Tuesday, April 21, 2009

The Free Market: Greener Than You Think

The Free Market is the best producer of big, evil corporations who love to pollute, pillage, and destroy our environment for the sake of the almighty dollar and profits galore. Or so some people would have us believe.

But John Tierney of the New York Times posted an interesting piece, titled The Richer is Greener Curve. The piece outlines some recent research into the correlation of a country's GDP per capita and the country's pollution rates. The cornerstone of the piece is this graph:

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Each line is an environmental Kuznets curve for a group of countries during the 1980s. The levels of sulphur dioxide pollution (the vertical axis) rise as countries becomes more affluent (the horizontal axis). But then, once countries reach an economic turning point (a gross domestic product close to $8,000 per capita), the trend reverses and air pollution declines as countries get richer. In this analysis by Xiang Dong Qin of Clemson University, the green line shows countries with strong protections for property rights; the red curve shows countries with weaker protections.


You can see his article for an explanation for the phenomenon. There is another observation in this graph that I'd like to point out.

Note that there are two different colored lines, indicating two different government attitudes towards private property rights. Since a free market cannot exist without strong private property rights, it stands to reason that the green line probably corresponds to democracies with strong protection for private property. By contrast, the red line probably corresponds to dictatorships and/or communist regimes, where private property rights are either trampled by their government or don't exist.

It is interesting to note that both curves follow the same general shape. But, the green line is consistently lower at all points along the curve. To me, the reason is pretty straightforward: If you own it, you probably don't want to pollute it, pillage it, or destroy it.

Yet isn't it interesting that most people, (political) parties, and politicians who claim to be "green" also do the most to restrict property rights?

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