3 ms·

Why were regulatory bodies needed? Why wasn't the market able to decide they don't want smog and pollution?

aaron695 7y ago
The market was at work. That pollution and smog was and is an important part of growth. During that time life expectancy and happiness were increasing dramatically. It's not hard concept that since the industrial revolution each persons grandparents have had it a hell of lot hard than them. Then you hit a level where kids aren't dying and you can care about more superficial things like your environment. Then, like all free markets, you can start policing lesser issues. If a company pollutes your view lowing your land value you can punish them financially. Just like if a person murders you the cops will punish them.
ncmncm 7y ago
Polluting cost them nothing. It was the public who shouldered the cost, while they took all the profit. Same as CO2 today, but visible.
YokoZar 7y ago
Pollution is the most obvious example of externalities leading to "market failure". Clean air, similarly, is the most basic example of a public good subject to the free rider problem. https://en.wikipedia.org/wiki/Free-rider_problem https://en.wikipedia.org/wiki/Free-rider_problem
dwaltrip 7y ago
Markets are not infallible tools. They are a pattern of human interaction that has certain pros and cons. It is a very powerful pattern, one that we should continue to use. But not blindly. One of the common modes failure for markets is situations with negative externalities. There is a negative outcome, a cost, that is not borne by the participants in a transaction. Thus, they have no economic incentive to do anything about it. The participants keep doing business, and the negative outcome keeps happening. Environmental damage is a very common example of negative externalities. E.g. groundwater poisoning, air pollution (which causes millions of deaths per year [1]), ecosystem destruction, climate change, and so on. [1] https://www.sciencedaily.com/terms/air_pollution.htm https://www.sciencedaily.com/terms/air_pollution.htm

The market was at work. That pollution and smog was and is an important part of growth. During that time life expectancy and happiness were increasing dramatically. It's not hard concept that since the industrial revolution each persons grandparents have had it a hell of lot hard than them. Then you hit a level where kids aren't dying and you can care about more superficial things like your environment. Then, like all free markets, you can start policing lesser issues. If a company pollutes your view lowing your land value you can punish them financially. Just like if a person murders you the cops will punish them.

ncmncm 7y ago

Polluting cost them nothing. It was the public who shouldered the cost, while they took all the profit. Same as CO2 today, but visible.

YokoZar 7y ago

Pollution is the most obvious example of externalities leading to "market failure". Clean air, similarly, is the most basic example of a public good subject to the free rider problem. https://en.wikipedia.org/wiki/Free-rider_problem https://en.wikipedia.org/wiki/Free-rider_problem

dwaltrip 7y ago

Markets are not infallible tools. They are a pattern of human interaction that has certain pros and cons. It is a very powerful pattern, one that we should continue to use. But not blindly. One of the common modes failure for markets is situations with negative externalities. There is a negative outcome, a cost, that is not borne by the participants in a transaction. Thus, they have no economic incentive to do anything about it. The participants keep doing business, and the negative outcome keeps happening. Environmental damage is a very common example of negative externalities. E.g. groundwater poisoning, air pollution (which causes millions of deaths per year [1]), ecosystem destruction, climate change, and so on. [1] https://www.sciencedaily.com/terms/air_pollution.htm https://www.sciencedaily.com/terms/air_pollution.htm