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September 10, 2005

The Appeal of the Commons

Both the left and the right miss something in their debates about climate change; the idea of a sky trust offers a third way.

I’m a businessman. I know the profit motive works. I cherish individual initiative and believe society should reward it. At the same time, I know that markets create illth (John Ruskin’s fine word) as well as wealth, and can’t solve all our problems.

I’m also a liberal, in the sense that I’m sympathetic to a role for government in society. Yet I’ve come to doubt whether representative government, within an economy dominated by large corporations, can ever adequately protect the interests of ordinary citizens, much less the needs of future generations, ecosystems and non-human species. I see this as a systemic problem of democracy-within-capitalism, not just a matter of electing better leaders.

If you share some of the preceding sentiments, then you might be — as I have lately been — confused and demoralized. If private profit-seeking has its limits, and at the same time government is an inadequate remedy, wherein lies hope?

This, I’d aver, is one of the grand dilemmas of our time. For years the right has been saying — nay, shouting — that government is flawed and only markets can save us. For just as long, the left has been insisting that markets are flawed and only government can save us. The trouble is, both sides are half right and half wrong. They’re both right that market and state are flawed, and both wrong that either market or state can save us. But if that’s the case, what are we to do? Is there, perhaps, a third set of institutions that can help?

I began pondering this dilemma about ten years ago, when I joined the board of Redefining Progress, a San Francisco think tank that aspires to break out of the boxes of liberal and conservative orthodoxy. My initial area of focus was climate change caused by human emissions of heat-trapping gases. Some analysts saw this as a “tragedy of the commons.” I saw it as a tragedy first of the market, which has no way of curbing its own excesses, and second of government, which fails to protect the atmosphere because polluting corporations are powerful and future generations don’t vote. This way of viewing the problem led to a hypothesis: if the commons is a victim of market and government failure, rather than a cause, the remedy might be to strengthen the commons rather than to blame it (and then enclose it).

But how might that be done? According to prevailing wisdom, commons are inherently difficult to manage because no one has an ownership role. If Waste Management, Inc. owned the atmosphere, it would charge dumpers a tipping fee, just as it does with its terrestrial landfills; the amount of the fee would reflect both the demand for dumping and the remaining supply of storage space. But since no one (at the moment) has title to the atmosphere, dumping proceeds without cost or limit.

“Who owns the sky?” became a kind of Zen koan for me — a seemingly innocent query that, upon reflection, opens many unexpected doors. I wondered what would happen if title to the atmosphere were held by a trust whose beneficiaries were all citizens equally. Such a trust would do exactly what Waste Management, Inc., if it owned the sky, would do: charge dumpers for filling its dwindling storage space. Pollution would cost more and there’d be steadily less of it. All this would happen without government intervention (other than assigning property rights to the trust). And there’d be a wonderful bonus: every American would get a dividend check! This model became known as the “sky trust” and has made some political headway.

In time, I realized this model could be extended to multiple, if not all, forms of pollution, and to much else as well. Waste sinks like air, water and soil are shared inheritances that have limited absorption capacities. They (along with other depletable gifts of nature) can and should be placed in trust for future generations — not just figuratively, but literally. The trusts would have two fiduciary responsibilities: first, to preserve their assets for future generations, and second, to use revenue (e.g., from dumping fees) for the benefit of living citizens more or less equally. Part could be paid out in dividends, and part could be invested in “public goods” such as education, mass transit, and ecological restoration. Polluters would pay, nature and citizen-owners would benefit — now and forever.

Government’s job would be to nurture commons institutions like these with as much vigor as it currently nurtures private corporations. In due time an enlarged commons sector would become not just a check on markets, but a source of security, health and creativity.