Basic, and sophisticated, economic ideas can show up in the most real-world of situations, such as the ongoing bickering over a police gun range in Maplewood. Indeed, the case involves insights that win Nobel prizes. And while this situation affects only a few square miles, it embodies factors at play in far more vital situations at state, national and international levels.
Start with a few details. The range is in Maplewood, but it belongs to the St. Paul Police Department. Other area police forces have also trained there. It was opened more than a half-century ago, when the area was very rural. When a 99-year lease was signed in 1974, there still were few, if any, houses adjacent to the range. That year, the range met all existing zoning requirements, as it did in the 1950s, when it was established.
Since then, the area has become highly urbanized, with housing right up to the edge of the police facility. When firing is taking place, the noise is audible at a mile or more and is highly disruptive to those living closest to the range. These neighbors want the range closed or at least want a noise ordinance to apply and open-air firing sharply limited.
Most would agree that weapons training is essential to competent policing and that such public safety forces fill a vital public purpose. Others might also note that the range was there first, and like an airport, most people living nearby knew it was there when they bought their homes.
So what would economists say?
I think my immediate reaction was typical: If people don’t like gun noise, why did they buy houses or apartments close to a long-established and legally operating gun range? That guns are noisy is self-evident. That the range had a lease well into the new century was easy to ascertain. The legal doctrine that “first in time is first in right” applies strictly only to water allocation in Western states, but it generally underlies much land-use regulation. If a facility is established in conformity with existing regulations well before any competing uses arise, the first activity should have some precedent over subsequent ones. No one forced any current neighbors to buy their specific properties. And here we get to economics.
Broad principles based on the 1821 work of British economist David Ricardo show that the amenities or dis-amenities of a piece of property have the same effects of greater or lesser income-producing capacity. A tract with significant drawbacks, such as proximity to a noisy but legal facility, will sell for a lower price than one without such a problem.
I bought a house on Como Avenue in 1986 that was cheaper than identical ones only blocks away because mine was on an arterial street with buses and diagonally across from a gas station where mechanics worked noisily until 11 at night. That was a tradeoff I accepted. And a similar tradeoff was accepted by all the complaining neighbors who now are shocked, shocked, that no noise ordinance limits the nuisance of gunfire.
This takes us from Ricardo to Gordon Tullock, who died in 2014 and who also should have gotten a Nobel Prize when his George Mason University colleague and collaborator, James Buchanan, did in 1986.
Tullock examined how people try to use political power to take money from others and get it for themselves. This is “rent-seeking,” a term actually coined by Anne Krueger, another formidable intellect who was a professor at the University of Minnesota for 23 years. Rather than using economic resources to produce new goods or services, or market forces to mitigate the problem, they go into lobbying and other efforts to sway politicians. Tullock and Buchanan, in particular, were conservatives, but other economists across the political and disciplinary spectrum would read about the residents’ reaction to gun range case and think, “well, here is a classic example of rent-seeking.”
Winning this political game would give adjacent property owners a quieter life. The value of their properties would go up. They, some hundreds or a few thousand of them, would be winners. Citizens of St Paul and other municipalities whose police officers use the range would be losers, as would taxpayers in general.
Certainly, more isolated land is available at the urban fringe, just as 60 years ago. But much taxpayer money has been invested in the existing range. The time and expense of sending officers out another 30 or more miles every time they need to train is costly — as would be putting a dome over the existing outdoor range. So how do the individual losses of taxpayers, spread out over several municipalities, compare against the gain of adjacent landowners who want changes in the range?
That brings us to economist Mancur Olson, a self-proclaimed Red River Valley farm boy and University of Maryland professor, who examined “the logic of collective action,” in which a small group of people, each of whom has much at stake, will win out politically over much larger groups, the members of which, individually, have very little at stake. Hundreds of well-organized, political- and media-savvy landowners who stand to gain a lot by closing the range have the edge.
That leads us to University of Chicago professor and 1991 Nobelist Ronald Coase, who died three years ago last week. Gun noise is an external cost, something intro econ theory says reduces the efficiency of a free market. But, Coase argued, the reduction in efficiency is minimized as long as property rights are clearly specified. In this case, the law could be clear that the range has the right to make noise. Or it could say neighboring landowners have the right to quiet.
In the first case, neighbors could get together and pay St. Paul to shut down the range, build noise reduction structures or limit hours. Or they could just live with the noise.
In the second case, the city could pay for noise attenuation, limit hours, close the range or pay damages to the neighbors, either a one-time lump sum for an easement or an annual nuisance compensation fee.
There is a difference in who comes out ahead financially between the two cases. But, Coase argued, either situation could be the most economically efficient possible as long as the rules are clear.
The law is pretty clear in this case: The city can legally operate the range as it sees fit. The neighbors should pony up if they want quiet and the higher property values that would come with it.
But one can always resort to public relations offensives and lobbying. That clouds the rules. Existing law can be overturned, or the city can be cowed into making concessions not required by law.
Identifying economic efficiency is a topic in itself. Working in the tradition of 19th century Italian economist-sociologist Vilfredo Pareto, Cambridge University economists Nicolas Kaldor and John Hicks clarified key criteria. (Hicks won a Nobel in 1972 for other work.) If the gain in well-being and net worth by neighbors from the peace and quiet of a closed range exceeds the loss in well-being to residents of the cities that had used it because of the higher taxes to move it elsewhere, then a shut-down is the economically efficient option. This is true regardless of who actually bears the cost.
On the other hand, if the added-taxes or reduced-effectiveness-police costs of shutting the range exceed the benefits to neighbors, then keeping the range open gives society the greatest well-being from a given use of resources. Again, this is independent of who actually bears the cost.
What is true for gun noise is true for sediment in the Minnesota River, acid rain, nuclear waste disposal and myriad other externalities at the state and federal levels. It is true for coral reef bleaching and sea-level rises globally as a result of man-made activities. The scale is different but the economics is the same.
There are even more economic concepts in this little brouhaha, but they would have to wait for another column.