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Michael Meeropol: The Economics of Ranching, Mining and Logging In The American West

On January 2, a group of armed protesters walked into the Malheur National Wildlife Refuge near Burns Oregon and vowed to remain there until their concerns were addressed.   What initially triggered this “protest” was the re-sentencing of two ranchers who had initially served a few months in prison for arson – setting fires that spread to federal land.   The protesters felt new sentences (requiring both defendants to serve 5 years) were too harsh.  In a January 6 statement, they announced that in addition to freedom for the two men, they wanted the land currently owned by the federal government to be returned to the people. They wanted “loggers get back to logging, ranchers get back to ranching, miners get back to mining and farmers get back to farming.” [part of this quote is from a press conference January 6 reported at http://www.cbsnews.com/news/militia-occupation-leader-in-oregon-were-like-rosa-parks/.  

There are a number of very good articles that tell the story in detail.   I recommend an OP ED article by historian Nancy Langston “In Oregon, Myth Mixes with Anger” The New York Times, Jan. 6. 2016 (A23).   Also excellent background is available at http://www.npr.org/sections/thetwo-way/2016/01/03/461831737/of-ranchers-and-rancor-the-roots-of-the-armed-occupation-in-oregon.  This is an NPR report entitled “Of Ranchers and Ranco:  the Roots of the Armed Occupation in Oregon.”   A important commentary is at http://www.huffingtonpost.com/heather-ann-thompson/putting-the-oregon-standoff-in-perspective_b_8919750.html- a Huffington Post commentary by Heather Ann  Thompson, “Putting the Oregon Standoff in Perspective:  America’s History and its Ironies.” (Jan 6, 2016).  Many of the details that follow are drawn from these and other materials made available on the web during the week of January 4, 2016.]

Of course it is hard to believe that forcing the two people convicted of arson to serve more time in prison than some people believe is justified would interfere with ranchers, farmers, miners and loggers going about their business.  Thus, it is important to consider the second part of the set of demands --- that the federal government return federal land to “the people.”

On one level, this is absurd because if we truly believe that the US is a democratic republic, then federal land (in fact everything owned by the federal government – post offices, military bases, the Smithsonian Institution) already belongs to the people.

However, it is of course true that some people believe that the federal government is an alien force that oppresses the rest of us with too high taxes, too many regulations, intrusive law enforcement efforts that invade our privacy, an outsized military, and I could go on for quite some time.   Notice, that the examples I just gave include complaints that are usually associated with the right wing (too high taxes, too much regulation) while other complaints are more usually associated with liberals and leftists (invasion of privacy and militarism).

It is safe to say that the Oregon protesters are not complaining about the size of the Pentagon’s budget.  Instead, they are following in a long line of complaints, especially from residents of many western states, that there is over-bearing federal interference into the ability of people – particularly ranchers, timber companies and mining companies – to earn a living.

The federal government owns 53 percent of all the land in Oregon.  (It owns 67% in Utah, 81% in Nevada, 62% in Idaho, 48% in Wyoming, 29% in Washington and 48% in California.) Because the feds own that land, government officials routinely impose rules on those who lease federal land for ranching, mining and logging.  This does not sit well with those who believe that they have the right to run their businesses however they wish.

The economics of this issue is plain.  The reason the federal government owns this land is that when the 1864 Homestead Act provided for 160 acres of free federal land to anyone who wanted it, ranchers found this acreage too small to let their free range cattle graze.  Most settlers didn’t have the money to buy enough land.  Much of the land remained in federal hands while a handful of very rich individuals amassed huge tracts of western land.     

In 1908 the Malheur National Wildlife refuge was created but Congress refused to appropriate enough money to protect it.   “By the 1930s, after four decades of over-grazing, irrigation withdrawals, grain agriculture, dredging and channelization, followed by several years of drought, Malheur had become a dust bowl.”  (Langston article cited above)   In 1934 a massive estate previously owned by a cattle baron was sold to the refuge.  The new manager worked with local ranchers to set grazing leases at a level necessary to bring that area back.  By 1968, the entire region had been returned to prosperity, with as much cattle grazing as in the late 19th century.   This was because the federally owned land was managed well.

One key element of this management is to avoid over-grazing.   It is a well known principle of economics, known as “the tragedy of the commons” that if something (public land, the air, a river) is not owned by any person or institution, then individuals with access to it will overuse it.   The argument is that to each individual that use is costless.  For the community as a whole, it spells disaster -- when a river is polluted; when public grassland is over-grazed; when the air is filled with carbon dioxide.  If an individual chooses to voluntarily conscientiously try not to overuse it, she or he will just be giving up what others will freely exploit.  In other words, according to this view it is impossible for society as a whole to preserve something valuable without someone owning it and being the steward of that land.   [For an interesting summary and commentary on the original Garrett Hardin essay on “the tragedy of the commons” see http://www.eolss.net/sample-chapters/c13/e1-45-01-07.pdf an Encyclopedia entry by P. Alexander Latta.]  

This argument has been forcefully challenged of course.  Many societies have found ways to manage commonly held resources.   Countless traditional societies indigenous to their regions before European or other colonialists conquered them managed common resources for millennia.   Even more developed nations have been able to take steps to preserve and even re-establish commonly held resources – that is, for example, what the US system of National Parks and, yes, Wildlife Refuges are all about.  

Noam Chomsky has written a piece on the British Magna Carta in which he focuses on the Charter of the Forest, a neglected part of the Magna Carta that explicitly protects common property from exploitation by individuals.  He argues that in fact, the danger to the commons stems precisely from privatization.  For example, a private firm, DuPont chemical bought land from a West Virginia farm family to use as a dumping ground for toxic chemicals and then fought tooth and nail to hide the impacts on the health of all people drinking the water contaminated by this substance.  [The story is detailed in a NY Times Magazine article:  Nathaniel Rich, “Rob Bilott v DuPont”  (January 10, 2016):  36-45, 57-61.)]  There are, he argues, well known and historically available models for managing the commons for the common good without privatization.

“The late Elinor Olstrom won the Nobel Prize in economics in 2009 for her work showing the superiority of user-managed fish stocks, pastures, woods, lakes, and groundwater basins.  The historical review in her study Governing the Commons ignores Magna Carta and the practices of centuries in nurturing of the commons, but she did conclude that the success stories she investigated might at least ‘shatter the convictions of many policy analysts that the only way to solve [common-pool resources] problems is for external authorities to impose full property rights or centralized regulation’.”  [The article “Saving the Commons” is in the 150th anniversary issue of The Nation (April 6, 2015:  190-194.  The direct quote is on 192.]

Returning to the context of the Oregon occupation, in 1934, Congress passed the Taylor Act tasking the Interior Department with the regulation of private grazing on public land.   This is what the protestors in Oregon are opposing.   Despite the dust bowl that occurred absent regulation, they believe that if the federal government would just get out of the way, everything would be much better.  Well, of course, ranchers, miners and loggers would get richer in the short run – but the long run impact would be an environmental and economic disaster.

One final economic irony.  Western ranchers and other entities that lease federal land get a massive discount.   According to recent statistics, the federal government took in an average of $125 million in grazing fees per year since 2002.   If they had charged market prices, the take would have been $261 million per year.  Thus, these protestors who want to be left alone are actually getting a massive subsidy from every other taxpayer because the federal government spends more money managing its western lands than it takes in.  In addition, the government provides many free services to ranchers, such as the killing of thousands of predators at taxpayer expense to protect their livestock.

[See “Costs and Consequences, the Real Cost of Livestock Grazing on America’s Public Lands”  report from the Center for Biological Diversity, authored by Christine Glaser, Chcuk Romaniello, and Karyn Moskowitz http://www.biologicaldiversity.org/programs/public_lands/grazing/pdfs/CostsAndConsequences_01-2015.pdf]

The Oregon protestors are definitely not asking to pay free market prices to graze.  They just want the cake of federal subsidies without having to do any of the hard work to keep the land productive for all uses for future generations.   (And that includes wildlife sustenance and nature tourism.

One non-economic irony.  They are claiming they want to federal land returned to the people, claiming that in fact the federal land was “taken” from them.   This response was greeted with outrage by the surviving member of the Burns Paiute Tribe, the Native American group driven off the land these protesters are now occupying by the US army back in the 19th century.     [See “Tribe Denounces Malheur Refuge Occupation” at  news/series/burns-oregon-standoff-bundy-militia-news-updates/tribe-denounces-malheur-refuge-occupation-/ ]

There are two issues in Oregon?   Will law enforcement agencies stop handling these criminals with kid gloves?   (Imagine if they were black protesting too high sentences for black lawbreakers by occupying a public building?)   Second:  Will individual selfishness triumph?  Those are the developing story from Oregon.

Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author (with Howard Sherman) of Principles of Macroeconomics: Activist vs. Austerity Policies.

The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.

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