In Calling on Government, the Pope Underestimates Power of the Market

Pope Francis’ new encyclical, Laudato Si, advocates a new “ecological spirituality.” Yet this challenging call is diminished by the document’s tendency to devolve into leftish policy positions. The encyclical underestimates the power of market forces to promote environmental ends.

There are serious environmental problems but Laudato Si presumes rather than proves crisis is the norm. Moreover, nothing in Scripture or nature tells us how much to spend to clean up the air.

Drawing environmental lines requires balancing such interests as ecology, liberty, and prosperity. One cannot merely assume that the correct outcome in every case is more of the first.

Indeed, the Pontiff’s own goals conflict. He speaks movingly of the dignity of work and its importance for the poor. But the more expensive and extensive the government controls, the fewer and less remunerative the jobs.

Perhaps most disappointing is how the Pope seemingly views capitalism, and especially property rights, as enemies of a better, cleaner world. Yet most environmental problems reflect the absence of markets and property rights, the “externalities,” in economist-speak, which impact others.

The best solution is to either create or mimic markets and property rights. For instance, public control rarely ends well.

Garrett Hardin famously wrote about the “tragedy of the commons,” in which land open to everyone typically is misused by everyone. Federal range and forest land is badly managed, not because government officials are malign, but because the incentives they face are perverse.

In contrast, a private owner bears both costs and benefits, and suffers when he misuses a resource. The owner may make a mistake, but his power to do harm is sharply limited.

Pollution taxes and tradeable permits attempt to apply market forces to the great common areas, such as air and water. Yet Laudato Si launches a perplexing attack on the use of emission credits to limit pollution. Properly designed they create an incentive for those who can control emissions at the least cost to control them the most.

Although the Pope acknowledges “that honest debate must be encouraged among experts, while respecting divergent views,” Laudato Si ignores the most sophisticated critiques of climate alarmists. For instance, many critics dispute the likelihood of catastrophic change and the best means to deal with the likely impact of any temperature increases.

For years models failed to match climatic behavior. Peer-reviewed research increasingly suggests that warming will be modest. Moreover, any prediction today as to conditions decades in the future is a wild guess.

These argue in favor of addressing specific problems rather than imposing arbitrary, draconian, and costly cuts in energy consumption. Economic analysis confirms that adaptation can achieve similar environmental ends at less expense.

Laudato Si criticizes wasteful, unnecessary consumption and worries about “the depletion of natural resources.” The Pope rightly asks, how should we use the resources entrusted to us by God?

However, the encyclical offers no evidence for its sharp attack on consumption in developed countries, which of course produce more than they use. In fact, unowned or underpriced resources are vulnerable to abuse in any society.

Where markets operate, resource depletion is largely a myth because prices signal consumers and producers to adapt. There now is more recoverable oil than ever.

Markets typically are better than governments in protecting “future generations.” An individual landowner who misuses his property loses its value. The typical political time horizon is until the next election.

As I point out for the Acton Institute: “Economic progress eases the impact of environmental problems on the poor. It also provides resources to enhance the environment, efficiencies to produce more using less, and technologies to better preserve ecological values.”

Of course, markets are not perfect or enough. Perhaps the encyclical’s most important message is that “the emptier a person’s heart is, the more he or she needs things to buy, own and consume.” That is something no government program can fill.