18 Jan 2011, 1:33pm
Private land policies
by admin

Koch Bros Are Not Free Marketeers

by Travis Cork

A recent post on the great blog, masterresource.org, congratulates the Koch Companies (includes Georgia Pacific and Flint Hill Resources) for its “adherence to free-market capitalism…”.

No doubt the Koch Brothers are better than most(they support Cato, but for some reason dismiss Mises), but like many, perhaps all businessmen, they do not understand the true nature of a free-market.

An example of their failure to understand the true nature is exemplified by the recent purchase by Flint Hills Resources of two ethanol plants in Iowa. Ethanol has not and so far cannot pay its own way. The propping up of this mis-allocation of scarce resources has had a number of detrimental consequences including adding to the government deficit, fouling price signals in the food market, and damaging engines (my lawn mower for one).

While I do not consider tax credits as a subsidy, it is a form of government intervention that would not exist in a true free-market. Would Flint Hills have bought these plants without considering the after-tax benefits of that government intervention? I doubt it. How does taking advantage of an obvious government intervention signal one’s “adherence to free-market capitalism?” Clearly it does not.

The recent pandering of Georgia Pacific to the Dogwood Alliance and NRDC is another example. In a free-market setting, if GP refuses to buy trees growing on sites it considers rare or endangered, that is certainly GP’s right. Do not doubt other timber buyers will be happy to step in and fill the market void created by GP’s policy.

GP has taken this step with considerable public fanfare, and in the process given support to entities, the aforesaid Dogwood Alliance, et al., that are very hostile to any type of free-market setting for the management and allocation of resources from the forest. With this backing, Dogwood Alliance, et al., will be bolstered in its efforts to champion further government intervention to prevent other timber buyers from buying timber from these sites. That this may damage the owners of timber on any sites that make the Dogwood Alliance’s “endangered” list is apparently not a concern.

GP is being advised by an academic at a land-grant University, UGA (Georgia). In a free-market, there would be no land-grant universities sucking off the taxpayer teat. If GP is such a supporter of free-market capitalism, why did it not hire a private sector expert on land classification?

Because UGA is a supporter of the longleaf pine ecosystem myth, it is a certainty that the academic will look to expand the acres of land that can be classed as endangered. When the Europeans started settling the North American continent in the early 1600s, they found a landscape in the southeast that entirely was created by man, the pre-Columbian settlers. But for the 100s, perhaps 1000s, of years of repeated firing of the Southeastern United States by these Pre-Columbian settlers, there would have been no parklike landscape with scattered longleaf pine. It was not a natural forest. That will not prevent many sites that would be better utilized by loblolly pine from being classed as “endangered”.

If businessmen are going to tout their support of free-markets, they first must understand the true nature of a free-market, and how its business practices aid or impede the process. Give the Kochs whatever praise they are due for being better than most, but do not praise them for their “adherence to free-market capitalism.” They are not there yet.



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