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Context From The Talk

Terry Anderson Asks Who Washes A Rental Car?

Free Market Environmentalism

What's the optimal way? It's a dynamic process and it can't be managed in a static kind of way. One of the tenants of free market environmentalism is to think about this dynamic and find creative ways to integrate dynamic change into this process. The second part of free market environmentalism is quite simple. It's just incentives matter, and this is back to, and then what? It's back to if you fine Ben Cone for cutting trees, and then what? What happens? Incentives matter. Those incentives come in two forms. One, they come in the information that markets provide us, and those incentives tell us a lot. They tell us, well, what do we get if we save those three antelope from Africa? What's the return on our investment of bringing them over and husbanding them? Prices tell us something about the values that people put on the environment. They provide information. 

Secondly, property rights provide incentives for people to act. If I own something you want it, and you offer to pay me, I have to consider what it's worth to you vis-à-vis what it's worth to me. I have an incentive through ownership to ask, "What's this worth? Should I save this species? Should I not save this species? Should I paint my house or not paint my house?" All of those are the kinds of things that Pageau said markets fail at, but free market environmentalism says let's think about how we might get property rights. I wrote a book for the Hoover Institution Press, co-authored with Laura Huggins. 

As we were writing it, I wish I could take credit but I'll give it to Laura. Laura came up with a creative title that said No One Washes a Rental Car, and so I use that all the time to illustrate incentives matter and property rights make a difference. I have a rental car that I have for the few days that I'm here now, and I can assure you I will not, no matter how muddy it might get, I will not take it to the carwash and get it washed before I return it. I used to give this lecture and I'd always say, "No one washes a rental car." Someone came up to me after the lecture and said, "You're wrong." Said, "What do you mean?" They said, "Except Hertz." That even adds better to the point. I don't wash it because I don't own it, but Hertz washes it because it does own it, and so no one washes a rental car except Hertz, illustrates how if we can make the environment an asset as the car is to Hertz, then people are more likely to take of them. 


Terry Anderson, 2017 Hoover Institution Summer Policy Boot Camp