F. A. Hayek made many contributions to the social sciences in his lifetime. This post shares his thoughts about natural resources–really mineral resources–from his 1960 book, The Constitution of Liberty. His thinking is contained in the section, “Conservation of Natural Resources,” (pp. 367–71).
The question Hayek addresses is whether self-interested free-market decisions overuse important, even ‘depletable,’ resources, leaving less for posterity from an economic viewpoint. Hayek argues against what might be called conservationism, or conservation for its own sake where present-value analysis does not apply.
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Hayek employed familiar reasoning to explain how privately owned resources had a capital or salable value, which was particularly relevant to mineral deposits for which, ceteris paribus, present production meant less future production. [1] In his words:
…If the owner can get a higher return by selling to those who want to conserve than by exploiting the particular resource himself, he will do so.
“There were times when Lay’s lobbying seemed at odds with his oft-stated belief in free-market solutions. A classic example was Enron’s dependence on such government agencies as the Overseas Private Investment Corporation and the Export-Import Bank, which provided loans and loan guarantees for development project in the third world.”
“Like most Wall Street frenzies, the international development craze was wildly overhyped…. [S]ome of Enron International’s assets were almost comically awful, and others were fields of dreams.”
– Bethany McLean and Peter Elkind, The Smartest Guys in the Room (below)
A best-selling Enron book by Bethany McLean and Peter Elkind, The Smartest Guys in the Room (Penguin: 2003), told of Enron’s many interactions with government. Their treatment of the subject is only the beginning, however. My forthcoming book, Political Enron: A Business History (Part I: 2016), will chronicle Enron’s unprecedented rent-seeking as a warning about the perils of a mixed economy where the worst can get on top.…
“The committee had evidence … from … a very credible witness, that about 16 years of the use of a wind turbine would be necessary before you would actually get back to the cost-benefit of the greenhouse gases forgiven as a result of the construction.”
“People say that [wind-turbine residents] are not really sick at all, that it is just in their heads. It is in their heads. You are quite right. Nausea, anxiety, annoyance, and sleeplessness are sure as hell in your head.
Let me put on the record that I am very much in favor of aspects of renewable energy…. I also want to place on the record my strong support for hydroelectricity in your state, Senator Anne Urquhart, and in the Snowy Mountains. When you can generate in the high peak periods and when you can use off-peak periods to pump water back up to generate again the next time it is needed surely has to be the ultimate value of renewable energy….…