President Bush thinks the oil beneath the Arctic National Wildlife Refuge is more valuable to society than the untrammeled wilderness above it. Environmentalists, of course, think the opposite. Who's right? Who knows?
This dispute occurs in a vacuum because we lack price signals to guide our deliberations. Prices reflect how much society values a good or service. Without them, we can't know how much anything is worth or how best to allocate it among competing claimants. If it were otherwise, then the socialist economic collapse would never have occurred.
If we want the reserve's maximum benefits for the American people, we should let market agents, not politicians, decide how best to use the reserve. Economists tell us it doesn't matter how we privatize the reserve or to whom we initially give it to: So long as we put the reserve in the marketplace, its resources will sooner or later end up with those who value them most, and economic efficiency will be served.
How we go about privatizing the reserve, however, will determine who receives the largest windfalls from privatization. We could, for instance, simply auction it off to the highest bidders with the revenue being rebated to every American.
Or the government could issue an equal amount of special vouchers to every American, vouchers redeemable only at auction for the reserve's resources. Each of us could decide whether to buy, sell or donate those vouchers to others, allowing all potential claimants to start the auction on an equal footing.
We could even give reserve lock, stock and barrel to the environmental lobby. The Greens, of course, might decide to lock it away (demonstrating that the wilderness is indeed more valuable to them than the oil revenue), but industry claims that they only need access to a tiny part of the reserve, an area about the size of Dulles National Airport in a reserve the size of South Carolina. There's good reason why conservationists might take, say, $10 billion for that access. They could use that money to buy more land elsewhere and insist upon environmentally sensitive drilling and transportation practices. After all, when environmentalist organizations manage their own lands, they often allow industry access under the right terms and conditions. And if not, then fine; economic efficiency would be served either way.
Any of these privatization schemes would be better then leaving decisions about the Arctic National Wildlife Refuge to the political class. Better to let rival claimants work out their differences freely and privately through market bargaining than publicly through all-or-nothing political warfare where only the best-connected have a chance to win.