I think this point is much more important in the health-care discussion than it gets credit for.
The truth is, you are going to take care of these people, they aren’t going away. You’re already paying for them, and there’s nothing you can do to stop it. The only question is do you want it to continue to be an out-of-control mess or do you want to deal with it reasonably.
There are two very different kinds of externality - one that is the direct result of individual or corporate action, while the other is an emergent property of collective behaviour.
As an example of the former, consider polluting a river. I have dumped toxic sludge in the water, which imposes an externality cost on people downstream. I should be made to pay for that. Co2 emissions are another example: The only people who pay a carbon tax are those contributing to the carbon problem.
Soft drinks are in a different category in that it is perfectly possible to drink a soft drink with no negative measurable health effects. You just have to drink it in moderation. And yet, across society we have an obesity problem. But if you try to attack that problem as an externality with a general tax or prohibition of soda, you are punishing people who did not contribute in any way to the problem. Gun control is another example of this type of issue.
I think it is important to always consider this distinction when making policy. Punishing people who are partaking in an activity but not in a way that contributes to an externality is to be avoided wherever possible.
And this is where I disagree. It’s always possible to avoid that, but it’s not always to be avoided. The actual effects of the “punishment” must be considered.
Take two extreme examples:
We must consider outcomes.
Take the soda example. Yes, liberty is curtailed even for responsible soda drinkers. The specific liberty curtailed is the freedom to get 40 oz. of soda in a single cup that you purchase at the same time as you purchase the soda. You may still purchase 40 oz. of soda; you may still drink it from a giant cup. But this tiny curtailment of liberty can have salubrious effects on public, and individual, health.
To make discussion concrete, rather than arguing past each other: Suppose foods X and Y have identical cost per calorie, but Y is known to be significantly unhealthy. Should government place a tax, of 5% or 15% say, on food Y? Yes or No?
I might vote Yes, perhaps starting with just a 3% tax, but would worry we were opening a Pandora’s box, and would soon be placing taxes or subsidies on a wide variety of goods.
There is some evidence that smart-phones have an adverse effect on emotional health. Should we tax them? 
Some cable-TV channels have severe social and political costs. Should we tax them too? :eek:
There’s no way to distinguish your examples. Drinking one cup of a soft drink vs dumping half a teaspoon of toxic waste. In both cases, it’s the amount, not the substance, that’s the problem.
You could then say “but a soft drink at least has a benefit when used in moderation” - but toxic waste isn’t just randomly lying around, it comes from producing things that have some benefit to someone.
Part of this issue is when the cost of something goes disproportionately to a different person than the benefits do.
Another part is that economic costs are never the only costs, and are often not even the primary costs.
That’s exactly the issue - we’ve decided as a society we can’t allow hospitals to turn away the sick. As a result, health care costs rise so that’s used as justification for more intrusive decision making like banning soda cup sizes, forcing consumption of broccoli, helmet laws, etc. The only reason someone else suffers is because we as a society have chosen to do so - but it’s not the way it has to be. We don’t have to have the EMTLA, but we do and as a result we all pay more.
True statements. Doesn’t change my calculus at all.
Well, the court ruled that the restriction on soda cup size was an overreach and struck it down.
I can see the tradeoff between principles and practical expedients, but it’s not persuasive for me. You look at it from the amount of liberty sacrificed, and if not significant than don’t see it as a large sacrifice. I would turn it around - unless the potential gain is truly monumental, then even the smallest sacrifice is too much. There are few things that I think we should sacrifice our principles for. Reducing negative health outcomes as a result of individual choices doesn’t even rank.
Yes, though without a UHC, it’s a bit more arbitrary, and is more of a sin tax than an offsetting of externalities excise tax. With a UHC, you can calculate a pretty exact cost of what these items cost, and either offset it entirely by usage taxes, or at least partly.
If you can articulate the actual costs that these things impose on society, then sure. If you cannot, then you are just doing a bit of a sin tax and trying to change people’s behavior through taxation.
(Unless the field of economics is stretched so far that it becomes Everythingology, which causes other problems.)
In terms of health care, it is possible to say “Those who can’t pay can just go to hell”. But the truth is that people don’t go to hell when they’re told to, so the health care problem remains anyway. “Not solving it” is meaningless in practice, because it does get solved one way or another.
The distinction you attempt makes no sense. And you seem to ignore that people consuming only moderate amounts of soft drinks will pay only moderate amounts of soft-drink taxes.
Moreover you seem to ignore that “imperfect” pricing is common, even in free markets. To offer just one of the more well-known examples, the margin on first-class airline tickets is higher than the margin on coach tickets, but the airline is trying to maximize profits, not to seek some unattainable “perfect” cost-price relationship.
Cigarette buyers are not exempt from the cigarette tax if they bring a note from the doctor that they are somehow immune to lung diseases. 
Nor if they’re already dying from lung disease (in which case speeding death might be a benefit to society!)
So I wonder what your plan is to disincentivize excess soft-drink consumption. Body-cams to record personal drinking? 
(My guess is you’ll oppose any tax on externalities if you can argue that the price-cost relationship will be imperfect.)
On the soft drinks vs toxic waste topic:
Producing certain cancer drugs creates toxic waste, and saves lives too.
But what if for each dose of a certain drug, a hundred tons of highly-toxic waste was created? Do we let a hundred people die to reduce everyone else’s risk to an acceptable level? Yes - if we have to. (Except the best answer is create a different drug or change the manufacturing process.)
It’s necessary to analyze all the risks and all the benefits of a policy, AND to monitor the results and change the policy to deal with new information and unintended consequences. An unchanging policy can only work in an unchanging situation, and very few situations fit that description - and even given an unchanging situation, there can hardly ever be a policy that’s truly perfect.
I don’t know of any possible government action that shouldn’t be analyzed from the point of view of economics.
Our public policy needs to be informed by factors from a number of disciplines - economics, science, morality/religion, law/constitution, etc.
That doesn’t mean that any one of these factors wins in all cases.
There’s still the check of democracy. If a government tried to, for example, make eating meat illegal, that government would be voted out and replaced by one with more relaxed attitudes.
What we have to fear in this country is the tyranny of the majority; things which are popular but wrong. Christianity will never be outlawed in this country. But you could probably convince a majority of people to outlaw Scientology.
No, I don’t either. I only meant that economics is a limited field that isn’t capable of a full analysis of any human situation.
How can judging between my neighbour’s interests and my interests be governmental mission creep? Somebody has to decide, it won’t decide itself. Asking which government should be the one to decide? Definitely. Asking that no government decide? Ridiculous.
What I notice is a pattern of speaking in vaugeries - like a horoscope there may be a kernal of truth present, but the dearth of specifics make it challenging to respond to. For example, a property line/fence dispute between neighbors may be appropriately adjudicated by a government agency. But if your neighbor really doesn’t like the new Toyota you bought and wants you to sell it, I’d say that’s not an appropriate exercise of government action.
I’m not so sanguine that the penchant for authoritarian approaches would be rebuked by voters. Bloomberg was able to relax term limits so he could continue his mayorship, and stop and frisk continued only until the courts stepped in. His authoritarian actions were not checked by the voters - sometimes the voters want an authoritarian.
Yes, this might spiral to exactly this point, which is nothing like authoritarianism, or non-democratic rule. Hayek claimed there was slippery slope between democratic socialism and authoritarian communism during the 1940s. It’s a fine hypothesis, but not a single example of it emerged since he wrote Road to Serfdom. On the other hand, a 100 year democracy in Chile was crushed by those paying lip service to Hayek’s argument.
The point: let’s not throw that word authoritarianism around too much. There’s no documented slippery slope between welfare state regulation and ending free and fair elections. And there’s a documented link between yammering about this and… ending free and fair elections.
Pollution is a clear case of an externality: people pollute too much because the costs of their effluent are borne by others. A tax on pollution would internalize the externality.
Ok what about a tax on soda? Just because it’s not a pure externality, doesn’t mean you shouldn’t regulate it and visa versa I suppose. Like any other policy problem, it’s a matter of lining up the advantages and disadvantages, keeping a clear view of the strength of every line item, and demanding empirical grounding when dealing with inchoate fears. And that’s only Part I. The second aspect involves politics, when fears and biases ought to be taken into account.
In On Liberty John Stuart Mill discussed whether a government concerned with freedom should tax booze. He was writing before automobiles, so drunk driving wasn’t much of a concern: he basically saw alcohol as something that did a lot of damage to the individual, but rather less to the public IIRC. However, Mill noted that the government needed to tax something to raise revenue, and it was better to tax things that are harmful, rather than things that were beneficial. He concluded (again IIRC), that alcohol taxes should be set to maximize tax revenue, but not above that point. I suspect a similar argument might be made for sugary water: tax it to maximize tax revenue, but not beyond. Better than taxing labor, which is the alternative in practice.
Externalities are only one form of market failure and not the only useful analytic tool for public policy.
I’m not making a slippery slope argument. Canceling elections isn’t the only bad outcome of authoritarian actions. We have two examples in this thread of authoritarian behavior - stop and frisk and the attempted soda ban. Unless you think these fall more on the liberalism end of the liberalism/authoritarian spectrum.