Peace, Prosperity and Property Rights

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Peace, Prosperity and Property Rights

By: Paul Schwennesen
Posted on January 28, 2016 FREE Insights Topics:

Foreword by John Baden

We can learn a great deal from the recent standoff in the Malheur National Wildlife Refuge. Clear and agreed upon property rights are critical to civility and productivity. It is nearly impossible to have peace and prosperity when property rights are seriously contested. This is as true in Oregon as in Israel.

Although the percent varies a great deal, the federal government owns roughly one half of the West, just over 53% in Oregon. Agencies in the departments of Interior and Agriculture manage this land. Private land owners, mainly ranchers, hold renewable grazing privileges on some of this land.

Only a few westerners understand this system. Apart from public land scholars, I've never met anyone in the East who does. The reason is simple: Federal lands are a complex mosaic of bureaucries, cultures, economics, individuals, and institutions.  Symbolism is high while substance is low. Further, the protestors' values are antithetical to those of America's elite media. Here is an example:

79-Year-Old Bird Watcher Takes Down Oregon Militant With Old High School Wrestling Move (The Lapine, January 10)

BURNS, OREGON — Grandfather of four Robert Saunders says he was just out to check on some young burrowing owls at the crack of dawn this morning when he was confronted by a “red-faced pudgy man with a big gun” and things got physical when Saunders refused the barked orders to halt and identify himself. But it wasn’t the retired teacher who ended up on the ground.

“Well heck, one second he was warming his hands by this kind of puny little fire and the next second he was running at me and shouting to get down on the ground,” Saunders told reporters gathered near the Malheur National Wildlife Refuge

 

 

“Made me mad really. It’s public property and here this guy is acting all big and tough and pushy.” *

In addition, the protestors present bizarre rational justifying their cause. As one example, Ammon Bundy a Phoenix, Arizona fleet car manager who is the leader claims he began the occupation after receiving a divine message ordering him to do so. This is not a persuasive argument in the policy arena.


 

 

 




Paul Schwennesen is a ranch owner, entrepreneur, and savvy political economist.  He has written a most perceptive essay on the context and causes of the Oregon protest. It helped me understand why it is nearly impossible to have peace and prosperity when property rights are seriously contested.

The Stetson Rebellion

by Paul Schwennesen

“…a little rebellion now and then is a good thing…”

—Thomas Jefferson to James Madison, 1787.

There is something deeply American going on out in Oregon. Urban elites from both ends of the political spectrum have dismissed the Malheur Standoff as ridiculous, gleefully rendering the participants as boorish and hypocritical. They may be both (“boorish,” after all, comes from the Dutch for “farmer” and who isn’t a hypocrite?), but by smugly discrediting the actors, we lose sight of the reason for the action. Like good Tories haughtily renouncing tea dumping in Boston ‘Harbour,’ we may be shocked to find that the ragamuffins are not only saying something important, but that their message is striking a chord.

What they are saying is that the Federal Government is too bloated, too heavy-handed, and too corrupt, and that it is most spectacularly evident on the rugged rangelands of the West. What makes this Stetson Rebellion a quintessentially American act in the classical sense (as opposed to the petty sniveling of student-debt protests these months past) is its stance against overweening authority. Right or wrong, the perception is that private land is being steadily absorbed into the federal domain, good people are being unjustly incarcerated on trumped up charges, and the social contract that made ranching possible is being unilaterally amended in favor of newer, “greener” causes. Ranchers are pissed. 

I can’t begin to understand (let alone address) all the complexities here, but perhaps I can push back on one aspect of the growing (and incorrect) narrative that ranchers are welfare recipients. This blossoming meme implies that ranchers are getting a “sweetheart” deal from the government through artificially low grazing fees on public lands, and should therefore “stop whining.” U.S. Uncut says that, “The US government charges 93 percent less for cattle grazing than private landowners” citing numbers published by the Center for Biological Diversity. 

The comparison is inappropriate. Ranchers pay $1.69 per AUM (animal unit month —what it takes to feed one cow and her calf for one month) to graze cattle on federal public land. And yes, that is substantially less than what it usually costs to graze private lands and somewhat less than state lands (depending on the state). But this simplistic calculus misses the fact that, unlike private grazing leases, most ranchers bought and paid for federal grazing permits when they bought their ranch — and by doing so, they paid for much of this “discount” up front. Also, unlike private or state leases, any improvements ranchers make on federal land (pipelines, fences, etc.) immediately become the property of the US Government, a fact that seriously tips the scales against this “sweetheart” deal. 

An even larger (though harder to discern) point is that it’s not clear that grazing rates are “low” in the first place. Outsiders are prone to make a snap comparison between federal and private grazing rates and conclude that ranchers are being “subsidized” with artificially low prices. The problem with this comparison is that private, market-driven grazing rates are derived on prime, productive, often irrigated land--land that settlers chose to purchase under the Homestead Act precisely because they were prime (what fool would pay the same for lush land as scrubland?) Not surprisingly, these private lands are generally well watered, well developed, and easily accessed. Federal lease land, meanwhile, is usually dry, often inaccessible, and is invariably wrapped in an unattractive bundle of red tape. Acre for acre, it is apples and oranges.

Moreover, if federal grazing rates were such a cushy “good deal” one would need to explain why ranches that come with federal leases are invariably seen as a bad deal by ranchers wishing to purchase a cattle operation. It’s well known that “State Lease” or “Lots of Private Land” have marketing cache, whereas “Federal Lease” on a listing is a distinct downside. 

One would also need to explain why so many federal allotments are “open” (un-leased). Near our ranch in Arizona, there are tens of thousands of acres of federal lease lands that remain unfilled; the “welfare” rate isn’t enough to make a living on. The market has indeed valued these lease-rates, and the “sweetheart” Federal rates appear to be marginally attractive at best. 

Let’s run a counterfactual thought-experiment: if the Federal Government were to suddenly sell 500 million acres of public land on the open market (reserving 140 million acres, say, for national parks) it seems entirely plausible that the glut of marginal lands would generate a market grazing rate below the rates currently charged by the US government. In other words, it’s as reasonable to assume that ranchers are overpayingas underpaying. The murkiness in this valuation simply highlights the absence of common-sense market signals and the absurdity of bureaucratically mandated lease rates. Price-controls didn’t work for the Soviets, they don’t work for “Rent-Control,” and they don’t work for public land.  Allowing politicians to set prices instead of freely consenting adults is a mistake we just can’t seem to stop making.

I’m reminded of a conversation we had with a visitor from Europe: after explaining what we do on lease-lands in terms of rotating cow herds, managing watersheds, maintaining fences, and so on, she asked—“and how much does the government pay you to do all that?” A fair question, to which the answer is “zilch.”

The Halves and the Halve-Nots

Now, all this said, grazing rates really aren’t the crux of the issue. They’re surely not worth dying over. The issue is much deeper--it’s about land ownership. According to the 1/21/16Congressional Research Service (CRS), the Federal Government owns about half (46.9%) of the 11 coterminous western states. In contrast, the federal government owns just 4% of lands in all the other states. This is a glaring, order-of-magnitude discrepancy in land tenure between East and West, a reality that the CRS says, “has contributed to a higher degree of controversy over land ownership and use in that part of the country.” Well, that’s certainly true…

While the feds own half of the West, they have also steadily reduced ranchers’ ability to graze that land. The amount of grazing authorized on lands managed by the Bureau of Land Management is just half of what it was in the 1950s. This “halving of the half” lends considerable weight to the perception that ranching is being systematically edged off the map. 

In the end, what we are seeing in Oregon is the lingering manifestation of antiquated Progressive-era planning that believed in the efficiency of centralized command-and-control. The wisdom of that policy appears increasingly anachronistic—the land has not benefitted, the “beneficiary public” loses money on “its” resource, and the local people who have lived, loved, and stewarded this land are furious. Shawn Regan, at the Property and Environment Research Center, is right to point out that, “We fight over western lands because it’s unclear who has what rights.” The Stetson Rebellion is, in its clumsy way, affirming that we need a new conversation over the just and effective allocation of public lands in the American West.

As Edward Abbey (no friend of public grazing!) said, “A patriot must always be ready to defend his country against his government.” It’s hard to imagine him standing shoulder-to-shoulder with ranchers in Oregon, and yet something tells me he would. It is distinctly American to stand up against perceived abuse, and in Jeffersonian style we should welcome this manifestation of “tumultuous liberty.”

-- Malo periculosam libertatem quam quietam servitutem.


*Shortly after this column was posted, Dave Anderson, a friend and seasonal neighbor, wrote to tell me:  "John, I liked this piece, but wanted to mention that the Lapine is a satire website--I'm pretty sure this didn't actually happen."

Friends are a blessing!!

 

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