Fracking good question

I’d really appreciate a Libertarian view of fracking in the Karoo, and related issues.
Do private sector companies have any real concern for the environment, and do they act accordingly?
Do we need a regulatory framework to protect the environment?
If it were allowed to, would Shell go ahead and frack, largely regardless of the consequences?
Who should own the resources that lie under the ground – the people who own the ground, or some other group, or agency?
Who should own water in South Africa?
Colin Bower.

, , , ,

  1. #1 by Trevor Watkins on March 27, 2011 - 11:43 am

    On Mon, Mar 14, 2011 at 5:42 PM, Stephen van Jaarsveldt wrote (and Colin Bower replied in bold):
    In my view, the answer to this is very simple, but worth answering exactly because it has become a disproportionately emotional issue devoid of all reason (as with “food security”, which is a complete scam and wholly bogus notion); What has become an emotional issue, “devoid of all reason”, the arguments in favour of fracking, or the objections to it? The point of my query was that both sides have some reasonable arguments to advance. Your “food security” analogy is irrelevant.

    1. When government takes ownership of natural resources, we all carry the risk. True, but at least nominally, and possibly in fact, we all also share the reward. This leads to a tragedy of the commons i.e. nobody really cares. My local public library is a triumph of the commons. Like parks or over-grazing are you telling me that Karoo farmers haven’t been guilty of over-grazing their land for a century or more? Yes, they did so because of government sponsored marketing boards, but they were nevertheles prepared to damage environmental resources, sometimes, irreperably, for short term gains. or Eskom or Transnet… we each use as much as we can, because the stuff being used up belongs to someone else your ethic, not mine (i.e. the collective us). If people don’t care enough under private property, they will certainly care even less under public I am not sure exactly what is meant by this.

    2. We are assigned the collective risk by government without having any say (or hardly any say in a democratic political system if it is a democratic political system, then we do have a say). We all carry risk whether we agree to carry it or not – government commits us to risk that we would never agree to, given the choice. Who is the “we”? Libertarians don’t want collectivities, but the majority of South African voters clearly do. If we would agree (or decline), then why use government at all ? The question doesn’t make sense to me; if “we agree” to use government, which the majority of South African voters do, then that’s what we do Thus there is a moral question of whether we should be forced into “taking the risk collectively”… and that question can have only one answer. So what’s your answer … but more puzzlingly, what’s the question?

    3. Assuming government ownership of the land who assumed that? , they must licence or permit the use of it… whether for fracking or farming or textile industry. In other words, they give permission up front to consequences yet unknown. Once the consequences become known, the perpetrators have little permission slips (licences to do what they did) already in hand. I simply don’t understand the meaning or purpose of this tangent. If this does not worry you deeply do you mean me personally, or “one? If me, what gives you the warrant from my simple questions to speculate about what worries me? nothing should. I therefore don’t see how regulation makes things better and can see a hundred ways that this makes it worse. I live in a residential area. My neighbour wants to undertake noisy welding work in his house alongside mine. Regulation prohibits him from doing so. Does regulation make my situation better, or a hunderd times worse?
    4. Private companies care deeply about their reputations and their profits. Bullshit. They care nominally, not actually. They certainly act accordingly, as do we all. Equally bullshit. They will not frack unless they are sure it will not lose them a market of obstinately car-bound and taxi-loving people like us… I just want to be sure: your argument then is that they care about their profit and they don’t care about the environment? If they can sustain their profit even as they damage the environment, they will do so? This was the nub of the question I wanted an answer to. or at least that the gain (to us all, as manifested in the money we hand them also known as profits) exceeds the damage, plus whatever could have been gained in any other venture (opportunity cost). There are natural consequences to private company actions and unless government removes the negative consequences by handing out permission slips to screw up the planet (i.e. licences), they will not risk it. I cannot make out the sense of your use of the negative, but if you are saying that private companies will not risk reputational damage by doing something bad you are wrong.

    5. Just to bring home the point, whatever companies do in a free market will have a reasonable chance of adding more value to society than it takes away. Skin lighteners? That is what business does. It is also what you do when you damage your kids by leaving them at school in order to come home later with a pay check which in turn feeds them. Tendentious; many people believe – and are entitled to their belief – that leaving their kids at school doesn’t damage them. But in any case, I don’t see the connection. There is a trade-off with a net benefit. The moment the net benefit becomes negative, the damaging activity will cease. Ah, the human being as a rational actor; more bullshit.

    6. Government has shown historically that it will not cease damaging action and is very slow to take remedial action. When the SAA loses R4billion, it hands over the money rather than to liquidate the offending money-sucker. Ditto Eskom, SABC and others. Enron lost all share-price value in a single day and was found guilty by the market, liquidated, closed, broken down and sold off in 3 days… the government trial started only 6 months later. The market has no mercy with even the suspicion or smell of dishonesty. More bullshit. For business, honesty is a tactic, not a value. It’s tolerance of pollution is not much higher. Business is tolerant of pollution.

    7. Governments don’t care about profits or reputations. They depend on the continued support of those who they have made so dependent on grants and social services that they can do anything and yet not fear losing support You’re simply throwing formulae at me. Of course governmnets care about reputation; it’s truth they care nothing about. – for the same reason drug pushers don’t fear being ratted out by those addicted to their wares. If the company offers them a few token jobs to punt in the next election, bad things may happen.

    8. If my support for private ownership of all resources has not shone through in the preceding points yet, take it as stated now. This also happens to be the only way to determine relative levels of importance in a world of limited resources. We cannot build houses and provide water and provide petrol and food and everything else… we need to prioritise and do more of that which is most useful and less of that which is less useful. What makes you think you need to tell me this? How do we distinguish the more and the less useful from each other ? How do we set priorities ? Price is the only costless (i.e. efficient) way and price can only be determined through trade in a free market. Without private ownership we might be up to our necks in spotted owls while having no food to eat. Sorry, infantile.

    In my little town. we derive our water from a stream that starts in the mountains, and comes into the town in a furrow built centuries ago. The distribution of that water has been made unequal and unjust by centuries of power control, not least of course the power of the state. Now the state wants to solve the problem by arrogating to itself the complete and exclusive ownership of all of this water delivered by the natural world. Who owns the water? How should it be distributed? What do we do about applications of the water readily known to all as wasteful, eg. letting it run across the street? (by private water rights owners).? Helpful answers much appreciated.

  2. #2 by Trevor Watkins on March 27, 2011 - 2:37 pm

    Do private sector companies have any real concern for the environment, and do they act accordingly?

    Private companies, like the private people who compose them, have a great concern for “their” environment, and much reduced concern for other environments. If the private company owns and occupies the land in question, it may have a heightened sense of concern for that environment, but there is no guarantee. However, I don’t think the existence of some touchy feely “concern” by corporate types is the issue here. The fundamental issue is the old one, what does it mean to own something?
    For libertarians and free marketeers, owning something gives you the right to alienate it (always wanted to use that word). I take this to mean that you can pretty much do what you want with this property – sell it, destroy it, do rude and unspeakable things to it. What you can’t do is alienate someone else’s property while acting like a jackass on your own. So, poison vapours, toxic fluids, abnormal noises, etc may not leak out from YOUR property and affect someone else’s. Of course, defining poison, abnormal, toxic is where the game gets interesting, and reasonable men need to be found.

    Do we need a regulatory framework to protect the environment?

    Do you mean “Should we pass a law saying that the world will be green and beautiful?” Sure, why not? Will the world then be green and beautiful? How stupid do I look?
    In my libertarian opinion, you may only regulate that which you own. So, while on MY property, you MAY NOT pee on the grass, or frack any damn thing. If you really want to do that, buy it from me. (The concept that my ownership of property is fragmented, with other people like government owning and selling off “mineral rights” is truly stupid. The fact that this idea arises from private businesses in collusion with government does not change the stupidity , but does demonstrate the need for sound, fundamental principles.)
    We DO need certain rules/regulations/laws/rights that govern the interactions between mutually consenting humans. The right to own and alienate property is one of these. The right to interfere in other people’s lives and property should not be one of them. But that, of course, is in a perfect libertarian world. In the messy one we actually live in, we should at least strive for reality and consistency. Allowing a mining company to devastate your property because they claim some ill-defined right to the minerals beneath it – that’s just dumb.

    If it were allowed to, would Shell go ahead and frack, largely regardless of the consequences?

    The answer, of course, depends on the consequences. If the consequences are a few aggrieved Karoo farmers, or the destruction of some god-forsaken desert habitat, sure, Shell would go ahead and frack. A hundred years ago those would have been the only consequences. Not so today. As the Gulf oil spill demonstrated, consequences of damaging the environment these days comes with a very heavy, financial cost. If regulation worked at all, we wouldn’t have these oil spills (have you ever seen any regulation PERMITTING catastrophic oil spills). What does seem to work these days is threatening the reputation of a company, refusing to buy its product, taking the directors to court.
    Should Shell go ahead and frack? If it owns the land (surface and mineral), that should be its decision. If fracking is going to affect your land in some way, demonstrate this in a court and claim compensation. If you try to tell me what I may do on MY land, pretty soon I’m going to start telling you what YOU may (or must) do on yours.

    Who should own the resources that lie under the ground – the people who own the ground, or some other group, or agency?

    My view on that is expressed above – the ownership of land includes all the minerals beneath it. This is so obvious that one can only assume a politician responding to a vested interest came up with an alternative.
    A more interesting question – who owns the space ABOVE your land – but lets leave that for another day.
    The hard thing for you, Colin, to accept (having a vested interest in the Karoo, I assume) is that a mega-corporation like Shell can probably buy half the Karoo out of petty cash, and could then do pretty much whatever it pleased – concrete it over and put up condominiums. Your only weapon, as a non-owner of that land, is persuasion, public opinion, peer pressure. Good luck with that.

    Who should own water in South Africa?

    I suspect you can only really OWN water that you can put a fence around – ie a dam or a tank or a canal. Water in the sky, in a river, in a borehole is a shared resource until you successfully surround it in some way. As with all free shared resources, your best individual strategy is to surround as much of it as you can as quickly as you can. The cost of dams, tanks and canals puts a natural upper limit on this strategy. What if you build a canal that diverts a shared resource such as a river only on to your property and deny all others access to that resource? That’s called “cornering the market”, and is what most businesses strive for. Why do most businesses fail to corner their markets? See any libertarian economics 101 book.
    If the government claims to own all the water in SA, then it should use it or lose it, like everyone else. Of course, I don’t think government should own the water, anymore then they should own the land or minerals, if they have not either surrounded them or purchased them.

    By the way, have a look at for 2 alternative views of this water issue.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: