Book Review: Peter Barnes' "Who Owns the Sky?"

Capitalism 2.0

Who Owns the Sky: Our Common Assets and the Future of Capitalism, by Peter Barnes (Washington: Island Press, 2001).

Who Owns the Sky is an important book at a bitter moment. Its important because it tries to make a realistic proposal for a fair way of managing the USs transition away from carbon-based fuels, and because, in many ways, it seems to actually succeed. It certainly highlights some of the crucial questions, and it just may do a whole lot more. In normal times, it might automatically command a bit of attention

Which is where this bitter moment comes in. With the USs attack on Kyoto taking all the attention just now, the ideas here, useful though they are, could easily be lost in the spume. Most climate activists are busy trying to fend off Bushs claim that Kyoto is unfair. Few of them have much time left to wonder what fairness might actually mean in practice.

Still, it would be too bad if Who Owns the Sky was forgotten in the tumult. For one thing, it does an excellent job of introducing the Sky Trust proposal, and the Sky Trust, in turn, is aimed not at the global debate (where most all of the policy attention goes) but to the problem of designing a realistic and fair climate regime for use within US borders. It addresses the problem of domestic equity, and I think we can agree, just now, that its a crucial one. And if the Sky Trust has only half the potential for making Americans like the climate treaty that Barnes thinks it does, he really may have found the keys to the kingdom.

So if youre reading this website, you need to know about the Sky Trust. The thing is, it probably isnt what you think youre looking for, so you probably have to go out of your way to notice it. For one thing, the Sky Trust proposal is rooted in both market mechanisms and the principle of per capita equity, and the two dont usually go together in peoples minds. And then theres the fact that Barnes (a cofounder of Working Assets) is presented by Island Presss marketing department as Barnes the Entrepreneur, a man to whom we should carefully attend when it comes to reading the tea leaves of hard-world economics. Normally, it would put me off, and Im not alone. But, full disclosure, I know Peter, and I know hes a serious guy. And then there are those two other books, the ones he wrote in the foggy days before climate crises and socially responsible phone companies: Pawns: The Plight of the Citizen-Soldier and, get this, The Peoples Land: A Primer on Land Reform in the United States.

So, a successful businessman who once wrote a book on land reform, and in the United States no less! Thats interesting, more than interesting actually. And, now, an idea that can help us deal with global warming in a fair way Even in the United States

In a Nutshell

Someday, by Kyoto or otherwise, the US will be assigned a share of the global carbon budget. Normally, wed expect this share to go to the US government, but Barnes (who does not particularly trust the government) has another idea. Why not assign the US share of the sky to a public trust, one to which each and every US citizen is granted, at birth or nationalization, a single nontransferable share The Sky trust would then turn around and auction the USs emission rights to the highest bidders (all of which would be corporations, who would thus have to purchase emission rights) and thenthis is the key bitimmediately disburse most of the auction revenue to its citizen shareholders.

There would be three huge immediate wins:

* First, there would be no grandfathering, no quiet sleazy transfer of free emission rights to the corporations, who, lets face it, are going to lobby to the death to get them. If the Sky Trust idea was in play, however, grandfathering would be a lot harder to justify, for the corporations would, in effect, be proposing to take money directly out of the pockets of Mr. and Ms. America. It would be easy to organize a populist campaign against them.

* Second, with the auction revenues captured in a Trust, they would be safe. In Barness vision, a full 75% would get cut immediately into checks to the Trusts citizen-shareholders. Each would get about $644 a year, for starters, assuming the Kyoto targets and carbon emission permits priced at $25 a ton. These would be rent checks, reflecting the fact that US citizens own their portion of the Earths carbon absorption capacity. As such, they would not only turn the climate treaty to immediate public benefit (and make it popular as hell), but theyd also represent a new form of what, for lack of a better term, well have to call property. Thus, the atmospheric commons would be enclosed (as is inevitable), but it would not be privatized.

* Third, the Sky Trust, precisely because it created a new source of revenues independent of the tax stream, would support a just transition fund to compensate coal miners and other greenhouse losers. This is a very important virtue, and it alone demands that the Sky Trust be taken seriously by all friends of economic and environmental justice. Barnes offers a rough estimate for the size of the Fund at $25 billion a year, and this is, as they say, real money.

You may, at this point, recognize the core idea here. The Sky Trust is based in large part on the Alaska Permanent Fund, which is funded by mining and drilling royalties. Every year since its inception in 1983, most of the Funds income has been distributed, on an equal per capita basis, to Alaskas citizens. Last year each Alaskan received a check for nearly $2,000, so it shouldnt be any surprise that the Fund (and the mining and drilling that support it), are very popular.

Is it that simple Not quite. There are details, and angles to consider, which is why the book is worth reading. I will, however, note two details, for your policy wonks out there:

* First, the Sky Trust would use upstream permitting. This means that only the few thousand firms that import carbon into the US economy would need permits, not every driver of every car.

* Second, following the Resources for the Future safety value proposal there would be a price-cap on the cost of emission permits, which would initially be set to $25 per ton of carbon, or about 6 cents per gallon of gas. Barnes proposed cap would increase annually for five years, and then expire. (Which is a good thing, because the safety value would raise some pretty thorny international issues if it was adopted on a long term basis.)

The Commons

All in all, though, the Sky Trust is simple in the extreme; just the opposite, in fact, from the issues it raises. To consider these, you have to first step back and see that, architecturally, the Sky Trust is an attempt to avoid the tragedy of the commons. That tragedy (in my non-Malthusian version) originates in the fact that none of the villagers actually owned the commons, and that once the acid fogs of capitalist social life had eroded the traditional commons regime, once each villager was only in it for himself, then each was powerfully motivated to increase his grazing stock, and increase it again, with little regard for either the good of the community or the carrying capacity of the land. The result, of course, was the destruction of the former commonwealth.

And such destruction is just whats coming today, to the air, the waters, and all the other public goods and common spaces by which and within which we share our daily physical lives. We have, in the language of the day, no common property regime by which to assign the rights and responsibilities of ownership, and the ideologists of the unfettered market do their best to ensure that we can never imagine one. The only way to avoid the destruction of the common spaces, so they tell us, is enclosure and privatization, just the fate that befell the British commons several centuries ago, just the fate that grandfathering threatens the atmosphere with today.

Or, to put this all in another, better way, the tragedy of the commons is not a tragedy at all, for it is not, as the word implies, inevitable. Rather, its the fulfillment of a dark prediction made half a century ago by economic historian Karl Polanyi(1)when the market escapes all regulation, then anything left outside the market, anything without value, is destroyed. It is destroyed not because of any evil intent, but simple because what Polanyi called the self-regulating market is indifferent to common spaces. Public goods and public spaces do not exist for it, and cannot be made to do so unless they are brought into the market, unless they are priced.

The dots are easy to connect. Since the commons are unowned, they are unprotected, and the economy can simply expand into them. The owners of the economy, colloquially known as the rich and powerful, end up appropriating the commons, and all its wealth and services. Down the road, the can purchase all the lawyers and politicians and public relations firms they need to legitimize their appropriation. In days like our own, they even get to announce that our best attempts to establish new common property regimes (for this, really, is what Kyoto is all about) are fatally flawed, and “unfair.

Which is where the Sky Trust comes in. Barnes idea is that to protect the commons, we have to institute new forms of common property that resist private appropriation, but which are, nevertheless, economically and institutionally real. It may sound like the utopian dream, and given the political obstacles it faces, it would be easy to cast it as an inaccessible dream, but Barnes is very clear in arguing that it is exactly not utopian. It requires neither a social revolution nor a reinvention of human nature, and Barnes thinks that, institutionally, the already extant, buttoned-down notion of the trust is actually a perfect fit.

Who Owns the Sky is not unique in asserting that new, hybrid forms of property are going to be necessary if were to make the leap to real sustainability, but it is rare in presenting an already worked out and entirely plausible form of common property. And damn if it doesnt make a whole lot of sense. As an added bonus, the Sky Trust focuses on equity within countries, an all-important area that has been almost scandalously neglected by the climate policy people. When it comes to the international negotiations, Barnes simple assumes that, somehow, the United States will one day be assigned a share of the air, and avers that, in the best case, the global climate regime would be based on the same per capita principle that undergirds the Sky Trust. He stays focused on his core question, which is how the US share should be divided, within the US. His answer raises issues that should have been addressed years ago.

Distributional Justice

First, theres the notion of per capita rights. This is, in fact, why EcoEquity is such a friend of the Sky Trust, for it seems to us, as it does to Barnes, that such a trust would be a natural domestic analog of a global regime based on per capita rights. Now, note that the notion of per capita equity, compelling though it may be, is not without wrinklesand this is as true at the national as it is at the international levels. The Sky Trust, for example, stumbles into the problem of citizenship. If youre an undocumented immigrant, or an ecological refugee, you dont get a thing. Is this a serious problem Not if you take this is a realist exercisenations are facts of life, and any nation, at least in theory, could have its own trustbut its an interesting point, and worth noticing.

Second, theres the transition fund. Barnes (page 65) explains that, as carbon prices rise, Many of Americas coal miners will lose their jobs. Farmers and truckers who drive long distances will also be hurt, as will poor people in cold climes whose winter heating bills soar. To help these people, 25% of the Sky Trusts income would go not to its citizen-shareholders, but to a transition fund, which is, frankly a fantastic possibility. Indeed, at a time when the just transition discussion should be heating up, its instead wrapped in an eerie silence, and the fact that no one can really imagine the government funding it in anything like an adequate degree is clearly one of the reasons.

But theres a problem. 25% of the Trusts income would go to the transition fund in the first year (for a total of about $25 billion a year) but, Thereafter, the Transition Funds share of revenue would decline by 2.5 percent a year, while the dividend share would correspondingly rise. After ten years, the Transition Fund would expire and 100 percent of the revenue would be paid out in dividends. Barnes, in other words, asks us to believe that the climate transition will be essentially completed in ten years, while anyone who follows global climate politics will know that in one decades time the transition (such as it is) will still be in its early stages. The justice of a ten-year timeout is implausible, and I, for one, dont buy it.

Still, this isnt in any way an argument against the Sky Trust proper, and, indeed, the idea at this point is to put the idea onto the agenda. Barnes is perhaps a purist and wants to see 100% of the Trusts revenues returned to its citizen-shareholders. Alternatively, he may simply see the politics of the situation differently than do I, which is fair enough. In any case, I quite confidently think that the climate transition will be long and stunningly difficult, and that well have to attend to justice and differential impacts at every point, and that we do no favors by imagining otherwise.

One other point: the distributional consequences of the Sky Trust would not be limited to its dividends and transition funds. Barnes rule here is, rather, from all according to their use of the commons, to all according to their equal ownership, and leaving aside its somewhat unfortunate cadences, the fact remains that some people (the rich) use more, while per capita regimes like the Sky Trust grant rich and poor equal rights. Their immediate result, then, is a (mild) redistribution of wealth.

Barnes has managed, in the last few years, to organize a number of studies of the Sky Trust and its likely impacts, and he cites two, one by economist Marc Breslow (using US Census data) and another by the Congressional Budget Office. Both conclude that the poorest 40% of the citizens would gain, while the rest would either lose or find their overall economic fortunes unchanged. The Sky Trust, in other words, would be good for the poor. And note well that this is very much in contrast to scenarios in which carbon emissions are reduced in the absence of a Sky Trust or other form of revenue recycling. In this case, by Barnes numbers, All but the top 20% would lose. Wealthy households would gain because, as stockholders, theyd share in the windfall that energy companies would reap if carbon permits are given away to historic emitters.

Note, by the way, that the Sky Trust has some traction (and even a few Washington lobbyists) but there are other revenue recycling and transition proposals in development as well. One of these in particulara proposal for a labor friendly climate policy thats being developed at the Center for a Sustainable Economy has real union backing, is traditionally progressive, and would offer a nice point-by-point contrast to the Sky Trust. It would make for an interesting debate, and a useful one, and it would help to put just transitions planning on the map. And lets be very clear here, unless we do so, we dont stand a chance.

Capitalism 2.0

In writing this, Ive wondered what Barnes would think of my taking the Sky Trust as a just transition proposal. His focal concerns, after all, are helping to solve the climate crisis, and instituting the Sky Trust as a model for common property trusts of all kinds. In this regard, he seems to belong not with the just transition people, with their focus on community rights and environmental justice, but with the various enviros who are trying to rethink public goods, public rights, and public responsibilities. (Just to give one example, you might want to take a look at Mary OBriens recent Making Better Environmental Decisions(2), which offers a vision of public goods as wide and startling as it is compelling.)

Peter Barnes, in any case, is very much a green thinker, in the tradition of the old German Green slogan neither left nor right, but out front. Like Adam Smith (and Karl Marx!) he admires capitalism, and he isnt shy about saying so! Hes optimistic about the potential for short-term humane reform, and even imagines a future in which a variety of public trustsup to and including an Intergenerational Transfer Trust replacing the estate and gift tax, with income flowing equally to all babieshave added together to bring us Capitalism 2.0. He is, at the extreme, a bit of a Pollyanna, and seems to me to underestimate the severity of the problem.

But maybe this is why hes been able to take his Big Idea so far. Who Owns the Sky is, moreover, a provocative book, in the best sense if the term. It advocates market-based solutions to the environmental crisis, but argues that they need to be based on a strong equity principle, and this makes it big part of the solution as far as were concerned. And if its a bit out of step with the environmental justice people, it only fair to note that its also out of step with both the radical environmentalists and the environmental mainstream.

This alone seems justification for reading it.

— Tom Athanasiou (July 2001)

1. Karl Polanyi, 1944, 1957, The Great Transformation: The Political and Economic Origins of Our Time. (Boston: Beacon Press). For a quick pointer into the Polanyi literature, see http://www.eh.net/bookreviews/library/polanyi.shtml (Return to text)

2. Mary OBrien, Making Better Environmental Decisions: An Alternative to Risk Assessment, (Cambridge, MIT Press, 2000). (Return to text)