Posts tagged with: UN

Blog author: lglinzak
posted by on Tuesday, April 12, 2011

It sounds draconian and contrary to the beliefs of many humanitarian organizations, including the United Nations which declared water as a basic human right in 2010. However, if we expect to take the correct steps forward to solve the global water crisis, then water must be treated as a commodity not a basic human right.

In his book, The Mystery of Capital, and also in an essay published in the International Monetary Fund, Hernando de Soto explains why capitalism has failed in many third world and developing countries and continues to succeed in many Western countries.

According to De Soto, by assigning property rights, people are held accountable when any sort of damage of property is committed. Such accountability is accomplished through the legal system:

The integration of all property systems under one formal property law shifted the legitimacy of the rights of owners from the political context of local communities to the impersonal context of law. Releasing owners from restrictive local arrangements and bringing them into a more integrated legal system facilitated their accountability.

By transforming people with real property interests into accountable individuals, formal property created individuals from masses. People no longer needed to rely on neighborhood relationships or make local arrangements to protect their rights to assets. They were thus freed to explore how to generate surplus value from their own assets. But there was a price to pay: once inside a formal property system, owners lost their anonymity while their individual accountability was reinforced. People who do not pay for goods or services they have consumed can be identified, charged interest penalties, fined, and embargoed, and can have their credit ratings downgraded. Authorities are able to learn about legal infractions and dishonored contracts; they can suspend services, place liens against property, and withdraw some or all of the privileges of legal property.

While De Soto’s arguments look at property mostly as land and buildings, his principles can also be applied to water. Treating water as a commodity and granting it property rights will reduce pollution and help create more sanitary sources of water. Once water becomes a commodity, the legal system will have the justification to prosecute any industry or individual that damages the water supply because it will be destruction to property. When water is a human right, and nobody owns the rights to the water, then there is nobody to prosecute because everybody owns the water and can freely do with it as he or she pleases.

Many are familiar with the economics behind the tragedy of the commons. Just as the commons were over-used, water will be depleted if we continue down the path of treating water as a basic human right.

People will over-use water until they are faced with an enormous crisis. The UN’s call for making water a basic human right does not provide any deterrent from over-use, but instead gives people the entitlement to use as much water as they desire. By charging people for the amount of water they use, people will be more conscious of their use of water and take measures to not waste it. There is no incentive to provide free water, and without assigning property rights to it, as De Soto’s argument articulates, there is no way to legally prosecute anyone or any industry that damages or pollutes water.

Samuel Gregg also articulates the problems that come from central planning and communal ownership:

Why then do people tend to favor private over communal ownership? One reason is that they are aware, as Aristotle and Aquinas witnessed long ago, that when things are owned in common, the responsibility and accountability for their use disappears, precisely because few are willing to assume responsibility for things that they do not own. Our everyday experience reminds us of the tragedy of the commons. The early advocates of socialism were well aware of these objections. Their response was to hold that all that was needed was a change of mind and heart on the part of people as well as profound structural change: a change that would not only produce a new system of ownership, but also a “new man” — the socialist man much trumpeted by the former Soviet Union.

Furthermore, in his essay, Our Stewardship Mandate, Rev. Robert Sirico explains how integrating the market supports stewardship:

Long experience has shown that the state is a bad steward. One reason this is so is because of what has been termed the “Tragedy of the Commons.” Simply put, if everyone owns something, no one person has any incentive to protect or take care of it. This has been graphically demonstrated by the appalling reports of environmental disaster in the former communist countries. Furthermore, the state has many incentives to be a poor steward. For example, the federal government owns a great deal of forestland. These forests are supervised by the U.S. Forest service, the mission of which is to cut down trees. Because it is federally funded, the Forest Service has no market incentives to keep its enterprises cost-efficient. As a result, the forest service is logging old-growth forests with a return of pennies on the dollar. Had these forests been supervised by a private company, they would never had been touched.

Likewise, experience has shown that the market is a better steward of the environment than the state. Not only does it allow for private ownership and offer better incentives, but it allows for the expression of minority opinions in regard to land and resource use. Take, for example, the Hawk Mountain Sanctuary in eastern Pennsylvania. Located along the Appalachian migration route, it provided an ideal location for hunters to shoot thousands of hawks. Conservationist Rosalie Edge decided that those birds ought to be protected, a minority opinion at the time. In 1934 she purchased the property and prevented the hunting of the birds. It is now considered one of the best bird-watching locations in the world. Had Ms. Edge lived in a regime where property was owned by the state, she would have to convince a majority of the lawmakers, bureaucrats, and competing special-interest groups that Hawk Mountain should be a preserve, so daunting a task it is unlikely it would have happened. As it was, she only had to purchase the land.

The same principles Rev. Sirico articulates in his essay can also be applied to support stewardship in the global water crisis.


Gas prices are not the only thing on the rise. As of yesterday, corn is at its highest level in three years at $7.60 a bushel and prices are not predicated to go down anytime soon. The United States government anticipates a shortage despite farmers’ intent to plant 5 percent more acreage of corn this year, a shortage is still predicted.

Reuters also indicates that rising corn prices will continue:

U.S. corn prices will keep rising to new highs over the coming months, a new Reuters poll has found, as demand from ranchers and ethanol makers proves better able to withstand record costs than many thought.

The forecasts will compound inflation concerns as higher feed costs filter through to beef and chicken prices. Analysts also warned that anything less than perfect growing weather for the spring crop could push prices even higher as traders fear tight conditions will extend well into next year.

As the article later states, the chances of having a perfect growing season with no weather related problems are very slim.

Reuters also asserts that food prices rose by 14 percent over the past three months which can be attributed to the rising use of ethanol and the ranchers demand for feed for livestock: “The rally has sharpened the focus on two imponderables: the price point at which livestock ranchers or ethanol makers will begin to cut back use, relieving demand pressures; so far, traders say there’s little evidence of this happening yet.”

Perhaps the United States should learn from China’s mistake. An article in the New York Times describes how the biofuel sector does affect the food supply and price, and how China’s ethanol use resulted in higher food prices:

It can be tricky predicting how new demand from the biofuel sector will affect the supply and price of food. Sometimes, as with corn or cassava, direct competition between purchasers drives up the prices of biofuel ingredients. In other instances, shortages and price inflation occur because farmers who formerly grew crops like vegetables for consumption plant different crops that can be used for fuel.

China learned this the hard way nearly a decade ago when it set out to make bioethanol from corn, only to discover that the plan caused alarming shortages and a rise in food prices. In 2007 the government banned the use of grains to make biofuel.

However, the article later explains that China is now using cassava, instead of corn. China may have not entirely learned their lesson as cassava is still a food crop used predominately in Africa and also in China during food shortages.

The article by the New York Times adequately closes with a quote from Olivier Dubois, a bioenergy expert at the UN’s Food and Agriculture Organization that gets at the root of the food and fuel argument: “We have to move away from the thinking that producing an energy crop doesn’t compete with food,” he said. “It almost inevitably does.”

Previous blog posts on ethanol, rising food prices, and the moral issues of the two can be found here, here, here, and here.

In his new encyclical, Caritas in Veritate, Pope Benedict XVI calls for an international political authority, “so that the concept of the family of nations can acquire real teeth.” He tasks it with issues like human rights, ensuring access to necessities including food and water, and managing the global economy. What might an effective international governing body look like?

The Nobel laureate economist Friedrich Hayek asked the same question in 1944 in his book, The Road to Serfdom. Seeing his beloved Europe torn apart by war and gross economic inequalities, Hayek wrote, “we cannot hope for order or lasting peace after this war if states, large or small, regain unfettered sovereignty in the economic sphere.” He was referencing World War II, but it sounds like the Pope feels the same way about hoping for order and prosperity after this recession.

Neither Hayek nor the Pope have utopian visions of the world. The Pope reaffirmed the value of subsidiarity many times in Caritas in Veritate. Subsidiarity is the principle that decisions should be left to the smallest competent authority. In questions of politics and economics, this is often a local authority; it is rarely an international organization. Hayek said the same thing when he noted that “the problems raised by a conscious direction of economic affairs on a national scale inevitably assume even greater dimensions when the same is attempted internationally.”

These constraints make international governance difficult, and they all but rule out any effort by a world body to coordinate economic activity. Real problems still remain with a nationally-divided world, though. Hayek said that “it is neither necessary nor desirable that national boundaries sharp differences in standards of living,” and the Pope refers to the “scandal of glaring inequalities” in Caritas in Veritate. What, then, is to be done?

First, it is necessary to ask what stands in the way of people having their rights respected and their needs met. All too often, it is the state. The Pope criticizes much government-to-government foreign aid on the grounds that corruption and bad economic policy need to be fixed before money will do any lasting good. He also calls for Western countries to end the subsidies to agriculture that block farmers in poor countries from having fair access to global markets. When it comes to accessing investment, food, and water, poor governance has done much to hold back the world’s most impoverished people.

As an Austrian who witnessed the rise of Nazism, fascism, and communism in Europe, Hayek shared a similar critique of the unwillingness of many governments to give their people the freedom they need to flourish. His experiences impacted his vision of the international order, and Hayek ultimately proposed that “there must be a power which can restrain the different nations from action harmful to their neighbors, a set of rules which defines what a state may do, and an authority capable of enforcing these rules… it must, above all, be able to say ‘No’ to all sorts of restrictive measures.”

Perhaps Pope Benedict XVI could draw inspiration from this perspective. In order to promote general equity and a search for the common human good among nations, an international authority with the ability to check irrational and cruel decisions made by governments may be the best way to proceed. An international body with the ability to veto rights abuses, tariffs, excessive inflation, corporate welfare policies, agricultural subsidies, and other harmful laws might be the best way to encourage the solidarity of the “family of nations.” It would let markets tap into the ability of every person to create wealth and meet their own needs through the dignity of their own work. By promoting openness and checking destructive policies without trying to take on the job of managing everything in the world, such an authority could also meet the Pope’s requirement that global political authority be organized in “a subsidiary and stratified way.”

The United Nations may or may not be the best organization to carry forward this vision, and it is possible that some other body might be the future of internal governance “with teeth.” Between Hayek, the Pope, and everyone looking for the best way to heed the challenges of Caritas in Veritate, hopefully a productive framework for governing globalization so that it works for the benefit of everyone can emerge.