Philippine Environmental Issues: Government Interventionism And Private Property

Finally some eye-popping economic realism from local mainstream media.

While the majority of mainstream media, the church and the public have swallowed hook, line and sinker to the government and academic propaganda that environmental issues have mostly been caused by "market failure" due to "greed", the fact is that markets, composing of acting individuals, respond to incentives.

And unknown to many, government policies shape the incentives that govern the markets.

Here we are reminded of Frédéric Bastiat, who in his classic must read That Which Is Seen and That Which Is Unseen- the book that fundamentally altered my fundamental perception, cautioned us about interpreting on what may seem as the plausible and visible but are fundamentally short term effects as proximate causality.

Instead, we have been advised to dig deeper in order to fathom on the authentic and not the shallow causes; from which mostly have been the baneful long term consequences of populist political actions.

In other words, the politicians and the gullible public severely overestimate on the culpability of the markets while grossly underestimate on the role of government in influencing such behavior.

And it is no different in the populist agenda known as environmentalism.

Here is a splendid article (Kudos to Calixto V. Chikiamco-author of the article) on domestic environmental problems seen in context of how government interventionism, which constricts on private property, have prompted for the aftermath of environmental degredation. [Hat tip: Francis Bonganay]

The intro from the Chikiamco's article on the Businessworldonline, [bold emphasis original]

``When one thinks about being friendly to the environment, one usually counterposes it to private property rights. Along this line of thinking, the government is for the environment and the private sector with its "greed" is anti-environment.

Mr. Chikiamco does a Bastiat,(bold highlights mine)

``How can we then explain the massive denudation of the country? Well, government was and is the culprit.

``The macro-explanation is that the government’s protectionist import-dependent import-substitution economic policy in the fifties encouraged deforestration. This policy, buttressed by an overvalued exchange rate, ensured a persistent trade deficit. To finance the trade deficit, the government encouraged extractive industries -- logging and mining -- in the sixties and seventies to generate foreign exchange. In effect, our natural resources were used to pay for the inefficiency of our protected import-substituting industries.

``However, government exacerbated the situation by two wrong-headed policies.

``One is that it imposed a "reforestation fee" on logging companies, telling the logging companies that the government will assume the responsibility of replanting and sustaining the forests. Of course, the government never did replant and used the reforestation fee wisely. The fee got lost in graft, the government didn’t have the resources and interest to police the forest and keep out the kaingeros (slash-and-burn farmers), and because of population pressures, people started moving upland and cutting trees.

``The other is that the government did not give logging companies secure, long-term property rights. Logging permits were usually short-term (five years or less) and highly political because keeping them was dependent on one’s padrinos and political connections. Because of the long period it takes to plant and grow a tree and recoup one’s investment, the government should have given secure property rights of 25 years or more.

``Property rights analysis, therefore, should be at the core of any plan to preserve and sustain the environment."

Read the rest here.

In contrast to popular wisdom, in effect, the sordid state of our environment hasn't been due to the aftermath of greed, but rather, of the political failure to uphold its touted responsibility (reforestation fee) and importantly the use of environment to award or dispense political privileges known as economic rent to politically favored affiliates, interest groups or patrons via the curtailment of private property.

I would intuitively suggest that there is more to this, albeit I haven't made an indepth research on it.

In short, government failure have resulted to the present environmental decadence and the public being misled by looking at the wrong dimensions would see the aggravation and not the abatement of the present predicament.

The last words of wisdom from Frédéric Bastiat, ``Between a good and a bad economist this constitutes the whole difference - the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, - at the risk of a small present evil."