Last week, I was writing about the first UN World Happiness Report and how it pits wealth creation and wealth against happiness. I promised to discuss why wealth creation is not only good for people’s happiness but also for the planet. Wealth creation without the right to private property would be much diminished, for the lack of incentive to produce, so my argument is that wealth creation, under the condition of private property ownership and protection of property rights, is good for the planet.
Look anywhere in the world where the least wealth is being created, in other words, where poverty is the highest (many places in Africa and developing nations elsewhere come to mind). These are the places that are also the most polluted, for lack of technology and infrastructure for sewage treatment, for emission controls, for cleaning up—and for the so-called “tragedy of the commons.” If there is little private property, all waste gets dumped onto the “commons” which no-one feels responsible to clean up. It is no wonder that some of worst cases of industrial pollution were found in the former Soviet Union where the state owned all property. A solution to the problem of pollution? Wealth creation, which makes possible new innovative technologies that can be used to control and clean up pollution. Add to that private ownership of all property, protected by property rights (enforced by the government), and problems of pollution will be further diminished and eliminated: every time you violate someone else’s property rights by polluting their soil, airspace, or ground water, you are prosecuted and pay compensation and fines.
What about “depletion” of natural resources that the environmental alarmists (and the UN World Happiness Report) claim is caused by production and wealth creation? First, natural resources are not being depleted; only a fraction of what is contained in the earth’s core has been used, and more discoveries of existing and new raw materials are being made continually—thanks to wealth creation and investment in new technologies for discovering and recovering natural resources for human use.
But if we grant the premise that earth’s resources are being depleted, human ingenuity, assisted by investment from those who create wealth, has always discovered new raw materials and new combinations of those materials (such as aluminum and stainless steel, and more recently, plastics and ceramics) to replace what was used before. We don’t use whale oil any more to light lamps but electricity generated by coal, oil, nuclear, or hydro power. And even if some resources are being in short supply—such as the rare earth minerals used to manufacture consumer electronics such as cell phones—companies develop technologies to recycle those materials. Japanese companies, for example, have developed highly advanced methods of recycling almost all rare earth minerals from used cell phones.
Any “depletion” of natural resources can be found, again, primarily in the poorest areas of the world where people live on subsistence farming, such as remote regions in South-America, or depend on hunting and gathering. Poverty prevents farming practices that allow fertilization, crop rotation, and “resting” of fields and leads instead to soil erosion and depletion of nutrients. Poverty also leads to over-harvesting (of crops and trees), which undermines sustained production. And hunters and gatherers do not produce; they merely consume.
The antidote to both pollution and “depletion” of natural resources is wealth creation, protected by private ownership and property rights, which make efficiency-enhancing—life-enhancing—technologies possible. Instead of undermining wealth creation by income “redistribution” schemes and by regulations hamstringing companies, governments should privatize all property, let companies be free to produce, create wealth, and innovate—and protect everyone’s right to private property.