Command and Control

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Command and Control

We need to align our incentives with where we want to go, with our values. What we reward, we get more of. Do we want land speculation? Do we want pollution?

Henry George: The Condition of Labor — An Open Letter to Pope Leo XIII in response to Rerum Novarum (1891)

Take, for instance, protectionism. What support it has, beyond the mere selfish desire of sellers to compel buyers to pay them more than their goods are worth, springs from such superficial ideas as that production, not consumption, is the end of effort; that money is more valuable than money’s-worth, and to sell more profitable than to buy; and above all from a desire to limit competition, springing from an unanalyzing recognition of the phenomena that necessarily follow when men who have the need to labor are deprived by monopoly of access to the natural and indispensable element of all labor. Its methods involve the idea that governments can more wisely direct the expenditure of labor and the investment of capital than can laborers and capitalists, and that the men who control governments will use this power for the general good and not in their own interests. They tend to multiply officials, restrict liberty, invent crimes. They promote perjury, fraud and corruption. And they would, were the theory carried to its logical conclusion, destroy civilization and reduce mankind to savagery. ... read the whole letter

Rev. A. C. Auchmuty: Gems from George, a themed collection of excerpts from the writings of Henry George (with links to sources)

IMAGINE an aggregation of men which it was attempted to secure by the external direction involved in socialistic theories that division of labor which grows, up naturally in society where men are left free. For the intelligent direction thus required an individual man or individual men must be selected, for even if there be angels and archangels in the world that is invisible to us, they are not at our command. Taking no note of the difficulties which universal experience shows always to attend the choice of the depositories of power, and ignoring the inevitable tendency to tyranny and oppression, of command over the actions of others, simply consider, even if the very wisest and best of men were selected for such purposes, the task that would be put upon them in the ordering of the when, where, how and by whom, that would be involved in the intelligent direction and supervision of the almost infinitely complex and constantly changing relations and adjustments involved in such division of labor as goes on in a civilized community. It is evidently as much beyond the ability of conscious direction as the correlation of the processes that maintain the human body in health and vigor is beyond it. — The Science of Political Economy unabridged: Book III, Chapter 10, The Production of Wealth: Cooperation — Its Two Kinds • abridged: Part III, Chapter 8, Cooperation: Its Two Kinds

THE ideal of socialism is grand and noble; and it is, I am convinced, possible of realization, but such a state of society cannot be manufactured — it must grow. Society is an organism, not a machine. It can only live by the individual life of its parts. And in the free and natural development of all the parts will be secured the harmony of the whole. — Progress & Poverty — Book VI, Chapter 1, The Remedy: The Insufficiency of Remedies Currently Advocated; V.—From Governmental Direction and Interference

SOCIALISM in all its phases looks on the evils of our civilization as springing from the inadequacy or in harmony of natural relations, which must be artificially organized or improved. In its idea there devolves on the State the necessity of intelligently organizing the industrial relations of men, the construction as it were of a great machine, whose complicated parts shall properly work together under the direction of human intelligence. — The Condition of Labor, an Open Letter to Pope Leo XIII

... go to "Gems from George"

Bill Batt: The Merits of Site Value Taxation

... Not all revenue collection on the part of government is grounded in the constitutional authority of its tax powers. Taxes in the strictest sense of the term are revenues involuntarily paid to general funds for the general purposes of government. But there are many other revenues paid to government that would never be construed as taxes: lottery revenues, fines, interest payments, environmental (green) fees, payment for information, and user fees being the most common examples. Fines, green fees, and user fees are instruments of police power precisely because their primary purpose is to correct behavior, and only secondarily to raise revenue. User fees, along with environmental fees particularly, are employed to recover the costs of use, wear or damage to environmental or government-provided "services." (Only in recent years has it been fashionable to regard use or degradation of the natural environment as a "service," necessitating "correction," as was originally explicated by Pigou earlier this century.

Fiscal measures such as those noted above can be employed under police powers to correct, or at least compensate for, otherwise egregious social behavior, and public policy makers must concern themselves with the question whether such measures are more or less appropriate or effective. These provide an attractive alternative to what have come to be known as "command and control" approaches. Just as are so many fiscal measures, command-and-control approaches to regulating and controlling social and economic behavior is also grounded in the police powers of government. Administrative theory has grown in appreciation for fiscal approaches and away from command-and-control approaches in recent years.8 This is because they are often far less expensive and more efficient to implement, easier to understand, have a greater degree of compliance, and has the added virtue, lastly, of raising revenue for the support of governmental responsibilities. This interest in "tax shifting" has inspired the slogan, "Tax Bads, Not Goods." ... Read the whole piece

Bill Batt: The Nexus of Transportation, Economic Rent, and Land Use

... These pricing approaches taken together offer the prospect of both recovering costs in their varied forms as well as fostering efficient transportation services. There are grave misconception in how much fiscal policies distort social and economic behavior. And the fiscal policies that foster the greatest distortions of all are those involving road costs and the failure to collect economic rent. Rather than resort to traditional command-and-control approaches which are frequently just as cumbersome and distorting as current unthinking fiscal measures, now is an opportune time to consider models which will help us to get things right. ... read the whole article

Bill Batt: The Compatibility of Georgist Economics and Ecological Economics

The answers being offered, however, don’t address the root causes of the problem. The most talked about panacea is the institution of urban growth boundaries, but these have failed to be demonstrably successful even in the two communities most often cited (Portland and Boulder) where they were instituted over twenty years ago. Recent days have witnessed a profound and growing awareness of the problems due to sprawl development. In fact one opinion poll marked sprawl as the highest current concern among American voters.6061 Solutions such as these reflect the penchant of policy makers to rely upon so-called “command-and-control” (CAC) approaches to government rather than “pricing” approaches. The extension of government reach and weight to impose policies deemed appropriate is burdensome, expensive, and inefficient. ...

Daly and Cobb outline eight issues relating to the ecological economics perspective which call for clear public policy changes in their view. All relate to the American context: economic globalization, population, land use, agriculture, industry, labor, income policies and taxes, and national security policy. Put differently, there is no realm of policy outside of the reach of ecological economics; this is what makes it truly interdisciplinary. The second book focuses more directly on means by which to preserve natural capital, using what means governments have at their disposal. After first distinguishing between “command-and-control” (CAC) and incentive pricing systems, the authors continue by exploring the various ways that the latter, fiscal measures, can be engaged to alter the course of current economic practices in favor of more sound and environmentally sensitive ones. No short treatment can do justice to each class of proposals, but a quick summary indicates their general direction.

Underlying the whole agenda is a commitment beyond simple description to sustainable development economics and to Daly’s “steady state” economics. This entails the institution of environmental safeguards, protection of cultural and biological diversity, minimal resource use, and recycling. It further means protection of small countries and localities — of both ecosystems and populations — against all-encompassing economic units that preclude the possibility of their being able to survive independently. It presumes also that not just humans alive today have entitlements, especially privileged elements of wealthy countries; it recognizes rather the justice and moral claims of people and natural ecosystems yet to live to survive as intact and integral units. It recognizes that governments must take a hand in the preservation of such ecosystems, as markets forces left to themselves will wreak destruction on the most vulnerable parts of the earth and ultimately upon the earth itself. It accepts the fact that the carrying capacity of the earth is limited, and that we appear to have already exceeded that carrying capacity in our ignorance.119

119One oft-cited article is that of Peter Vitousek, et al, “Human Appropriation of the Products of Photosynthesis,” BioScience, Vol. 36, No.6 (1986), pp. 368-373, available at http://dieoff.org/page83.htm. It calculates that consumption of earth’s resources is doubles at an ever increasing rate, and that humans have already appropriated 40% of terrestrial biological productivity. The most comprehensive collection of articles addressing this perspective is created and maintained by retired Cornell Professor Jay Hanson, at www.dieoff.org. The site name arises from his view that the world economy’s dependence upon fossil fuels faces an imminent end, and the earth will then be capable of supporting only about two billion people. Hence a looming dieoff.

The distinction between CAC approaches to environmental challenges as compared with pricing approaches is central to all this analysis. Daly’s shows a strong preference for the latter. In what he calls “graded ecozoning,” for example, potential atmospheric impacts are divided into three areas.

First, for emissions that do not cause significant damage and do not accumulate in significant concentrations, taxpayers would be charged a general fee.
Second, in instances where incentives require altered behavior to address problems such as high ozone or carbon monoxide emissions in certain local areas, more targeted taxes would apply.
Finally for those pollutants that have profoundly damaging impacts, regulation and perhaps criminal liability would be called for in cases of their release. These classes are labeled the “property rights zone,” the “incentive zone,” and the “regulatory zone” respectively. The model follows the growing interest and preference for pricing approaches over more heavy-handed and administratively inefficient CAC approaches.

Green taxes, sometimes also called corrective taxes or Pigouvian taxes, are their first candidates for consideration. This is because they can, if priced right, recover the costs of externalities in ways that allow individuals to use their own discretion about employing environmentally damaging practices. But the authors extend their thinking to cover goods and materials that may have negative ecological impacts although not yet conclusively demonstrated by science. The answer there is to rely upon a “precautionary polluter pays principle” based on the present value of the forecast impact should the worst case scenarios be borne out. The annual cost of using a car in the early 1990s, for example, was $51,656 according to their calculations.120 This would obviously entail an enormous imposition of taxes, far above the less than $7,000 direct annual costs typically shouldered by drivers now,121 the rest of which are now passed on to society generally. Grave doubt exists about the potential impact of various externalities of driving, along with concern about the extent of damage which might possibly occur to the ecosystem; this warrants employment of the precautionary principle and calls for policy solutions to curtail this travel mode. Complete prohibition of certain materials and chemicals may be warranted in some cases. ...

POINTS OF SYNTHESIS OF GEORGIST AND ECOLOGICAL ECONOMICS
The commonalities of Georgist economics and ecological economics appear to be organizable into six general points:

1) preservation of the commons,
2) sustainable development,
3) appropriate valuation of natural capital,
4) ensuring social and biological community,
5) fostering individual self-realization, and
6) securing economic justice.

Implicit in all these points is the view that market activity needs to be circumscribed and juxtaposed to the non-human, biological realm. It appears that there is lots to be gained by some synthesis of the two fields of discourse.

Ecological economists worry about the encroachment, and even the elimination, of those elements of nature to which private property title has not been granted. In their concern about the need to protect the “commons,” they are torn between the view that only through privatization can all the world’s assets be preserved and the alternative view that any private appropriation of the commons constitutes a moral compromise. They fear a repeat of Garrett Hardin’s “tragedy of the commons.” Their argument often proposed is rather complex to explicate: it assumes that private property titles may perhaps provide the best incentive not to exploit the fruits of the earth and the earth itself.126 To Georgists, on the other hand, the earth and all its resources are already in fact the birthright of all humanity; individuals are entitled to its use in return for the payment of rents. Further privatization is anathema. The key rather is in distinguishing the various components of ownership and getting prices right — mainly in the collection of economic rents.

One must ask then whether there is some such means by which to accomplish the goal of environmental preservation — through either of the means by which government has at its disposal: command-and-control (CAC) approaches or pricing approaches. It has already been noted how difficult CAC approaches are to enforce, and how expensive they are both in terms of administration and economic inefficiencies. Pricing on the other hand suffers from the difficult challenge of getting it “right,” som ething which typically must be resolved through formal public decisions, especially when and insofar as they involve public goods or common property.... read the whole article

Bill Batt: Stemming Sprawl: The Fiscal Approach

Stemming Sprawl: Command-and-Control Measures

Policymakers have two modes of leverage by which to implement public will: 1) so-called command-and-control approaches that are typically enforced by what state and federal constitutions group under "police powers" and 2) fiscal approaches that typically involve a variety of taxes, fees, fines, and other charges that derive constitutionally from either police powers or "tax powers." When governments administer either of these powers, they are legitimate and authoritative. Fiscal measures available to governments can come from either ground. The charges that the private sector usually impose differ in that they usually are responsive to market forces. Prices that are established by government, however, are not necessarily responsive to market forces, nor are they intended to be. Rather, they are set in order to accomplish specific public policy goals.[19] They can be no less efficient, however, when responsibly instituted.

19. One recent exploration of this is a chapter titled "Catalytic Government: Steering Rather Than Rowing," in Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector, ed. David Osborne and Ted Gaebler (New York: Penguin, 1993).

Governments face the challenge of knowing which of the tools at their disposal — command-and-control approaches or "pricing" approaches — will best serve effective and efficient achievement of public policies. Only in recent years, however, has there been a renewed interest in fiscal levers to achieve goals that policymakers seek to achieve. There is particular interest among students of welfare economics in incorporating costs earlier regarded as externalities, especially in designing environmental policies. Moreover, the use of pricing approaches to recover costs of government services that have a high level of private good about them can bring about more attractive and achievable goals than reliance on conventional police power approaches. User fees, environmental fees, and other such fiscal tools have become more fascinating — at least to students of public policy — than conventional taxes.

The renewed interest in fiscal approaches comes in recognition of the fact that traditional command-and-control approaches have not been successful. Government authority is far more effective at prohibiting and controlling than it is inducing and channeling.[20] Three illustrations of failed command-and-control approaches will demonstrate this: zoning, urban growth boundaries, and altering (usually expanding) political jurisdictions. ... read the whole article

Mason Gaffney: Red-Light Taxes and Green-Light Taxes

Likewise, there are at least two kinds of containment policies for urban sprawl.

One says Stop! Thou shalt not settle outside the designated growth boundary, neither shalt thou build, nor manufacture, nor trade, nor store goods, nor park vehicles, nor disport thyself in other than traditional country-squire-like amusements. I shall call this a "negative containment policy."
The other policy says Go!, or rather Come! Come into my city and rebuild it. This is not "development" in the modern pejorative sense of territorial expansion. Rather it is REdevelopment in the manner of the phoenix - the mythical bird, that is, not the city misnamed Phoenix, which is an awful example of mindless lateral expansion without renewal.

Consider Philadelphia, once the City of Brotherly Love founded by an idealistic English Quaker. Today, after 3 centuries of development, Philadelphia has 15,800 vacant lots, but that only begins the story. It has 27,000 empty houses (i.e. junkers on usable lots that might as well be vacant); 1500 acres of vacant land and brownfields; and 700 vacant commercial bldgs. A local journalist names it BlightTown, U.S.A. If he travelled a bit he'd find it is only one of many.

The result of decay without renewal is to threaten the countryside; settlers spill out, "like ghosts from an enchanter fleeing." Yet, these are not ghosts, nor autumn leaves in the west wind; these are live people. Destroy man's habitat here and he moves it there, and takes habitat from other life forms. The solutions to urban decay and disintegration are infilling and renewal. Here is where the Green Light Tax is such a good management tool. It lets cities rebuild themselves without tax penalties on new building, and rise like the phoenix from their own ashes.

There is a reflex against growth and development we must learn to overcome. "Growth" should not be an issue to divide us: it depends on the kind of growth. Resentment of growth and development stems in large part from associating them with territorial expansion. Infilling and renewal and rehab, however, UNCOUPLE growth from sprawl: they let cities grow (or at least stop shrinking) without sprawling. Ascending to a satellite view, let's look at the whole system of settlement: focusing people where they should be keeps them away from where they shouldn't be.

Here is an aerial view of Albuquerque, New Mexico, a state dominated by owners of million-acre ranches, and therefore with about the lowest property tax rate in the U.S. Albuquerque sprawls out about 30 miles east-west, and another 30 miles north-south, giving a density of about 300-400 people per square mile for its 330,000 residents. Many of its homes are slums.

Contrast that with the aerial view of Sydney, Australia, a city that raises a lot of its budget from "Green Light" taxes on site value. Sydney and suburbs have nearly 3 million people, on less land than Albuquerque, and with no slums.

There is plenty of land to go around. The pleasant green villages of Shorewood and Whitefish Bay, Wisconsin are upper-income Milwaukee suburbs that feature detached homes on tree-lined streets, with detached garages, laws against overnight curb parking, a number of lakeshore mansions with parklike grounds, ample public parks, good shopping, and a little industry. Their densities are 10,000 persons per square mile. At this density, 250 million Americans would fit nicely into less than half of Wisconsin, an average-sized one of 50 states. (They would occupy 0.7% of the United States.)

At the 10,000 density, Greater Milwaukee would fit inside Milwaukee County, yet it now sprawls out over several counties. It sprawls farther yet if one counts the rural residents who float in and out of town for seasonal work. Shorewood and Whitefish Bay have high density because they are the only Milwaukee suburbs with no vacant land; the others, and the central city itself, are full of holes. Result: sprawl, invasion of wildlands, loss of farmland, forced automobilization of former pedestrians, water pollution from new grading - the whole litany of green laments. High density is not their cause, but their cure. ... read the whole article

Dan Sullivan: Are you a Real Libertarian, or a ROYAL Libertarian?

The red, red herring
Royal libertarians are fond of confusing the classical liberal concept of common land ownership, particularly as espoused by land value tax advocate Henry George, with socialism. Yet socialists have always been contemptuous of George and of the distinction between land monopoly and capital monopolies. However, Frank Chodorov and Albert J. Nock (the original editors of The Freeman) were both advocates of George's economic remedies as well as lovers of individual liberty.

The only reformer abroad in the world in my time who interested me in the least was Henry George, because his project did not contemplate prescription, but, on the contrary, would reduce it to almost zero. He was the only one of the lot who believed in freedom, or (as far as I could see) had any approximation to an intelligent idea of what freedom is, and of the economic prerequisites to attaining it....One is immensely tickled to see how things are coming out nowadays with reference to his doctrine, for George was in fact the best friend the capitalist ever had. He built up the most complete and most impregnable defense of the rights of capital that was ever constructed, and if the capitalists of his day had had sense enough to dig in behind it, their successors would not now be squirming under the merciless exactions which collectivism is laying on them, and which George would have no scruples whatever about describing as sheer highwaymanry. —Albert J. Nock "Thoughts on Utopia" ... Read the whole piece

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