There was some question about what role the army may end up playing in all of this.  My sense is that there has been a bit of a purge in the revolutionary guards, older, moderate officers have been pushed out and those loyal to Ahmedinejad promoted.  It also seems like the Basij paramilitary has been strengthened, and made a vehicle for patronage by being given valuable franchises (including large construction contracts). Similar to the state of affairs in China, where certain enterprises are run by the army.

The patronage is coupled with something like selective economic warfare.  If you inflate the economy, and then increase salaries for those loyal to you, you will impoverish your opponents and weaken them. Your opponents economic resources are weakened without your having to resort to something as crass as wholesale confiscation of their property.  I’ve begun to think Ahmedinejad may be a lot more cunning than he is given credit for, and I don’t believe Khamenei is entirely in control. The army is a wild card, but some of the moderate forces have led the RG in the past and may still have friends there.

Another wild-card could very easily be the religious establishment.  Their relationship with Khamenei may be less than collegial, apparently there has been some questioning of Khamenei’s religious training.  If a group of influential clerics were to speak in favor of a run-off election, or against the repressive actions of the regime on Friday, that would have a huge impact.

Courage, Merry, courage for our friends

To continue the realpolitik theme, I keep hearing from friends that these protests will die when they are ruthlessly crushed by the military and para-military forces firmly controlled by the Iranian regime through a system of patronage. This risk definitely exists, but the most anyone can do is follow their conscience and do the right thing. This is the first popular movement in a repressive regime to be documented via social networks. That makes a difference, just like the letter-writing campaigns pioneered by the folks at Amnesty International made a difference. We also should not doubt the power of non-violent protest and the moral authority it confers.

There are a few things about this protest that may make it stronger than it appears:

  • The protests are widespread, and have broad support within the country.
  • Civilian supporters of the regime admit the election results are likely inaccurate, even if they want their guy to win.
  • The protesters have major political figures on their side.
  • The religious establishment has yet to make it’s views known and they may not look kindly at the takeover by a militarized regime which will eventually undermine their authority.
  • Despite the Iranian regime’s attempts, news, photos and video continue to stream in documenting the protests and the authoritarian response.

These are all good reasons the movement in Iran may be more successful than the nay-sayers fear. But even if it isn’t, the real question is who stands in the right, and whether we, as bystanders should recognize the abuse of power for what it is.

We must hope for the best, there is no courage to be found in despair, and the people of Iran will need all the courage they can muster to see a restoration of their right to freely elect leaders of their choosing.

Free Market Environmentalism

Free Market Environmentalism, Terry L. Anderson & Donald R. Leal;
Pacific Research Institute for Public Policy, 1991; ISBN: 0936488336

“The question is not whether the right solution has been achieved but whether the relevant trade-offs are being considered in the process.” [pg. 5]

Free Market Environmentalism is a book about how best to assure that decision makers take into account the costs and benefits of their decisions and actions.  The question is easily answered when we speak of private property, since the structure of private property is such that each individual has her own sphere of influence within which most costs and benefits are contained.  The owner can claim compensation for any damage done to her property by anyone else and reaps the rewards of good resource-management.  In the environmental sphere, this problem has been complicated by a mode of thought that holds environmental resources are only appropriately handled when responsibility for them is turned over to the state or its agencies.  Since it then becomes unclear as to who owns these resources, and how liabilities and benefits are to be assigned, a problem that is solved inherently by the system of private property we are now forced to find other solutions for.

With communal property comes the tragedy of the commons as each individual attempts to acquire as much of the resource as possible since others are out to do the same.  This inevitably leads to over-utilization of the particular resource and a disincentive to save for the future.  This scenario is applicable today to public fishing grounds and with subsidised water for farmers.  In both cases we see that rational agents decide to use/acquire as much of the resource as they can.  In the first case this is because the first person to harvest a fishing ground has a much lower marginal cost than those who come later.  In the case of water, we see farmers “over-utilizing” water because they do not face the real resource cost of doing so.  In both cases the solution is to attempt to ensure that all relevant costs are taken into consideration before any decision as to resource-utilization is arrived at.  Anderson and Leal suggest that in the case of common fishing grounds the appropriate solution would be to place the water-body in private hands so that both recreational and commercial fishermen have to pay the real costs of their decisions.  The present system (of common fishing rights) leads to an inefficient outcome since there is a tendency to over fish as the resource is publicly owned and no costs are imposed for using it.

The political process is not well adapted to resolve such issues.  Special interest groups are apt to pursue extreme ends and expend resources on lobbying political decision makers to choose one or the other option. Interest groups are generally not willing to consider median solutions which take into account the value of alternative ends for which a resource can be used (presuming such values can be calculated in the absence of a functioning market for them).  What ends up happening, as Anderson and Leal demonstrate, is that interest groups opposed to one another are locked in a zero-sum game.  The result of which must leave one player standing out in the rain.  This is an endemic feature of the political process where “political resource managers make trade-offs in terms of political currencies measured in terms of special interest support; at best this unit of account provides imprecise measures of the subjective values of citizens.” [pg. 16] Unlike the price system, a political resource management mechanism must rely on artificially generated abstractions to approximate the demand for various commodities and services.  The presence of externalities, transaction costs and dispersed, unorganized consumers makes the political market for environmental goods exceptionally imperfect. Anderson and Leal attempt to question the need for a system that is incapable of moving towards an efficient outcome when other alternatives present themselves.

An objection often raised against a market based environmental policy is that such markets do not exist.  The reason such markets do not exist is precisely because they have not been permitted to develop.  As the authors point out, when individuals face incentives to protect and realize the value of their property, tools to facilitate the demarcation and transfer of such property will evolve.  Since owners of private property find it in their self-interest to use means that help them establish control over their property, incentives are created for other agents to develop technology that would fulfill this demand.  Creative solutions are forthcoming when opportunities to market them profitably exist.

The authors are aware that the market solution still relies on the government to define and enforce property rights. [pg. 166] Nor do they claim that their proposals are a perfect solution.  “Property rights are costly to define and enforce, but these costs are a function of the value of the resource in question and the technology” [pg. 167] There is no reason to believe that a system of well-defined property rights will result in an “optimal” use of environmental resources by any or all standards.  That said, there is reason to believe that a structure which permits resource owners (not far-removed proxies) to make decisions based on their own values and market conditions would result in a more efficient use of resources than a system which does not have the benefit of the information conveyed by prices and knowledge of particular circumstances. It is by no means clear that politically appointed managers will be impartial or disinterested agents of society.  In fact, there is reason to believe that they would be very interested in promoting certain evaluations of the state of environmental resources, and the general concern for their future, if only to secure large, discretionary budgets for their departments.  At the other end of the spectrum, there is the concern that government appointed managers may be too disinterested, to the extent of being blind to theft of resources under their very noses.

Since we are dealing with issues that are still being debated in scientific circles, it is doubly difficult to judge, post-facto, whether the correct decision was made by an agent of the government or whether all relevant details were taken into consideration. Unless decision makers are faced with the consequences of their actions, i.e. only when they receive “negative feedback”, will they be prompted to take into consideration the effects of their actions.  Making sure that resource managers are also resource owners has been found to be the most effective way to promote the responsible use of all sorts of resources.  In the environmental sphere this can only be accomplished when specific resources are owned by individual entities.

That government agencies are not always the best executors of “society’s wishes” has been demonstrated a number of times, and is in part caused by the nature of the political process.  That individuals or organizations are in a better position to exercise their property rights over resources, and put them to their most valued uses is also quite clear.  What the authors have shown is that common objections to privatizing natural resources are often based on unsound reasoning and a willing ignorance of history.  The position advanced by Anderson and Leal deserves to be examined more closely, and it is clear that market solutions are being applied in a variety of environments with remarkable success.  Perhaps the most telling ratification of this stance is made by conservation groups that decide to put their lands to a variety of uses. Conservation groups are willing to evaluate the various trade-offs to be made between preserving environmental conditions in the region and the broader scope for conservation afforded by putting environmental resources to commercial use when they own the resource in question.  They are less amenable to compromise when the resource is publicly owned.  The same applies to commercial operators harnessing the recreational value of a particular natural resource.