How to promote abundance in Scottish fishing

How to promote abundance in Scottish fishing

by Eben Wilson
article from Monday 8, May, 2017

IN 1783 a Mr John Knox travelled around Scotland examining the local fisheries and fishing practices. He found coastal waters literally teeming with fish, and a fair amount of local knowledge that made great profit from the diversity of the resource. He was one of the sources cited by Thomas Telford some years later when he, in turn, was sent by the Commissioners of Roads and Harbours to open up the Highlands to an expanded commerciality.

Yet, as many know, the fish stocks around Scotland, and elsewhere in the world, have been decimated in the latter part of the twentieth century.  That word is not too strong, in many areas we are talking reductions in populations of more than eighty percent between 1960 and the first decade of the new century. What went wrong?

A key driver has been that technical advances meant that we could catch more fish more easily. One extraordinary fact is that there is one Danish ship – the Cornelis Vrolijk – that has been allocated just under one quarter of the entire fish quota for the area of the North Sea managed by England.

Students of economy will know about the Law of the Commons – the phenomenon whereby producers exploiting a resource without property rights have no disincentive to over-use it because, first, they see no costs to over-exploitation and, second, know that if they do not continue someone else will.  Allied to technical advances and a rising population the lack of constraining private ownership makes it a short journey to Malthus’ dismal conclusion about human advance.

But there is a third part to the fishing story; that when property rights and market pricing are replaced by governments with central planning in an attempt to counter the Law of the Commons, things can get very contrary indeed. There are perverse outcomes that policy makers in Scotland desperately need to learn; fisheries policy is a cipher for how to get things badly wrong across the public sector.

For public choice economists, state intervention is itself a common property in tax revenues – where politicians see little costs to them of exploiting our taxes for gain, while taxpayers see their wealth slowly destroyed.   

It is one of the more peculiar aspects of political economy that when a policy goes agley, political forces often act to make things worse. The reason is that while the choices made often run counter to economic sense, the vote motive that drives politics makes such choices appear perfectly sensible to politicians, aided and abetted by civil servants who enjoy the peace of an unchanging status quo. The story of fishing shows this progression with great clarity.

Over the years, EU fishing control policy has repeatedly combined increasingly complex top-down constraints on catches with subsidies to promote the construction of more catch capacity through boat modernisations, harbour improvements and processing plants. Often, these subsidies have purportedly been attempting to constrain catches; but bureaucratic delay, muddle, plus a good measure of corruption has produced policy failure. 

While the failure has been recognised frequently in reviews and reports, the golden rule of state bureaucracy has always sustained; when the central plan fails don’t abandon the plan, change the mission and design a new central plan.  Thus, limiting quotas has led to limiting boat and engine sizes, limiting locations for fishing, limiting net meshes, limiting catch landings; and all surrounded by a panoply of advisory groups, inspection routines, rules and fines that totalitarian centralisers always turn to when defending their central plan.  The Scottish Government’s Marine (Scotland) Act of 2010 gave our nation a one hundred and eleven page framework for policy sclerosis across the marine sector.

Such is always the fate of centralised managerial socialism; like so much of modern government fishing administration is buried in a sea of acronyms that hide repeated adjustments, reorganisations, revisions, refinements and rationalisations that essentially define a repeated failure of policy to work with even a grain of economic reality and human behaviour. (The Scottish Government please note; there are lessons here to be learnt across our health, education and welfare policies.)

The peculiarity of all this is that economists have for decades been explaining how to design policies that would counter the Law of the Commons in fishing and help retain and expand fishing stocks.  Iceland and New Zealand have been pursuing such policies with much success.

Essentially, what is needed is, first, to introduce a mechanism of tradeable property rights in fish stocks.  Then, second, a rather more complicated idea; the allocation of these rights has to be localised to the fishing industry in a way that allows innovation in fishing practices to take place that maximises efficiency through achieving optimum catches – but also optimise sustainable future stocks.  “Localised” in this is not always a geographical notion but rather the localisation of productive capability to those through whom sustainable fishing practices are best practiced.  That’s fishermen, not state bureaucrats or environmental bullies.

This sounds complex, but what it is really about is making the future costs of present fishing practice transparent to fishermen today.  So, for example, if a right is allocated to land so many tonnes of a certain fish from a specific fishing area (inland, near coastal, or open sea waters) the cost of future less profitable fishing from over-doing things today has somehow to be made real.

This is what trade in exchangeable fishing quotas can do, especially if a brokerage system whereby these can be traded very rapidly is introduced.  So for example, let’s say a small trawler off Mull finding a large catch of Cod hoovers-up a third of the quota for the Oban area in a day. This catch is also three times that boat’s own quota – so the skipper has to go into the market and purchase more quota, which raises its price – and depresses his profit.  On the other hand, it could be that Cod has not been running off the Sussex coast all year and quotas from the South of England can temporarily be bought for Oban at low cost. That allows Oban a little more fish landings from the plentiful local stocks, but protects the re-building of Cod stocks in the English Channel.

In this case, technology, rather than being the killer of fish stocks, can become its creator. Imagine a scenario whereby fishermen can as today, using technology, see their potential catch prior to hauling it on board. They can also see the quota price and the landing price from their boat, and indeed agree those telematically; they create the market and its quota prices in edible fish landings and sustainable fish stocks from their wheelhouse. 

If this seems far-fetched consider this; a shoal of fish can within the space of half an hour change from a placid feeding colony to a rabidly spawning crowd of cross-insemination.  At the same time, a single trawler hauling net boards across the sea bottom at that very moment can destroy ninety percent of that future fish crop in ten minutes. Pricing that future from the wheelhouse could stop that destruction.

Institutional arrangements like this, when tried, have done what markets always do – manage scarcity.  One of the great insights of economics is that collectivist measures always promote rationing, private property rights and prices always promote abundance. 

The sad thing in all this is that the EU has been complicit in making things a lot worse. Acting in its guise of an over-weening superstate, but as such replete with inconsistencies, inefficiencies and incompetence in administration, it has driven the fishing industry and fish stocks to the edge of oblivion at huge cost to taxpayers.  Few realise that of the EU fleets there are several that land fish of lower value than the cost of the effort needed to catch them.

The Scottish Government should not compound the error by continuing with centralised managerialist methods; the fishing industry is well capable of organising its own property rights.  One paradox here is that any effective property rights approach to fishing quotas implies that those properties are allocated in perpetuity to all market players. As such, setting this up would match fishing policy with policy supporting Scotland’s remote communities through land rights. Supporting new land tenure while denying fishing tenure would be a very odd policy stance indeed.

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