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Book Review:Eco-Nomics

Environmentalists stubbornly refuse to study the fundamentals of Economics. Almost all those who are posing to be lovers of Environment have one thing in common-They hate Capitalism. It is written all over their works. Murray Rothbard had pointed out that it is amusing that collectivists who have short term plans in the case of the economy plan in terms of generations in the case of the environment. It is a well known fact that the most Capitalistic countries have the best environment and cleanest air. Yet, environmentalists ignore these facts. They want a check on unbridled Capitalism. Richard Stroup’s “Eco-Nomics” flies in the face of such an attitude.

Stroup proves logically and objectively that the size of the Government should be reduced if we are to protect the environment. The book begins with an example of a forest fire caused as there was no judicial cutting of trees. Good intentions are not enough; if at all these law makers can have the excuse of having good intentions. Scarcity is a problem in even the richest countries, which only private property can weaken. Stroup brings our attention to the conflict in goals of people with even altruistic motives. Mother Teresa might be happy if more funds are diverted to treating sick patients when John Muir would be satisfied is these funds are devoted towards preserving wilderness. Even altruistic people have narrow focus on their goals and tend to overvalue their personal preferences.

Stroup stresses that a free market economy based on private property rights will provide incentives for everyone to preserve the environment. He blasts the myth that in a trade some people gain at the expense of others. Anyone with the slightest understanding of free market economics would agree that both people making a voluntary trade gains in the deal. Profits, he says, will divert the resources towards needs which the consumers value the most. Businessman can’t make profits without serving the consumers and cutting down costs. Collectivists usually claim that lack of information causes asymmetry in markets. Information, however, is costly and it is not in the self-interest of people to be fully informed of the deal he makes. It is also a widespread myth that advanced technology hampers the environment. The present day cars, for instance pollutes the environment less that the cars in the past, and even less than horses.

Stroup makes clear that private property rights will resolve most of the conflicts we face in the present. Moreover, it provides incentives to innovate and brings in accountability. He cites the example of Peru where the Government strangles private industry through a myriad of regulations. The case of collective farms in Russia is a classic case of the tragedy of commons he cites. Russia used to produce more food than they consumed. Millions of people died when the communists tried to force people into collective farms. They were not even able to feed themselves. They had to provide freedom to have private farms on 3% of the land. Not surprisingly, 27% of the food products came from this land. There is nothing new in this book for an adherent of the Austrian School of Economics. Nevertheless, reading it would cement ones understanding of Free Market Economics.

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