And Communism isn't any better

The BBQ Pit
41

Ic ringed when I read it, too. No free market economist would suggest that environmental law should be based on “convincing people” to do the right thing.

Pollution is an example of an externality, a situation wherein people are rationally motivated to act different as individuals than they would as a group. In this case, there is justification for government action because no individual has a rational reason to act on their own. Most of what the government does is based on addressing externalities. Buying a fighter jet, for instance; it might be worth it to you to pay $2 towards a CF-18 fighter jet, as long as you are assured everyone else kicks in their $2 so the plane gets bought. You feel that kicking in your $2 makes your country safer and enables Canada to protect democracy. But it would not be worth it to ANYONE to pay the entire $50 million tab for a Forces to have a CF-18.

Imagine the following hypothetical situation.

You smoke, and you love smoking. You smoke at every possible opportunity. You love smopking so much that, if pressed, you would say that smoking a cigarette is worth about $1.00 to you.

However, you hate OTHER people’s smoke. You would really like it if nobody smoked but you. All in all you would say that every other person in a room with you who smoked was taking away 10 cents of your smoking pleasure; you’d happily pay then a dime to stop smoking.

You take a night class with 50 people in it. They all smoke and they all like smoking and hate other people’s smoking as much as you do. So if everyone smokes, you are up $1 in pleasure at your own smoking but down $4.90 for the other 49 people smoking. You experience $3.90 worth of displeasure sitting in a smoky room for 49 other smokers.

Now, when you think about it, in this room you will ALWAYS be better off smoking. You can’t stop the other 49 people from lighting up, so you’re screwed no matter how many of them happen to have a butt lit up at any time. IF 20 are smoking you’re suffering $2 worth of secondhand cancer; if 35 smoke you’re down $3.50, if 5 smoke you’re down 50 cents. But no matter how many smoke, you can improve your lot in life by lighting up. You’ll always mitigate your displeasure by $1 by sucking back on a nice smoke. Rationally, you and everyone else in the room will be marginally ahead if you individually choose to smoke. Unfortunately, because of that, EVERYONE will smoke, and you’ll almost always be down $3.90. And you will not have any personal motivation to pay anyone to smoke, because each person’s smoke will be worth only ten cents to YOU to get rid of, but you’d have to pay them a dollar to not want to smoke. You’re screwed.

But let us say that we were to put a vote to the class to completely ban smoking. Clearly, it would be in your best interests to vote to ban smoking. You’d be screwed out of your $1 marginal gain… but the ban would assure that you would be better off, anyway. With no smoke, you’re at 0. with smoking, you’re usually down $3.90 or close to it.

That basically illustrates the role of government in reducing pollution. That’s not to say all government action in reducing pollution is smart or even warranted - frankly, in many areas the problems have been ridiculously exaggerated - but it IS true, and free market economists (e.g. me) DO realize and can rationally explain, that the free market is not capable of solving every problem.
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42

The other point about pollution and such that would be relevant would be to assume Coase to be correct. His theorem was that if the transaction costs are zero, externality problems work themselves out on their own. That is, regardless of how you define property rights, people will buy and sell rights to achieve the same result.

As a society, we are of course willing to tolerate pollution, as that is the price of technological advancement. Thinking of pollution as a cost that society must bear (ignoring the possibility of total annihilation of the human species), Coase’s Theorem states that the economically efficient solution will always be found if transaction costs are reduced to nothing, regardless of how the laws are written, as long as everyone can freely trade rights (i.e. society could pay polluters to give up the right to pollute above certain levels, or polluters could pay society to be allowed to pollute to certain levels).

This is all well and good, with everyone being free, except for the fact that it requires society to act in some sort of collective fashion, which would mean huge transaction costs in the form of freedom, as well as the cost involved in determining the costs to society of pollution. Thus, to think that pollution can be effectively regulated under a truly libertarian context is wishful thinking.

Yes. It really is me writing this, no one has stolen my password. I’m still a libertarian, but I do recognize the limits of what can be accomplished realistically under that context.

43

That does tend to get ignored a lot, doesn’t it?

44

With good reason. How many predictions of the end of humanity have come true in the past 2,000 years? We’re gonna be around for a while.

Marc

45

Not really. But I was ignoring it because it’s rather difficult to figure out how polluters could compensate society for wiping humanity off the face of the planet, and because it seems incredibly unlikely that the human race will exterminate itself entirely through pollution in the forseeable future. I mean, even the most cold-hearted corporate raiders know that you need to leave someone alive to ansure the continued viability of the company’s stock.

46

Do they? Do they really?

Where’s the self-interest in ensuring the survival of humanity beyond your own death?

47

Cause most folks have kids?

(I don’t however, so I plan to destroy humanity and turn everything over to the tigers before I leave. :slight_smile: )

48

Four billion years of genetically-inscribed instinct.

49

Depends on your definition of the word “self”.

50

OK - where’s the corporate self-interest in looking beyond the next 50 years?

When evaluating the potentials of a venture capital project, one assesses the potential risks and how to mitigate them over the lifetime of the project. One does not consider that one is using fuel that may cause a problem in 200 years. Externalities, remember?

pan