The Productivity of Privatization
If we agree that resources should be employed as efficiently as possible, then the case for privatizing public lands can be reduced to two issues: (1) Would privatization make resources more productive? (2) If so, is it worth the trouble? None of the improvement standards that give definite content to (1) appear to advance the argument for it. Judged by the Pareto standard, it’s clearly false: someone is going to prefer what federal land management delivers. Understood in terms of one of the net-gain standards, (1) may be true, but these standards are so hard to apply that we’re going to have trouble justifying a belief that it is. They are too closely tied to facts about individuals (or what we hope are facts) that are inaccessible to the analyst. So we must either find a way to apply them indirectly or develop some other standard. The indirect approach involves seeking to correlate productivity with some measurable feature of allocation systems. Were such a feature P to be identified, we could determine whether II was more productive than I simply by comparing their P-values. Unfortunately, if there’s something about an improvement standard that makes it hard to decide whether II is productively superior to I, then it’s also going to be hard to establish that systems with higher P-values are more productive, at least for any measure P we can easily ascribe to them. Now we could propose replacing the problematic standard with whatever index is developed: “II uses resources more productively than I” just means that II has a higher P-value than I. The problem here is arguing that systems with higher P-values direct resources to uses that better satisfy the desires of consumers. The net-gain standards derive from analyses of this notion. If we abandon them because they are difficult to apply, we may at the same time break the connection between greater productivity and better satisfying desires. Some of the arguments of privatization advocates can, I think, be construed as appealing indirectly to net-gain standards or directly to other notions of productivity.