Tag Archives: Terry L. Anderson

Reviving the Austrian Tradition

reviving-austrian-school-of-economics
https://www.liechtenstein-academy.com/services/austrian-economics/

Everything you always wanted to know about the Austrian School of Economics

by Alvino-Mario Fantini

Speaking about Austrian Economics—or, rather, ‘the Austrian Tradition’—is often met with raised eyebrows.  It’s not just that the vast majority of people are unacquainted with this tradition. It’s more a consequence of having been purposefully ignored by the leading departments of economics around the world. Even Austrian universities fail to teach it anymore.

All that may be about to change. The Liechtenstein Academy, a non-profit educational institution set up last year, aims to provide students with a broad multi-disciplinary education in the basics elements of the Austrian School of Economics and, more generally, the Austrian Tradition.

The brain-child of HSH Prince Philipp of Liechtenstein, the Liechtenstein Academy will offer a program of eight ‘modules’, each focusing on a different aspect of this intellectual tradition. These modules will focus on economics, philosophy, law, politics, and sociology, all of which are essential to understand the Austrian Tradition.

“It is important for students to understand that the Austrian Tradition is not just about economics,” says Kurt R. Leube, a fellow at the Hoover Institution at Stanford University, during a recent interview. It is a whole “methodology of value”, he explains, which relies on input from across the humanities and social sciences.

Leube—who happens to have been Friedrich von Hayek’s last assistant—developed the innovative curriculum, in close consultation with other members of the faculty. He explains that participants will be encouraged to enroll in all eight modules—though they can just as easily enroll only in the ones that most interest them.  The number of participants per module will be capped at 25.

Participants who complete all eight modules will receive a Certificate accredited by the academic authorities of Liechtenstein. In addition, for those who are interested, there will be the option of receiving an academic degree for their work, through an arrangement with Unitelma Sapienza University in Rome.

Modules will begin with a Thursday evening dinner, followed by two days of intensive lectures, readings, and discussions, explains Hans Rudolf Maag, the Executive Director of the Academy. Participants will then have the option of leaving at their leisure Saturday evening or early Sunday morning. In addition, an online version of the program will be launched in the fall.

In addition to Leube, who will teach the introductory module on economics, other program faculty include Terry L. Anderson, senior fellow at the Hoover Institution and the former executive director of the Property and Environmental Research Center; Erich Weede, professor emeritus at the University of Bonn; Pedro Schwartz, professor of economics at Camilo José Cela University in Madrid and the current president of the Mont Pèlerin Society; Carlos Gebauer, a well-known German jurist, writer, polemicist, and television personality; Hardy Bouillon of the University of Trier and a guest professor at the Vienna University of Economics and Business; Michael Wohlgemuth, director of Open Europe Berlin; and HSH Prince Heinrich von und zu Liechtenstein, professor of financial management at IESE Business School in Barcelona.

The program will take place at Schloss Freudenfels, a beautiful 18th century structure overlooking Lake Constance in Switzerland. The venue – which was chosen because it offers the kind of environment in which students will be able to grapple with serious ideas rigorously, without distractions – offers state-of-the art facilities. Students will be provided with full board and accommodations.

Those wishing to enroll in the full program offering of eight modules can expect to pay CHF 9,500 ($9,400). Modules will be offered in German or English, depending on the instructor. There will be simultaneous interpretation in English.

The Liechtenstein Academy offered its first formal educational event last summer – a sort of ‘pilot’ seminar – on the theme of ‘Semantic Traps’, exploring the use and abuse of words and phrases to further collectivist and other politically left ideas.  The seminar was well-attended, with more than 40 participants of all ages from across Europe.

The Liechtenstein Academy will start with the first module in October.  More information about the program may be obtained at www.liechtenstein-academy.com/services/austrian-economics.

 

 

On Environmental Regulations, Private Property and Free Markets

by Terry L. Anderson
13th Gottfried-von-Haberler Conference in Vaduz, May 19, 2017

Modern environmentalism and neo-classical economics have more in common than is often thought, but the commonalities too often cloud how markets and the environment can be productively linked. The commonalities include a focus on equilibrium systems and on the inability of humans to integrate into those systems. Unfortunately, both are inconsistent with the reality of how natural systems and market systems work and how the two might be integrated. This essay provides a way of reconciling environmentalism and markets by building on the importance of property rights, markets, and prices—free market environmentalism—as an alternative to command-and-control environmental regulations.
Environmentalists and economists generally call for regulation of human action on the grounds that humans disrupt nature without being held accountable for their actions. In the vernacular of economics, externalities are pervasive. For example, human deforestation is a disruptive force to ecosystem stability while naturally caused forest fires are part of natural succession. Similarly, decaying vegetation is a natural part of the carbon cycle, but burning wood or coal is an unnatural cause of global warming. When the production of steel emits smoke into the air and the producer pays nothing for the use of air as a disposal dump, too much steel and too little clear air will be produced. In other words, humans are destroying the environment and governmental regulation is necessary to correct market failures.
My argument here is that the focus of ecology and economics on externalities misses the important connection between humans and nature, namely property rights and prices as a way of encouraging environmental stewardship. The alternative is known as free market environmentalism. It builds on teachings of Nobel laureates Friedrich Hayek and Ronald Coase

Read the full essay here ->
Anderson: Environmental Regulations,
Private Property, Free Markets (DOC, 66kb)

Beat Kappeler Dinner-Rede
Joachim Starbatty Über den Missbrauch der Geldpolitik
Johan Norberg Subsidies: When Free Comes at a High Cost
Carlos A. Gebauer Plurimae leges, summa iniuria
Terry L. Anderson On Environmental Regulations, Private Property and Free Markets
Erich Weede Wieviel Umverteilung verträgt die Demokratie
Karl-Peter Schwarz Lügenpresse?

Unlocking the Wealth of Indian Nations

By Terry L. Anderson*

Many Europeans still view Native Americans as the “noble savage” depicted in the paintings of Karl Bodmer. Traveling with the German explorer Prince Maximillan zu Wied-Neuwied from 1832 through 1834, Bodmer saw and painted American Indians with the dignity and cultural wealth they deserved. Unfortunately, that dignity and wealth have been stripped from most Native Americans by the federal government.

The dignity painted by Bodmer derived from the fact that Native Americans had well established institutions—property rights, limited government, and trade—that sustained indigenous economies. Before the arrival of Europeans, the more sedentary Indians of the East had well defined tribal and individual property rights to land, and invested in making land more productive. Pacific Northwest tribes invested in weirs to catch salmon on their upstream migration and sustainably harvested salmon to increase populations. Pueblo bands in the southwest developed sophisticated irrigation systems to cope with aridity. Even the more nomadic Plains Indians invested in “surrounds” into which buffalo were driven and in stone walls miles long to drive buffalo over cliffs. Thanks to the ingenuity of their members, many tribes were able to build up a surplus of goods—to, in other words, accumulate wealth—and trade with other tribes.

A story from the Lewis and Clark expedition shows the propensity of Native Americans to trade. While the Corps of Discovery, as the expedition was called, spent the first winter of 1803 in a Mandan village (now North Dakota), the blacksmith among them made trade axes and used them to barter with Indians for food, horses, and artifacts. Months later, when the expedition reached the Pacific Coast, they were surprised that one of the axes had beaten them there, having been traded between Indians many times across the plains and mountains. In the words of Adam Smith, Indians had the “propensity to truck, barter, and exchange.”

If Bodmer ventured into Indian Country today, however, he would be struck by the poverty and lack of economic development. Housing is typically substandard, businesses are small if they exist at all, and infrastructure is poor. In 2015, average household income on reservations was 68 percent below the U.S. average of $53,657; twenty percent of the households made less than $5,000 annually compared to 6 percent for the overall U.S. population; and 25 percent of the Indian population was below the poverty level compared to 15 percent for the nation as a whole. The suicide rate among Native American males aged 15 to 34 is 1.5 times than for the general population, the rate at which Native American females are raped is 2.5 times the national average, and the rate of child abuse on reservations is twice the national average.

In essence, Indian reservations are islands of poverty in a sea of wealth. Even though the Native American population of 2.9 million is roughly the population of Kansas, it is mainly ignored except by Washington bureaucrats. Bureaucracies, housed mostly in the Department of Interior, employed 9,000 people and spent approximately $2.9 billion in 2012. That amounts to one bureaucrat for every 322 Indians and $1,000 for every Indian.

The subjugation of Native Americans by the federal government began at the same time that Bodmer was traveling with Maximillan, when in 1832, Supreme Court Justice John Marshall concluded that the relationship between the federal government and Indians is that of “a ward to his guardian.” Since then through laws such as the Allotment Act (1877) and the Indian Reorganization Act (1934), Congress has locked Indian lands into perpetual trusteeship with the Department of Interior (DOI) as the trustee. As trustee, the DOI regulates land use, oversees leasing of Indian lands, collects revenue from Indian land leases, and distributes revenues back to the tribes and individual Indians. The resulting bureaucratic red tape makes development virtually impossible.

Consider what this means for the abundant energy resources in Indian Country. Reservations contain almost 30 percent of the coal reserves west of the Mississippi, 50 percent of potential uranium reserves, and 20 percent of known oil and gas reserves. The Council of Energy Resource Tribes recently estimated the total value of these resources at nearly $1.5 trillion.

Energy development on reservations could lead to jobs for people with the highest unemployment rates in the country, in some cases over 50 percent. For instance, on the Blackfeet reservation in Montana, drilling a single oil well resulted in 49 new jobs for the tribe, and each of its members received a $200 royalty payment in 2013. From its oil and gas reserves, the Blackfeet tribe has collected around $30 million in leases and bonus payments. Not surprisingly, Ron Crossguns, from the tribe’s oil and gas department, doesn’t think outsiders should tell the tribe how to manage its energy resources: “It’s our right. We say yes or no. I don’t think the outside world should come out here and dictate to us what we should do with our properties.”

The Bureau of Indian Affairs (BIA) is involved in nearly every aspect of energy development on Indians lands, including reviewing and approving pipeline agreements and rights-of-way approvals, and the process is notoriously inefficient. A 2015 Government Accountability Office (GAO) report observed that “the added complexity of the federal process stops many developers from pursuing Indian oil and gas resources for development” and that the process “can involve significantly more steps than the development of private or state resources, increase development costs, and add to the timeline for development.” The GAO report noted further that in 2014, the Southern Ute tribe reported that the BIA’s review of several of its pipeline rights-of-way agreements took as long as eight years. A simple review of a wind-energy lease on the Rosebud Sioux Reservation in South Dakota took a year and a half for the BIA to review. According to the developer, the delay made the project lose its agreement with the local utility, resulting in a loss of revenue for the company and the tribe.

Beyond energy resources, tribes also have water, timber, fisheries, grazing lands, and recreational amenities that could help pull them out of poverty. And, of course, for some tribes, especially those in more urban areas, gaming has brought jobs and income.

The enormous resource potential on reservations begs the question: Why can’t tribes unlock their wealth potential? Is it because their culture is inimical to economic growth? Is it that their members lack entrepreneurial and technical skills?

As described above, the historical record suggests that these are not the reasons for poverty in Indian Country. As tribe member and law professor Robert Miller notes, “Contrary to what most Americans believe, individual and family entrepreneurship is not a new concept to Indian cultures.”

If culture and entrepreneurship are not the impediments, what is the key to reservation growth? The key to Unlocking the Wealth of Indian Nations (Lexington Press, 2016),, is for Indian Nations to establish clear and stable property rights to their land, to create a rule of law that will attract the capital investment necessary to stimulate reservation economies, and to create fiscally responsible tribal governments that can provide the local infrastructure to support investment.

The lack of a rule of law on reservations thwarts capital investment in Indian Nations. Because tribes are considered sovereign nations, many have their own judicial systems separate and apart from the states in which they reside. Because tribal courts often do not follow jurisprudential rules taken for granted outside reservations, they discourage capital investment and credit markets on reservations. Writing for Forbes, Joseph Koppisch quoted an officer of a local lending institution near the Crow Reservation in Montana: “We take on such a huge extra risk with someone from the reservation. If I knew contracts would be enforced, then I could do a lot more business there.” As a result, when reservations with independent courts are compared to those whose civil disputes are adjudicated in state courts, per capita income for Indians on the latter reservations was 35 percentage points higher than the former. Hence, a stronger rule of law on reservations could contribute significantly to helping Indian Nations rise out of poverty.

The Trump administration may change much of this status quo. Trump has formed the Native American Affairs Coalition to free Indians from “a suffocating federal bureaucracy.” As Markwayne Mullin, a U.S. representative from Oklahoma and a Cherokee tribe member who is co-chairing Trump’s coalition, put it: “It is time to end the overreaching paternalism that has held American Indians back from being the drivers of their own destiny.”

If Native Americans are to determine their own destiny, rise out of poverty, and unlock their wealth trapped by trusteeship, they must achieve what the great Nez Perce Chief Joseph sought in 1879: “Let me be a free man, free to travel, free to stop, free to work, free to trade where I choose, free to follow the religion of my fathers, free to talk, think and act for myself.” It is past time to give Native American the freedom they deserve to make their own decisions about the future of their culture and economies.


* Terry L. Anderson is a fellow with the Lichtenstein Academy, PERC (Bozeman, MT), and the Hoover Institution, Stanford University. This essay is based on research published in Unlocking the Wealth of Indian Nations (Lexington Books) edited by Dr. Anderson.

Environmental Markets: A Property Rights Approach

Environmental Markets: A Property Rights ApproachIn a new book “Environmental Markets”  Terry L. Anderson and Gary D. Libecap explain the prospects of using markets to improve environmental quality and resource conservation. No other book focuses on a property rights approach using environmental markets to solve environmental problems. Anderson and Libecap apply this approach to land, water, wildlife, fisheries, and air. The book has been published in May 2014. It concludes by discussing tougher environmental problems such as ocean fisheries and the global atmosphere. The authors compare a market-based property rights approach with standard approaches to these problems using governmental management, regulation, taxation, and subsidization, emphasizing that neither governmental nor market solutions are a panacea. Environmental Markets is the inaugural book in Cambridge Studies in Economics, Choice, and Society, a new interdisciplinary series of theoretical and empirical research focusing on individual choice, institutions, and social outcomes, edited by Peter J. Boettke and Timur Kuran.

     If you are interested in receiving examination copies, please contact Ellena Moriarty at emoriarty@cambridge.org. The book is also available for purchase at Amazon.com

     Praise for “Environmental Markets”:

     “Two of the world’s leading scholars on property rights and the environment … offer a rich review of the myriad creative ways in which market forces can be harnessed to improve environmental quality. The book’s fresh perspective on the question of how best to solve problems ranging from climate change to overfishing reminds economists and their students to look before they leap, with regulation as a solution.”

Sheila M. Olmstead, The University of Texas at Austin

     “The world is bedevilled by problems caused by lack of private property rights. Terry Anderson and Gary Libecap document just how many environmental problems could be solved by granting stronger property rights to tackle ‘tragedies of the commons,’ in which open access results in a destructive free-for-all.”

Matt Ridley, author of The Rational Optimist


TERRY L. ANDERSON
is the president of the Property and Environment Research Center (PERC) and Senior Fellow at the Hoover Institution, Stanford University. Anderson is the author or editor of thirty-seven books including, most recently, Tapping Water Markets with Brandon Scarborough and Lawrence R. Watson. He has been published widely in both professional journals and the popular press and has received many awards for his research and teaching.
GARY D. LIBECAP is Professor of Corporate Environmental Management in the Donald Bren School of Environmental Science & Management and Professor of Economics at the University of California, Santa Barbara. He is also a Research Associate at the National Bureau of Economic Research in Cambridge, MA, a Research Fellow at the Hoover Institution, Stanford University, and a Senior Fellow at PERC, Bozeman, Montana. ABOUT PERC—Founded more than 30 years ago, PERC—the Property and Environment Research Center—is the nation’s oldest and largest research center dedicated to improving environmental quality through property rights and markets. Learn more at PERC.org.