Wednesday, August 24, 2016

When is Limited Resource Utilization "Hoarding"?

For all the importance of private property, sometimes its legal structure includes passive elements which further restrict economic activity for the resources at stake. Indeed, resource hoarding doubtless contributes to a monetary hoarding equivalent during recessions, to a greater degree than recognized. Only consider how prosperous cities often wish to maintain local environments (and their existing values) so as to discourage greater population densities. When does limited resource utilization become a problem?

Some aspects of resource utilization are far more passive than others, hence hidden from view and rationalized a bit differently. For instance, when governments allow specific companies to hoard knowledge application for themselves, the natural result is going to be higher prices.

What is not recognized in the current Epipen debate for instance, is that even though the herbal remedy ephedra was widely available to the public for centuries, in the U.S. we lost the battle (2004) to use this vitally important herbal remedy, via our own resourceful means. While my allergies weren't so strong as to to need ephedra, I suspected this latest regulation would hurt limited income folk who suffered from severe allergies - or worse - anyone experiencing severe allergic reactions, such as the Epipen is intended. The only surprise is that it took twelve years for this problem to surface.

Now, if ephedra gets used at all it is likely tucked away in doctors prescriptions, intended for those fortunate enough to have the discretionary income to visit doctors when they are sick. Worse, now there is not even a competing pharmaceutical company left standing to provide a similar product, to Epipen. Unfortunately, I doubt that many individuals in this debate have connected the dots between the loss of ephedra in a "free" marketplace, and the current situation. Hence I would say that the protection of the public from itself in using ephedra, is nothing but knowledge hoarding. Perhaps we deserve the high prices we get for "protecting" ourselves! Of course I don't think so, but sometimes it is hard not to be cynical.

Bonnie Carr revisited an apt historical example of hoarding in a recent post, which we had also discussed some months earlier in a related context. Thomas Jefferson had written to James Madison, just prior to the beginning of the French Revolution:
In the letter, Jefferson discusses the land use situation in France at a time when the population was facing inadequate stocks of food, noting that much of the land had been claimed by the French nobility, and that it was illegal for anyone to hunt or fish on the land that may only be used for recreational purposes...
Jefferson did not say government had a responsibility to feed people or guarantee land, or game, or what have you. In my interpretation, he said government should prevent hoarding, a supply side policy aimed at the availability of raw materials for subsistence. It is what I would call the ultimate in what today we call a libertarian approach to practicality that answers the question: are people entitled to do what they like when it harms or deprives someone else of a means of survival. Jefferson's answer was, obviously, no. 
It's not easy to imagine knowledge hoarding in the same sense as land hoarding. But ultimately, the result can be the same. And when practical, freely available knowledge is disregarded in the constant efforts to protect us from ourselves, that means more lost discretionary income, and possibly even less food on the table for middle income families whose children suffer from strong allergic reactions.

Granted, some resources are not as important as others, for daily life. But governments and special interests aren't good at telling the difference, as they continue to define how resources of all kinds can be applied in the marketplace. Perhaps citizens would not clamor so for protectionism from other countries, if special interests and governments weren't so interested in the domestic protection of everyone from themselves. Meanwhile they imagine doing so on our behalf, as practical knowledge continues to be undermined for wealth capture. Clearly, this strategy is not working.

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