Property Rights and the Public Good

Elizabeth Brubaker, Patricia Adams, Lawrence Solomon
CBC Radio Ideas Program
November 18, 1996

NB: The conversion of this document to a digital format may have introduced errors. To see the  document  in its original form, click here. 

Lister Sinclair

From CBC public radio, and worldwide on the internet at www.cbc.ca, this is IDEAS with programme eleven in our November series about The Public Good. I’m Lister Sinclair. This program is about property rights and the public good.

When we talk about public services, or the public good, or “the public” in general, just how many people are we talking about?

When governments claim to be acting in the interest of “the greatest good for the greatest number” — in China for instance, where the enormous Three Gorges Dam project will displace more than a million people, in the name of downstream flood control and hydroelectric power generation —just who is “the public” that this project is said to be good for?

What about the people who say: This is our turf; we live here; your schemes don’t benefit us.

Well too bad, says the guy in Beijing, or Ottawa, or St. John’s. Our interests override your property rights. You and your neighbours may have had common-law rights (and responsibilities), but that old-fashioned idea is …. old-fashioned.

Or is it?

Three people are here. They all work in Toronto, under the umbrella of the Energy Probe Research Foundation. Pat Adams heads Probe International, an organization concerned with development issues worldwide. Larry Solomon is the editor and publisher of the magazine The Next City. And Elizabeth Brubaker is a policy analyst and the author of “Property Rights in the Defence of Nature”. They’re talking with IDEAS producer Max Allen.

Max Allen

I think I’d better declare my position here. My position is: puzzled. I don’t know what to make of your ideas. Our listeners should know that we’re all friends. I’ve been on the board of directors of Energy Probe for years, and we’ve had lots of discussions about these issues — they come up when we’re talking about nuclear power or gas pipelines or pollution regulations or airports —just all the time.

So maybe a good place to start is for each of you to say how you got interested in the question of the public good. You all come from different backgrounds. Pat, where did your interest come from?

Patricia Adams

Well, what I noticed was happening in the Third World were these cases, one after another, where communities were being displaced from their lands for so-called development projects. And those were projects that were typically hydro-electric dams, big dams, mining projects, forestry and logging projects. And I began to notice that these communities were saying we would like our customary property rights to be respected, and that means that we have managed these resources, whether they be rivers or forests or agricultural lands, for example, for hundreds and in some cases thousands of years in a way that has been very productive for our communities and has preserved the integrity of these environments.

But the promoters of these development projects, such as the World Bank and the Canadian International Development Agency, essentially aid agencies, would say no, no, we have a better idea of what development is for you. We’re better judges, and we’re going to make that decision for you.

And inevitably what would happen is those decisions would be bad ones for the communities and for the economies of those nations. And we began to realize that these communities were very similar to communities in Canada who were arguing for the same sort of respect for their traditional property rights which is probably the most common term that is used to describe them. And that’s the right to make decisions how your environment’s going to be used, whether it be your forests or your rivers or your particular piece of land. And we began to realize that when the governments and when these governmental institutions made these decisions, and often it was in cahoots with particular firms who were going to benefit from those decisions, that the demise of their environments suddenly started to occur.

So, for example, throughout the Third World you find that when forests were nationalized, when forests in which use and access had been governed by local communities and the individual rights and responsibilities of the members of that communities were defined by a property rights regime — when they were superseded by, in essence, the nationalization of those forests, the forests started to decline.

A government may want to win particular favour with an individual company and will give that company access to a particular forest. And that forest may be the basis of subsistence or survival of the community that lives in that forest or near that forest! But they suddenly have no rights any more to determine how those forests are used.

Max Allen

Elizabeth, talk about your experience in Canada with this issue.

Elizabeth Brubaker

Well, I suppose it was my looking into pollution control in Ontario that most interested me in this issue of the pubic good and the question of whether there could be any “public” good.

There were a couple of cases, one in the 1940s, one in the 1950s, in which the government very explicitly cited the public good to destroy the environment. One of them was in 1946, when a pulp mill operated by the KVP Company started to pollute the Espanola River, the Spanish River in northern Ontario. They were harming the downstream residents. Their mill effluents were making the river smell, making it taste bad, killing the fish in the river.

So the downstream residents went to court to stop the mill from polluting. A fisherman, a tourist operator and a farmer banded together to sue KVP. And the court said KVP is not allowed to pollute the river, KVP is violating these people’s property rights. The court issued an injunction against KVP. It gave it six months to clean up its act. If it didn’t succeed in doing so, the mill would be shut down. The case went all the way to the Supreme Court of Canada. The Supreme Court upheld the injunction.

Well, the Ontario government was outraged. The government feared that shutting down the KVP mill would impede development in northern Ontario, and it was very important for the government that northern Ontario be developed. So it passed a law dissolving the injunction. It specifically said in legislation that the KVP company could continue to operate and pollute the Spanish River. This it did explicitly citing the public good.

The Spanish River was a very popular tourist destination in those days because it had such clean, clear water and such plentiful fish. But the public good wasn’t the good of the tourist operators. The public good wasn’t the good of the farmers. It wasn’t the good of the fishermen. And there was a commercial fishery operating downstream. It was the good of the people who lived in Espanola, Ontario, and worked in the KVP mill,

Max Allen

Do you conclude that this was the wrong decision?

Elizabeth Brubaker

I certainly think it was the wrong decision. It was, first of all, economically not sustainable. The mill always had and continued to have a lot of financial trouble. Environmentally it was not sustainable. AH of the people downstream ended up going out of business. And the most pathetic thing is that it was preventable. There was technology available at the time that could have been used to reduce the pollution. It would have been a little bit more expensive.

Max Allen

Do I take from both of you that you think there’s some kind of general principle here that the closer to a situation the decisions can be made, the better?

Elizabeth Brubaker

I certainly agree with that. As Pat said, governments are often very remote. They don’t have much sense of what the resource is, who depends on it, what the complexities of managing it can be. The citizens themselves are the ones who live with these waters or with the air that may be polluted. They’re the ones who depend on these resources.

Max Allen

And your interest, Larry, is in even smaller-scale issues, not at the provincial level or at the national level, but at the …

Lawrence Solomon

City level.

Max Allen

You wrote, a short time ago, that you thought that parking spaces in front of people’s houses in Toronto should belong to those people instead of to the city which gets the money from the parking meters. Was this an example of taking rights away from government and giving them back to a very local inhabitant?

Lawrence Solomon

Well,   right now,   the way   parking is used   is  very inefficient, it’s harmful for the environment, it leads to people out of frustration paving over their front yards to put parking pads on their front yards. The parking spaces in front of residential streets are generally empty during the days. At times they’re under-used. When people need them, they’re not available. It’s a typical situation of a commons not working very well.

If, instead, people managed those spots themselves, I think what we would find is that they would use them much more intelligently. We’d find that people placed a higher value on parking than the city does. We ‘d find that, as a result of that, the use of parking would diminish. We’d find that people would be able to maintain their front yards, their gardens. There would be more amenities in the city. We’d maintain our traditional streetscapes. In a very small way, the fact that we’ve created a commons out of the parking spaces has had a profound and deleterious effect on urban life.

Max Allen

Who wants to define “commons”?

Lawrence Solomon

A commons is an area that has no owner and it’s too large to be naturally administered by those who use it.

Max Allen

It has no owner you can point to, you mean.

Lawrence Solomon

It has a remote owner or perhaps no owner. The remote owner may be the federal government that owns Crown lands and because it doesn’t care that much about its Crown lands it gives them away for very little. When you look at the areas in the country that are being deforested, it’s the areas that the government owns. The ten percent of the forested land that’s owned by individuals is not being deforested, despite efforts by governments to encourage citizens to deforest their lands. And this isn’t just the case in Canada, It’s the case in Europe, it’s the case in the Third World.

In Sweden, for example, by law, you must harvest trees within ten years after they’ve become mature. In fact, you must clear-cut them because that’s what the government thinks is most important. The last thing you’d want would be some unruly stand of trees. The reason you clear-cut them is so that when they grow back they’re nice and uniform and exactly the way the lumber interests want them.

Max Allen

You’re making this up.

Lawrence Solomon

I’m not making this up. This is the way governments behave versus the way individuals behave. People love their trees. People love their resources. People have always protected their resources. That’s why we have so many of them to this day.

Max Allen

You’ve written a good deal about the question of how to manage a forest and I’ve found the statistics on forest management under government control versus private control to be quite startling. Do you want to tell me some of them?

Lawrence Solomon

Governments are not really interested in money. They’re interested in votes, which more often translates into job creation than profit-taking. As a result, government is willing to promote as much harvesting of its lands as it

possibly can. The government in Ontario, for example, has been selling trees at a loss. The)’ sell a tree at an average of— well, a few years ago when I looked at it, the average was 85 cents a tree. That’s the cost of a tree in Ontario. Talking to a forester from the States who was bidding on the right to harvest Canadian forests, he was a little bitter, but the government came back to him and said there’s a problem here. You’re not creating enough jobs. Why don’t you cut some forests that aren’t economic, use the profits from areas that are economic. That way we can tear down more forests, you could still get the same rate of return that you want and we’ll have an extra 50 jobs.

What we would find, if the land was privately held, is that people would value their lands much more for bird-watching, much more for recreational walks, much more for cottage use, than for the creation of a certain number of board feet. This is not going to be always be the case. It’s just the empirical evidence around the world whenever people have an opportunity to hang on to their forest, they usually do.

Patricia Adams

In the case of the environment, I think that individuals are much better at assessing the value that they place on their own environment than the government is. As Elizabeth explained, they have a much better understanding of the complexities of managing that environment. And I think when you give them either as individuals or as groups of individuals and communities that are using resources communally such as rivers, for example, when you give them the right to make sure that their values are incorporated into decisions — and you would do that by protecting their property rights and by forcing proponents who might want to destroy that river with either pollution or a hydro dam or whatever to internalize the costs of using that river or that resource — then you start to get decisions that actually reflect real values of real people, whereas a government is in a very handicapped position. It’s very difficult for them to understand what is so important to those individuals and those groups of individuals.

Max Allen

If people have property rights, how do they enforce them? I know how a government would enforce what it thinks is its interests, but if you’ve got somebody who wants to do something to you and is going to create a lot of difficulty and you want them to internalize those costs (in other words, keep their pollution to themselves or keep whatever it is that you don’t like to themselves), and you say, well, you’re impinging on my property, what do you do to enforce it?

Patricia Adams

In Canada you use or have traditionally used the courts. In the Third World there are governments that are in essence set up to protect, for example in Thailand, to protect rivers. There’s the muang faai system which constitutes communities that live along tributaries of rivers and they will actually set up mini-governments that will determine who has access to water, and when.

Now, there are principles of equity that dominate these decisions so that everybody who lives along the river does have access to water. But there are also responsibilities. You’re not allowed to pollute the water. You’re not allowed to take more than your share. You can take it at certain times of the day so that your neighbours will also have access to it. So there are lots of enforcement mechanisms and if anybody breaks those rules then there are methods that are used to restrain those individuals. Apparently in Thailand, one of the methods is to tack a note to a tree which tells everybody that such-and-such a person has violated what really were their rights of access to that water. So it depends on the culture, it depends on the system. Elizabeth can certainly describe the mechanisms that are used in Canada.

Elizabeth Brubaker

Well, here in Canada, of course, we do use the courts to preserve our property rights.

Max Allen

We sue, in other words.

Elizabeth Brubaker

We sue. That’s right.

Max Allen

But suing doesn’t help if some level of government steps in an pulls the rug out from under you, like hey did in

the pulp mill case.

Elizabeth Brubaker

Yes, and another example a little closer to home would be with sewage pollution. The Ontario government did something very similar in southern Ontario in 1956 to what it had done in northern Ontario several years before. Here in southern Ontario, in Woodstock and in Richmond Hill, communities were spewing raw sewage into local rivers. The downstream residents again protested, not surprisingly, took the municipalities to court, got injunctions against the municipalities and once again the provincial government intervened. And it said we need to develop our municipalities, we need to give them some free rein, the public interest demands this. And so once again the Ontario government dissolved the injunctions against the sewage polluters.

It then passed a law deeming that all sewage plants in Ontario were operating with government authority and that nobody could use his common law property rights to sue a sewage plant and to shut it down or to require it to put in abatement equipment, to enlarge it—whatever. We now have sewage pouring into Lake Ontario. We have sewage polluting lots of rivers in Ontario. Many of the sewage plants in our province are out of compliance with provincial regulations and there’s nothing that any of us can do about it.

Max Allen

How do you feel about government in general, maybe I should ask you?

Elizabeth Brubaker

I think government’s very important. But I don’t think that it should be intervening to diminish our common law property rights, especially in terms of environmental protection. Government regulation usually hurts the environment instead of helping the environment.

Max Allen

Does anybody else believe that, except you and possibly two other people in this room? Is this a widely-held view?

Elizabeth Brubaker

I think that anybody who’s familiar with the legal history in Ontario would feel that way. And that’s true, actually, across Canada. People had such terribly strong property rights earlier in our history and used them time and again to clean up our rivers, for example, or to clean up our air, to reduce air pollution. And governments continually intervened to lessen people’s rights.

Max Allen

Now, wait a minute. Here we are in downtown Toronto and the story I know best, of course, is the lead smelters. And if it hadn’t been for a very slow process of government intervention in that, nobody as far as I know could have asserted their property rights in a way to stop that pollution. Could they?

Elizabeth Brubaker

In a pre-regulatory state, they could have.

Max Allen

Oh.

Elizabeth Brubaker

A government’s laws and regulations override the common law.

Max Allen

Yes, that’s true.

Elizabeth Brubaker

And when a government passes a regulation to allow a certain amount of lead pollution or gives a lead smelter…

Max Allen

A standard that says it’s okay…

Elizabeth Brubaker

That’s right, or gives a lead smelter a permit to operate, it has overridden the property rights of the victims of that lead smelter.

Max Allen

So: Turn back the clock?

Elizabeth Brubaker

I would think turning back the clock would be excellent for the environment.

Lister Sinclair

This is IDEAS, about property rights and the public good. Elizabeth Brubaker is a policy analyst who’s the executive director of Environment Probe. Pat Adams is executive director of Probe International and the co-author with Larry Solomon of “In the Name of Progress—The Underside of Foreign Aid”. Larry Solomon is editor and publisher of the quarterly magazine The Next City. They’re talking with IDEAS producer Max Allen.

Max Allen

The idea of property rights, I think, implies that somebody is well enough off to own some property. Where does this leave people who don’t own anything?

Elizabeth Brubaker

Well, you’re mistaken. Property rights are not linked to ownership. People have property rights if they own or occupy land. So somebody who lives along a river has rights to clean water, whether or not he is the owner or tenant. Also, property rights can attach to resources that are not owned. Again, the neighbour of a river is a good example of this. A riparian has rights to the water, but he doesn’t own the water.

Max Allen

What’s a riparian?

Elizabeth Brubaker

A riparian is somebody who lives beside a lake or a river.

Max Allen

Okay.

Elizabeth Brubaker

And under the common law, he has something called riparian rights. He has the right to use the water. He has the right to receive the water in an unpolluted state. And he has the obligation to return the water to the river or to the lake also in an unpolluted state. So there, ownership just doesn’t come into it. Location comes into it, but not ownership. There also are examples that Pat can give of many communally owned resources that people have rights to. She was talking about the Muang faai and there. the people don’t own that water but they have very strong rights and responsibilities toward the water, and those are property rights.

Patricia Adams

And I think it’s important, when you define a commons, to distinguish between an unmanageable commons and a manageable commons. Because there are all kinds of cases in this country and in the Third World where communities will use a resource communally, but because they are accountable to one another, because they meet each other along the river bank, because they see each other on a day-to-day basis and so on, they can enforce the rules of society, of their particular community, on each other.

And what happens, I think, if you take the case of forests in the Third World, is that forests were traditionally managed by the communities that depended on them. Either they needed those forests to collect leaves and so on for forage for their animals, the trees turned the soil into a sort of sponge that would absorb water and stop landslides in their agricultural areas. It would also protect the rivers, of course, too and protect the fish stock and so on. So there were very, very clear rules of access to those forests. And they were managed by local communities and they were preserved.

Now, that didn’t mean that the use of the forest was completely prohibited. There were certain uses that were recognized as being important and were allowed. For example, I think, if you got married you were allowed to cut a certain number of trees to build a house. And of course, all these other traditional uses. But what has happened I think in most cases was that during colonization the colonial powers came in and said, we’re going to define these forests as national forests and we’re in charge. And so you have, for example, in Thailand, the Forest Department or the Royal Irrigation Department who suddenly are in charge and making decisions for their own reasons which are not necessarily ones that are going to protect the forests in those regions.

And indeed, that’s exactly what happened throughout the Third World. When those forests were nationalized, they started to be cut. Before then, they were protected because they were extremely important to those communities. No one individual owned them, but everybody had access to them under certain conditions and with certain rules and those were enforced by those local communities.

Max Allen

When you say the forest was managed locally, is this by some council or is there a boss of the forest appointed by the village? How does it work? There must be something that would look to me like a formal mechanism for doing this.

Patricia Adams

In the case of Muang faai. which is this water management system in Thailand, the community that lived along the river of course required that water to irrigate their rice paddies and so on. And the water flows were regulated by little dams that were put in. They were made of bamboo poles and mud and so on and the local communities could regulate not only the flow of the river, the volume of the water that they could control with uncanny precision where the water actual!}’ went and when. And those decisions were made by elected irrigation councils, and so every little community would have one of these councils and then the councils, of course, would, to a certain extent, relate with each other because those communities downstream would depend on the good water management and behaviour of communities upstream.

And so you had political structures that came out of an understanding that they had a shared need, that everybody depended on these rivers to be clean, to be silt-free, and they required to have a certain amount of water at different times. And so people needed each other. They needed to regulate each other. And they did so, and they did so for over a thousand years. Until the Royal Irrigation Department in Bangkok took over and then they started building big dams on the main streams of the rivers and trying to replace a lot of these small, bamboo weirs with little concrete ones^ and then of course at the same time the Forestry Department started issuing licenses to log these forests and before you knew it there were landslides and the rivers were filling up with silt and it was impossible to actually dredge the rivers of the silt because the silt was accumulating behind these big concrete weirs. And the entire system began to fail. And in the end, the country has suffered enormously. The entire country has suffered because of the nationalization of these resources. And there’s a huge movement in Thailand now to reclaim those customary rights.

Max Allen

So this is not incompetent management of what was fundamentally a good idea, that is, national management. Your argument is this is fundamentally a bad idea, that if all of these little concrete dams had only been done a little bit better things would have worked out all right. That’s not the argument. The argument is this is the wrong way to go about it to begin with.

Pat Adams

Yeah. I think the wrong people were making the decisions.

Max Allen

Let’s look at the worst dam in the world, I think, and that is the Three Gorges Dam in China. You’ve looked at dams all over the place and haven’t seen one you’ve liked particularly, so as I know, because you haven’t written a hymn of praise to a big dam. In China, you’ve got a situation where individual rights in the area of this enormous construction have just been steamrollered.

Patricia Adams

The Three Gorges Dam will be the biggest dam in the world and it’s the kind of dam that would never, never be built in a country where there was some semblance of democracy because it’s going to require the forced resettlement of 1.3 million people. That’s the largest resettlement program in the world today. It’s enormous.
And if each of those 1.3 million people had the right to say if you flood our orange trees we want this amount of compensation, if you’re going to flood our temples, we want our temples moved to another spot — if they were allowed to force conditions or if they were allowed simply to say, there is no price that you will be able to compensate me for the losses that you’re proposing to inflict on me, I think that the dam wouldn’t go ahead. I think, first of all, if you could negotiate with each one of those 1.3 million people, the price of the dam would be prohibitive and it simply wouldn’t be economic for the proponents to build it. The only way they can go ahead with it is by externalizing those costs, by burying those costs, by pretending that those real costs, which 1.3 million people are going to bear, don’t exist. And so you end up with very dishonest accounting in these development decisions with cost-benefit analyses that don’t really reflect the real cost to society because they’re being imposed on individuals who have no mechanism to force the proponents to pay.

Max Allen

But there is thought to be an overriding public or social need for the project, we have to protect people downstream from floods that are ruinous to them, it will produce electricity that people all over the country need and so forth. So there’s an argument that there’s an overriding social need here. Surely you’re not going to say that one person can hold this up. If we’ve got somebody who’s going to be displaced and they say no amount of money is enough to get me out of here, you don’t want to stop all of these projects on the basis of a couple of kooks, do you?

Patricia Adams

First of all, it wouldn’t be a couple of kooks. It would be a lot of people saying here are the values that I place on the land that you’re proposing to flood. And when you add up all of those costs, then you start to get a really good sense of what the real cost is of that particular project.

The problem with the arguments that you just laid out is that they can be made very cheaply. And this is often what happens. I think Romeo Saguenash from the Grand Council of the Cree said it most beautifully. He said, “Development is what somebody else wants to do to your land”.

It’s very easy to say, look, this is in the public interest, this is in the interest of the downstream inhabitants. They say: how could you dare deny the hundreds of millions of people downstream of the Three Gorges Dam the right to flood control because they’re now going to suffer as a result. Well, in fact, when you dig deep into the analysis of the engineers, you find out that they cannot, in fact, justify the flood benefits of this dam.

I think if the proponents actually had to make the case to all of the people that they’re going to affect, then you would start to get very, very good analysis. You’d start to get all the information out into the public domain and you’d start to put the proponents on the spot and force them to justify what they’re going to do and to convince the victims that it is worth their while to lose their interests, to lose their orange groves or their temples or whatever, their factories and so on, because of course everything is going to be flooded by the Three Gorges Dam. I mean, cities and towns and farms and so on. And then you would start to get very honest accounting.

But at the moment we don’t get that because, as David Hopper, who worked at the World Bank (he was a Senior Vice-President) said — and this I think reflects the values of a lot of proponents: “Somebody’s going to get hurt in the development process”. That’s the attitude that proponents at the World Bank, for example, have: that you’re always going to have victims. Well, when you take that approach, if you assume there are always going to be victims, then you don’t have to worry about how many victims. And then you can get schemes like the Three Gorges Dam that are really off the scale, where you’re moving 1.3 million people, which is more than the population of Saskatchewan or Manitoba. I mean, it’s a fantastically enormous project that, as I said, would not be tolerated in a democracy because a government wouldn’t survive that kind of a forced resettlement scheme. But I think the attitude of the proponents is: too bad, some people are going to be hurt
as a result.

Max Allen

You can’t make an omelette without breaking eggs.

Patricia Adams

That’s exactly what he said, that you can’t make an omelette without breaking eggs. And so you stop worrying about how many eggs. You just assume that it’s inevitable that some people will be hurt. And I think you lose that checking mechanism which you would have in a property rights regime which allows the victims to actually place some restrictions on the proponents.

Max Allen

Do you expect in a property rights regime to have anything called progress?

Patricia Adams

Oh, absolutely. If you take the engineering industry in Canada, I think our engineering industry has developed a real expertise in building big dams because we’re very good at expropriating property in this country and traditionally it’s been native communities who have had their rivers expropriated and their riparian rights and so on overridden. I think if, on the other hand, everybody’s property rights were respected, then you would have companies and engineering companies and various proponents saying all right, we want to build a paper mill or we want to build some energy-producing device, so what is going to be acceptable to communities downstream, down river, downwind? And then I think you would start to get technology that actually reflects the values of society.

Elizabeth Brubaker

You would actually get communities competing against one another for an environmentally-friendly hydro dam.

Max Allen

How do you know?

Elizabeth Brubaker

Well, it’s happened. The private sector often doesn’t have the same kinds of expropriation powers that the public sector does. Here in Ontario there is a private hydro company that wanted to dam a northern river. It had to get the local native community’s permission to do so and the community said, well, these are our concerns: We use this river to fish in. We don’t want you to destroy our fisheries, we want you to provide fish habitat here if you destroy it there. We want you to leave the flows relatively even. We don’t want a lot of peaking and ponding in the operations of this dam. They participated in the design of the dam. They were very interested in creating jobs for their own community and they insisted that if they did give their permission to the hydro developer the developer would train some of the people in the community.

Anyway, the dam that resulted was such a success that the native community is now developing another dam on its own. It wants hydro development, as long as it can control the hydro development, as long as it has the authority to say this is what we want, this is what we don’t want.

And you see that happening also with transmission lines. Transmission lines are extremely unpopular with people whose land will be expropriated for the lines, but in communities where a private electricity developer needs to run a line through some private property and needs to get the property owner’s permission, property owners will actually vie for the line because they know that they’ll get paid to have the line running through their back property. But again, it’s because they know that they’ll benefit and they can control the risk. They can say we don’t want it too close to our house, we don’t want you to use herbicides on the right of way. Whatever their demand might be, in private negotiations it can be met.

Lister Sinclair

This is IDEAS, about property rights and the public good. Elizabeth Brubaker is the author of “Property Rights in the Defence of Nature”. Pat Adams is executive director of Probe International and the co-author with Larry Solomon of “In the Name of Progress—The Underside of Foreign Aid”. Larry Solomon is editor and publisher of the quarterly magazine The Next City.

Lawrence Solomon

I would say that progress is usually retarded when property rights are overridden. And we see it in the large-scale projects that really have all proven to be dinosaurs. It’s large-scale dams, but it’s more than that. It’s also the large-scale coal plants, it’s the large-scale nuclear plants. And the only companies that are really building these dinosaurs are state monopolies.

Look at what the private sector does when it has a chance, when the monopolies are broken up, they don’t build coal, they don’t build large hydro. They don’t build nuclear. What they build are small-scale technologies. Generally it’s high efficient natural gas technologies, but it’s also renewable energy technologies. And these are the things that environmentalists have always been arguing for and it’s what the market prefers when government allows the market to operate.

Max Allen

Give me an example of what happens when state monopolies don’t build new projects.

Lawrence Solomon
The best example occurred in the United Kingdom, where the state monopoly, the Central Electricity Generating Board, was privatized. It had built coal plants and nuclear plants. That’s all that it knew. And there was a wide consensus in the country that more were needed. The business community felt that and the government felt that. The only problem was who to pay for it. And Thatcher, who was a great fan of nuclear power, decided that the consumer would pay for it. All that she’d have to do was put these monopolies in private hands, create some competition, let the private sector work its wonders and people will start paying for their power.

Well, as soon as the private sector had a chance to buy the plants that it had wanted the government to keep building, it decided it didn’t want them. It certainly didn’t want the nuclear plants at all. It refused to take them. Thatcher tried to bribe the private sector, offering them five billion pounds if they would take the nuclear plants. They said no, thank you. The nuclear plants were left in state hands. The other plants were put in private hands, but what the private sector found was that the coal plants weren’t worth running and they embarked on a rapid program of phasing out the coal plants, and all that’s being built now in the United Kingdom are high-efficiency natural gas technologies and renewable energy technologies. And all the new energy that is being produced—all of it—is cheaper and cleaner than the old coal plants and nuclear plants that the state monopoly had preferred.

And now there is an effective regulator, because the role of government should not be to own these plants, the role of government should be to regulate the private sector and to keep the private sector honest. And it cannot do that if it has to regulate itself. And now that the government is at arm’s length from the industry it’s becoming an honest broker. Rates are going down. They’re going down for small business most. They’re going down for the small consumer and they’re also starting to go down for big business. Service levels’, at the same time, are increasing and the government regulator is watching, it’s publishing the results, it’s letting people know how often there are black-outs, how often there are disconnections.

Max Allen

Is there any place in the world for large-scale, public ownership of anything?

Lawrence Solomon

I can’t think of any.

Max Allen

Why doesn’t private ownership drive the owners to seek the largest market and ignore the minority interests? You’ve argued that government ownership does this, but why doesn’t private ownership do the same thing? If I were to privately own a bus line, for example, I wouldn’t want to run bus routes in places where there weren’t very many people.

Lawrence Solomon

No, you wouldn’t, and you’d love to be able to extract a thousand dollars a fare from everyone. But your competitors just wouldn’t let you do that. And your customers would be the ones who’d dictate the services that they’re entitled to and the price that they’re willing to pay. When the government is in control, they can say price be damned, service be damned, this is what we’re going to do.

Max Allen

Now, let’s talk about public broadcasting.

Lawrence Solomon

If there wasn’t a public broadcaster in Canada and if there was a need for the services that the public broadcaster provides, mechanisms would come about to fill that need. And it could be a PBS-‘type subscription service. It could be some other grants system. It could be something that goes in the direction of cable, where people are actually paying per view. If there’s a value to the product, then people will want that product.

Max Allen

And let’s compare the American health care system, as it’s misnamed, with the Canadian one. We think that the Canadian system represents some version of the public good and the American system, which is in private hands, delivers service which is worse. It’s more expensive and more brutal, is it not?

Lawrence Solomon

Well, the Canadian medical system is publicly regulated but it’s not in public hands. The medical system is …

Max Allen

You’re right. I’m sorry, that’s a very good point.

Elizabeth Brubaker

And it’s publicly financed.

Lawrence Solomon

Yes.

Elizabeth Brubaker

And you have no objection to the public finance of medical care.

Lawrence Solomon

Government should not be involved in commercial activities. But there’s absolutely nothing wrong with government subsidizing the poor, the sick. There’s nothing wrong with redistribution of wealth to further goals that society wants.

Patricia Adams

I don’t know of any society that has not made a decision to do that. I think what happens is at a certain point people lose confidence in the system, because they believe it’s taking too much and redistributing it badly, and that’s what I think a lot of the debate is over today. But even in the muang faai system there is a social security net. The people who are furthest away from the water, from the river, receive their water first. And in times of drought, then everybody receives enough water to plant their rice because it is an important subsistence crop. Market crops, which farmers are going to sell in the market, would be irrigated last. So I think most if not all societies take on that responsibility to look after other members of society in times of need.

Max Allen

I don’t doubt that that happens when there is a face-to-face society to do that work. But if we think of Canada in the 90s, we don’t have that kind of society. How does a system like this work when you don’t know your neighbours?

Patricia Adams

Well, I think then you have a situation where you have an unmanageable commons.

Elizabeth Brubaker

But that argues for a small commons, if you have a commons. It argues for small decision-making units. It argues for small management units.

Lawrence Solomon

And you have to ask why we don’t know each other any more. The reason is big government. We no longer have to deal with our neighbours the way we used to have to. Now we can go to a government body to get what we want. When we start using politics, we don’t have to confront our neighbours over decisions the way a property rights regime would force us to.

Max Allen

Are you then arguing for an elimination of the very idea of the commons and substituting a property rights regime for it?

Elizabeth Brubaker

No. I think that I would be arguing for any system that successfully internalizes the costs and the benefits of resource management. And that could …

Max Allen

This is an idea that maybe everybody isn’t familiar with. What do you mean by internalizing the cost?

Elizabeth Brubaker

The people who make certain decisions and the people who take certain actions have to bear the consequences. Now in terms of the environment and managing resources, they have to benefit if they’re managing the resources sustainably. They have to benefit if they’re taking care of the environment. They have to pay the price if they’re managing their resource unsustainably.

Now when you have a large commons that doesn’t happen. Take the fisheries, for example. If I am a fisherman and I decide not to catch all the fish I might otherwise be able to catch because I want to save some for tomorrow, I’m not going to benefit because the guy fishing in the boat next…

Max Allen

Somebody else is going to get them.

Elizabeth Brubaker

… to me is going to get those fish. Exactly. I have to make sure that I am operating within a system that allows me to benefit from such decisions. If I want to put off resourcing the fish, harvesting the fish, I have to know that I’ll be able to reap the benefits of that decision. That means that the following year I’ll have more fish.

Max Allen

And it also means the reverse, that if I fish like crazy it means that I will suffer next year and I won’t be able to steal from somebody else. The industrial version of this is: I produce a hideous chemical that would poison everybody if they were exposed to it, and I put it some place a long way away and let somebody else suffer …

Elizabeth Brubaker
 
That’s right.

Max Allen

… when in fact I should be required to pay the costs as well as to get the profits.

Elizabeth Brubaker

That’s right. And you see, in something like the fisheries, you do see this working. Every day. There are a number of countries that have private fisheries—Iceland, Scotland, England. We even have private fisheries here in New Brunswick. And you can see that the private fisheries owners do take these things into account with every decision they make. So in privately held salmon streams, for example, the owners will allow only a few people to fish on a pool at one time. They’ll charge a lot of money for the opportunity to fish on that pool in order to reduce the number of people who are even interested in doing so. They’ll hire wardens to watch their pools at night to make sure that nobody sneaks in and lakes any fish. They’ll maintain the habitat. They’ll do everything to ensure that their valuable asset remains valuable or grows in value. And they know that year after year after year they can charge, say, in Iceland they charge thousands of dollars a day for the opportunity to fish on these salmon streams. So they know that if they maintain the habitat, if they don’t over-fish that they’ll have this stream of income coming in, year after year.

Max Allen

But that’s sort of a tourist fishery you’re talking about there.

Elizabeth Brubaker

That’s right.

Max Allen

What about a commercial fishery?

Elizabeth Brubaker

The same thing happens in commercial fisheries. People make decisions based not just on their catch this year, but on their catch three years from now. Businessmen operate like that. Businessmen don’t have a one-year time horizon. And of course these private owners aren’t making political decisions regarding their fisheries. They’re not interested in putting people to work. They’re not the slightest bit interested in unsustainable harvest. That’s unlike the governments, of course. The Canadian government certainly knew that the cod stocks out on the east coast were in terrible trouble and they kept paying fishermen to go out there and fish. They kept paying fishermen to stay in the industry by giving them unemployment insurance. They wanted to put people to work. And the cod stocks be damned. Of course the cod stocks were damned.

Patricia Adams

Another example of the absence of internalizing costs is the cyanide spill at the Omai gold mine in Guyana that was run by two Canadian mining companies, Canbure and Golden Star. And I think if the riparian rights of the 20,000 people who live downstream of this mine on the Esakebo River in Guyana had been intact and the court system had been operating properly and so on, that those companies would have taken very different measures to ensure that that kind of spill didn’t happen. They probably would have been an awful lot more careful. They may have    been    forced    to    introduce    certain    kinds    of technologies and different kinds of protective measures to stop such a spill. They may have had to take out performance bonds to set aside money in the case of a spill. And I think the knowledge that they might be held to account should such a spill occur would have led to very different behaviour on their part and it would have forced them to internalize the costs of the risks that they were imposing on those 20,000 people who live downstream.

Max Allen

What was the result of the spill?

Patricia Adams

A huge amount, about 1.2 billion litres, of cyanide was spilled into the river. It’s the main waterway in Guyana. Of course, cyanide is immediately poisonous, though it does degrade. One of the concerns now is that it causes a leaching of other heavy metals from the sediment and from the actual tailings pond itself into the river and then that gets into the food chain. And of course this river is an important food source for the people who live along it. Immediately after the spill, for several weeks, nobody could consume any of the fish that were harvested from that river. Businesses had to shut down. And so there were real short-term costs for those 20,000 people, the cost to the fishing industry, cost to the local industries along that river. And the long-term costs have not been properly investigated, but there are great fears and concerns and scientific evidence that it could cause very serious long-term consequences for the fish stock, for example.

Max Allen

Your argument here is that a property rights system would have gone a long way toward preventing this. It’s not only that you can sue afterwards and say interests were harmed but that it would make people cautious beforehand.

Patricia Adams

That’s right. It would have made the companies very cautious. If they knew that 20,000 people could take them to court and sue for damages to their riparian rights that Elizabeth described, then they would have, I’m sure, been much more cautious than they were.

Elizabeth Brubaker

Can you see that happening in England, where people do have very strong riparian rights and people have strong rights to the fisheries? And there there’s actually an organization called the Anglers’ Cooperative Association. They represent people who either have riparian rights or fishing rights in their fights against polluters. And they have had so many successes over the years that they now find if they approach a polluter and say we’re thinking of taking you to court, the polluter will almost always stop polluting. They’ve approached municipalities who have been considering erecting certain, say, sewage plants that might damage the environment and they have said if you do we will sue, and the municipalities have altered their plans so that they will install a plant that’s more environmentally friendly. So they have a very strong prophylactic effect in England.

Max Allen

That’s good. I was thinking that what this was going to result in mainly was a lot of work for lawyers, that the out of work and underemployed lawyers in Canada were going to find themselves with one case after another. If as a result of the property rights regime, there was going to be an enormous increase in the number of lawsuits, it was not clear to me who was going to benefit in the long run except the people in the court system.

Elizabeth Brubaker

Industries won’t take that risk. Because common law…

Max Allen

Is that true?

Elizabeth Brubaker

Yes. Common law property rights give you the right traditionally to an injunction and damages. No business is going to build a factory that a court is going to shut down six months later. The business is going to make sure that it has built something that can get through the court challenges.

Lawrence Solomon

In fact, there is a direct relationship between the number of lawyers and the amount of government regulation. The more regulation, the more lawyers we need. It’s very hard now in our society to really function without lawyers because everywhere you turn there’s a fear that there’s some government rule that you’re running afoul of.

Max Allen

And your argument, the three of you, is that with less rules there’d also be less trouble?

Lawrence Solomon

Less arbitrary rules, but the rules would be very strong.

The principles behind property rights are very strong. People have rights and those rights are theirs. They can’t lose them unless they willingly lose them.

Max Allen

And government can’t override them with sets of regulations.

Lawrence Solomon

They shouldn’t be able to.

Patricia Adams

And instead of a company having to go to a government to get government approval to pollute a river, which is relatively easy to do, they’d have to go to all the downstream people and start negotiating with them. And that’s when you would start getting the tourist operators and the fishermen and so on saying, well, here’s the value to me if you destroy my fish stock, and that forces the proponents and the polluters to start internalizing the real costs that they are used to being able to inflict on those members of society with impunity.

Elizabeth Brubaker

I came across a great quote in a book on regulation recently. The author, an advisor to industry, said “No industry offered the opportunity to be regulated should decline it. Few have done so.”

Max Allen

Give me an example of how this actually works.

Elizabeth Brubaker

An example is the way in which Ontario Hydro is given permission to pollute the air and the water in Ontario. The emissions from its nuclear plants, the emissions from its heavy water plants are all regulated. And …

Max Allen

And that sounds to me like they are controlled or prevented or something. That’s what regulation seems to mean. Wrong, eh?

Elizabeth Brubaker

No, it’s facilitated. They are given permission to put a certain amount of, say, radioactive material into the air every day.

Patricia Adams

And compared to a property rights system, you’re saying…

Elizabeth Brubaker

Many property rights systems are zero discharge systems. The riparian system is a zero discharge system. How many regulations do you know in Ontario that are zero discharge regulations? Not very many.

Max Allen

I knew most of you when you were “socialists”, or something like that. And I’ve been interested, over the years, in listening to the way your political language has evolved. Would you have described yourselves as “left-wingers” once upon a time? And if so, what do you think you are now?

Patricia Adams

I would have described myself as a left-winger and I still think I am because I believe in power to the people. And I think one of the best ways to give power to the people is to give them property rights. Give them the tools to defend their communities and their environment. And then you’ll have this incredibly decentralized environmental police force and people will be internalizing the costs and protecting the environment that’s so important to them.

Lawrence Solomon

Twenty years ago, I was writing material that labelled me as a left-winger. Now I’m writing the very same material and people are calling me a right-winger. I don’t think I’ve changed.

Elizabeth Brubaker

I would echo Pat. I certainly always assumed that government intervention was necessary and good and that governments played a very important role. I still do, but I’ve seen how much damage governments can do when they take power away from the hands of the people. I’ve become very disillusioned with the governments as the protectors of the public good.

Lister Sinclair

Elizabeth Brubaker, Larry Solomon, and Pat Adams from the Energy Probe Research Foundation in Toronto.
IDEAS tonight was produced by Max Allen, with Dave Field. I’m Lister Sinclair.
These programs on CBC public radio are made possible by you, the taxpayers of Canada.
– transcript by Max Allen

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