Part One: Creation at Montana State University

Forty years ago this summer several Montana State University (MSU) colleagues and I launched an intellectual experiment in the political economy of natural resources. We all had an economic specialty, mine economic anthropology. We also favored environmental quality over material quantity and elected Bozeman as the place to build our lives. When selecting academic jobs mountains trumped money.

As a student I helped save Montana's Lincoln-Scapegoat Backcountry from the ravages of the U. S. Forest Service and Anaconda Forest Products.  My National Science Foundation post-doctoral fellowship was with Prof. L. K. Caldwell, an author of National Environmental Policy Act. My post-doc was to help establish Indiana University's School of Public and Environmental Affairs. (I claim no credit but again in 2016 it ranks number one in America.)

Our experiment was an exercise in intellectual entrepreneurship and we were well prepared. Three of us had worked closely with Nobel Prize winning economists. Although we taught in a small cow college in the most remote of the lower 48 states, we all had excellent connections with nationally respected economists. I also had contacts with foundation leaders. Further, public policy was an unknown field at MSU so we were, for a while, free to roam.

Our general goal was to explore and promote intersections of liberty, ecology, and prosperity. Where and why do they thrive together? Responsible liberty, sustainable ecology, and modest prosperity don’t always or easily go together. How could we foster their concurrence?

This approach became know among economists as the New Resource Economics, or NRE.* The conventional, or old resource economics, was based on the Progressive ideal of command and control by experts, Green Platonic despots. These fine men, nearly all agency people were male, were assumed to understand ecological systems. They didn't. Further, they could somehow divine the public interest. No one can. Also, they were to be insulated from and immune to political influence. Irresponsibly naive. Actually, the Progressive Era model usually led to regulatory capture by the bureaucracy and allied commodity groups.

Our orientation was radically different from the conventional Green perspective.  In that view, ecology, liberty, and prosperity are necessarily in opposition; theirs is an inherently dark perspective. We believed the environmental culture actually can be sunnier. The New Resource Economics we created at Montana State University in the 1970s shows how to brighten an oft dark and negative arena.

Our highly positive outlook came naturally for we worked in the "romance" arena of environmental policy rather than sludge. Parks, wilderness, forests, rangelands, water, and wildlife had our attention. We avoided nasty, toxic sludge in both research and residence. We found Bozeman a great place to live and earn a living.

In addition to marrying Ramona, several other good and important things happened to me in 1976, the summer of America's bicentennial of independence. (Thanks to France for the Statue of Liberty!) I was at the economics department at UCLA for a summer program for young professors. J. Clayburn (Clay) LaForce, chairman of the econ department, organized the program. Clay introduced me to several presidents of foundations interested in supporting libertarian professors and we began discussing the institute I soon founded at MSU, the Center for Political Economy and Natural Resources.

Two well-educated foundation officers, Neil McLeod (Harvard Ph. D.) of the Liberty Fund, and Richard Larry (MBA, Penn's Warton School) of the Sara Mellon Scaife Foundation, joined Clay in several of our dinners. They were enthused by the possibilities of a free market institute focused on the romance sector of environmentalism. We proposed to study parks, range and timberlands, water, and wildlife not nasty sludge. This was a vacant niche and the foundation officers offered funding to pioneer it.

The MSU faculty linked with the resultant institute, MSU's Center for Political Economy and Natural Resources, published numerous refereed articles in academic journals. (I had not yet understood the importance of having a catchy acronym such as FREE or PERC.) We took no corporate or governmental contracts but received many foundation grants. These funds enabled us to host academic conferences that included several Nobel Prize winners.  The Center for Political Economy and Natural Resources blossomed.

However the three wise men I met at UCLA, Clay, Neal, and Richard, had given me a caveat. Each warned me of political problems inherent to operating such an institute at a state university. Special interests, recipients of federal subsidies and their university co-conspirators in administration, would be exposed by our work. Faculty dependent on grants from federal agencies, mainly people in the natural sciences, would surely not understand our work. They would also be hostile to it by predisposition. The great majority of academics are statists, people who favor government control over individuals and the private sector. That was and remains the dominant force in academic culture.

The wise men warned me it is risky to reside in a state university while advocating liberty as a complement to ecology and prosperity. This was a risk I chose to accept. While their expectations were correct, the outcome ultimately became highly positive. I feel blessed.
*The key features are clear and enforceable property rights, the rule of law, entrepreneurship, and the market process. For over forty years the NRE has explained how this works and examined its applications and limitations. Examples are most clear and attractive in the romance arena of natural resources.

Part Two: Dissemination of the New Resource Economics

The NRE emphasizes the importance of entrepreneurship in protecting, promoting, and restoring ecological sustainability. It is a constructive alternative to the bureaucratic command-and-control model of the Progressive Era reformers a century ago. The NRE provides an innovative policy framework for harmonizing ecology, liberty, and prosperity. Its principles are increasingly adopted by leaders in the conservation community. We expect this trend to accelerate as governmental agencies are faced with even tighter constraints.

These wise men I met at UCLA Economics Department in 1976 were prescience in warning me of the dangers of running a free market oriented institute at a state university. And for the right reasons. We were doomed by our success in exposing environmental damages compounded by economic waste.

Most of this mischief and worse was generated by explicit and implicit subsidies. And subsidies develop constituencies. The result was political pressure to constrain, censure, and condemn. After a long and extremely unpleasant battle, I closed the Center for Political Economy and Natural Resources and left MSU.

The university president, under pressure from the state's governor, claimed I had no intellectual credibility and our work no value. They University raised the overhead rate on our grants from 9.5% to 72%. The university president and VP for Research had to approve all future publications, proposals, and programs.*

One last thing: The MSU administration first denied the existence of and then squelched a peer review report headed by Prof. M. Bruce Johnson of the University of California Santa Barbara, then president of the Western Economic Association. The full report is on FREE's website under “History”. **

Finally, after experiencing recurrent lies, cowardice, extortion, and threats of censorship I decided to leave the university. That was the only honorable course***

However, we had grants pending to my MSU institute so I needed to call the foundation presidents to explain the sorry situation. Dick Larry, one of my original three wise men, responded with this when I told him I was leaving MSU:
“John, there is something you should understand. People in my situation, foundation heads, don't buy restaurants: We follow chefs. As long as you continue your good work, we'll be back.”

He came back and encouraged his foundation friends to come with him. They did. I founded PERC, the Political Economy Research Center (now the Property and Environment Research Center) in 1982 and FREE in 1985.
FREE and PERC have prospered and the NRE spread. While in 1980 the NRE perspective was unlikely to appear in an environmental policy textbook, it is now featured as a sophisticated and enlightened way to understand resource issues. What ever their philosophical orientation, intelligent people interested in environmental policy recognize the analytic leverage offered by the NRE.  However intellectually sound, the political costs of hosting it were far too high for our land grant university.

PeugotJohn & Ramona BadenIn July Ramona and I will be in France at the Univ. of Aix en Provence giving two talks on the NRE. A few days later I'll address the 10th International Conference of Environmental Entrepreneurship, again using the NRE paradigm. Several other scholars with Bozeman ties and NRE publications will be speaking at these meetings. Truth and logic are stubborn forces indeed.

I'm sorry the NRE no longer has a home where it was born. While ecology, prosperity, and liberty can be strong complements, rarely do we see intellectual integrity, courage, and politics coexist in a university setting. Think tanks offer more congenial homes.

However, as universities become increasingly stressed, and they surely will, intellectual entrepreneurs may find vacant niches to pioneer within them. One thing is certain: one can never predict what entrepreneurs will do. As the NRE demonstrates, the results may be successful and satisfying.

Ramona and I will surely enjoy again taking the NRE paradigm to Aix en Provence. We will share the foundations of liberty, ecology, and prosperity and celebrate our success in promoting them.
*External pressure on the Center and the University grew and eventually the program fell casualty to academic politics. (You can find a 1982 peer review of the Center’s work by Professors M. Bruce Johnson and Vernon W. Ruttan at Baden left MSU in 1982 to found the Political Economy Research Center (PERC), of which he was Chairman until creating FREE in 1985. PERC, now known as the Property and Environment Research Center, and FREE have no formal relationship.
**UNIVERSITY OF CALIFORNIA, SANTA BARBARA Department of Economics December 10, 1982 Dr. William Tietz, President President’s Office 103 Montana Hall Montana State University Bozeman, Mont. 59717 Re: REPORT OF THE SITE VISITATION COMMITTEE CENTER FOR POLITICAL ECONOMY AND NATURAL RESOURCES.
I. FINDINGS A. We find that the benefits of the Center outweigh the costs. The Center has had an impact on the national debate and agenda concerned with Natural Resource Policy. In other words, Center personnel have made intellectual contributions to the debate and have made an impact. B. We find the Center staff to be a group of intellectually active and productive scholars. There is strong support for the Center among all of the “general” economists in the department. However, we also found that the Center personnel are not a monolithic, single-minded group. Our interviews suggested that there was a wide diversity of interests in both potential research topics and potential research techniques. The most frequently mentioned benefit of the Center was its success in bringing distinguished, outside scholars into contact and communication with Center and, to a lesser extent, campus personnel.)
***That president was later dismissed but alas not for failing to respect and protect freedom of inquiry and dissemination of scholarship. Rather, his departure was due to remarkable personal indiscretions and abuse of privileges. Fortunately for the University's reputation, two subsequent MSU presidents recognized our national stature and for over twenty years MSU was listed as co-sponsor of FREE's seminar series for Article III federal judges, law professors, and religious leaders. Numerous MSU professors spoke at these academic programs.


Editor's Note: John Baden found Bozeman in the late 1960s when looking for the best place to build his life.   He explored and ranked every town in the Northwest having a four year college or university.  Bozeman ranked first and he left Bloomington, Indiana in 1970 to accept an offer from MSU. He earned a Ph. D. in economic anthropology from Indiana University and was a NSF post doc in environmental policy.   He founded the Foundation for Research in Economics and the Environment (FREE) in 1985 which he and his wife Dr. Ramona Marotz-Baden lead.  FREE's mission is to harmonize three oft conflicting values; environmental quality, responsible liberty, and modest prosperity.  John and Ramona live on an irrigated Gallatin Gateway ranch, all but thirty acres of which they placed in a conservation easement.