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Alternatives to Environmental Bureaucracy
By Robert Higgs, Carl P. Close
The Independent InstituteCopyright © 2005 The Independent Institute
All rights reserved.
ROBERT HIGGS AND CARL P. CLOSE
The title of this book prompts some obvious questions: What exactly do we mean by "environmental bureaucracy," and why are we asking readers to rethink it? What principles inform this book's critique of current environmental policies, and what evidence suggests that these principles would provide a better guide to environmental policy?
The answers to these questions will emerge as the following pages are read, pondered, and debated, but asking readers to hold their questions until they discover the answers for themselves would be more than coyly evasive — it would forfeit an opportunity to explain why more and more analysts and observers are seeking alternatives to thecurrent approach to environmental protection. The story of that search begins with a brief look at the rise in environmental regulation and how it came to exemplify thedreariness of politics as usual.
ENVIRONMENTAL "AWAKENING" AND POLICY REALISM
Contrary to popular mythology, the environmental "awareness" that came of age publicly in the United States with the first Earth Day in 1970 did not spring fully formed from the brow of the Woodstock generation or even from Rachel Carson's Silent Spring eight years earlier. Rather, it was the culmination of earlier efforts by John Muir, Gifford Pinchot, Theodore Roosevelt, Aldo Leopold, and others. These thinkers and policymakers' legacy is hardly monolithic. Many writers today distinguish, for example, between the "conservationists" and the "environmentalists" among these seminal influences, thus revealing inconsistencies in the goals of environmental policy (Chase 2001).
Nor are historians' interpretations of these legacies uniform. Samuel P. Hays (1959) has argued that the conservationists of the late nineteenth and early twentieth centuries were more concerned with promoting wise environmental stewardship for human purposes than is suggested by the rhetoric of preserving wilderness for its own sake. More recently, however, a case has been made that the early conservationists were not the efficiency-driven, public-interest technocrats that Hays suggested and that their environmental evangelism was more spiritual than scientific (Rubin 2000). The point here, however, is not to trace the history of environmental thought, but merely to indicate that environmental history is a tangled thicket.
Similarly, significant differences exist in how best to interpret the history of environmental regulation. One source of such differences (one not touched on in this volume) is the inherent complexity of the scientific aspects of numerous environmental issues. Another source, which may often be more difficult to resolve, is the problem of understanding how particular regulations operate in the real world. The last four words are emphasized because for too long the goals and efficacy of particular regulations were taken at face value. The goals of a regulation, to the extent that they are influenced by electoral politics, were often assumed to coincide with "the public interest," and seldom were proposed regulations examined sufficiently to establish whether they would advance a reasonable conception of this goal in the presence of real-world political and institutional constraints.
Another type of "awakening" has also taken place in recent decades. Public choice, a young hybrid discipline of economics and political science, aims more or less explicitly to remedy the deficiencies that result from taking public-policy proposals at face value by prescribing a strong dose of policy realism. Rather than ask, idealistically, "What would we like governments to do?" public choice asks, realistically, "What are governments likely to do, given the incentives and constraints of politicians, voters, bureaucrats, and special-interest groups?" Like the consumer who discovers that sausages are less appetizing after he or she sees how they are made, students of public choice learn that political processes — even revered democratic ones — often result in outcomes far different from those described in high school civics classes.
The dethroning of idealized conceptions of political institutions has not been solely a "destructive" affair, however. Public choice has contributed a number of positive insights that can promote the improvement of our institutions. It recognizes, for example, that voters typically display "rational ignorance" in public-policy matters, which means that they often view the opportunity costs of becoming well informed about particular political candidates and proposed changes in the law as greater than the perceived benefits of possessing such information. Rational ignorance thus contributes both to voter "apathy" and to politicians' tendency to pose as "doing something" to fix a perceived problem rather than to deal with the problem's root causes. Recognizing the risks of rational ignorance is the first step toward reforming our institutions.
Public choice also emphasizes that government programs have disparate impacts on people and that such disparities affect the political process. In many cases, for example, a program's relatively few beneficiaries are subsidized by a greater number of taxpayers or others disproportionately burdened by the program's costs. The combination of concentrated benefits and dispersed costs encourages lobbying efforts by the potential beneficiaries. In fact, it often means that a formal lobbying organization, strategically located near political or media centers, will emerge to court favor with policymakers in order to maintain or expand the benefits and to capitalize on the rational ignorance of those who must pay the bill. Thus, the risk of disproportionate influence by special-interest groups is another hazard that must be considered when reforming political institutions.
The preceding public-choice insights also cast aspersions on the assumption (still taken seriously in many classrooms) that politicians and bureaucrats act as selfless representatives of the electorate. This assumption seems especially odd given the widespread recognition that when these government functionaries act as private consumers, their behavior corresponds predictably to their perceived material self-interest. Yet government functionaries do not undergo a profound personality transformation each time they don their "public-interest" vestments. Rather than clinging to the childlike assumption that they do, public choice holds that material self-interest helps to explain their behavior (for example, their quest to win reelection or their desire to detect new problems to fix in order to justify a larger budget).
In the real world, this incentive problem combines with the knowledge problem: even if politicians and bureaucrats place the "public interest" above their material self-interest, the problem remains of how to define that goal and how best to discover and aggregate the knowledge necessary to achieve its realization.
These points are but a few of the better-known concepts that inform public-choice analysis (see Mitchell and Simmons 1994 for a more thorough treatment), but they are sufficient to suggest an important piece of public-policy advice. Proposed reforms must take into account the cold reality that political institutions seldom perform in the real world as we would like, and government policy must be assessed in a real-world context, not in relation to a textbook list of ideal public-policy criteria (the "nirvana" approach). The risk of government failure cannot be ignored without cost.
THE FAILURES OF ENVIRONMENTAL BUREAUCRACY
Environmental policy in the United States is not entirely without success stories, but the contributors to Re-Thinking Green argue that, for the most part, it has been unexpectedly costly, corrosive to America's liberal political and legal traditions, and not very effective in enhancing environmental quality. These failures are rooted in the bureaucratic, top-down approach that has characterized U.S. environmental policy.
If environmental policies worked as they were intended to work, there would be no need for this book (although other problems in environmental policy would still merit discussion). In too many cases, however, environmental policies have failed to advance policymakers' stated goal — namely, to improve environmental quality.
Policies intended to protect endangered species, for example, have rescued few species from their endangered or threatened status. The Endangered Species Act, in particular, has created disincentives for private landowners, who lose much of the economic value of their land when a member of an endangered species is discovered on it. In Africa, the global ban on trade in ivory has created a profitable black market in ivory, leading to widespread poaching of elephants. Protection of endangered species thus fails to live up to Hippocrates' directive that healers should "first, do no harm," as do many other environmental policies that create perverse incentives.
Policy fads have also caused their share of policy failures. In the United States, for example, cities whose governments have sought to improve the urban environment by implementing "smart-growth" policies have experienced increased crowding, traffic congestion, escalating housing prices, and deterioration in the quality of urban living.
In any event, the fact that environmental policies often fall short of their aim has been perhaps the most influential reason for seeking new approaches to environmental problems.
The prevailing command-and-control approach to environmental policy has entailed heavy costs. For example, Clyde Wayne Crews Jr. has recently estimated that in 2002 the costs of enforcing and complying with U.S. environmental regulations amounted to $201 billion (2003, 5). Such costs spill over from the businesses, households, and governmental entities directly subjected to the regulations and affect everyone: the costs of production and hence the market prices of many goods and services have been elevated greatly; other goods have been restricted or eliminated entirely (e.g., asbestos, Freon), compelling consumers to make do with inferior substitutes.
In chapter 2, "Prophecy de Novo: The Nearly Self-Fulfilling Doomsday Forecast," Craig S. Marxsen cites studies that conclude that by 1990 the regulations issued by the Environmental Protection Agency (EPA) had resulted in an estimated 22 percent reduction in manufacturing output and a 21 percent reduction in U.S. gross domestic product compared with what would have been produced in the absence of the regulations — statistics that have considerable significance for families struggling to eke out a living. Even those who believe that the benefits of these regulations have been substantial may be hard pressed to believe that such benefits have exceeded these enormous costs and hence that the regulations can be defended on efficiency grounds.
Legally and Politically Corrosive Policies
The most important claim advanced in various chapters of Re-Thinking Green is that environmental bureaucracy has contributed to the corrosion of America's best legal and political traditions, undermining such core institutions as private-property rights, the rule of law, representative government, and individual liberty. The reasons are readily apparent. Throughout its history, the U.S. government has grown during times of crisis (real, imagined, or manufactured), especially military and economic crises. When a crisis occurs, traditional obstacles to the expansion of government give way to political expediency, allowing new government powers, higher taxes, and new restrictions on individual liberty. After the crisis subsides, government may be scaled back to a degree, but the retrenchment is seldom complete. The establishment of new legal, political, and cultural precedents; the softening of ideological opposition to expanded government; and the creation of a new class of lobbyists (composed of politicians, bureaucrats, special-interest groups, and voters who see themselves as beneficiaries of the new powers) create pressures for the maintenance and expansion of the new powers. In short, national crises tend to create a climate conducive to "ratcheting up" the size and scope of government at the expense of individual liberty (Higgs 1987).
In recent decades, sundry environmental "crises" have played a growing role in altering America's legal and political institutions. These crises have inspired much ill-considered and hastily enacted legislation that has crowded out potentially far more effective approaches to dealing with environmental problems. Statutes and regulations rather than common-law rules of nuisance, trespass, and strict liability now govern environmental law — often to the detriment of environmental quality. For example, the U.S. Supreme Court ruled in Milwaukee v. Illinois (451 U.S. 304 ) that the common law may not be used to establish emission standards more stringent than those set by the Clean Water Act and its attendant regulations (Meiners and Yandle 1992; Brown and Meiners 2000). Thus, the act forces every jurisdiction and watershed to rely on a standard that is too stringent in some cases and too lax in others.
Or consider another example of how environmental law has changed the U.S. legal system. The Pollution Prosecutions Act of 1990, as Craig Marxsen explains in chapter 18, made the indictment of "environmental criminals" a growth industry for government, especially in prosecuting small business owners with few legal resources. Many of these cases seem absurdly unfair because the laws are not widely known, and the penalties are not proportionate to the harm. A Honolulu wastewater plant manager was sentenced to thirty-three months in prison (his partner received twenty-two months) for discharging only 6 percent more effluent than his permit allowed, and the court refused to hear the claim that the two managers mistakenly believed their actions were lawful under their permit.
Although it is impossible to say with precision how the common law would have evolved in the absence of the Clean Water Act, it is likely that it would have developed means more appropriate for diverse conditions than the act's one-size-fits-all approach. Still, even though the common-law approach to water pollution may be far superior to the Clean Water Act, it has little chance of returning to the forefront because the act has created constituents who are effective in maintaining the legal status quo. (Current antitrust laws also inhibit promising approaches to environmental protection; see Yandle 1998.)
Environmental bureaucracy is also having a major impact internationally. Reports of global climate change, for example, have prompted political leaders around the world to draft and support the Kyoto Accord, which, if ratified, will mandate restrictions on greenhouse gases in an attempt to reduce emissions to 1990 levels. The international scope and broad regulatory sweep of the Kyoto Accord would make it an unprecedented challenge to the traditional concept of national sovereignty. In the United States, the prospect of the adoption of the Kyoto Accord has enlisted intense lobbying efforts not only by those who oppose it, but also by special interests (including some segments of industry) that expect to benefit from its passage. In this respect, however, the Kyoto Accord does not differ from other government regulations that create "winners" who see these regulations as conferring a special advantage to them at the expense of competitors with less political clout.
Excerpted from Re-Thinking Green by Robert Higgs, Carl P. Close. Copyright © 2005 The Independent Institute. Excerpted by permission of The Independent Institute.
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