Thus far the typical libertarian response to the growing clamor has been to challenge the science behind it. Now it really is the scientific consensus that global warming occurred during the twentieth century. What is not so obvious is that (1) humans caused this warming and (2) this warming is necessarily bad.

Although it is interesting to explore the question of whether science has been perverted in the cause of environmentalism, there is a danger for libertarians in pinning their entire case on this strategy. After all, every serious student of science knows that when it comes to empirical claims, we never achieve certainty. For example, even if today one thinks that there are insurmountable problems facing the theory of manmade global warming, one still must accept the possibility that new evidence or theoretical advances could indicate that the environmentalists are perfectly right. Another possibility is that there is some other, similar disaster lurking unsuspected.

For these reasons, I believe it is crucial to accept provisionally, for the sake of argument, the scientific claims behind the case for manmade global warming. In the present article I will demonstrate that it still would not follow that the taxes and other regulations typically proposed by greens are the best way to address the problem. Just as the free market is still the optimal economic arrangement, regardless of how many citizens are angels or devils, so too does the free market outperform government intervention, regardless of the fragility of Earth’s ecosystems.

When trying to determine if the free market is to blame for possibly dangerous carbon emissions, a logical starting point is to list the numerous ways that government policies encourage the very activities that Al Gore and his friends want us to curtail.

The U.S. government has subsidized many activities that burn carbon: it has seized land through eminent domain to build highways, funded rural electrification projects, and fought wars to ensure Americans’ access to oil. After World War II it played a key role in the mass exodus of the middle class from urban centers to the suburbs, chiefly through encouraging mortgage lending.

Every American schoolchild has heard of the bold transcontinental railroad (finished with great ceremony at Promontory Summit, Utah) promoted by the federal government. Historian Burt Folsom explains that due to the construction contracts, the incentive was to lay as much track as possible between points A and B—hardly an approach to economize on carbon emissions from the wood- and coal-burning locomotives. For a more recent example, consider John F. Kennedy’s visionary moon shot. I’m no engineer, but I’ve seen the takeoffs of the Apollo spacecraft and think it’s quite likely that the free market’s use of those resources would have involved far lower CO2 emissions. While myriad government policies have thus encouraged carbon emissions, at the same time the government has restricted activities that would have reduced them. For example, there would probably be far more reliance on nuclear power were it not for the overblown regulations of this energy source. For a different example, imagine the reduction in emissions if the government would merely allow market-clearing pricing for the nation’s major roads, thereby eliminating traffic jams! The pollution from vehicles in major urban areas could be drastically cut overnight if the government set tolls to whatever the market could bear—or better yet, sold bridges and highways to private owners.

Of course, there is no way to determine just what the energy landscape in America would look like if these interventions had not occurred. Yet it is entirely possible that on net, with a freer market economy, in the past we would have burned less fossil fuel and today we would be more energy efficient.

Even if it were true that reliance on the free-enterprise system makes it difficult to curtail activities that contribute to global warming, still the undeniable advantages of unfettered markets would allow humans to deal with climate change more easily. For example, the financial industry, by creating new securities and derivative markets, could crystallize the “dispersed knowledge” that many different experts held in order to coordinate and mobilize mankind’s total response to global warming. For instance, weather futures can serve to spread the risk of bad weather beyond the local area affected. Perhaps there could arise a market betting on the areas most likely to be permanently flooded. That may seem ghoulish, but by betting on their own area, inhabitants could offset the cost of relocating should the flooding occur. Creative entrepreneurs, left free to innovate, will generate a wealth of alternative energy sources. (State intervention, of course, tends to stifle innovations that threaten the continued dominance of currently powerful special interests, such as oil companies—for example, the state of North Carolina recently fined Bob Teixeira for running his car on soybean oil.)

Private insurers have a strong incentive to assess the potential effects of global warming without bias in order to price their policies optimally—if they overestimate the risk, they will lose business to lower-priced rivals; if they are too sanguine about the dangers, they will lose money once the claims start rolling in. Individuals finding their homes or businesses threatened by rising sea levels will find it easier to relocate to the extent that unfettered markets have made them wealthier. Industrial manufacturers, as long as they are held liable for the negative environmental effects of their production processes—a traditional common-law liability from which state policies intended to “promote industry” have often sought to shield manufacturers—will strive to develop technologies that minimize the environmental impact of their activities without sacrificing efficiency. Government interventions and “five-year plans,” even when they are sincere attempts to protect the environment rather than disguised schemes to benefit some powerful lobby, lack the profit incentive and are protected from the competitive pressures that drive private actors to seek an optimal cost-benefit tradeoff.

If the situation truly becomes dire, it will be free-market capitalism that allows humans to develop techniques for sucking massive amounts of carbon out of the atmosphere, and to colonize the oceans and outer space. Beyond these futuristic possibilities, the obvious responses to global warming—such as more houses with AC, sturdier sea walls, and better equipment to evacuate flooded regions—are again only feasible when the free market is unleashed.

It is the poorest people and nations that stand to suffer the most if the worst-case scenario for global warming is realized, and the only reliable way to alleviate their poverty, and thus help protect them from those effects, is the free market.

Can the Market Meet the Threat Head-On?

In the first section I summarized some of the ways governments inadvertently contribute to the very activities that allegedly cause dangerous global warming; in the second I sketched some of the ways that free markets allow humans to better adapt to climate change. However, I haven’t really tackled the problem directly. Am I conceding that with a worldwide problem the market—which is just dandy for one-on-one interactions—can’t match the concerted “will of the people” working through their elected representatives for a common solution?

Of course not. Even when economic transactions generate so-called negative externalities (activities that shower harms on third parties), I still contend that the free market is the best institution for identifying and reducing the problems.

One way negative externalities can be addressed without turning to state coercion is public censure of individuals or groups widely perceived to be flouting core moral principles or trampling the common good, even if their actions are not technically illegal. Large, private companies and prominent, wealthy individuals are generally quite sensitive to public pressure campaigns.

To cite just one recent, significant example, Temple Grandin, a notable advocate for the humane treatment of livestock, asserts that McDonald’s is the world leader in improving slaughterhouse conditions. While many executives at the fast-food giant genuinely may be concerned with the welfare of cattle, pigs, and chickens, undoubtedly a strong element of self-interest is also at work here, as the company realizes that corporate image affects consumers’ buying decisions.

But that self-interest does not negate the laudable outcome of the pressure McDonald’s has applied to its suppliers to meet the stringent standards it has set for animal-handling facilities. Similarly, to the degree that the broad public regards manmade global warming as a serious problem, companies will strive to be seen as “good corporate citizens” that are addressing the matter. And this isn’t ivory-tower speculation on my part—I can see the “green friendly” ads already.

Critics of libertarianism sometimes denigrate it as a political program of “market fundamentalism” that, if put into practice, would reduce all human values to the price they can fetch as mere commodities. But that is a caricature of the social arrangements advocated by any sensible libertarian. The great figures of classical-liberal and libertarian thought have always recognized the vital contributions that nonmarket institutions, such as churches, families, charities, social clubs, communities of scholars and their students, art foundations, conservation groups, neighborhood associations, and youth athletic leagues, make to the healthy functioning of a free society. What libertarians offer as an alternative to statism is not a social order that judges every human interaction solely on a miserly calculation of profit or loss, but a society in which every desirable form of voluntary association is allowed to flourish, free from coercive interference by the state.

Customary Law

Besides the samples listed above, most libertarians recognize private or customary law as another important, nonmarket source of social order. A historical case in point is the Anglo-American common-law tradition in which legal norms evolved spontaneously from the customs of the people to whom it applied, rather than through legislation and state planning deliberately aimed at achieving some “public good.” The many centuries during which the common law sustained civic order in the face of inevitable divergences between individual citizens’ own interests demonstrate that a successful legal order does not inevitably require state sponsorship. The common law has shown itself to be fully capable of dealing with a number of issues that, while not exhibiting the worldwide scope of global warming, are still similar to our present concern in arising from the cumulative effects of many individual actions, each of which, regarded in isolation, appears to be unproblematic and not subject to legal sanction. For instance, the salmon-fishing streams of Scotland are a valuable natural resource, and the communities along them have developed quite successful institutions for ensuring the value of the streams is maintained, including private policing and legal penalties for overfishing and for polluting the water.

The many cases in which voluntary solutions to problems of collective choice have worked pose an empirical embarrassment for those who argue that “public goods” must be provided by the government. Most advocates of compulsory solutions to pollution abatement, for example, would assert that voluntary efforts will be vitiated by “free riding.” If individuals are not forced to contribute their fair share toward addressing these problems, this argument runs, each person rationally will hold back and hope others will pay for the proposed solution, since any free riders would gain the benefits (such as clean air) anyway. Since almost no one likes to be “the sucker,” it follows that the amount of resources devoted to the provision of the public good will fall woefully shy of the total that would be available if each person gave the amount he’d be willing to give if only he could count on everyone else pitching in equally. The sole solution that can be imagined is for the members of a society to create a “social contract” by which they are forced to pay for pollution abatement.

However, Anthony de Jasay notes in his book The State that this argument is severely flawed. If people cannot solve public-goods problems through voluntary cooperation, how can they rely on politicians’ promises to do so? There is no external authority to enforce those promises. There is only public opinion, the same thing that would enforce voluntary solutions. Moreover, government is itself a “public good” in the sense that free riders benefit from the efforts of those who try to get the government to produce public goods such as clean air.

Is Temperature a Public Good?

Another consideration is that the earth’s temperature isn’t such a public good after all. That is, certain people really do have more at stake, particularly if the warming is moderate. For example, if Manhattan became submerged because of rising sea levels, that calamity would not affect every human being equally. The residents of Manhattan and the owners of its skyscrapers would be hurt far more than people living in inland China. Because all the various potential dangers of global warming affect particular people more intensively than others, it is these groups that (in a free market) would have the incentive to reduce CO2 concentrations. For example, if rising sea levels would cause $10 trillion in damage to a comparatively small group of wealthy individuals, that’s a huge “pie” that the wealthy can offer others to motivate them to reduce emissions.

Despite my optimism about the potential to deal with environmental problems through voluntary means, I don’t wish to be misunderstood: If the official global-warming story is true, it presents a serious problem that humanity will find difficult to solve through voluntary means. But this isn’t a strike against voluntarism—of course a difficult problem will be difficult to solve! By the very same token, the government doesn’t do a terrible job at collecting stray dogs, because that’s a very simple task. When it comes to harder assignments, such as stopping terrorism or reducing teen pregnancy, the government’s record is quite a bit worse.

The very features of the official global-warming scenario that hamper purely private solutions would apply equally to government efforts. For example, even if the U.S. government passed draconian measures at home, that alone wouldn’t be enough if China and Indiadon’t follow suit. And just as private companies in a free market may have an incentive to pollute if they can get away with it, so the state, under the influence of special-interest groups and run by leaders always tempted to ignore the public good in favor of increasing their own power and wealth, can have incentives to allow more pollution than is optimal. (It should be clear the “best” amount of pollution is not zero, because even using fire to cook generates some pollutants, and I doubt that anyone but the most misanthropic, fanatical nature worshippers want to reverse all of the last 40,000 years of human progress.)

As in all debates over public versus private choice, it’s inappropriate to measure a realistic free-market response to global warming against an idealized government program. We must try to envision what real people would do if their property rights were respected and compare that scenario with the probable outcome of actual politicians in today’s world being given a blank check in the name of saving the earth.

Government programs don’t ameliorate world poverty or sickness, and no libertarian would deny that these are serious problems. So even if manmade global warming is a real threat, why should we expect governments to get it right on this issue?

Related posts:

1. Global Warming Revisited
2. Higher CO2, More Global Warming, and Less Extinction?
3. Global Warming and the Layman

Perhaps it is the emphasis on youth in marketing and advertising—aside from a few prescription-drug commercials these days—that creates the impression that the rich are all young or have their career paths set by age 30. In fact, however, America’s business landscape blooms with people who didn’t hit their stride until they reached 50. Opportunity sometimes knocks later rather than sooner, but as the following examples show, what is important is whether or not you are ready to open the door.

John K. Hanson (born 1913), who was a furniture dealer after World War II in Forest City, Iowa, came up with the concept often associated with older people, the Winnebago motor home. He once accepted livestock in payment for couches and tables, even drawing the attention of Time magazine in 1947. Concerned his little town might be shriveling with the decline of family farming, Hanson pondered ways to save the town. Rather than run to the government for aid, Hanson noticed (ironically, also in Time) an article about the camping and trailer boom in California. After researching the project in person, he convinced more than 200 local townspeople to invest $50,000 in a corporation to manufacture travel trailers for a California company.

That venture failed, however, not long after the first trailer came off the assembly line. Hanson, convinced that the outdoors movement was a trend, bought out some investors and encouraged others to stay in and give the project another try. At Winnebago Industries he copied Alfred Sloan’s model at General Motors: have plenty of variety in cost, luxury, and accessories. After ten years the company had 20 models of campers and mobile homes, all making use of Hanson’s innovative foam-rubber cushions and mattresses that made the units more comfortable and thus more profitable. He also introduced the “unbalanced panel,” in which plywood and aluminum sandwiched a layer of Styrofoam insulation, which proved lighter and cheaper than existing “balanced” panels.

By 1965 Winnebago reached $2.8 million in sales, offered stock to the public, and soon became the first exclusively recreational vehicle firm listed on the New York Stock Exchange. After retiring, Hanson watched Winnebago stock slide from over $80 to a low of $1.75 in 1979. Coming out of retirement at age 65, Hanson brought the company back to profitability, although it was difficult. He had to fire more than 3,200 employees: “I came in like Wyatt Earp. I just lined ‘em up and shot ‘em down.”¹ But he saved the company, and for the second time, saved the town. Reflecting back on whether he could have started Winnebago at an earlier age, he concluded there was no way. He did not have the experience or knowledge.

A more colorful and bombastic figure, Phineas Taylor “P.T.” Barnum experienced success even later in life. Barnum (born 1810) was a natural salesman, who loved a practical joke. A prankster as a child, he once pushed a scam too far when he had a friend spread the word around town that he was an escaped killer. A mob nearly lynched him. But this, and other experiences, convinced Barnum of the incredible power of hype—that publicity could sell anything. In 1835, he managed the American Museum, where he displayed a woman he claimed was 165 years old, and when public interest declined, he wrote articles to the local papers under pseudonyms accusing him—Barnum—of fraud regarding the exhibit, and attendance again soared. Although he never admitted it, one of his main attractions at the museum was the “Feejee Mermaid,” a creature that Barnum had apparently sewn together from a monkey’s head and a large fish’s tail.

No matter what the exhibit, though, Barnum learned that if you promoted it with “the largest” or “greatest,” or “most spectacular,” people would come to see it. But he also knew which acts sold, bringing the famous Jenny Lind, the “Swedish Nightingale,” to America for a tour. Typically, Barnum’s promotional skills produced a crowd of 30,000 to greet her.

Barnum went bankrupt in 1855 after getting involved with a clock-making company in which he was himself swindled. Embarrassed at being out-hustled, he rebuilt his fortune around exhibits of wild animals and birds. Collaborating with a circus group, Barnum conceived of the notion of moving the animals from town to town by railroad, although he still was not showing a profit. In 1880, however, he encountered the London Circus, run by James Bailey. They merged, with Barnum handling the promotion. Thus it was not until P.T. Barnum was 70 that the famous Barnum and Bailey Circus became a solid business.²

Fast Food at Fifty

Someone almost as well-known as Barnum, McDonald’s founder Ray Kroc, likewise did not come into his own until middle age. Kroc was a 52 year-old Dixie Cup salesman when he learned of a new product called the Multimixer, which mixed several milkshakes at once. When Kroc quit his paper-cup job to sell Multimixers, he became acquainted with Mac and Dick McDonald in San Bernadino, California. He observed their fast-food operation firsthand in 1954 and was amazed at the assembly-line production. All the operation needed, he thought, was his Multimixers. Working out a deal with the brothers for the name, Kroc opened his first location in Des Plaines, Illinois, and after more than a year, he had enough money to open other locations. Within five years Kroc, well past the mid-century mark, had 200 restaurants. Within another seven years the company would open 100 new stores per year.³

Less well known, but nearly as successful, were two other middle-aged masters of sales, Lowell Paxson (born 1934) and Roy Speer (born 1932), co-founders of the Home Shopping Network in 1982. Paxson had owned an AM radio station in Clearwater, Florida, but found FM radio stealing his listeners. He had difficulty selling ad time, so he experimented with selling products directly. Acquiring overstocked products from local merchants, he premiered a show called “Suncoast Bargainers.” After cable television penetrated the market, he decided to make the move to TV, where people could see the goods.

Paxson found his business and management skills wanting in some areas, so he looked for a partner. He found Roy Speer, a man nearly his own age. The two opened Vision Cable System in Clearwater to carry the Home Shopping Channel. Initially only 200,000 cable subscribers saw the show. Still, the duo had nearly $900,000 in sales after a year. They looked for an opportunity to go national, and in 1985, the Home Shopping Network began broadcasting 24 hours a day, earning $6 million in six months. Demand was so great that a year later, they started HSN2, a second network featuring more upscale, name-brand merchandise such as Gucci and Yamaha. Although the “rocket ride” that the two men experienced slowed in the late 1980s, when Sears and J. C. Penney started direct sales on cable, the success of Paxson and Speer seemed to confirm the adage that life begins at 50.⁴

Tonic and Soft Water

Probably few entrepreneurs had as hard a road to hoe as Lydia Pinkham, a housewife whose husband, Isaac, was in a wheelchair and who had five children to feed. The Panic of 1873 had pushed the Pinkhams into abject poverty, and out of desperation Lydia began selling a vegetable compound for “female complaints”—a term that covered a number of discomforts related to women’s anatomy. Manufacturing the tonic in her basement, she sent her two sons to sell and distribute the product, using their wages to purchase supplies. Husband Isaac wrote copy and stuffed envelopes. The family’s break came when an ad placed in the Boston Herald brought in large orders. By that time, Lydia was 60 and had her own image placed on the bottles. A new ad campaign, using streetcar signs, magazines, and bottles, made Lydia Pinkham a household name. Her share of misery did not end, though, as both sons died of tuberculosis, at which time Pinkham, then nearing 70, sold the business.⁵

Emmett Culligan was certainly younger than Lydia Pinkham when he invented his water-softener equipment in the early 1920s, but he did not make a go of his business until he was close to 50. In business terms, though, he had already lived two lifetimes. Culligan had been worth $200,000 at age 28 when the value of his lands plummeted and forced him to move home with his mother. Meanwhile, he had experimented with a filter that removed hard minerals from water using a natural greensand called zeolite. Borrowing a bag of the sand, he experimented until he perfected the device. Opening a new firm in St. Paul in 1924, Culligan immediately got into patent squabbles and found himself broke again. After resolving the dispute, he continued to believe in the water filter and concluded that he merely had to find a way to bring the price down to see heavy sales.

Culligan also understood that no matter how good the product was, it would not just “sell itself.” Creating the right type of sales force was key. Ready to try again in the middle of the Great Depression, Culligan opened a new company in Northbrook, Illinois. Using new machinery, he got the price down, but the sales gimmick that proved successful was a guarantee that the customer could cancel service anytime. Continuing to sell during World War II, by V-E day, Culligan had nearly half a million subscribers. Previously he had hired salesmen to copy the tactics of vacuum-cleaner salesmen or the famous “Fuller Brush Man.” But by the 1950s times had changed, and Culligan altered his approach. An ad company in 1959 came up with the famous line, “Hey, Culligan Man,” which characterized all the company’s promotions. By the early 1960s, sales had doubled, and Emmett Culligan, having made his fortune after he was 50, retired before he lost another.⁶

Mary Kay

Opportunity is no respecter of persons or circumstances. Consider Mary Kay Ash (born 1915), whose life resembled a movie, something like The First Wives’ Club. Supporting her husband by selling cleaning supplies and conducting in-home demonstrations, Ash attained a top position and a good salary in a direct-sales organization. She was repeatedly passed over for promotions, however, even after outperforming male counterparts. Then, having gotten her husband’s company off the ground, she found herself served with divorce papers. Already in her late 40s with a family to support, she took more sales positions, until she encountered a woman who had developed her own skin products. Purchasing these, Ash started her own company in 1963 under the name Beauty by Mary Kay. She conceived the sales tactic in which a woman would host an in-home beauty show, or party, for her friends in return for certain rewards. Most of Ash’s sales force were women—many in the same position as she had been—and she emphasized incentives as a means to boost sales. Although she gave out bonuses, vacations, and other prizes, the most famous of her incentives was a car. At first she gave away pink Buick Regals, but eventually upgraded the prize to the famous Mary Kay pink Cadillac.

By the late 1980s Mary Kay had 120,000 employees and had established itself as one of the leading cosmetics/beauty companies in the world. When she died in 2001, Mary Kay had created an empire, all of it after age 50.⁷

If the stories of these eight individuals tell us anything, it is that opportunity knocks, although sometimes later rather than sooner. The key is to be ready to open the door. More important, though, most of these successful entrepreneurs failed and struggled, some of them for decades, before finally landing on the product or service that made them famous. Resilience, determination, and a refusal to view age, poor health, marital status, or any other circumstance as an impediment moved these men and women to the forefront of their businesses.

Notes

1. Quoted in Joseph J. Fucini and Suzy Fucini, Experience, Inc. (New York: Free Press, 1987), p. 64.
2. Phineas T. Barnum, Struggles and Triumphs, or, Forty Years’ Recollections of P.T. Barnum (Buffalo, N.Y.: Courier Company, 1878), and Irving Wallace, The Fabulous Showman: The Life and Times of P. T. Barnum (New York: Knopf, 1939).
3. Ray Kroc and Robert Anderson, Grinding It Out: The Making of McDonald’s (Chicago: Contemporary Books, 1977).
4. See Fucini and Fucini, pp. 89–95.
5. Robert Sobel and David B. Sicilia, The Entrepreneurs: An American Adventure (Boston: Houghton Mifflin, 1986), pp. 193–96.
6. Emmett Culligan, “Softeners Rented,” Business Week, December 28, 1946, p. 21, and Joseph J. Fucini and Suzy Fucini, Entrepreneurs: The Men and Women Behind Famous Brand Names and How They Made It (Boston: G. K. Hall, 1985), pp. 99–101.
7. See P. Rosenfield, “The Beautiful Make-Up of Mary Kay,” Saturday Evening Post, October 1981, pp. 58–63, and Larry Schweikart, Entrepreneurial Adventure: A History of Business in the United States (Ft. Worth, Tex.: Harcourt, 2000), pp. 504–505.

Related posts:

1. Equal Opportunity versus Individual Opportunity
2. Opportunity Cost and Hidden Inventions
3. Urban Renewal– Opportunity for Land Piracy?