November 16, 2006
-- by Dave Johnson
I’ve just finished a very interesting book, Capitalism 3.0, A Guide To Reclaiming The Commons, by Peter Barnes. The book talks about ways we can restructure our laws and rules of ownership to cover who should pay for polluting and other harmful things -- costs that our current system ignores and even encourages. The change is based on our realizing that we all own certain things in common.
Here’s a quick way to understand the ideas in this book:
Suppose you live next door to a sawmill operation. The owner makes lots of money, but aa waste product, sawdust, is building up on his lot. This big pile of sawdust is getting bigger and bigger, and it's getting to the point that he’s going to have to shut down his profitable operation if he can’t find some place to dump some sawdust. So one day he comes to you and asks if he can dump some sawdust in your back yard. You answer, “If you give me $25,000 a year, each year you can dump 5 truckloads, but no more, in my yard.” You are $25,000 richer, you limited the sawdust to a level you could tolerate, and the sawmill can continue to operate and make money.
This happened because you “own” that property and have the “right” to refuse to let others make money by dumping their waste in it – or to negotiate for some of the resulting profits. This sounds so basic – but there is a reason I put quotes around the words “own” and “right.” The concepts of ownership and rights only exist because they are granted to us by law, and laws are nothing more than creations of government. It didn’t used to be that way, that regular people could "own" things and have "property rights," but people thought it would be a good idea, and made it happen. And in America it is set up that we can do things like that because, guess what, WE're the government. (It says that in our Constitution.) More on this later.
Now, suppose that you live in a condo, and there are 25 units that share the property, and the condos have a condo association. So the sawmill owner comes to the condo association, and the same transaction occurs. Everyone benefits. Each condo owner gets $1,000 a year, and the sawmill keeps operating and making money.
Suppose the sawmill owner wanted to just dump that waste on that lot next door – the one you live on? That would be great for him if he could do that. He would save, or “externalize,” that $25,000 cost. It wouldn’t even show up on anyone’s books! And he could charge less for his product! But he can’t and the reason he can’t is because you understand that you own that property, which gives you the right to refuse or to ask for payment.
Here is what I am getting at: Oil and auto companies currently dump CO2 (and other stuff) into the air. This is an “externalized” cost. They don’t pay anyone and it doesn’t show up on anyone’s books. They make tremendous profits from this arrangement but the rest of us suffer the consequences.
But what would happen if we started to realize that this is OUR air? You know, “the people” and all that, like it says in our Constitution. Democracy and community. And what would happen if we decided to set up our laws so that we have “ownership” and “rights” to refuse to let them do that – or to charge them and limit how much they can dump?
Is this a far-fetched concept? Maybe not – it is already happening in some places. For example, did you know that everyone in Alaska receives a check because they – the people of Alaska – decided that the oil under the ground there belonged to them? So they passed a law that said they have the right to charge oil companies for that oil and that the money would go into a fund that would pay a dividend to all the citizens of Alaska, as well as put money into a fund that will continue to pay a dividend, forever, even after the oil is gone?
They decided to do that with their oil. They enacted laws to make it so. Now they all benefit. The oil companies benefit, and the people of Alaska benefit from now on. Because they realized that it was their oil, and did something about it.
Go look it up. And then start thinking about how much we should charge to let oil companies dump CO2 into OUR air.
This might help your thinking: this year Exxon was the most profitable company ever in the history of commerce, and we didn’t get a dime for letting them dump their wastes into and onto our common property. The way things are set up now, instead of collecting from Exxon and others for letting them pollute, the resuting global warming, health effects and other results of this mean we and our children will instead have to pay the price in coming years. We can decide to do it a better way.
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