but it would just be for a few seconds.
You know, the way college kids get into a phone booth, well, that would be something
like that.
Well, I mean, if it's just one square mile and this earth is a lot bigger, I forget how
big it is, you know, there are very few people.
It's also not true that poverty is correlated at all with overpopulation.
You know, we speak of the teeming masses of India and all the Indian support, but what
about the teeming masses of Toronto or the teeming masses of Paris or London or Manhattan?
I mean, they're teeming, or San Francisco, well, forget about San Francisco for a moment,
Los Angeles, they're teeming in there, but they're pretty rich.
and then there are people that are dying like flies in a desert like Ethiopia where there
are hardly any people for square miles. If you make a table where you put rich or poor
and population density, you conceal in all the boxes. That is, you get some poor concentrated
countries, some poor empty countries, some rich concentrated countries, some rich empty
countries. Poverty has got nothing to do with overpopulation. What it's got to do with is
The Big G. Too much G. That'll get you every turn. I once debated somebody on this and
I used the following argument and I got roundly booed and hissed, but I'm sure in this audience
I won't. What I said is that my opponent has it within his power to reduce the population
by one. The fact that he's sitting over there waiting to get on this podium shows that he
He doesn't believe in his own theory. He's a hypocrite. And then I sat down. And they
booed me mercilessly. Well, and he got up and sort of, you know, a little sickly grim,
because it's true. I mean, if he's so concerned about extra people, you know, let him take
the one action that the libertarians want. It allows him to deal with this problem and,
You know, let's have one more person, but I don't, you know, even him, I don't think
he should kill himself because I think people are precious and people are very valuable.
And I take a very long run perspective on this problem, very, very long run. My long
run perspective is that one day, not soon, but in a couple of billion years, the sun
will go out. And on that time, we'd better have technology and enough spaceships or beam
I see this world, instead of 6 billion people, you know, 60 trillion people, and I think
we could all fit very happily if we didn't have any zoning laws, that you can't build
more than 10-story buildings.
I mean, you know, with technology like that, in a couple of dozen years, or even now, we
can build 150-story buildings, you know, if we build 3,000-story buildings and own the
oceans, we can get a lot more people in here without any air crowding or anything.
and I'm not saying tomorrow but you know ultimately. I don't see any overpopulation problem. I
see each person is indescribably precious and important and this overpopulation is just
another incidence of this death wish that I started to talk with. I mean there are certain
people that just, they don't want to have the decency to commit suicide on their own.
They want to take the rest of us with them and this permeates their philosophy and the
and the overpopulation is in these just one more instance of it.
Let me get to cigarette smoking and then I'll pause for breath, pardon the pun, didn't
mean it.
Now we have to divide cigarette smoking, the effects of cigarette smoking, into two.
On the one hand there are the intrapersonal effects and on the other hand there are the
inter-personal effects.
Now, our friends on the left, or our friends on the G side, want to deny this distinction.
They want to say that everything is interpersonal. There is no such thing as smoking that involves
only you, because we have socialized medicine. And if, who's the smoker here? You're the
smokers here. If you smoke, you get lung cancer, then I have to pay for you, so I'll prohibit
you from doing it in the first place. So there are no intrapersonal effects. They might think
Well, according to that logic, we can make them not eat chocolate, make them brush their
teeth, make them drink their milk, you know, no hang gliding, no basketball, you know,
you hurt your knee when you go up for a rebound. I mean, there are so many things that we could
prohibit people from doing on the grounds that if they do them, they'll hurt themselves
and Socialization.
We'll have to pay for them through socialized medicine.
Well, I've got a great solution.
I'm sure it didn't occur to any of you.
Why not get rid of socialized medicine and keep our freedom?
I mean, it seems a lot more logical to me.
Okay, now let's take the case of secondary smoke where obviously it does affect other
people.
You know, you smoke and other people breathe in the fumes or what have you.
So what does the government do?
and keep our freedom. It seems a lot more logical to me.
Okay, now let's take the case of secondary smoke, where obviously it does affect other
people. You smoke and other people breathe in the fumes or what have you. So what does
the government do? It very inflexibly either prohibits it or sets up smoking sections in
And all of this is not as good as the marketplace could do.
What the marketplace could do is be much more flexible, because remember what the market
is trying to do is please customers.
The customer is always right.
And maybe what you'd have in some restaurants, say the beer and pizza parlors in the bowling
alleys, they'd allow smoking, or at least some of them would, they'd have oil smoking
And what we can say is that if people are allowed to compete, they're more likely to come up with solutions to the problem than a bureaucrat sitting in Ottawa or Toronto or wherever it is deciding the rest of their lives.
So, to summarize my position, it might seem that from the concentration on the environmental issue that we have met a problem for our philosophy.
I conclude that we have not met any problem, that the entire difficulty of the environment
and ecology and extinction of species and pollution and all the rest is not an unraveling
of the market, does not show an inconsistency of free enterprise or liberty, but rather shows
that what we need is more liberty, not less.
Thanks.
www.fieggen.com