If you want to see the case for limited government, consider that there’s a siege happening in some dusty corner of Nevada over tortoise welfare.
Cliven Bundy, a Nevada rancher currently engaged in a standoff with the federal government over grazing land that his family has used since the 19th century, is very likely to end up bankrupt, in prison, or dead. As it turns out, the Coase theorem breaks down when one side in the negotiation has a standing army and nothing to lose.
Mr. Bundy’s family has been grazing cattle on their allotment of federal land since the 1870s, and things went along fairly well until the desert tortoise showed up. The Mojave population of desert tortoises is listed as a threatened species, and it is a crime to touch, harm, or harass a wild desert tortoise. (If it seems to you that tortoise harassment should be something less than a national priority for these United States, you are not alone.) It is permissible to adopt tortoises in Nevada, because of course we have a tortoise-adoption program administered by the Bureau of Land Management, which places microchips in the backs of captive tortoises before handing them over to eager new tortoise-keepers — limit one per family. The BLM also has imposed various tortoise-friendly rules on federal lands, and thus Mr. Bundy’s problem: He refused to accept new conditions on his grazing allotment in 1993, and continued pasturing his cattle in defiance of the federal government. This being the United States, litigation ensued, which Mr. Bundy lost, with a 2013 court decision ruling finally in favor of federal tortoise mandates. Mr. Bundy figures he owes the feds some $300,000 in fees, fines, and interest, whereas Uncle Sam puts the figure at more than $1 million. The government has been sporadically seizing his cattle. He calls them “cattle thieves,” which still constitute fighting words in the West.
And it may come to a fight. The outlaw rancher is as of this writing surrounded by a growing detachment of heavily armed law-enforcement agents — the BLM would neither confirm nor deny the deployment of snipers — and with a crowd of more than 100 supporters gathered, he is making comparisons to Ruby Ridge and the Branch Davidian raid at Waco. The BLM says that the rancher’s use of the term “range war” is inflammatory, which of course it is, but then so is the presence of armed federal agents.
Mr. Bundy maintains some eccentric legal theories in support of his case, and examining them in detail would be both exhausting and beyond my scope of expertise. Let us assume that he is in the wrong, legally speaking, and that the feds are in the right. What should be done?
In his famous 1960 article “The Problem of Social Cost,” the most cited law-review article in American academic history, Ronald Coase, subsequently a Nobel laureate, considered the problem of externalities, property rights, negotiation, and legal rules. The most well-known hypothetical example he considered was almost precisely Mr. Bundy’s situation: a case of trespassing cattle. Coase argued that in an environment of free and easy negotiation, the most economically efficient outcome would be achieved irrespective of the question of formal legal rights. For example, if the cost of building a fence to keep in the cattle is less than the cost of the damage the cattle do to the crops of the farmer who lives next door, then the fence will be built regardless of who is “in the right.” If the legal rule says that it is the farmer’s responsibility to protect his own property, then he builds the fence if the cost of doing so is less than the cost of the damage to his crops — but not if the cost is greater. If the legal rule says that it is the rancher’s responsibility to control his cattle, then he also builds the fence if the cost of doing so is less than the cost of the damage to his neighbor’s crops — but not if it costs more. In the latter circumstance, it would be more economically efficient for him to pay restitution to the farmer. Which is to say, you end up with the same outcome regardless of the initial allocation of legal rights.
It’s a fascinating idea, and some years later the Yale law scholar R. C. Ellickson got it into his head to test out the Coase theorem in the very context Coase imagined: conflicts between ranchers and farmers, in this case in Shasta County, Calif. His report, “Of Coase and Cattle: Dispute Resolution among Neighbors in Shasta County,” is itself a minor masterpiece. Among Ellickson’s findings:
The Shasta County evidence indicates that Coase’s Farmer-Rancher Parable correctly anticipates that a change in the rule of liability for cattle trespass does not affect, for example, the quality of fences that separate ranches and farms. The Parable’s explanation for the allocative toothlessness of law is, however, exactly backward. The Parable’s explanation is that transaction costs are low and that parties respond to a new rule by agreeing to an exchange of property rights that perpetuates the prior (efficient) allocation of resources. The field evidence I gathered suggests that a change in animal trespass law indeed fails to affect resource allocation, not because transaction costs are low, but because transaction costs are high. Legal rules are costly to learn and enforce. Trespass incidents are minor irritations between parties who typically have complex continuing relationships that enable them readily to enforce informal norms. The Shasta County evidence indicates that under these conditions, potential disputants ignore the formal law.