FREC 424--Resource Economics

Course Wrap-Up

Resource scarcity generates public concern. Some of this concern reflects public ignorance about how competitive markets allocate resources efficiently through time. Increasing resource scarcity is reflected in rising prices, and motivates appropriate market responses. But public skepticism about market efficiency is high. Public fears about resource scarcity can motivate market-distorting policies which will actually make us worse off.

We have analyzed some well-identified cases of market failure: inadequately-defined property rights, externalities, public goods, open-access common-property resources. Public policies to correct these market failures are clearly justified, and we have discussed various economic solutions: corrective taxes, privatization, transferable emissions permits. In many cases, however, economically ignorant policy-makers have opted for inefficient command-and-control policies rather than incentive-based economic solutions. Irrational social guilt about resource depletion and environmental problems makes our society tolerate unnecessary limitations on property rights and individual freedoms.

These problems require hard-headed economic solutions, and your calling as an economist is to push for such solutions. Here are some principles to live by:

Don't just swallow the simplistic media slant on resource and environmental issues; get the whole story.

Cultivate your own "numeracy." Pay attention to the numbers.

Don't join in the hunt for villains or scape-goats; there usually aren't any. Polluters see themselves as job-creators and community-builders, not as criminals. Name-calling usually precludes effective negotiation.

Don't buy into "enviro-guilt" trips. Stay optimistic.

Get politically active. Most politicians are honest, concerned people who really appreciate straight input from informed, mainstream voters (like you) rather than self-serving propaganda from the noisy special interest groups which polarize our political process.

Be a leader. Work to educate other voters. Fearful people may be openly hostile to your ideas; be patient with them.

Analyze the economic incentives underlying social problems; look for ways to correct those incentives rather than distort them further.