On the Governing of Externalities

Great Debates
1

So, over in this thread, Bone is making the argument - originally concerning the soft drink ban but later expanded - that Michael Bloomberg is authoritarian in his political operations.

Well and good. I’m not sure I’d go for the argument, but I can see one being made.

But it got me thinking about externalities. Those things and behaviors that we have and participate in that entail a cost on the body politic. Should those things - and there’s a lot of them - be tightly regulated.

Sure, on the subject of soda and other high-calorie, low nutrition foods, there’s a strong argument to be made that they contribute to Americans having a high obesity rate and all the health issues that entails such as higher risk of diabetes, heart attacks and so forth. I’ve always believed that the health risks are the responsibility of the consumer. That health risk does not create a need, in me at least, for tighter regulation.

But what about the indirect externalities? Higher rates of illness leads to higher health care costs for the nation overall, including on Medicare and Medicaid and disability payments. Those are paid for out of the public coffers by taxes - or deficits and therefore higher interest rates - and therefore cost those not involved in the consumption decision.

So on an entire plethora of issues, is tighter regulation or taxation justified when a person or other entity is costing the wider society in some way?

Would the health effects of fast food be justification for a special tax on it to pay for the added societal healthcare costs?

Or pollution? Should more polluting vehicles be subject to added taxation to deal with clean up costs?

I’m sure there are many, many other examples we could come up with.

In addition, what about the disincentive such provides? Smoking, has, according to this 2015 article in TWP, dropped by more than half over the last 50 years and almost 20% in the ten years between 2005 and 2015. A part of that is clearly the anti-smoking information campaign about the health effects, surely. But I wouldn’t be surprised if a large part of it is affordability. Back in the 80s when I was a kid my friends would by packs of cigarettes for less than a dollar. These days the average cost is $6.16 per pack.

So where’s the line? I find I think about this as being one with that old saying, “You’re right to swing your fist ends at my nose.” One gets to do what one wants, providing there’s no negative impact on others.

But where does this line get drawn? Cigarettes? Big Macs? Pollution? Noise? Out of control kids? I’m sure there are as many lines as there are readers of this post.

But isn’t a big part of government’s job the balancing of freedoms vs costs (both monetary and otherwise)?

2

There’s a real danger, in my opinion, in trying to reduce everything to singular bright-line principles, in trying to straighten out the fundamentally crooked path of social and individual well-being. By this I mean that there are two competing principles (do what’s best for society; leave people the fuck alone), and following either one wholeheartedly is gonna create problems.

As you say, government’s job is balancing these sorts of equations. It’s never going to be perfect. The line will necessarily be drawn in an arbitrary place. It will necessarily change as the government changes.

That’s a feature, not a bug. If you don’t like where the line is drawn, you can vote for change, or file lawsuits.

In this case, I tend, very slightly, to agree with Bloomberg’s drawing of the line. But I really have no problem with people who disagree. My real problems are reserved for people either who call this fascism, or the (probably fictitious) people who want to extend this to cover all food and drink, to protect people from themselves.

Drawing the line by one principle, instead of trying to balance multiple principles, is a recipe for serious nonsense.

3

ISTM it’s simple: There are no externalities, not at the highest level, that of society itself where public policy is made. Everything that happens, somebody benefits from and somebody pays for. There is nothing that legislators and statespersons can dismiss as irrelevant to their responsibilities.

4

It’s a brilliant example of governmental mission creep. Some problem presents itself and government involves itself in solving or addressing it by spending taxpayer money. And since taxpayer money is being spent, that’s justification for further involvement. This can spiral to the point where the government can force people to buy and eat broccoli in the name of health outcomes, or purchase GM cars in the name of saving the economy.

I think it’s fair to say there isn’t a hard and fast limit, no bright line where the public good should supersede personal freedom - but the scale should be heavily and severely tilted towards personal freedom. Part of personal freedom is being comfortable with a certain level of people suffering for their poor choices.

5

Yeah, but I’m talking about someone ELSE suffering from someone’s choices, Bone.

People eat unhealthy, end up using healthcare, everyone’s taxes rise. Or if it’s deficit spending interest rates go up and everyone’s credit card and mortgages increase. There’s indirect costs to these things.

So how is MY cost justified by their choices? As a society, we’ve decided we can’t allow hospitals to turn away the sick. But where’s the line? How much are we collectively on the hook for?

Hell, the recent discussion of tariffs could fall under that role as well. People aren’t willing to pay more for American-made cars? We make all cars more expensive through import tariffs.

6

All of it. The issue is only about how the costs are distributed.

7

The line shouldn’t be drawn. It should be a constantly shifting divide moved by grassroots political pressure, backlashes, judicial rulings, legislative compromises, election promises and all the other eternal vigilance guff that goes into making law in a modern democracy.

8

Not everyone suffers due to* their own* personal choices.

There are many who benefit from their poor choices, and are comfortable allowing others to do the suffering for them.

9

I am a militant middle-of-the-roader, which puts me at a disadvantage in debates like this. When something falls midway between the priority of personal freedom and the priority of social benefit, it’s hard for me to have an adamant position one way or the other. :slight_smile:

The ban on selling super-sized soft drinks is easy to accept — a consumer is still free to buy two Larges if he can’t get a Super-Large. As for putting taxes on certain types of food, I’d support that … except
(a) it’s far from clear precisely which foods are precisely how unhealthy (and Congressional action would be determined by lobbyist spending, not nutrition science); and
(b) since less healthy food tends to be cheaper, a tax on unhealthy food would adversely affect the poor.
For my support, a tax on unhealthy food would need to be accompanied with some policy (e.g. income redistribution) to make healthy food more available to the poor.

More generally, going down this road will require society to make a huge number of value judgments. If we’re going to tax french fries and soft drinks, I’d like first to see a huge tax on guns and ammunition!

I’m afraid right-wingers will turn this argument against you. That publicly-funded healthcare will be “on the hook” for unhealthy choices made by the underclass is an argument against that public funding!

10

Indeed! But there’s an argument that we’re already funding such…just indirectly.

11

I agree with you that the issue is one of cost distribution. We probably disagree about the methods and outcomes.

The goal for me would be to ensure that the person reaping the benefits of an action pays the full costs themselves and doesn’t foist them onto society. Otherwise, that distorts the market. An example would be a pollution tax, tailored to cost exactly as much as it costs society, in cleanup and healthcare among other aspects. This way industries can take the full costs of production into account and the market can dictate how much will be produced and at what price, all freely and above board.

Pollution bans, or hard limits, on the other hand, still leave a large demand, open up black markets, and raise costs for everyone while making it close to impossible for new competitors to enter the market. Same goal of less pollution, but a very different method of dealing with it leading to different outcomes.

I am not a right-winger at all. But I feel the same way. I support universal healthcare, but implying that therefore the government should now have a say in my personal decisions is a great way to lose my support.

Sorry, I think I misunderstood you. It’s not that I disagree with subsidizing unhealthy behaviors of the poor, because that’s the whole point of UHC, it’s that I disagree with the conclusion that “the government pays for the lower class’s healthcare, so therefore it has an interest in policing the lower class’s diets, behaviors, et cetera”. The goal of universal healthcare should be more freedom, not more control. If you can’t offer healthcare without overbearing regulation on individual recipients, count me out. Certainly, banning particular beverages (or serving sizes) is right out.

12

If you decide something that affects me indirectly, it isn’t “your personal decision” anymore. That’s exactly the problem.

13

That’s why taxes are better than bans. If it is determined that a certain activity is costing society a certain amount, then those who are participating in that activity should bear the burden of the cost.

14

But the whole idea behind UHC is that the costs shouldn’t be borne in relation to the individual’s needs, or else we could get rid of UHC entirely and go back to where everyone pays their own medical costs alone.

Besides, we’re not talking about a situation where you pay more taxes if you drink soda, but a situation where society says “we pay the costs for healthcare, so sodas are now banned”. The former is more palatable than the latter, I agree, but it leads us right back to the situation we’re trying to avoid by instituting UHC in the first place.

15

Except for those many who can’t. They either do pass their costs on to others anyway, in a highly inefficient way, or die. People’s lifetime health costs are only slightly driven by personally controllable factors anyway, so blaming them is worse than unhelpful.

The idea behind UHC is that people shouldn’t be penalized for not winning the gene lottery or the catastrophe lottery or the pollution lottery, but that the consequences of personally uncontrollable factors should not result in randomly imposed penury, or inadequate to no treatment at all. The idea is that health is a community asset, like roads or police, and the cost should be community-borne.

16

I think this gets too far into the principles at the expense of paying attention to what we’re actually trying to accomplish.

We’re trying to prevent people from facing agonizing decisions about whether to bankrupt their families to pay for necessary medical care, trying to prevent people from losing their retirement savings, trying to prevent people from putting off necessary care because they can’t afford it and dying an early death therefore. There are actual humans who will actually experience suffering if we don’t enact UHC.

Compare that to soda size bans: what’s the suffering they’re gonna cause? Somebody wants 40 oz. of soda, so they have to purchase two cups instead of one.

If we look only at the principles, issues of liberty can look very similar. But when we look at outcomes, at effects, suddenly things become much more distinct.

As a society, we’re pretty cool with limiting unhealthy behaviors. Here in North Carolina, when I go to a bar, I can only purchase one alcoholic drink at a time. Bartenders are required to cut me off if I look sozzled. I have to wear a seat belt when I sit in the front passenger seat. I can’t buy raw milk. In all these cases, my liberties are infringed upon–but not in an important fashion. The rationale for the infringement is (entirely in the seat-belt and milk cases, and significantly in the alcohol cases) to protect me from my own poor decisions, and by extension to protect society from having to deal with the effects ON ME of my own poor decisions.

It would certainly be possible to go overboard in this direction. Society could rule that I must go to the gym for an hour a day for an aerobic workout, because that’s what doctors recommend. Society could, given certain nutritional reports, outlaw all consumption of cured meats, given their carcinogenic properties. Society could outlaw all driving after dark, given the increased accidents that occur at night.

Those issues may look similar to the soda issue, but again, we gotta look at actual impacts.

17

There are a lot of attractive ways of oversimplifying this discussion. :slight_smile:

Sometimes it’s right that a person bear more of the cost of one of his actions than he has in the past. Sometimes it’s right that everyone else bear more of that cost. The reasons are not always similar.

Usually when a person has no choice but to act the way he’s acting, we tend to give him more support. Usually when he has several choices that are acceptable to him and one of those choices is a serious problem for others, we try to make him pay more of the cost. But it isn’t absolute, and it keeps needing adjustment.

18

I am not talking about paying based on need, I am ta;ling about paying based on increased risk. An excise tax on tobacco products, soft drinks, alcohol, even bullets, for the purpose of paying for the medical costs involved in having those items available in society.

Who is “we” in this? The thread is talking about both bans and taxes. I specifically said in my post that I prefer taxes to bans. So, we are talking about taxes, not bans.

I don’t know that taxing items that increase the overall cost of healthcare is something to avoid. It has two benefits. One is that you get revenue needed to cover the costs associated, and two, it incentivises people to find healthier options to spend their money on.

The only detriment is that it means that you pay a bit more on luxury goods that cuase some harm to society by being available.

19

It’s because of the effects ON OTHERS of your poor decisions, too. The alcohol laws, for instance, keep you from killing anyone else while you’re driving drunk. They also save the rest of us from the bother of hauling your broken carcass to the morgue and staging a funeral, while dealing with the myriad consequences of your sudden absence from life.

There is essentially *nothing *you can do that doesn’t affect anyone else. You even use community oxygen when you breathe.

20

That is not to say that society could not give some sorts of rewards for those behaviors.