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One of the shortcomings of "free market systems" is they historically fail at pricing ecological consequences... look at the fight around putting a cost onto ca
by CWuestefeld 11y ago
One of the shortcomings of "free market systems" is they historically fail at pricing ecological consequences... look at the fight around putting a cost onto carbon emissions.
Actually, this isn't a shortcoming of the market as such. It's a failure in conjunction of our incomplete recognition of private property rights. By preventing certain types of property from having private ownership, we don't allow the market to correct itself. More specifically, if we had some private entity or entities that were recognized as the owners of air or water, then they would be able to recover damages from the polluters, thus removing ability to externalize the cost of pollution.
But once you start removing things from the purview of the market (in this case by saying that nobody can own it, and thus nobody has an ownership interest in protecting or has a right to damages), then you're actively preventing the market from correcting. I think it's really amazing that the market does as well as it does, considering how ubiquitous are the regulations that handicap it.
Edit: I should have read farther down the chain, where this [1] mentions the same idea.
[1] https://news.ycombinator.com/item?id=10024457 https://news.ycombinator.com/item?id=10024457
- lisper 11y ago> if we had some private entity or entities that were recognized as the owners of air or water I volunteer to be that entity.
- politician 11y agoI can't upvote you. Bravo.
- lisper 11y agoThanks, but why can't you upvote me?
- politician 11y agoI don't want to endorse your position as a monopoly owner of both air and water, and yet I want to reward you for boldness. There isn't a button for that.
- lisper 11y ago> I don't want to endorse your position as a monopoly I really don't think you need to worry too much about that.
- bjelkeman-again 11y agoSo are you saying that the solution to externalisation of damage to the environment by a corporate entity is to have other corporate entities own everything? All the air, all the sea, all the rivers etc?
- CWuestefeld 11y agoIt's certainly one possible solution. This isn't just my idle speculation; see Coase Theorem [1] in economics: The theorem states that if trade in an externality is possible and there are sufficiently low transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property. In the interest of intellectual honesty, I should go on to quote: In practice, obstacles to bargaining or poorly defined property rights can prevent Coasian bargaining. ... Coase argued that real-world transaction costs are rarely low enough to allow for efficient bargaining and hence the theorem is almost always inapplicable to economic reality. Since then, others have demonstrated the importance of the perfect information assumption and shown using game theory that inefficient outcomes are to be expected when this assumption is not met. That being said, it should be equally clear that the failures of public choice [2] are also legion, and in the example of pollution, it's clear that the regulatory system has bungled quite a lot of it, so it's far from obvious that the private ownership approach would be any worse. [1] https://en.wikipedia.org/wiki/Coase_theorem https://en.wikipedia.org/wiki/Coase_theorem [2] https://en.wikipedia.org/wiki/Public_choice https://en.wikipedia.org/wiki/Public_choice
- schiffern 11y ago>if we had some private entity or entities that were recognized as the owners of air or water How exactly would that work? Say I buy a piece of land. Under your proposal, I presume I would have to pay a licensing fee to Nestle whenever it rains, and to 3M for the privilege of breathing?
- rjmunro 11y agoWhy can't the government be the entity that owns air and water and recovers damages?