Wednesday, July 14, 2004

Corporate Subsidy Watch: The Environment and Loggers, or Is It?

The Bush Administration is gearing up to open national forests to loggers according to the CSM.

For decades, politicians, environmentalists, and commercial interests have wrangled over what to do with the millions of acres of national forest land that remains pristine. Leave it that way? Bulldoze in roads to provide access for loggers, miners, and energy developers?

This week, the Bush administration signaled its intent to allow more roads to be built for resource extraction and other commercial development in national forest roadless areas. The decision overturns a Clinton-era rule preventing road-building on such federally managed land.

The CSM poses this story in the classical way. Environmentalists and hunters pitched in a battle against real estate developers and loggers. The poor loggers can't get a job because of those dang environmental regulations! Well not quite.

As it turns out the real reason that loggers are going out of business is tree farms. Tree farms are privately owned land where trees are grown and then cut for production of wood and paper products. The increase in supply from well-managed tree farms has been what has been depressing prices in the wood and paper markets.
Nearly 4 billion trees worldwide are cut down each year for paper, representing about 35% of all harvested trees. Fortunately, many of the trees used for paper come from tree farms which are planted and replenished for that purpose.

So as it turns out, those poor loggers aren't being run out of business by overly harsh environmental regulations but by competition from tree farms. The only way they can stay in business is by wastefully using government-administrated land in order to chew up and mow down forests in order to get any profit at all. Frankly it's the same dynamic in Canada as it is in the USA. (Greenpeace citation offered to show issues the same in Canada)

What this story is really about is one industry competing with an old one, and the old one turning to politically connected interests to stay in business when the market would otherwise dictate that they go out of business. So much for the "invisible hand" of the market right? You get in trouble and run to a politician and he'll bail you out, if you donate enough money to him.

If it was really the case of environmental regulations versus logging, that would be one thing. That's probably why the logging industry plays it that way. But the current logging industry simply isn't financially viable and requires government subsidies - to be able to cut down trees for free and sell them - in order to stay in business. Well as a capitalist I'm firmly against that. Let them compete against the tree farms, and the viable businesses will stay afloat and the rest will go down.

Once again the rhetoric of free market and free trade falls flat on its face in the real world, in which I would genuinely support a free market supposing we actually had one over here to support.

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