Politics and Policy Archive
Welcome to Politics and Policy where you will find the latest thoughts and reflections by CLAL faculty and associates on the important political and public policy questions facing us as Jews and as Americans.
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Would Isaiah Approve of Emissions Trading?
By Robert Rabinowitz
The overwhelming confidence in the “genius of
capitalism” characteristic of the late nineteen-nineties is on the wane at the
moment. The increasingly justified suspicion
that something is rotten at the heart of Wall Street and large corporations is a major
factor hampering recovery in economic confidence. Nevertheless,
the market continues to expand its hegemony into new areas of life, as witnessed by the
transformation of knowledge into “intellectual property,” the growing role of
private companies in funding scientific research especially in the field of bio-tech, and
the burgeoning environmental finance sector which promotes market-based solutions to
environmental problems.
Unease about the growth in
the power of the market has ancient precedents. The
Biblical prophet Isaiah condemned those land-owners whose greed for property and desire
for security led them to create huge landed estates backing onto each other, robbing the
landless poor of a place to live or to tend their flocks.
“Woe to them that join house to house, that lay field to field till
there is no room, that you may dwell alone in the midst of the earth!” (Isaiah 5:8) Isaiah’s complaint calls to mind the
Enclosure Movement of 18th and 19th century Britain in which wealthy landowners enclosed
common fields for their own use, usually for the purpose of raising sheep. In the process, many rural laborers were displaced
from the land and had to move to the new industrial urban centers, leading to the poverty
and squalor so vividly described by writers such as Charles Dickens.
Contemporary examples of
“enclosure” that exclude those who cannot afford the market’s price of
entry are not hard to find. Environmentalists
and others accuse giant Western agricultural corporations of trying to make poor peasant
farmers dependent on expensive genetically modified seeds the farmers can ill afford
rather than simply planting the seeds left from the last season’s crops. There are also concerns that patients are not
getting timely medical tests and researchers are not doing necessary research because of
the license fees charged to use genes patented by bio-tech companies.
Yet, the expansion of the
market into new areas of life is not simply the result of individual and corporate greed. For example, there are good reasons, both
theoretical and empirical, to suggest that market-based policies can be highly effective
in counteracting environmental degradation. The
fundamental argument for these policies can be found in Garrett Hardin’s celebrated
1968 essay, The Tragedy of the Commons. Hardin
argued that since nobody really owns many natural resources such as water, the atmosphere
and fish, individuals have little incentive to limit their use of the resources. Individuals limiting their use of the commons for
the sake of conservation would reduce their own income while less scrupulous individuals
would benefit at their expense. This leads
inevitably to disastrous over-use of the natural resources, what Hardin called the tragedy
of the commons. This phenomenon was most
dramatically exemplified by the drastic decline of the Canadian Atlantic cod fisheries. They had yielded around 250,000 tons of cod per
year for over a century until decades of over-fishing caused them to be virtually wiped
out in the early 1990’s with a loss of around 40,000 jobs.
The main thrust of
market-based environmental policies is to “enclose” natural resources; to
transform them from the equivalent of the commons -- from public goods that are open to
all -- into privately held goods from which people can be excluded and which people have
to pay to use. One such policy, emissions
trading, has been used with great success in the United States to limit emissions of
sulfur dioxide, which causes acid rain. The
atmosphere, like Hardin’s commons, is open to all -- everybody’s chimneys
discharge into it. The Clean Air Act set
limits on the amount of sulfur dioxide that companies can emit. If a company exceeds its limits, it has to buy the
right to emit the extra pollution from companies that have reduced their emissions below
their limits. By putting a price on the
emission of pollutants, companies gain an incentive to reduce pollution rather than
emitting as much they can get away with. The
ability to trade emission permits also tends to foster the most economically efficient
means of reducing emissions. The sulfur
dioxide emissions reduction program has been a major success, reducing emissions by 30% at
one sixth of the original estimated cost. Ironically,
a major element of the Kyoto treaty rejected by the United States government is an
international market for greenhouse gas emissions modeled on the American sulfur dioxide
market.
In light of Isaiah’s
warning, the use of market mechanisms to solve environmental problems should be monitored
very carefully. A failed water privatization
program in Bolivia is a case-study for the adverse consequences of “enclosure”
of natural resources. In 1999, the Bolivian
government granted a contract to a private company to run the water system in Chochabama,
Bolivia’s fourth largest city. It was
believed that privatization would increase the efficiency and cost-effectiveness of the
water supply which, at the time, did not reach 40% of the population and had heavy debts. One of the first steps the company took was to
raise prices precipitously, effectively excluding many poor people from access to clean
running water. This led to a local
insurrection in which police killed a young man before the contract with the private
company was canceled.
Taken to extremes, we might imagine a world in which we have to pay to breathe because someone else owns the air. While this may seem ridiculous, it is worth remembering that James Watt, U.S. Secretary for the Interior, fought the proposal to ban CFCs (chlorofluorocarbons), which destroy the ozone layer, arguing that people should instead begin to wear hats, dark glasses and sunscreen. Rather than protecting the ozone commons, Watt argued that each of us should be forced to pay the cost of protecting ourselves against increased levels of ultra-violet light. A parallel response in the case of air pollution would be to suggest that we all buy gas masks rather than legislating for clean air. Then Isaiah’s worst fears really would be realized.
One approach to thinking about how to implement market-based environmental policies without causing undue exclusion can be found in the Talmudic book Baba Batra, which deals primarily with property held in common. The first chapter focuses on procedures for dividing common property into private shares. The chapter opens with a discussion of hezek ri’ah (literally, damage of seeing), which refers to the damage sustained by a person whose privacy is infringed by his or her neighbor. The Talmud’s discussion then moves on to a series of considerations and stories about the Temple, especially concerning the construction of the wall in front of the Holy of Holies. The inference is clear - the wall built in front of the Holy of Holies prevents hezek ri’ah - infringement of public sight into the realm of the divine. The converse inference is equally clear: private property is in some way sacred like the Holy of Holies.
The rabbis do not explain their preference for privately held property over that held in common, a preference that is demonstrated throughout Baba Batra. It may be connected with their predilection, identified by Jacob Neusner, for clear boundaries; whether between day and night, pure and impure or one person’s property and that of the next person. The rabbis of the Talmud also demonstrate in various places a concern to prevent property from lapsing into disrepair, something that, as Garett Hardin points out, is more likely to happen to property owned in common.
Nevertheless, the rabbis are also alive to the fact that private property must not serve as an excuse for the sort of detachment from the needs of others decried by Isaiah. Mutual rights and obligations flow across the boundaries of properties. The chapter in Baba Batra goes on to discuss the public’s right to expropriate private property and the obligations of private individuals to support both public and charitable causes. Even if property is privately held, others still have some claim on or rights to it. A significant ruling cited in the chapter is that public rights of way across private land are sacrosanct and cannot be altered without the permission of the public, with one opinion claiming that even a single dissenting voice can block the removal of a right of way.
The rabbis’sensitivity to the need to balance private and public rights to the same piece of property is a useful tool for thinking about market-based environmental policies. The creation of private rights to natural resources is not an end in itself. It is justified by the need to prevent or reduce ongoing tragedies of the commons. There is, however, an established and compelling public "right of way" in natural resources that can be justified by reference to many ethical values, including the justice and fairness invoked by Isaiah. The challenge in each case is to find the balance that gives sufficient private incentive to steward natural resources effectively while protecting common rights. This is an incredibly complex challenge because the balance is likely to be different in each case, demanding a highly pragmatic case-by-case approach. The tantalizing prospect this challenge offers, however, is a world in which our economic system no longer offers us perverse incentives to damage the beautiful planet on which we live, a world which can combine economic prosperity with environmental integrity. And that’s something to which Isaiah would probably say "Amen."
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