Paul Jacob

This cleaned up some of the worst abuses. But it did so at great cost, and it set up bureaucratic rules doomed to obsolescence. As economist Bruce Yandle puts it,

Students of regulation know there are three types of regulatory instruments that may be used when governments choose to regulate: performance standards that set limits or goals without mandating how the outcomes must be achieved, technology standards that specify how the goal will be achieved, and incentives such as fees, prices, and taxes that put a price on the activity to be limited. . . . Any one of the three can generate a desired outcome, but it is generally agreed that technology standards — the approach mandated by our basic environmental statutes — are the most costly and therefore least effective regulatory choice.

Professor Yandle prefers performance standards, and urges Americans to reform our environmental regulatory practices to encourage a more efficient and results-based set of processes, with accountability. The current system, which picks and chooses among available technological options, suffers, as Yandle explains, from a “knowledge problem.”

Like everybody else, bureaucrats cannot have all the answers.

Pretending that they know which technologies best reduce pollution flies in the face of what we know about bureaucracies. But pretend for a moment that a bureau does know, or can know, the best set of a given set of options: even when it lucks out and selects the right alternative today, by tomorrow a newer, perhaps greener and better and even cheaper solution may arise.

And that new tech will either be prohibited, or the whole lumbering beast of the bureaucracy must be petitioned and prodded and poked to change its ways.

Both results are unduly expensive. And kind of crazy.

Yandle is the author of the classic rethink of the regulatory process, “Bootleggers and Baptists.” His Earth Day 2012 paper is worth reading, too. Alas, this is probably not the kind of analysis that protestors want to hear on Earth Day. They want something earthier. They want to have bad guys to hate and good guys to love — a real pagan fête. Instead of a coliseum with contests and sacrifices, they want a political arena where contest and sacrifice require bloodshed while still eliciting more than scant bloodlust amongst those in the bleachers.

Sorry. Can’t provide. Pollution and environmental degradation is not nearly the good-guy/bad-guy thing pushed by Earth Day speeches and signage. Indeed, the usual suspect list has it almost exactly backwards.

Pollution has always been largely a problem of “the commons,” not of “capitalism” as such. The air doesn’t belong to anybody in particular, so of course it’s not part of the property rights nexus of the private sector. It’s into the commons that we put what we don’t want . . . if we can get away with it.

Waterways can be owned, and sometimes are, though not very often in the U.S. Tort actions against polluting cities resulted in many municipal sewage monopolies (monopolistic because of politics, not economics) in the 19th and early 20th centuries. But cities also resisted the expense, and, like many businesses, often preferred dumping their pollutants into the publicly-owned commons of rivers, lakes, oceans and streams. Because the water bodies were “common resources,” the private property regime of markets and lawsuits failed to protect many people.

And there have been no worse polluters in history than the socialist “planners” of the Union of Soviet Socialist Republics.

Which is not to say that businesses haven’t lobbied for the ability to pollute. Polluting businesses defended themselves from tort actions in courts, but were far more successful cutting off such litigation by pressing legislatures “to promote economic growth.” This may seem un-American, but it’s part of the whole “internal improvements” ideology that swept 19th century politics, a Federalist-Whig-Republican idea before it became bipartisan in the next century.

What businesses couldn’t get away with at common law, they got away with courtesy of politicians. The bulk of the harm came more directly from government itself.

In other words, the system that supported rampant pollution — the outrageous pollution that sparked the environmental movement and the first Earth Day — was not laissez-faire so much as “business-government partnerships.”

It should be no surprise, then, to discover that particular businesses today lobby the EPA for regulatory changes. It should be even less surprising to learn that many of the petitioned changes “just happen” to favor the lobbying business over its competition. Professor Yandle tells some great stories. There are many more.

And they should make Earth Day protestors sick with rage.

But to prevent such tragedies in the future, environmentalists would have to give up the current method of regulation in favor of a more rational approach.

And wouldn’t it be great if “rational” and “environmentalism” could somehow unite, like two great tastes that taste great together?


Paul Jacob

Paul Jacob is President of Citizens in Charge Foundation and Citizens in Charge. His daily Common Sense commentary appears on the Web and via e-mail.