Table of Contents:
- Bundy Case Is A Requiem For Property Rights In America
- Bundy's Lease
The sad reality is that private property rights no longer exist. You can hold your land until the government decides to take it. It’s just a much more real experience for people in the West.
I think many, if not most, cattlemen can’t understand why Cliven Bundy is considered a hero in some people’s eyes. After all, he didn’t pay his grazing fees for 20 years. Of course, like most things, the situation is a little more complicated than it appears at first glance.
This issue goes back over 100 years. After the U.S. government acquired the vast tracts of the West from Mexico, they wanted it settled. But unlike other areas where the government allowed homesteading, the number of acres that the government allowed a settler to stake his claim to simply didn’t constitute a viable economic unit in the West. A parcel of 160 acres in Missouri isn’t equivalent to the productive capacity of 160 acres in most of these areas of the West. The whole concept of public lands evolved out of the fact that the government allowed producers to lease larger tracts of land in order to construct viable production units.
Then along came the multiple-use doctrine. It sanctioned that the land was to be used to benefit the public, and included such things as grazing, energy development and tourism, which are the lifeblood of the economies in the West. The way things developed, grazing permits or leases were tied to privately held acreages, which enabled producers to maintain ranching operations that were theoretically economically viable.
The expense of dealing with the government on these leases is astronomical, which is the reason the actual lease rates are well below national averages. Of course, to all of us outsiders, it looks like a sweetheart deal.
When I was fresh out of grad school, I did a research project on a couple of data sets, trying to look for the secrets of profitability and being a low-cost producer. There were a lot of great tactics that could be learned, but one of the biggest drivers of profitability was the percentage of ground that was leased from the state.
In the state of Colorado, for instance, essentially every township has a section of grass that is leased out in order to support public education in the state. These are called school sections. The holders of these school sections pay one-third or less of the typical going rate. These long-term leases are structured so that they’re nearly impossible to get from the current holders of the lease. The result is that such producers have a dramatic competitive advantage over others.
It’s a convoluted mess, because relative to federal lands, the value of those leases was built into the ranches that had the land that the leases were tied to. In essence, the first holder of the lease raked in a windfall, essentially being allowed to sell the federal land with the lease; subsequent holders have paid for those leases. Thus, a change now would force them to essentially pay fair value twice.
The above isn’t even one of the two biggest dynamics of running on federal land. The federal government is the most fickle and demanding landlord you can imagine. For the first 100 years or so, federal lands were understood to be a vital part of these states’ economies and were managed as such, but that changed.
Federal lands came under the control of politicians and environmentalists, who wanted those lands managed for their benefit; you can imagine the problems that have ensued. This is why Bundy is a hero to many people in the West, and a criminal to others.