OPINION/COMMENTARY

Property Rights

When Eastern Europe began to open up in the late 1980s, one of the great shocks was the severity of its environmental problems. Journalists reported on skies full of smoke from lignite and soft coal, children kept inside for much of the winter because of unsafe air, and horses that had to be moved away from the worst areas after a few years or they would die. Many of the environmental ills reflected an abysmally low level of technology. Old, polluting factories of the kinds that are dim memories in the United States were the mainstay of socialist industry. Smelly, sluggish automobiles polluted the roads. Energy waste was tremendous. Their own statistics showed that socialist economies were using more than three times as much steel and nearly three times as much energy per unit of output than market economies. One cannot look about in Warsaw or Moscow, Budapest or Zagreb, Krakow or Sarajevo, wrote economist W. W. Rostow in 1991, without knowing that this part of the world is caught up in a technological time warp. Not everyone realized it at the time, but the state of the environment was directly connected to the absence of property rights in the Soviet system. The authorities had refused to allow most resources to be privately owned. Most market exchanges were criminal acts, and entrepreneurship of most kinds was declared to be criminal behavior. Production was centrally planned, with land and other resources owned by the state, not individuals....