Richard L. Stroup RIP – Econlib

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As a number of economists and others have noted, Richard L. Stroup died on November 18. He was a good and gentle man and a very good economist. He used straightforward microeconomic tools to investigate, and generate insights on, interesting issues. I’ll highlight some items from the 10th edition of his textbook, Economics: Private and Public Choice, co-authored with James D. Gwartney, Russell S. Sobel, and David A. Macpherson. I’ll point to sections for which there is a high probability that he wrote them.

Question 14, p. 151: Do you think that the political process works to the advantage of the poor? Why or why not?

Question 16, p. 151: The United States imposes highly restrictive quotas that result in a domestic price that is generally about twice the price. The quotas benefit sugar growers at the expense of consumers. Given that there are far more sugar consumers than growers, why aren’t the quotas abolished.

Why do I think there’s a high probability that Rick wrote these? Because they’re about Public Choice and that was one of his areas of research and expertise.

Another one on Superfund. This is too lengthy to quote so I’ll note a few nuggets in which the textbook’s authors summarize the research of James T. Hamilton and W. Kip Viscusi in their 1996 book, Calculating Risks.

Superfund: A Highly Inefficient Cleanup Program

Most supposed Superfund “risks” do not pose a threat to human health now and they will do so in the future only if people violate commonsense precautions and actually inhabit contaminated sites and disregard known risks there.

Even if the risks of exposure above did occur, there is less than a 1 percent chance that the risks are as great as EPA estimates, due to extreme assumptions made by the EPA about the dangers.

Replacing extreme EPA assumptions with more reasonable averages brought the estimated median cost per cancer case averted to over $7 billion. (p. 775)

This item footnotes Rick’s Summer 2001 article in Regulation.

On the unintended consequences of the Endangered Species Act (ESA):

Under the rules set by the FWS [Forest and Wildlife Service], most potential uses of land are forbidden within several hundred yards of any tree, once the protected species [the red-cockaded woodpecker] has built a nest there.

Many landowners dread the possibility that the species will be found on their land, leading to the imposition of restrictions by the FWS. Such landowners can take subtle management steps to make their land unattractive to the listed species, and evidence has appeared that they do just that. Economists Dean Lueck and Jeffrey Michael found that landowners located close to colonies of red-cockaded woodpeckers in North Carolina cut down their trees sooner than did those who were far away from the woodpeckers, where older trees were less likely to draw the listed woodpeckers which could trigger a transfer of control of their land to the FWS. The unwanted secondary effect of the ESA has been a reduction in the habitat for listed and candidate species–just the opposite of the goal of the law. (pp. 787-788)

This section footnotes his articles co-authored with Thomas R. Bourland and with his wife, Jane S. Shaw.

As you might guess from the above, Rick was one of the leaders in the free-market environmentalist movement and literature.

Rick also wrote two entries in David R. Henderson, ed., The Concise Encyclopedia of Economics. They are “Political Behavior” and “Free-Market Environmentalism.”

In one of my favorite passages from “Political Behavior” Rick makes the case that whether or not players in the political arena are always selfish, they are always narrow:

An advocate of the homeless working in the political arena typically lobbies for a shift of funding (reflecting a move of real resources) from other missions to help poor people who lack housing. The views of such a person, while admirable, are narrow. He or she prefers that the government (and other givers) allocate more resources to meet his or her goals, even though it means fewer resources for the goals of others. Similarly, a dedicated professional, such as the director of the National Park Service, however unselfish, pushes strongly for shifting government funds away from other uses and toward expanding and improving the national park system. His or her priority is to get more resources allocated to parks, even if goals espoused by others, such as helping the poor, necessarily suffer. Passionate demands for funding and for legislative favors (inevitably at the expense of other people’s goals) come from every direction.

And he nicely shows why the incentive for voters to become informed is so weak and the consequences that follow:

An individual voter has virtually no chance of casting the decisive vote in an election. Even among the more than four thousand elections held each decade to fill the U.S. House of Representatives, a race decided by less than one hundred votes is newsworthy at the national level, and a recount is normally conducted. Moreover, the cost of an uninformed or mistaken vote that did make a difference would be spread among other citizens. This differs from the cost of a mistaken personal purchase, the full burden of which the buyer pays. People thus have little incentive to spend valuable time and effort learning about election issues beyond their narrow personal interest, monitoring politicians’ overall performance, or even voting. Instead, voters are “rationally ignorant” on most issues. Thus, it makes sense for a politician to pay attention primarily to special interests on most issues, and to use the financial support of special interests to campaign on “image” issues at election time.

One of my favorite passages from his “Free-Market Environmentalism” is this:

Environmental problems stem from the absence or incompleteness of these characteristics of property rights. When rights to resources are defined and easily defended against invasion, all individuals or corporations, whether potential polluters or potential victims, have an incentive to avoid pollution problems. When air or water pollution damages a privately owned asset, the owner whose wealth is threatened will gain by seeing—in court if necessary—that the threat is abated. In England and Scotland, for example, unlike in the United States, the right to fish for sport and commerce is a privately owned, transferable right. This means that owners of fishing rights can obtain damages and injunctions against polluters of streams. Owners of these rights vigorously defend them, even though the owners are often small anglers’ clubs with modest means. Fishers clearly gain, but there is a cost to them also. In 2005, for example, Internet advertisements offered fishing in the chalk streams of the River Anton, Hampshire, at 50 pounds British per day, or about $90 U.S. On the River Avon in Wiltshire, the price per day was 150 pounds, or $270. Valuable fishing rights encouraged their owners to form an association prepared to go to court when polluters violate their fishing rights. Such suits were successful well before Earth Day in 1970, and before pollution control became part of public policy. Once rights against pollution are established by precedent, as these were many years ago, going to court is seldom necessary. Potential plaintiffs who recognize they are likely to lose do not want to add court costs to their losses.

And I must not leave without quoting from his analysis of Love Canal:

Thus, liability for pollution is a powerful motivator when a factory or other potentially polluting asset is privately owned. The case of the Love Canal, a notorious waste dump, illustrates this point. As long as Hooker Chemical Company owned the Love Canal waste site, it was designed, maintained, and operated (in the late 1940s and 1950s) in a way that met even the Environmental Protection Agency standards of 1980. The corporation wanted to avoid any damaging leaks, for which it would have to pay.

Only when the waste site was taken over by local government—under threat of eminent domain, for the cost of one dollar, and in spite of warnings by Hooker about the chemicals—was the site mistreated in ways that led to chemical leakage. The government decision makers lacked personal or corporate liability for their decisions. They built a school on part of the site, removed part of the protective clay cap to use as fill dirt for another school site, and sold off the remaining part of the Love Canal site to a developer without warning him of the dangers as Hooker had warned them. The local government also punched holes in the impermeable clay walls to build water lines and a highway. This allowed the toxic wastes to escape when rainwater, no longer kept out by the partially removed clay cap, washed them through the gaps created in the walls.

The school district owning the land had a laudable but narrow goal: it wanted to provide education cheaply for district children. Government decision makers are seldom held accountable for broader social goals in the way that private owners are by liability rules and potential profits. Of course, anyone, including private parties, can make mistakes, but the decision maker whose private wealth is on the line tends to be more circumspect. The liability that holds private decision makers accountable is largely missing in the public sector.

My condolences to his lovely wife, Jane Shaw. Many of us will miss him and all who care about the environment owe him some gratitude.

 

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