Does Government Intervention Help or Hurt?

This is part 5 of a serialized version of the article, Innovative Dynamism Improves the Environment, by Arthur M Diamond, Jr. The full article appeared in Libertarian Papers on 19 October 2018.

This section is skeptical of plastic bag bans introduced on the basis of being harmful to the environment.  However, while plastic litter and its breakdown are certainly a waste issue, it has adverse effect on human health as well, and more directly, causes serious problems and death for the animals who eat or otherwise ingest it.

Those who allege that the innovative entrepreneur often harms the environment usually propose government actions that constrain the innovative entrepreneur, either through regulations or through government programs funded by taxes that reduce the funds available for entrepreneurial innovation. So it is useful to consider the benefits and costs of such government programs.

As we have already seen, since the environment is constantly changing, with or without human actions, it is not immediately clear what static snapshot of earth should be preserved by those who want the government to save the environment. But apart from that key issue, government actions may not always have the effects desired by those who want to protect the environment. A startling example occurred in 1964, when the United States Forest Service chopped down the oldest tree in existence, a 4,900-year-old flourishing, dignified, defenseless bristlecone pine known to its friends as“Prometheus” (Robbins 2017, p. D9).

Capitalism: The Unknown Ideal

For an earlier historical example, in the early decades of the twentieth century, the Department of Agriculture encouraged farmers to settle in the Great Plains, in spite of the evidence that the region was subject to recurring severe droughts, and Congress doubled down by subsidizing banks that agreed to offer generous loans to those who credulously followed the department’s advice (Egan 2006, pp. 50 and 126). In recent decades,government mandates for ethanol have raised prices for food and increased the amount of land under cultivation, reducing land left as natural habitat for native species (Martin 2008, p. 5). Surprisingly, the mandates also actually add carbon dioxide to the atmosphere since plowing additional land to grow corn for ethanol releases carbon dioxide from the soil (Matthews 2016, p. A9).

Another current example is the government-subsidized crop insurance for farmers that reduces the incentive farmers would otherwise have to adapt their farming practices to global warming and so increases the costs of global warming (Annan and Schlenker 2015, p. 266). Another unintended consequence arises when local governments limit the use of plastic bags at stores on the grounds that manufacturing the bags hurts the environment: reused plastic or cotton bags have been found to be contaminated with bacteria (Gruen 2014, p. A13; Klick and Wright 2012; Williams et al. 2011). Advocates of bag banning suggest that bags only be reused after they are washed. But is that consistent with conserving water and energy, not to mention human time?

Innovation in the construction and architecture professions could result in using land in ways that provide housing and services to a wider part of the population, but instead “environmental” regulations often freeze neighborhoods in a way that serves the preferences and interests of the incumbent long-term residents of the neighborhood (Dewan 2014; see also Glaeser 2011).

Or consider the Amish, who prefer to use simpler machines on their farms. If their corn stalks are broken by the corn borer pest, then their simple machines cannot pick up the stalks, and they must pick them up by hand, which is hard, tiring work (Kelly 2010, p. 222). So they prefer corn seed that is genetically modified to repel the corn borer. The Amish do not want government regulations against genetically modified seed innovations, because the innovations allow them to preserve other forms of stasis on their farms that they prefer.

How Not To Die

Arthur M. Diamond, Jr. is Professor of Economics at the University of Nebraska Omaha. 

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