Who Conserves Our Resources? R. Maynard

WHO OUR CONSERVES RESOURCES? "WHO SHOULD conserve our resources?" If a poll were taken, a large majority probably would answer: "Our federal and state governments." And if one were to ask why this view is so widely held, he would find among other "reasons" the following: (1) that the free market is chaotic, gives profits to the few, and is unmindful of the great "waste" of our di minishing resources; (2) that "people's rights" are above "private or spe cial interests" and only the government can properly serve the public interest; (3) that government has access to more funds; (4) that government has the power and facilities to obtain all the necessary data and to do the research needed for the best "scientific" decisions on resource conservation; (5) that the price system does not operate in the in terests of conservation because of the "unrestrained pur suit of self-interest"; Dr. Maynard is Assistant Professor of Economics, Lake Erie Col lege, Painesville, Ohio.

374 WHO CONSERVES OUR RESOURCES? 375 (6) that the concentration of power in some corpo rations further threatens our dwindling resources and must be regulated by government. These "reasons," of course, do not indicate how a government agency would go about attempting a solu tion to the conservation problem-this is always just assumed-but consider them briefly: (la) The free market is anything but chaotic. Com peting natural market forces reflect in prices the wishes of both buyers and sellers-millions of individuals, sepa rately accountable and responsible for their own actions in their own field of economic activity. All persons seek their own advantage when allowed a choice, but in the free market a producer cannot profit unless he pleases consumers better than his competitor does. Since he must think of efficiency and lowered costs in order to survive, it is false to assume that he alone profits from the use of natural resources from which are made the products wanted by consumers. All gain who use the resulting products.

(2a) Can there be "people's rights" superior to the rights of individuals? All individuals have special and pri vate interests and rights. Therefore, the "people" cannot have rights except individually; and the right to life carries with it the right to maintain it by private and special means. (3a) The government has no funds that have not been taken from the people by force, whereas many a large private undertaking has come forth from volun tarily contributed funds. In fact, the entire industrial 376 RUTH SHALLCROSS MAYNARD development in this country has been a continuous ex ample of this voluntary way of creating the facilities for production by giving the consumer what he wants at the price he is willing to pay in competition. (4a) Offhand it would seem that a government might have access to more data about scarce resources than would a private enterpriser. But government cannot bring forth the detailed information so vital to sound deci sion. The kind of detailed knowledge needed simply isn't "given to anyone in its totality," as Hayek has pointed out. 1 "Knowledge of the circumstances of which we must make use never exists in concentrated or inte grated form," he states, "but solely as dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess." Yet, pro ducers need such information before they can decide how to act. The chief communicator of this knowledge is free price movements. If the price of a given resource continues upward, this tells producers all they need to know about its increasing scarcity and signals them to conserve it, to use it sparingly and for the most valu able products. Advocates of government planning never seem to grasp how this works, for they are constantly tampering with market forces, distorting the delicate price signals that could otherwise guide them. Thus, government planners must rely on using general data obtained by crude polling methods which are unreliable for action in specific economic areas and are out of date 1 F. A. Hayek, "The Use of Knowledge in Society," The Ameri can Economic Review, Vol. XXXV, No.4, September, 1945.

WHO CONSERVES OUR RESOURCES? 377 before they can be collected, analyzed, and summarized. Moreover, such studies cannot tell the government con troller as much as free price movements tell individuals acting in a particular market as buyers or sellers. (5a) The role that prices play in the free economy is so little understood that many people believe govern ment must set prices lest they reflect only the "selfish interest" of the producers. The price system not only tells producers and consumers when scarcity of a prod uct exists (prices rise) or when it has become more plentiful (prices drop); it also supplies the incentive to act in the interests of conservation by seeking a sub stitute for the high-priced scarce material. Competitive prices allocate scarce resources to those who will pay more (not those who have more, as is alleged) for the right to try to serve consumers efficiently as well as profitably.

(6a) If concentration of power in corporations is too great to be permitted, what about the ultimate concen tration of power in a government institution beyond the regulation of market forces? Government is unaccounta ble in the sense that it is not obliged to please consum ers in order to stay in business. If it does not show a profit, its losses can be covered by tax money. Big corpo rations can behave in monopolistic fashion only if they enjoy government privileges of some kind. Potential competition, substitution, and elasticity of demand force them to keep prices close to the competitive leve1.2 2 Hans Sennholz, "The Phantom Called Monopoly," Essays on Liberty, Vol. 7, p. 295.

378 RUTH SHALLCROSS MAYNARD When Government Controls The foregoing arguments, however, do not touch up on the basic problem involved in the conservation of resources. Let us assume that Congress passes a con servation law setting up "The Federal Bureau of Con servation." Tax Imoney must then be appropriated for this Bureau. The director, a political appointee, must find a building and hire a staff large enough to justify his salary. To investigate and collect data on what is being done is a time-and tax-consuming job. Turning the conservation problems over to an agency with police power does not mean solution, however. It only means that the director has been given the au thority to find a solution and to force it on those in dividuals who are in the market for natural resources. This does not assure the public that the director has any special grant of wisdom concerning the problems involved, or that he will even know what they are. This appointment would lead him to assume that individual enterprisers were not doing their jobs well. He would undoubtedly define his task as one of finding what in dividual enterprisers are doing wrong and stopping it.

Such interference could only prevent private individuals from utilizing their creativity and energy in seeking a solution to both immediate and long-run conservation problems. Having stopped this flow of creative endeavor, he would need to find a "positive" solution-such as stockpiling by force certain quantities of those materials deemed most scarce.

WHO CONSERVES OUR RESOURCES? 379 But for whom would the director be stockpiling? Would he sacrifice the present generation to future ones? And, if so, which ones? The next generation, the one after that, those living a hundred years from now, or whom? And how could he possibly know what those generations would want or need? Moreover, he would have the problem of what quantities to stockpile and what grades (best or worst) to save. Would some items have alterna tive uses? Would he plan for possible added or new uses in the future? These questions never seem to be asked by the authors of books and articles on conserva tion, whose sperialty is to condemn private enterprise. Stockpiling only aggravates the very scarcity given as the reason for stockpiling. The more scarce a stockpiled item, the higher the price, and the more complaints to be heard from the users. Whereupon, the director prob ably would seek power to :fix prices lower than market levels. This, of course, could only lead to increased de mand and pressure on prices, leading to black markets or government rationing, or both. Allocation by ration ing would present the problem of whom to favor and whom to slight. Hiis authority to discriminate would subject the director to strong political pressures. If not by political favoritism, the director could select by per sonal preference, or first come, first favored. Any system is discriminatory. The system of government planning implies arbitrary discrimination by one man with police power who decides who shall get what. Without per sonal favoritism, the free market "discriminates" against those who would waste scarce materials-it lets their 380 RUTH SHALLCROSS MAYNARD businesses fail-and "discriminates" for those who would most efficiently use the resource to serve consumers their profit depends on their capacity to conserve the scarce resource.

The government system is based on arbitrary decisions of man over man, with strong probability of political influence; the free market system is influenced by non political and nonpersonal forces. There is no other alter native. The first system leads to static conditions which cannot meet the changing needs and desires of consum ers, the "people" most involved and presumably those whom a conservation agency ought to protect. The busi ness way encourages search for substitutes when price rises indicate growing scarcity. This not only aids con servation but also affords the consuming public more reasonably priced alternatives in times of scarcity. When prices are fixed below market levels by the government director, this discourages conservation and gives a false signal as to the degree of scarcity all the way from the natural resource level to the final consumer. Is It Not Worth Saving?

UntiI someone discovers that a resource has a specific use, it has no value for which it should be conserved. Alexander the Great had no use for the reservoir of oil beneath his domain. The underdeveloped countries do not lack resources. But they have not yet found the key (personal saving and competitive private enterprise) by which to utilize the resources to meet the people's needs.

WHO CONSERVES OUR RESOURCES? 381 Private enterprisers are constantly trying to find new materials and new uses for known resources, always looking ahead to see which ones will be available and how efficiently they can be utilized. Pick up any trade journal and note the articles on how to cut costs, util ize waste materials, be more efficient. Because the gov ernment told them to? No. The hope of profits acts as a powerful compulsion to be efficient, to improve, to conserve. The following examples show how private en terprisers eliminate waste and utilize natural resources to meet the needs of the consuming public. Until natural gas was known to be useful as a fuel, petroleum producers burned it to get rid of it. Until ways were found of storing and transporting gas with safety, it had only local use. Competition forced the search for further uses and wider markets, and profits rewarded those who best served consumers. As ways were found to handle gas beyond local markets, con sumers elsewhere gained a wider choice of fuel, and other fuels were thereby conserved.

Reliance on Hindsight Accusations of waste in private industry are always based on hindsight. Any statistics of inadequate use of natural resources are history. When a new method or new use is discovered, it is easy to point out past waste and misuse. The assumption is that industrialists are wasteful if they haven't seen in advance all possible uses for all materials.

382 RUTH SHALLCROSS MAYNARD The meat-packing industry over the last century has used all but the squeal of the pig. But this did not· come all at once. Nor did or could it have come from gov ernment decrees. It came slowly through individual ef forts to cut costs and increase profits in competition with others. In the lumber and pulp-paper industries, uses have been found for virtually all of a tree, including the bark, branches, and sawdust which were formerly "wasted." The "waste" lignin, after removal of the car bohydrates, has been the concern of many a pulp com pany as well as scientists at The Institute of Paper Chemistry, who have yet to find a use that will meet adequately the competitive market test of consumer choice. With the increasing scarcity of pure water, the pulp and paper industry has used less and less of it per ton of product. When wood became scarce in Wisconsin, the "Trees-far-Tomorrow" program was instigated, en couraging farmers to grow trees as an added cash crop.

As salt cake from Saskatchewan grew scarce, the South ern kraft-pulp mills learned how to reclaim it and cut the amount needed per ton of pulp by two-thirds or more. Could such a conservation measure have been forced by government decree? It is most doubtful. In the agricultural field are many illustrations of con tinuous improvement: of tools (the history of the plow alone would make an impressive volume); of methods of utilizing land, fertilizers, insecticides, and seeds; of knowledge of genetics, hydroponics, and radioactive rnaWHO CONSERVES OUR RESOURCES? 383 terials. All of these have played a vital part in getting better farm products to the people with fewer man hours and at less cost. These all conserve time. Time also is a resource. Conserving time can save lives from starvation, give relief from backbreaking jobs, enable individuals to further achieve their respec tive purposes. Improved tools have won time for more leisure, for increasing recreational, cultural, educational, and religious activities.

Individual Improvement Improvement of the well-being of individuals, rather than conservation, is the chief goal in the utilization of resources. Absolute conservation could lead to the ab surdity of not utilizing our resources at all, and thus conserving to no purpose-no freedom and no improve ment of our lives. J. S. Mill has expressed it thus: "The only unfailing and permanent source of improvement is liberty, since by it there are as many possible inde pendent centers of improvement as there are individ uals." The energy of the police force of a government agency must by its very nature be negative. Enterprisers are positive, constantly trying to solve specific problems. It is impossible to force the release of the creative en ergy of millions of individuals who, if free, are each highly motivated to release it in trying to improve their status. Thus, force only inhibits the real sources of im provement.

Because individuals have been free to find the best 384 RUTH SHALLCROSS MAYNARD use of land resources, the American farmer today feeds himself and at least 25 others. In our early history food production was the principal occupation, and in some countries today as high as 90 per cent of the population still spends long hours of backbreaking work farming for a bare subsistence. Who Is Responsible for Waste? The real waste in resources comes from government policies. It is seen especially in wartime, but more and more in peacetime programs. The government farm pro gram has encouraged waste of land, seeds, fertilizers, labor, and capital by subsidizing the production of sur pluses to be stored in bins that dot the countryside. The foreign aid program has wasted various resources, send ing them to countries where little if any use has been or could be made of them. Waste occurs in such projects as the TVA that floods permanently many fertile acres which formerly provided millions of dollars worth of food products and which the Army Engineers have esti mated would not be flooded by the natural forces of the Tennessee River in 500 years.

Rising taxes also promote waste. The corporate in come tax of 52 per cent of earnings, for example, en courages industrialists to engage in questionable and wasteful projects which appear justified only when pur chased with a 48-cent dollar. This is not in the interests of conservation. However, the errors individuals make and their waste WHO CONSERVES OUR RESOURCES? 385 of resources are small and inconsequential compared with those made by government agents in controlling a major supply of a scarce resource. Those in civil service positions are rarely dismissed or otherwise held account able for their errors. A private individual stands to lose personally if he wastes resources in his field of economic activity, and has a built-in motivation for attempting to correct his mistakes as soon as they are reflected in ris ing costs or decreasing demand. A government agent, however, risks no personal loss when he misuses re sources, he cannot recognize mistakes by rising costs when prices are fixed arbitrarily, nor is he motivated to correct his mistakes even when recognized.

Natural resources are best utilized and conserved where they meet specific economic requirements in the most efficient way as determined by competition in the free market. Government control of natural resources reduces the freedom of choice of producers in using these materials and this affects adversely the freedom of choice of consumers who buy the final products made from them. There is no effective method of determining the economic requirements of the people when the free market is not allowed to reflect them, nor can force solve the problem of conservation. It is a false panacea that is centuries old, advocated by those who desire power over others whom they neither trust nor respect. Conservation will take place in the best sense where in dividuals are allowed to seek solutions to their own per sonal problems as they arise. Necessity is the mother not only of invention but of conservation as well.