Passing the cost on to others

Wish I'd said that!

[Reprinted from Issues & Views September 22, 2003]

David Lucas owned shoreline property that the South Carolina government told him he couldn't develop, even though his next-door neighbors developed their property. South Carolina's regulation made his shoreline property virtually worthless. Lucas sued, and the U.S. Supreme Court forced the South Carolina government to pay him $1 million. Once the state was forced to pay Lucas $1 million, it changed its mind about the worth of keeping the shoreline undeveloped. In fact, it sold it to a developer.

South Carolina's actions demonstrate that incentives matter. Costs born by others will have less of an effect on our choices than when we bear them directly. Environmentalists love it when the government can force private citizens to bear the burden of their agenda, as opposed to requiring that government pay landowners for property losses due to one regulation or another. It's cheaper, and that means government officials will more readily cave in to environmentalists' demands.

In other words, regulations that stop a landowner from using his land because of the red-cockaded woodpecker, or prevent a farmer from tilling his land because of an endangered mouse, or prevent a homeowner from building a firebreak to protect his home produce costs that are privately borne. If government had to compensate people for regulations that reduce the value of their property, more intelligent decisions would be made. Besides, if a particular measure will benefit the public, why should its cost be borne privately?

Environmentalists go berserk whenever there's talk of drilling for the tens of billions of dollars worth of oil in Alaska's National Wildlife Refuge. Why? It doesn't cost them anything.

Here's what I predict. If we gave environmentalists Alaska's National Wildlife Refuge, you can bet your last dollar that there'd be oil drilling. Why? It would now cost them something to keep the oil in the ground. The Audubon Society owns the Rainey Preserve in Louisiana, a wildlife refuge. There's oil and natural gas on its property, and it has allowed drilling for over half a century. Not allowing drilling, in the name of saving the environment, would have cost it millions of dollars in revenue.

-- Walter Williams, syndicated columnist and Professor of Economics at George Mason University, Fairfax, VA. He is author of The State Against Blacks, (McGraw-Hill), and several anthologies of his syndicated columns, which include: Do The Right Thing: The People's Economist Speaks (Hoover), All It Takes Is Guts: A Minority View (Regnery), and More Liberty Means Less Government: Our Founders Knew This Well (Hoover). (Creators Syndicate)

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