re: farsightedness of capitalist farmers

Topics: Resources
11 Oct 1993

From: ervan

My summary of the debate so far:
H: It would be better in the long run if farmers let their croplands flood.
They don't do it because they (and capitalism) are too short sighted.
E: Nonsense. Capitalists are just as worried about future profits as
current profits.
H: But they are losing topsoil to erosion which is not sustainable and
therefore, by example, they are not interested in the long run.
E: Simply false (references previously provided).
H: Okay, so they are using pesticides which have external costs.
E: True but irrelevant. It shows only that pollution is a problem,
not that farmers are shortsigted about preserving their land.
(details follow).
H: Individuals are far sighted but not about their own property for
which there may be a conflict of interest.
While some top soil will remain, the amount in existance will
shrink to an inefficiently small amount (just enough for the
Market forces just don't work in some cases, and community action
is called for.

Summary of new response:

If anyone is farsighted enough to see the value, capitalism
provides a mechanism for them to extract it. If no one sees the
future value, we are screwed, regardless. Socialsim prevents
people from finding the possible value.

If people are making profit with soil, it's efficient and they will
want to keep on doing so. Profits from feeding the poor are no less
preferred than profits from feeding the rich.

Real value accrues to individuals. Society per se is not something
that can receive value. If the net value of a transaction is
positive, the beneficiaries will induce the transaction on the free
market in their own interest. Community action can never be anything
but tyranny of the majority.


> [ Farmers will use monoculture until the soil is depleted
> then abandon it. ]

No. In this scenario they would not be able to sell it, at least
not for very much. When it comes time to sell their land for
retirement (or inheritance) it would be worthless and they would
lose their primary assett because of years of capital consumption.
Farmers understand this perfectly well. Do people fail to fix their
cars on the theory they can sell them just before they stop working
completely for the same amount as if they were in good shape? No.

> [ Individuals only have short range vision. ]
> [ Individuals are as far-sighted as the community ]

This seems like a contradiction to me. Do people think long
term or not? Let me rephrase that: are people individually
less concerned about the future than they are collectively?

It may be that society is not sufficiently concerned about the
future by your standards. But this is not relevant. If people
don't care, letting them decide collectively won't change anything.
Socialism is not some magic balm for the perceived ills of
capitalism. It merely let's people with no immediate interest or
knowledge (i.e. the voters) decide how to best use someone else's

> [ your argument that sometimes depletion is economically
> rational is wrong because there will not be enough land
> left to feed the popluation. ]

Nonsense. Farmers are making a profit feeding the poor as well as
the rich. They have no intention of losing their market by
depleting all of their capital (in this case land).

You have reality backwards. In a truly democratic state, the rich
and the middle class (sufficient to form a majority of voters) would
vote to turn all of that 'excess' land into paved parks for their
summer vacations or 'nature' trails for their kids to ride dirt
(motor) bikes on, starving poor be damned. Fortunately, capitalist
farmers realize their is more profit in feeding the poor than
providing dirt bike trails and they respond appropriately.

> [ Depleting a resource may cause political problems because
> other users of a communal resource will be mad. ]

Yes! This is exactly why communal property is a bad idea.
Prviate ownership avoids this problem. The probelm is
technically known as "tragedy of the commons". It affects
most government programs.

> [ German zoning keeps 80M people in a small country from
> being a "horror" ]

4 Million people live in Houston without zoning. That's even more
crowded. Is it a "horror"?

Returning to the substantial theoretical problem here:
> [ I think people ought to "cooperate" to preserve soil and you
> think capitalism will do it. I think capitalism will be too late. ]

As for soil erosion in particular, I have already given you the
references that show capitalism does preserve soil. Meanwhile
government lands are overgrazed (the government does not have any
significant amount of crop land). Until you can cast doubt on those
references or the latter datum, I think this particular issue is

For the wider issue, I think are you making two mistakes, either
of which alone are fatal to your argument:
1) The government will, if given the power, do the right thing.
2) There exists benefit to society that does not accrue to
any individual.

(1) can be more quickly disposed of. You already pointed out in a
previous post what a terrible job the government was doing by paying
people not to grow crops. Even if capitalist farmers were not
preserving the soil in an efficient way, why would you trust the
government to do so? It has clearly proven itself incompetent.

The mechanisms involved make this the only outcome. The government
is not a group of perfectly altruistic intellectuals sitting around
trying to do their best for society, but a group of slick Willies
who know nothing about farming trying to buy votes by redistributing
other people's money. They can buy farmer's votes by giving them a
handout. That is their motivation. The future value of the soil
is irrelevant to the politician trying to win the next election.
With a system like that why should we ever expect them to do the
'right thing'? I don't.

(2) is the deeper problem. You tell me there is some value that
only society can realize collectively. What is that value? Nowhere
have you pointed to something and said 'here is value that is
preserved collectively but not individually'. What I have heard is
that if put to a vote you might get your way in certain matters
versus the interest of the owner. Tyranny of the majority
demonstrates nothing about value. If 60% of the people can extract
$100 of benefit each by voting to take $200 of cost from each of the
remaining 40%, they will do so. That is neither just nor efficient.
Unfortunately, it is democracy.

Other than tryanny of the majority, the price system already
encompasses all value, both personal and societal. The reason is
that 'society benefits' is a nonsensical idea. Society is not an
organism, it is individuals. To say society benefits, can only mean
that certain individuals benefit. If some transaction is in the
interest of 'society', the extent to which it is valuable is exactly
the extent to which the beneficiaries are willing to pay the cost.
So, I completely deny you assertion that:

> [ sometimes the community must decide against the individual
> for the greater good. ]

Let me take a specific example to make the point more clearly.
Let's say I have 40 acres of crop land that I could use as a rock
quarry. As farm land, it's worth $100K based on expected profits.
As a rock quarry, it's worth $200K. So, it's worth $200K to me.
It's also worth $200K to society because that's what society is
willing to pay me for the value I generate from the rock. So, let's
say that some do-gooder socialists decide that my destruction of 40
acres of topsoil shows poor concern for the future. They could
confiscate the land and return it to farming. But, society just
lost $100K of value. It lost the rock it needed to build those
government edifices ;-) I would be screwed, but that doesn't
matter, after all, it's 'society' we are worried about.

Instead, maybe the value of the land really is higher than $100K for
use a farm land. Maybe it's worth $250K. Well, why is it worth
this? Because society wants that extra amount of food enough that
it is willing to pay an amount sufficient to justify spending the
$250K to buy the land. Or, maybe, it will be worth that in the
future (discounted to net present value) because my neighbors are
depleting their topsoil. So, some clever entrepeneur will come and
offer me $250K. I'll sell. After all, I'm a greedy capitalist and
I can make more money selling than mining rock. Society then gets
the extra food that it wanted.

The deeper issue, and I know I won't convince you of this, is that
it's not a simply a moral matter of avoiding theft via confiscation
but it is a matter of being efficient. My profit exactly mirrors
the value that society finds in my labor. The best thing I can do
for society is to seek maximum profit because then I am producing
the largest quantity of goods.

The point is that when the government confiscates land (or marginally
confiscates it by controlling its use) it must of necessity be
operating in an inefficient manner. If the conversion were
efficient the market would have already performed it in the search
for profits.

> better communal management [ than private profit interest ]


Maybe the problem is "better communal management". You are reaching
into some hypothetical universe that does not exist. If the
knowledge of that better management existed, someone could use it to
buy now, save the land, and sell the food in the future making
higher profits. That this does not happen (as you seem to think)
indicates this knowledge just does not exist anywhere. Leaving it
up to the coummunity will not conjure it into existance.

You said:
> [ individuals are as far-sighted as the community but their
> self interest will keep them from considering certain long-term
> effects. ]

The future's market does a good job of separating the two issues.
The speculators have no interest but the future. But, the point of
my challenge is that you personally can play the future's market. If
you are sure that topsoil is being utilized in a way that is
contrary to future interest, you can profit. If you don't do this
then why do you think you are right about the future value? That's
the beauty of capitalism, if the majority is wrong *you* can do
something about it. If instead, I have a farm that I want to save
for the future and majority vote to use it up now, I'm screwed.

> [ Pollution laws are an example of the community doing
> better than the individual. ]

This is a good objection, though not sufficient. Pollution is theft
of the value of a property by imposing losses on it. I don't
propose to legalize theft. Now, the question is how do we catch and
prosecute thieves?

As I have tried to explain in several different ways, there are some
limited number of goods that have non-excludable positive
externalities. For some subset of those goods the government can
act efficiently enough that there is positive benefit. Convince me
that land use is non-excludable and you'll be getting somewhere.
You cannot though, land use it totally excludable. If the Air Force
targets Moscow with a nuke and that deters them from striking, I
derive the benefit of that, regardless. Furthermore, the downside
of not doing so is so huge that the inefficiences of the government
run military become tolerable. Individuals have an inherent
interest in lying about the benefit they receive because they
receive the benefit whether or not they pay for it, thus coercive
taxation becomes necessary. Preventing theft in the form of
pollution *might* be like defense in this regard. Natural resource
usage is not in any way like this.


On another moral matter, you chastised me Thursday night for calling
welfare taxation theft. Let's ask it this way: Is it moral for you
to steal my TV? No. Is it therefore any less immoral for you to
pay someone to be your agent and steal my TV? I can't see how. Is
it moral for a homeless person to hold me at gunpoint and demand $20
for supper? If not, then why is it moral for the government to do
so as their agent?