Category - Commons

Barack Obama must have read the Jonathan Alter article in Newsweek, or maybe he shared the back of a taxi with Peter Barnes. Whatever the cause for his conversion, he’s now speaking a bit of the gospel.

Presidential hopeful Barack Obama on Monday called for reducing U.S. greenhouse gas emissions by 80 percent of the 1990 level by 2050. His proposal would force power companies and other businesses to pay for all their pollution.
…
He proposed a modified “cap and trade” approach to reducing emissions that would require businesses to buy allowances to pollute, creating an incentive to reduce energy usage.

Under a traditional cap and trade system, power plants or businesses that exceed pollution caps must buy or trade for additional capacity, generally from plants that have taken steps to reduce their emissions. Unlike some of his rivals, Obama said he would auction all allowances rather than grandfathering some to big emitters such as oil and coal companies.

“No business will be allowed to emit any greenhouse gases for free,” he said. “Businesses don’t own the sky, the public does, and if we want them to stop polluting it, we have to put a price on all pollution.”

Sweetness. Of course, Obama is still listed as a co-sponsor of Lieberman’s “big business owns the sky, so give allowances for free to the big emitters” bill, so we’ll have to see what he does in terms of walking the walk. But for all my cynicism, hearing the right talk is an unexpected pleasure.

Meanwhile, I’m surprised to see this statement in the Washington Post “campaign 2008″ blog:

Most legislation offered to reduce carbon emissions takes this form [cap total emissions and allow trading of allowances within that limit], even though many economists believe a carbon tax would be simpler, if more difficult to sell politically.

Which “most” economists are they talking about? When you have a specific target you are trying to reach, taxes are a blunt and inaccurate instrument. Plenty of the nerdiest economists can whip up a quick model to show how a cap-and-trade system is more economically efficient (using the terms of market economics) than a tax system in this kind of scenario. Maybe someone needs to do a survey of economists or something. Anyhow, I badmouthed Congress the other day for being (or acting willfully) ignorant of simple economic principles.* But now, if the Washington Post is right, I’ve got to badmouth “most economists” and give credit to the politicians for getting this one right.

*”which is so Econ 101 it’s plain pathetic that most of Congress seems to be dismissing it out of hand“

I’m in the process of playing catch-up with the climate legislation moving (or stalling, as the case may be) around Congress. I think I might have been wrong to identify Lieberman’s S.280 as the leading climate bill in the Senate. Turns out Bernie Sanders’ alternative bill, S.309, has close to twice as many co-sponsors (19 vs. Lieberman’s 11)–including Senators Clinton, Obama, Dodd, and Biden, a clean-sweep of the Senate’s presidential hopefuls. Oh wait–politics sure is messy–Clinton and Obama are also cosponsors of the Lieberman bill. Covering their bases, it seems. In Lieberman’s favor, his cosponsors include a bunch of Republicans, so while he has fewer cosponsors, that indication of “bipartisanship” might mean his bill would do better in a full Senate vote. Maybe so, maybe not.

I’ve only skimmed the Sanders’ bill so far, but frankly I’m finding it rather confusing. Well, maybe not confusing, but overly vague. (That’s something Lieberman’s has less of; it proudly wears the badge of corporate welfare on its sleeve.) The heart of it seems to be with Section 704 (f) (2), where it directs the EPA Administrator to establish a market-based program for reducing greenhouse gas emissions. The vagueness lies in the fact that the Administrator is not obligated–as far as I can tell–to use an auction for distributing the pollution permits (”emissions allowances”) to industry. This seems to leave open the possibility of a give-away. If that happens, then this bill will turn out to be not much better than Lieberman’s. While Section 704 (f) (2) (A) tells the Administrator to distribute any leftover permits to “households, communities, and other entities,” this is only an after-the-fact distribution. First industry gets a crack at the permits (through a give-away? an auction?), and only after that do households and communities get a chance to participate in the program. I’m sorry to say, that sounds like something paving the way towards a give-away.

Also, if I understand it correctly, Section 704 (f) (2) (D) grants the Administrator the ability to issue extra pollution permits (or by some other means to give relief to industry) if the cost of permits rises too high (according to the Administrator’s understanding of “too high”). That’s a dangerous loophole. Again, I find the law-speak a bit confusing, so the size of this loophole isn’t entirely clear to me. It does seem–thankfully–to be limited, because the Administrator is required to begin reducing the number of permits available after a maximum of three years of stalling the program. Still, all this vagueness and potential loopholiness has got me feeling more cautious than optimistic.

That’s it for now.

Ubuntu is a popular distribution of the Free/Libre/Open-Source Software (FLOSS) GNU/Linux computer system.

Using the COCOMO model to estimate the cost of producing computer code of specified length and complexity, a linux enthusiast estimated the actual cost to produce the software in the Ubuntu repositories. The Ubuntu software repository contains over 121 million lines of code, and the estimated cost to produce it is over 7 billion dollars.

Is this a lot?

On the one hand, it’s an incredible achievement for volunteered, uncoerced, even joyful labor. And the COCOMO approach seemed like a clever way to value this important part of the intellectual commons.

On the other hand, Microsoft’s market capitalization is 280 Billion, and in my opinion, Ubuntu does almost everything that Microsoft can do. (Well, not really; Ubuntu does not compete with the Microsoft X-Box gaming system or the Microsoft network, but Ubuntu does offer a complete computer system, including office software, web browser, operating system, multimedia viewers, etc.) So why do the valuations differ by a factor of 40?

Thanks to Kristian Hermansen of the UMassLUG (UMass Linux Users’ Group) for the lead.

The other night I attended a presentation by Peter Barnes at Vermont Law School. He was talking about different possible policies Congress might pursue to address global warming. Barnes is a persuasive advocate for a specific form of cap-and-trade on greenhouse gases, wherein the limited permits for emitting greenhouse gases are auctioned off and the revenue that comes in from the auction is then distributed on an equal per-person basis to everyone in the country. More on that in a moment (or see Jonathan Alter’s nail-on-the-head article in Newsweek).

I’d heard about Barnes proposal before–in fact, Nancy Folbre, James Heintz, and I used it as the basis for a bit of the Field Guide to the US Economy. What I hadn’t realized was that there is currently legislation working its way through Congress that would implement a different variation of cap-and-trade on greenhouse gases. The leading version is Joe Lieberman’s S.280 in the Senate and the near-identical bill fostered by John Olver, H.R.620, in the House. (Part of my ignorance stems from the recent birth of my daughter Susannah. I haven’t been keeping up with the news very much.) (But she sure is cute!)

“Wow,” you might be thinking, “Congress might actually pass a bill that deals seriously with global warming. Will miracles never cease?” Well, um, don’t get too excited just yet.

Marcellus Andrews is guest blogging at On the Commons and has a nice essay on how the world looks to an economist who’s “black and green”–an African American with a passion for the environment. “Somewhere along the way, I became a bit green in my views on economic life and policy, though my ‘greenness’ has a distinctly black undertone.”

Further down in his essay, Andrews raising the question of how unequal racial power might force its way into scenarios that seem to be so wonderfully egalitarian, like the proposed “Sky Trust.” (See this previous Econ-Atrocity.)

…Yet, even as I struggle with mathematical models exploring all the ways that such “sky trust” type systems reconcile efficiency and justice in a narrow sense, my studies evade the ruthless bio-politics of inequality bound to turn “the commons” into another hierarchy of the powerful over the vulnerable. The vulnerable forever stand apart and below the powerful – even green, progressive power – objects of charity or even redistributive justice, but objects nonetheless. Charity becomes thin, stingy, evincing slight degrees of sadism when, when the vulnerable are the wrong color.

Green power, like all power in divided societies, will balance the needs of rulers and ruled, whether the rulers are a clique, a board of directors, or a voting majority with blood-based antagonism toward the Others. Green power – the use of public and private power informed by scientific, particularly ecological, and economic reason – is far more likely to be humane than other forms of power precisely because it is imbued with a sense of limits and balance. Indeed, green power, at its best, constructs better ways of pricing and managing collective risks, thereby mitigating the destruction of natural capital.

But our individual, family and communal access to resources and the resulting unequal control of development are shaped by the bio-political facts of society: we are born into families and communities of color, class, region, religion and language, inheriting access to resources and levers of power or the abyss of powerlessness. We inherit and the bequeath the social wars that grant us access to power or leave us in weakness, even the power to shift policy in a green direction.

As you can see, I am struggling with the uneasy relationship between sustainability and equality in a market and technology driven world economy, where economic and social innovation must now redesign capitalism to make it cleaner and ecologically viable, yet where the mechanisms of social/racial inheritance threaten to reinforce bio-political and social power in unacceptable ways. I ask your patience and your help as I work through the problematic economics of equality and sustainability, hardened as I am by my American blackness. I want to think about the economics of the commons in light of the fact that green power is unlikely to be shared across American color lines, even as it reconciles the way we make a living to the life process of the Earth….

More power, so to speak, to Andrews for his willingness and ability to face the demons we might wish away. A sky trust will be a great institution for many reasons, but it will not only change society, but be affected by the pre-existing features of society in a give-and-take sort of way. Not all of them will necessarily be for the best.

Jonathan Rowe at On the Commons is writing about clotheslines, and the “tragedy of the private” market that has made them illegal for millions of people. A useful reminder that–while no view is strictly objective–some absurdities are pretty easy to identify, and these are just as likely (more likely?) to derive from the unfettered association of individuals through the marketplace as from any other source, particularly when profit maximization is the mantra. (Because, in this case, it’s the hope that property values will rise as fast as possible that leads snobs to ban clotheslines from a neighborhood.)

Given that the Supreme Court has ruled that carbon dioxide should rightly be treated as a pollutant, but the EPA continues to fail to act, clotheslines in restricted neighborhoods might make a great form of civil disobedience. If you live in such a neighborhood, set up a clothesline and wait for the order to take it down. It’d make for a great story in the local paper, which would help to spread the word about this absurdity and, hopefully, lead to laws that overrule the we-prefer-to-pollute-the-atmosphere snob factor.

Peter Dorman at Econospeak has a good conversation going on the advantages of controlling carbon emissions through auctioning off limited permits rather than using a tax on consumption of carbon fuels. Naturally, this reminds me of my implied plug for permits in my review of Peter Barnes’ Capitalism 3.0 [parts 1 and 2]. Regardless, Dorman is on the money when he concludes

Folks, this is a very important issue at a very important time. In the next year the contours of the national debate over climate change policy will be set. Huge ecological consequences – and gobs of cash – are on the line. It is essential to start off in the right direction. I’d like to see enough clarity and truculence in the activist community that journalists are forced to take notice.

[See part one]
Jonathan Teller-Elsberg, CPE Staff Economist

It’s worth remembering that commons already exist, lots of them, in various places and parts of the world’s economies. Most often, however, they are informal arrangements—holdovers from before the rise of modern market capitalism. In general, commons are not recognized formally by governments as a type of property arrangement deserving protection, the way conventional private property is legally protected.

It is this lack of protection that enables the famous “tragedy of the commons.” Barnes argues that, contrary to the standard perception, commons aren’t undermined by internal tragedies—they are victims of infringement from the outside. Marx described the enclosure of common land into private land as “the primitive accumulation of capital”; today, Barnes is primarily concerned with the ability of corporations to horn in on remaining commons as they seek new resources to exploit for private gain. A recent example is with the digital TV broadcast spectrum, with an estimated value of $70 billion but which the U.S. government gave away for free in 1996 to media conglomerates, even though the airwaves are supposed to be the shared property of all Americans.

Jonathan Teller-Elsberg, CPE Staff Economist

A few weeks ago, CPE Staff Economist Jerry Friedman wrote an Econ-Atrocity reviewing Bill McKibben’s new book, Deep Economy. Though he says McKibben “has written a clear attack on much of what ails us,” Friedman nonetheless criticizes McKibben for approaching the environmental and social problems of the day from an individualist perspective. For all that McKibben wants to promote and revive “community,” he has the attitude (says Friedman) of a “personal Salvationist . . . [who thinks that] the enemy [is] ourselves: we use too much, waste too much, want too much; and the only salvation for the environment is to change our preferences, use less, recycle more, and choose to live simply.” What McKibben misunderstands or ignores, Friedman argues, is the power of social institutions to drive behavior, regardless of the desires and seemingly free choices of individuals.

I think that Friedman will find solace in Peter Barnes’ recent book, Capitalism 3.0: A Guide to Reclaiming the Commons, since Barnes’ approach is definitively institutional. The problem, according to Barnes, is that the structure of the economy and society leave too much power in the hands of corporate capitalism. Even if all the CEOs and boards of directors and politicians were replaced with kind-hearted souls like McKibben, we would still face pretty much the same issues of environmental decay, economic inequality, and other social ills—the logic of capitalism and the legal structure of private property rights force the leaders of corporations to do what they currently do. He learned this from personal experience as co-owner and manager of several business ventures, most famously Working Assets (a telephone and credit card company that donates one percent of gross revenues to progressive charitable organizations). “I’d tested the system for twenty years, pushing it toward multiple bottom lines [that consider social and environmental impacts in addition to profit concerns] as far as I possibly could. I’d dealt with executives and investors who truly cared about nature, employees, and communities. Yet in the end, I’d come to see that all these well-intentioned people, even as their numbers grew, couldn’t shake the larger system loose from its dominant bottom line of profit.” (Ironically, Bill McKibben is quoted on the front cover of Capitalism 3.0 helping to promote Barnes’ book.)

Two weeks ago, after complaining to my daughter about how much I would dislike it, I bought Bill McKibben’s Deep Economy (New York, Henry Holt: 2007) from my local Amherst book store. Already familiar with his ideas from his various other writings (including The End of Nature; Staying Human in an Engineered Age; and various New Yorker articles), I suspected that his new book would be well written, an effective attack on much that ails us as a society, and would miss the point. It is this last that led me to threaten to throw the book against the wall in frustration. And that frustration led me to write this note. (Actually, it was my wife who wanted me to write this so that I would stop ranting to her.)

What could be wrong with a book that criticizes the Bush Administration, big oil, Cargill, Monsanto, and the Economics profession (among many many other villains)? Especially when the author has such good heroes: including farmers’ markets, urban gardens, organic farmers, Heifer International, and the Indian state of Kerala. Among economists, environmentalists like Herman Daly and Bob Costanza get most of the Kudos but a few, like Amartya Sen, make friendly cameo appearances. Individualism is bad; society is productive; and I agree that would all be better off, and the world a lot better off, if we listened to Bill McKibben.

The problem I have is that McKibben not only reads orthodox economists but believes them.

What will happen? Maybe not much. What could happen? Something big.

Top Court: EPA Can Control Emissions

By MARK SHERMAN Associated Press Writer
© 2007 The Associated Press

WASHINGTON — The Supreme Court ordered the federal government on Monday to take a fresh look at regulating carbon dioxide emissions from cars, a rebuke to Bush administration policy on global warming.

In a 5-4 decision, the court said the Clean Air Act gives the Environmental Protection Agency the authority to regulate emissions of carbon dioxide and other greenhouse gases from cars.

Greenhouse gases are air pollutants under the landmark environmental law, Justice John Paul Stevens said in his majority opinion.

[cont’d]

And in quick response, words to the wise from the auto industry:

Automakers urge economy-wide approach to global warming
POSTED: 12:56 p.m. EDT, April 2, 2007

WASHINGTON (AP) — Automakers called for an economy-wide approach to global warming in reaction to a Supreme Court decision Monday that could give the government the authority to regulate the emissions of carbon dioxide and greenhouse gases from cars.

The Alliance of Automobile Manufacturers, an industry trade group representing General Motors Corp., Ford Motor Co., DaimlerChrysler AG, Toyota Motor Corp. and five others, said in a statement that “there needs to be a national, federal, economy-wide approach to addressing greenhouse gases.”

Of course, don’t expect things to work out all rosy…. The auto industry plans to be the first among equals at the negotiating table:

Dave McCurdy, the alliance’s president and chief executive, said automakers would work with lawmakers and federal agencies to help develop a national approach.

[cont’d]

But even still, the idea is right. Cap and trade? A carbon tax? Good old fashioned rationing? Banning the worst offenders (as in, no new fossil fuel powered electricity plants, followed by a phase-out of existing plants; mandatory efficient building materials and techniques; minimal acceptable auto fuel efficiency; etc)? There are lots of options for economy wide approaches to dealing with carbon pollution, and no time like the present to start trying them out.

Having said that, what the Supreme Court has ruled looks to be restricted to auto emissions (thus the auto industry’s insistence on economy-wide action, so they aren’t made the only ones to deal with the greenhouse gas problem). This is based on

§202(a)(1) of the Clean Air Act, which requires that the EPA“shall by regulation prescribe . . . standards applicable to the emission of any air pollutant from any class . . . of new motor vehicles . . . which in [the EPA Administrator’s] judgment cause[s], or contrib-ute[s] to, air pollution . . . reasonably . . . anticipated to endangerpublic health or welfare,” 42 U. S. C. §7521(a)(1).

Become an expert: read the Court’s actual decision in “Massachusetts et al v. Environmental Protection Agency et al.” [pdf]

P.S.–Don’t confuse this decision with the other environmental decision also released today, “Environmental Defense v. Duke Energy Corp.” That one rules that the EPA should be more rigorous in enforcing the Clean Air Act when power companies alter existing plants to ensure that no more pollution is released than before the alteration.

By Matthew Riddle, CPE Staff Economist

The Regional Greenhouse Gas Initiative, or RGGI, grabbed headlines in Massachusetts recently when Governor Deval Patrick signed onto it, committing Massachusetts to a cut in its emissions of greenhouse gasses from power plants, and reversing Mitt Romney’s decision to abandon the agreement. In addition to rejoining RGGI, Patrick also outlined some proposals for its implementation, which may prove to be even more significant than his decision to join.

By Jonathan Elsberg, CPE Staff Economist

One of the more attention-grabbing ideas that has crossed academic disciplinary boundaries, as well as entered into everyday language, is the notion of the “tragedy of the commons.” Made most famous by late Professor of Human Ecology Garrett Hardin in an essay by that name, the idea is not too complicated, very powerful–and rather alarming.

The tragedy describes a situation in which there is public access to a resource. It is to the advantage of each individual to use a little bit extra of the resource, but when all individuals do this simultaneously, the resource is ruined for everyone. Dozens of references to the “tragedy” can be found in newspapers in just the last year, dealing with issues such as depleted fisheries, email spam, risky growth in hedge-fund investing, and worker migration and associated destruction of local communities.

While resources available “in common” sometimes have been tragically exploited, reality is (happily) more complicated, and tragedy is not destiny. One aspect sometimes overlooked by pessimistic analysts is that there are different kinds of common property resources. Some resources are totally open to any and all users, and are properly called “open access” rather than “commons”. These are the ones that are most likely to suffer tragic overuse. The earth’s atmosphere, and its ability to absorb global warming pollution, is one example.

Often, the “cure” recommended for these tragic commons is either strict government control or the conversion of the resource into pure private property. Under the ruling ideology of our times, it is the latter that gets the most promotion.

However, many resources are held in common by a group which is able to sustainably use the resource without resorting to the use of strict private property. The members of the group, be it a local community, professional organization, or national society, control and share access to the resource, yet establish and follow rules of behavior that override greedy urges and keep individual’s use of the resource to an acceptable level. These successful cases of working social rules and norms are arguments against the call for knee-jerk privatization of common properties, or for total government control.

Some examples include the sharing of fishing zones in Alanya, Turkey, maintenance of acequia irrigation systems around New Mexico, U.S.A., and the Ozone Transport Commission NOx Budget established among eight northeastern U.S. states to reduce smog-related air pollution.

These are important lessons, because some potentially tragic commons cannot be fully privatized or put entirely into the hands of the government. For example, avoiding global warming will require extensive international cooperation (there is disagreement on whether this cooperation can be built from the ground up, or must be imposed by a powerful, central world power). Not only will the citizens and businesses of each country have to take responsibility for their CO2 emissions, but each government will have to help establish a working institutional framework for such responsibility within its borders. However, each government, business and individual faces the tragic temptation - allow all the others to control their CO2, while we fake compliance and reap the economic advantages.

No international treaty will hold if the signers don’t want to follow it. Only through combined dedication to the well-being of the whole along with creative, yet feasible, new institutions to guard against cheating will the individual community members make triumphant rather than tragic choices. It is through the study of past common property success and failures that we can learn to succeed more often.

Sources:

Herman Daly, “Logic that leads to a plundered world,” The Guardian (London, England), September 1, 2003, pg. 25. www.guardian.co.uk/wto/article/0,2763,1033054,00.html

Nives Dolšak and Elinor Ostrom, eds., The Commons in the New Millennium: Challenges and Adaptations, MIT Press, 2003. (I especially recommend the chapter by Einar Eythórsson on Icelandic fisheries. It is an excellent analysis of a privatization scheme with mixed positive and negative results.)

Garrett Hardin, “The Tragedy of the Commons,” Science, Vol. 162, No. 3859, Issue of 13 Dec 1968, pp. 1243-1248. (Also available online at www.garretthardinsociety.org/articles/art_tragedy_of_the_commons.html.)

Tor Hundloe and Daryl McPhee, “No reason why we can’t have our fishcake and eat it,” Courier Mail (Queensland, Australia), August 25, 2003, pg. 11.

Barney Jopson, “Don’t turn to hedge funds when depressed,” Financial Times (London, England), March 31, 2003, pg. 25.

Las Vegas (New Mexico) Citizens’ Committee for Historic Preservation, “Historic Acequias of Las Vegas, New Mexico” web-brochure. www.nmhu.edu/research/cchp/tours/acequias/default.htm.

Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action, Cambridge University Press, 1990.

Jonathan Turley, “Uncle Sam and spam,” Milwaukee Journal Sentinel, (Wisconsin, USA), April 28, 2003, pg. 13A.

(c) 2003 Center for Popular Economics

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author’s opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.