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Private Property System Best Benefits Environment

R&L: It has been said, borrowing Oscar Wilde’s definition of a cynic, that an economist is one who knows the price of everything and the value of nothing. Assuming I place a high value on the environment, and knowing you are an economist about to talk about environmental issues, do I have reason to be ill at ease?

Hill: Yes, you do. You have caricatured economists a bit, but economists have spent a great deal of time talking about the decision-making process while often ignoring the question of the origin of value, of what truly gives things value. I do think that economists are skilled at discussing how values get transferred, how they get altered, and how people recognize other people’s values. But, ultimately, everyone has to think about the origin of those values.

I hope that, as a Christian economist, I am not completely insensitive to this issue, and my Christian theology certainly forms my position as an economist. In fact, I would argue that every economist has some sort of theology or view of the world that accounts for the origin of values. Because I am a believing Christian, my view is that value comes from God and is displayed in the universe he has created.

R&L: What does that mean in practice?

Hill: It means that I try to establish an economic system that recognizes certain important theological facts. In other words, I think about institutions or the rules of the game or what some people call property rights, and I advocate a particular set of institutions based upon my theology.

R&L: In thinking about economic systems, which theological facts are the most important to consider?

Hill: Two theological doctrines need to be considered. The first is that we bear the image of God, that we are morally responsible creatures who possess the potential to do creative things. Consequently, our institutional order should recognize that we can do all sorts of things to transform the world in ways that not only benefit others but also acknowledge God’s ultimate ownership of the world. The second is that we are fallen, that we and all of our institutions and endeavors are marked by sin. Consequently, our institutional order should recognize that we are sinful and that our efforts are always imperfect. So my theology leads me to believe that we need an institutional order that allows for human creativity but acknowledges human sinfulness, and I regard a well-functioning private property order as the best system I can think of that reflects those two theological doctrines.

R&L: In what particular ways does private property take into account these two doctrines?

Hill: Private property allows us to do things that benefit others—to take resources, combine them with other resources, and make the world better. What is more, private property actually encourages us to make the world better, because it gives us a great deal of freedom. The nice thing about the private property system is that you obtain resources not by simply taking them but, rather, by bidding for them or by offering better alternatives for them, which means that you must think that you have a better way to use them. And the private property system rewards you if you do, in fact, use those resources well, but it punishes you if you use them badly, so private property encourages the appropriate and creative use of resources. Further, private property allows for freedom in how resources are used. Some people will use them to build places of worship; others, to expand time with their families; still others, to create great works of art. Such creative impulses come from the fact that we are made in the image of God, and private property best allows for the free use of creative human action.

But private property also places limits on human actions, particularly on actions that physically invade someone else’s property. If you drive your car over my lawn, if you burn my house down, if you build a factory that pollutes my water, then you are invading my physical space. And because of our private property system, I can take legal action against your actions. A well-functioning system of property rights recognizes not only that we can be creative but also that we can be counted on not to be creative all the time. In other words, since we are fallen, our actions need restraints, and such restraints are built into a system of private property.

R&L: You mention the freedom that private property allows for decision making. It would seem that such freedom also extends to allowing for minority opinions on how resources are used, whereas strictly political solutions often either yield unsatisfactory compromises or ignore minority opinions altogether. Is that accurate?

Hill: Yes, it is. One of the good things about a private property system is that it allows people to go against the prevailing wisdom—and the prevailing wisdom is often wrong. People who disagree with the majority can go and buy some property and put it to better use. I have found some really interesting cases of such kinds of preservation. For example, in the 1930s Rosalie Edge preserved Hawk Mountain in Pennsylvania when the prevailing wisdom counseled shooting all the raptors that flew by. Even the Audubon Society agreed with that. But Rosalie Edge disagreed, and, basically, she bought Hawk Mountain and preserved what is now the Hawk Mountain Preserve. If, in 1934, she had approached the Pennsylvania legislature for a political solution, she would have failed, because she represented a minority opinion.

A second thing is that the private property system allows for a great deal of what economists call time- and place-specific information. Private property decentralizes many decisions and encourages—and sometimes actually forces—the decision-making process to be carried out at a very local and personal level by people who are faced with actual situations. In contrast, politics tends to centralize those decisions and place them in the hands of people who do not have either the local information or the personal contact with the situation in question.

R&L: It would follow that the private property system’s ability to accommodate minority opinions and to decentralize the decision-making process has significant implications for how power is distributed throughout a society. If true, this would be a great advantage, for as we know, “Power tends to corrupt, and absolute power corrupts absolutely.”

Hill: That’s correct. Another advantage of the private property system is that it fragments power. It does not distribute power perfectly, but when compared to the other alternatives, the market does have that significant advantage. We should consider this fact, because most of the injustices in the world occur because of the misuse of power. Christians, especially, need to consider this, because the Christian calling to be a voice for justice for the powerless is a very serious one. In contrast to some other Christian environmentalists, I would argue that the poor and powerless will do better in a regime of private property and markets than they will in a regime of heavy governmental intrusion.

R&L: When someone asked Brent Haglund, president of the Sand County Foundation, what he thought was the best tool for environmental conservation, he replied, “You know what I like? A deed in the courthouse.” That is very persuasive. Private property solutions to environmental concerns are elegant and effective, but few people take advantage of them. Why is that?

Hill: For one thing, just because private property solutions are superior does not mean that there are private property rights in place all of the time, particularly with regard to environmental protection. Sometimes when we look around and see environmental problems, our natural inclination is to say that we need to do something, and that something is governmental regulation. But there are several other things we can do.

One would be to try to remove the government’s heavy hand from the situation, because sometimes the problems are caused by governmental intrusion, which prevents markets from working well and private property rights from actually developing.

In other cases, government has a role to play by providing means that lower the transaction costs of defining and enforcing property rights, by helping make property rights more effective. For instance, with regard to automobiles, I think that the government effectively defines property rights through the title registry system. If someone bangs into your car, and you see the license plate, you have a way of knowing who did it. So while I argue for minimizing government in some ways, in some other ways, I really like government. A title registry system that requires license plate numbers on automobiles and that records those numbers in a central location so that people can find out who owns what and can hold others accountable for their actions—such a system is a governmental assistance of private property.

R&L: How could such systems be applied to environmental concerns?

Hill: We can move in the same direction in regard to pollutants by branding them with radioisotopes or tracer chemicals. People who use pesticides or herbicides could be required to brand the herbicide or pesticide they use with an identification number, which could be registered in a central directory, say, in the state of Wisconsin. In this way, you could identify the farmer who sprayed the herbicide that ended up polluting someone else’s ground water and hold him accountable—just like the automobile registration system. Cases such as these are where I think we need intelligent and thoughtful governmental action to help define property rights.

R&L: Many Christians try to attain environmental stewardship goals through political intervention and governmental regulation. When do political means offer appropriate solutions to environmental issues?

Hill: Governmental intervention is appropriate when people are not held accountable under the existing system of rules. I regard accountability as another aspect of Christian doctrine; we need to be held accountable for what we do. Sometimes property rights are deficient; in such cases, government needs to step in to improve accountability. In many cases, private property exists because government is present in the form of police forces and court systems, and those sorts of political systems are very useful.

R&L: When is politics not appropriate?

Hill: The one caution I have, especially for Christians who are thinking about using politics to address environmental concerns, is that the Fall is a problem in the political sector as well as the market sector. It is clear that actions are marred by sin in the marketplace, but sometimes we act as if that same sin problem does not also mar politics. Accordingly, we should not necessarily conclude that a problem in the marketplace can be solved simply by inviting governmental intervention or regulation. This is not to say that people in the political sector are more corrupt or more sinful than people in the private sector; however, it is certainly wrong to say that markets are sinister, while government is benign.

The real disadvantage of government is its monopoly on coercive force, which can be used (and used very badly) for taking property. So even if people in the market and people in politics are equally sinful, governmental use of coercive power provides the opportunities for that sinfulness to be used in some very inappropriate ways. So Christians ought to be very careful about saying unequivocally that political solutions will work. There are good theological and empirical reasons to believe that simply giving power to government and telling government to do good will not work.

R&L: What would be examples of inappropriate governmental intervention?

Hill: Command-and-control techniques and heavy-duty regulations that attempt to impose regulatory solutions rather than to provide incentive-based solutions. The Endangered Species Act is a good example.

R&L: That was an act many Christians supported.

Hill: That’s right. Christians, basically, have claimed responsibility for the renewal of the Endangered Species Act. And I think they made a mistake in doing so.

R&L: Why?

Hill: The Endangered Species Act has two big problems. The first is empirical: Does it work? There is considerable evidence that it does not work—at least not very well. This is why: If you discover that you own prime habitat for an endangered species, one of the things you will do is destroy the habitat, because if that endangered species does happen to show up, the government will intervene, and you will lose control of your property. There are very clear examples of people destroying habitat rather than running the risk of having endangered species appear.

R&L: What is an example of that?

Hill: Red-cockaded woodpeckers. In the southeastern part of the United States, you do not want to let your piney woods get old, because old-growth pine forest is prime habitat for the endangered red-cockaded woodpecker. So you speed up your harvest rotation and cut the trees every thirty to forty years rather than every sixty to seventy years to discourage red-cockaded woodpecker colonies from being established.

R&L: And what is the second problem that you see with the Endangered Species Act?

Hill: The second problem concerns justice, which is something that should be especially important to Christians. Simply saying that you need to pay the cost of preserving an endangered species on your land on behalf of society is analogous to saying that I need to house the police in my front room because having a police force is good for society. But that is not how we finance the police; rather, we support them with tax funds. Endangered species preservation, if it is to be funded, should be funded the same way. I am appalled at how quickly Christians will say that some particular individuals should pay something for the common good for rather than by society as a whole. I would prefer that such things be done at the state or local level, but doing them at the federal level with general tax funds is preferable to telling particular individuals, “You are the unlucky person; the endangered species happens to be on your property, and since the rest of us want it preserved, you are going to bear the cost, not us.” So the Endangered Species Act, with its focus on governmental intervention, places endangered species at greater risk and is unjust.


Religion & Liberty interviewed Peter J. Hill (professor of economics at Wheaton College and a senior associate of the Political Economy Research Center) for its March/April 2001 issue, which focused on environmentalism. Following is the second half of this interview, exclusive to Acton.org.


R&L: Besides private property and the rule of law, which you have mentioned already, what other aspects of the free market are important in addressing environmental issues?

Hill: Out of private property and markets come several interesting things. First, private property gives a voice to future generations. Contrary to popular opinion, markets are more future-oriented than governmental actions. In a market system, people will preserve resources for future generations because they can profit by doing so; however, with government, because there is no way to connect the voice of future generations to the present well-being of people in government, one has to depend almost entirely upon altruism and hope for the best. People in government generally hold office for a short period of time, and it is difficult for them to make decisions for the thirty-, forty- or fifty-year term. In a private property marketplace, you find people going out and planting walnut trees that may not mature for ten, fifteen, or twenty years. And they plant those trees even if they know that they cannot profit from them directly, because they know they can sell them to people who will. So private property rights embody a voice for future generations, and that is a useful thing.

The second thing that happens with markets and private property rights is that information flows rapidly and is generally of high quality. In the political arena, by way of contrast, it is more difficult to find out if the information represents reality. However, the marketplace does a good job of verifying the quality of the information and confirming that one can act upon it confidently.

R&L: Since, in a market, that information is transmitted through prices, if the government distorts those prices, then it consequently disrupts the flow of information and encourages people to make bad decisions, correct?

Hill: That’s right, and that is what we are seeing with the California energy crisis. Over the past year, the information that energy was becoming more costly should have been conveyed to consumers through rising electricity prices. But because of the regulatory regime, that information was, in fact, not passed on through the price system, which, in turn, prevented a more gradual adaptation to price increases. Instead, people were encouraged to go ahead and do wasteful sorts of things. And when the crisis reached its peak, California had to resort to people going on television and telling residents not to consume as much. If California had relied on the price system to convey that information, the crisis would have either been avoided or resolved more rapidly and gently.

Another thing I really like about markets and private property rights is that they maximize cooperation, minimize social conflict, and encourage people to find ways of getting along. For example, environmentalists and oil companies can get along pretty well in a world of private property rights because they can figure out where the margins of agreement are. A prime example of this kind of cooperation is the Rainey Preserve in Louisiana, which is owned by the Audubon Society. What happened is that the Audubon Society opened up its reserve to some gas exploration and pumping. Both parties profited from the enterprise, while guaranteeing the integrity of the preserve. In the political sector you are not rewarded for looking for ways of agreement; you are rewarded for being intransigent and for continuing to find ways to discredit your opponents. And so, with private property rights, I think we end up with a much more cooperative world.

One final benefit of a private property system is that it gives substantial latitude for individual choice. In other words, a private property world offers more freedom. Of course, there are still constraints in a private property world, places where you cannot go because doing so would entail invading someone else’s private property rights, but those constraints are rarer than they are in a government-controlled environment.

R&L: How should the Christian call to be stewards of creation figure into how we organize our economic and political institutions?

Hill: Because of the Fall, there is the tendency for us to want to overlook God’s call and to place our desires ahead of God’s desires, so there is a danger in arguing for human domination. And that danger exists both in the private property marketplace and in the political realm; wherever we are, we have to recognize that our desires do not always coincide with God’s desires. That is not a condemnation of markets; it just says that we, as humans, are flawed, so we need continually to return to our calling to be good stewards. I think the Christian environmental movement has been very helpful in reminding us of that call, and I disagree on very little with the Christian environmental movement on those grounds.

I would like, however, for people to be more sensitive to practical policy issues. In particular, I would say that, with regard to promoting policies, good intentions are simply not enough. Being well intentioned with regard to the environment—while important—can often translate into bad policy if we do not think about the consequences and incentives inherent in particular policies. For example, governmental ownership of land, generally, has been inimical to good environmental stewardship. The United States Forest Service does not have the appropriate accountability, information, or incentives to manage their forests well. I think those forests would have been much better managed in private hands. The Bureau of Reclamation, which was charged to do good by building dams, has actually caused a huge amount of environmental disruption through overbuilding. They constructed dams not because they met any sort of economic criteria but due to their political benefits. So, in areas such as these, people intended to do good by having the government undertake certain tasks, but then special interest groups captured the agencies that were created.

R&L: I’d like for us to shift from economic and political issues of environmentalism to more theological ones. Many environmentalists are critical of the prevailing anthropcentric view of the world and would prefer that humans espouse a more biocentric view. As a Christian, how do you respond to this criticism.

Hill: First of all, for me as a Christian there is a dualism. We are created in the image of God and are given particular responsibilities, and that is the way God made it. So theologically I have to draw a distinction between humans and the rest of creation. That does not mean that I favor what I would call a narrow utilitarianism, in which all values have to be human values. I think that creation is valuable because God says it is valuable, not because humans say it is valuable. I think the environment’s value to humans is important, but that is not the ultimate source of its value. So there is a sense in which the environmental movement is correct to criticize the anthropocentric view of the origin of values.

However, rather than advocating what we might call a biocentric perspective, as some environmentalists do, I would argue for a move to a theocentric/anthropocentric perspective. By theocentric, I mean that God, as creator, is the ultimate source of value. There is a distinction between the creator and the created, and we need to recognize that; however, I would also say that human beings, because they are made in the image of God, have particular responsibilities. We are the morally responsible creatures to whom God has given the job of managing, appropriately preserving, and appropriately transforming this world that he has created.

So there is a dualism. We cannot escape some sort of anthropocentrism; we cannot give rights to animals, trees, and rocks without human involvement. Every time someone claims that the rights of nature need to be recognized, that person is really claiming that certain humans and human values need to be recognized, because those rocks and trees and animals are not able to speak in the human sector. So in that sense I am very anthropocentric; however, I am not anthropocentric in that I do not believe that all value flows from humans. Rather, we are creatures who have been given particular responsibilities by our Creator.

R&L: So, in other words, we need to see that the world was created by God, that he cares for it, and that he has placed us in the world as his representatives—his stewards—to see that his work in the world is done. This world is our home, so we are not aliens or interlopers here.

Hill: Right. We are a part of God’s good creation, and because of that, we have particular responsibilities as well. We are not a cancer on the earth, as some people have argued. Nature is also marked by the Fall, so it has its own problems. But we are still required to be appropriately sensitive to God’s call to be stewards. In some cases, that will mean preserving some portions of wild nature. In other cases, it will mean appropriately transforming nature. The general rise in life expectancy—in many countries, from approximately thirty-five years to between sixty and eighty years—is a good example of this. Because humans have appropriately acted upon their stewardship responsibilities, today many fewer children die in infancy, and certain diseases have been almost entirely wiped out. Such advances in human well-being are good gifts of God that have come about because humans have appropriately transformed nature. It does not mean that we should do everything we are capable of. It does mean that we have to be good stewards and that we still have to respond to the fact that God is the ultimate owner of creation.