Learning to Trust Capitalism 3.0

31Oct06

I’ve finished reading a couple of chapters of Peter Barnes‘ new book Capitalism 3.0. Specifically, I’ve read his proposal for managing natural commons through public trusts which operate independently of the government. On first encounter, I like the idea a lot.

First, I have been in favor of imposing carbon taxes since I first understood what a carbon tax is. Barnes’ trust system is an elegant way of accomplishing this move towards a comprehensive fee system and away from direct regulation of pollution-control technologies. Unlike government, the trust simply has no power to tell anyone what sort of equipment they can install and use in their business. The trust, as property manager, can only charge them for what they release into the atmosphere. Voilà, we have a pollution fee system, with all of the advantages of flexibility, efficiency, and effectiveness that pollution fees have over direct regulation.

Secondly, I think Barnes is right that trusts, as an institution, are more likely to actually protect natural commons than governments for whom the commons are just one more piece of the churning mix of democratic politics. Trusts were developed, from the start, as a way of protecting and managing some resource or asset for long-term benefits. Our society has plenty of experience with how trusts are set up and managed, and has provided tools for beneficiaries to keep trusts on track. You can sue a trust that starts to squander the capital of the trust; you can’t sue the Federal government when it suddenly decides to gut the Clean Air Act.

Third, if an Atmosphere Trust is given the mandate to protect and improve the purity of the atmosphere, then we have a standard that is objective, measurable and unalterable by the trust directors or by politicians. That makes oversight of the trust by the public (the beneficiaries) relatively easy. It reminds me of the Rhine River cleanup project in Germany; they set a clear goal of cleaning the river up to the point where the native fish populations could thrive. Once the project had a goal as clear as that, everyone could measure how well they doing or not doing.

I am particularly intrigued by the idea of natural resource trusts actually generating income for the beneficiaries. In Barnes’ system, we would all be the beneficiaries of, for example, the Atmosphere Trust, and would receive payments from the sale of pollution permits to industry. This is a very concrete instantiation of the idea that we all own the sky, and very different than what I have previously had. As Barnes describes, it has the potential for creating some income for the poor on the basis of their part ownership of the common resources of the planet, rather than as charity. It is an interesting idea, and Barnes derives it from the actual, working example of the Alaskan Native Fund, which he describes in the text. If nothing else, it has the benefit of touching that awkward seam in conservative economics where it is vital that the poor be made to work for every dime they get, and yet it is also vital that trust-fund beneficiaries receive every dollar that they never lifted a finger to earn. We can use one bad idea to help overturn another.

This book has opened up my thinking, and that’s always a good thing. I need to buy it from Amazon now. If I just keep printing chapters from the downloadable pdf then I’ll end up using a bunch of my printer paper and toner and yet still owe Mr. Barnes a check for $15. That would be inefficient.

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