A student currently enrolled in an Institute for Humane Studies seminar writes me to ask about a libertarian argument I’ve heard before: that “privately owned lands will be better cared for since their owners have incentives to do so; public servants have no incentive to do so since their salary is independent of their success at preserving these lands.”
This has always struck me as a complete non sequitur. The conclusion seems to rely on an incentives argument but is stated with much greater confidence than the argument seems to justify.Â If I own a forest and clear-cut it for the lumber, I can make millions.* Â On the other hand,Â a forest service employee who lets the land be clear-cut will clearly be out of a job, will never get another one in the government, and will probably go to jail.Â Why are public sector workers whose job depends on protecting the environment supposed to be so lousy at protecting their interests while private entrepreneurs are perfect at protecting theirs?Â In other contexts, i.e. those in which public employees’ determination to protect their turf,Â budgets, and employee pensions are at issue, libertarians typically assume the contrary: public-sector employees will do anything to keep their jobs and to increase, not decrease, their power to regulate.
All this isn’t even to mention externalities: cutting down a tree causes costs to others that a forest owner doesn’t personally bear. Including externalities would make the libertarian argument even weaker.Â But I’m saying that even without them, the argument fails on its own terms.
Obviously, I’ve cited an extreme case. Most kinds of malfeasance would be harder to catch than allowing a treyf clear-cut. But the larger point is that incentive arguments can cut both ways.Â The public sector can provide adequate incentives for doing one’s job well. (It had better be able to, or else cops are no better than organized criminals.) And the private sector can contain incentives for doing extreme things that in a world of perfect information and infinite liquidity wouldn’t happen.
I’m sure that commenters will say that I’m taking libertarian dogma too seriously by even considering the question.Â But I’d like to prove that assumption wrong if I can.Â I’ve only heard the “private stewardship is best” argument in a very crude form. Is there a more sophisticated form that makes it less laughable than it seems?
*True, I might make more over time by husbanding the resource, but what if I’m hard up and need the cash nowâ€”or want the capital to start a business that makes more profit than growing trees?Â The answer might be that in that case I could sell it to someone who would in turn have an interest in husbanding it. But buyers aren’t always available when I need them and might be suspicious of my desire to sell within a week.