22 I CHRONICLESncern, in the fall of 1957 a sanitary sewer was laid across LovenCanal, breaking both the clay cover and the clay canal walls.nThe sewer bed was gravel, providing a path for chemicals tonleach out of the canal. This was the first time the canal wallsnwere penetrated. However, further breaching soon occurred.nIn 1960 a new storm sewer penetrated the west wallnof the canal. Finally, in 1968 the New York Department ofnTransportation cut the canal again while constructing annexpressway. The first major public outcry over the dangersnof the chemical wastes came in 1978, and later that year thenstate of New York declared Love Canal a health hazard.nThat was followed by the closing of the adjacent school andnthe evacuation of 255 families.nIf there is ever a case that cries out for strict accountability,nit is hazardous waste disposal. Without such accountabilitynenormous costs can be imposed on people who have nonchoice in the matter. However, not too much should benread into the account of Love Canal. It is not meant as anuniform condemnation of all government officials. Many donact responsibly when faced with waste disposal decisions.nNeither should we assume that all private companies actnappropriately. There are numerous cases when such companiesnhave disposed of their wastes without being held liable.nSuch cases, unfortunately, are the result of inadequatenproperty rights and demand a reform of the legal system tonbetter enforce liability. Such legal liability rules are annimportant part of a well-functioning private property set up.nIt is also interesting to note that in most cases where toxicnwastes have been inappropriately disposed of, public (common)nproperty has been used for dumping. Without privatenproperty rights, there is no owner whose wealth and welfarendemand responsible use of the property.nParticularly illustrative is the contrasting behavior of thenpublic officials and representatives of Hooker Chemical innthe Love Canal case. The public officials faced markedlyndifferent incentives than Hooker. Throughout the entire usenof the canal for disposal and the subsequent problems,nHooker had a much longer view than did the Niagara Fallsnboard of education. Hooker understood that it was potentiallynliable for adverse future effects and acted accordingly. Itnwas very willing to sacrifice short-term gains to avoidnlong-term liability. In contrast, the board had a limited viewnof the future. Current budgets and immediate politicalnpressure were far stronger motivators for the board membersnthan long-term considerations. Also, without the decisionmakers’nfinancial liability, there was less incentive for thenpublic officials to accurately inform themselves about thencanal and its chemicals compared to what Hooker officersnwere previously facing.nAgain, as in the case of the Forest Service, the lack ofnwell-defined and transferable property rights meant boardnmembers were not held accountable for the costs imposednupon society; similarly there was little reward for taking anlong-term view or for seeking additional information. Asnone board member said, “the Board of Ed didn’t donanything wrong. Anyway, we don’t have any legal responsibilitynfor it.”nA test of any communication or coordination system is itsnability to respond to major changes. By this measure thenprivate property framework of the market does well.nThroughout history there have been predictions that thennnincreasing scarcity of some natural resource spells almostncertain doom for society. Although the energy crisis of then1970’s is freshest in our memory, similar situations havenoccurred numerous times in the past. Charles Maurice andnCharles Smithson detail 10 such crises, spread over 100ncenturies, in their book. The Doomsday Myth. In each casenthe information and incentives generated by the marketnencouraged responses that rendered inaccurate the doomsayingnof numerous people.nIn 1905 President Theodore Roosevelt threatened thatn”if the present rate of consumption [of timber] is allowed toncontinue … a [timber] famine is inevitable.” The UnitednStates timber crisis of the end of the 19th century and thenbeginning of the 20th century was of major concern. Thisnwas an age of rapid economic growth, but wood, essentialnfor this growth, was becoming more and more scarce. Inn1908 one leader even suggested banning Christmas trees asna partial answer to the timber shortage. Given the rate ofnwood use in 1900, a rapid depletion of an importantnresource could be predicted.nThe rate of use did not continue, however. Faced withnrising wood prices, both consumers and producers responded.nRailroads, major users of wood for sleepers, substitutednalternative materials — usually steel or concrete — changedndesigns to conserve wood, and used chemical preservativesnto extend its life. Wood had been used as a major source ofnfuel in both industry and home, but with rising prices coalnbecame a cheaper substitute. Housing construction changedndramatically, with balloon frames replacing a more copiousnuse of timber.nBy the 1920’s, the wood crisis was over. The scarcity ofntimber did not end economic growth; neither did it severelyndisrupt the economy. The price system quickly informednboth producers and consumers of a need to mend theirnways, and they responded rapidly and dramatically.nEngland had undergone a similar wood crisis long beforenthe one in the United States. In the 16th and 17th centuriesnthe price of firewood rose 730 percent, while the generalnprice index increased only 177 percent. Wood was criticalnfor almost all of Britain’s industries. It was used to smeltniron, lead, tin, and copper and in glass production. Salt, anmajor preservative when few other methods of food preservationnwere available, was obtained by using charcoal tonevaporate seawater. Again, in response to rising wood prices,nappropriate modifications occurred. Technological changesnto use coal evolved, and by 1700 Great Britain had escapednthis particular resource crisis.nOther examples abound. Whale oil was a critical resourcenin 19th-century America, but as whale oil prices rose,npetroleum was refined to serve as both a superior lubricantnand illuminant. In ancient Greece bronze was crucial to theneconomy. However, when tin, an important component ofnbronze, became scarce, iron replaced bronze. The U.S. wasncritically dependent upon natural rubber prior to World WarnII. With the beginning of the war and the loss of much ofnour rubber supplies, synthetic rubber became a profitablenalternative. Changes in resource availabilities have occurrednoften in the past and will continue to occur in the future. Ifnprices are allowed to communicate their message, we havenlittle to fear from these changes.nAnother important aspect of the communication ofn