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Ah, indeed, no true scotsman would pollute the planet, don't be daft! We are not blessed to be living in a perfect world that can be set up for an ideal market

Ah, indeed, no true scotsman would pollute the planet, don't be daft! We are not blessed to be living in a perfect world that can be set up for an ideal market system. For the last four decades, these externalities have gotten ramped up to fever pitch. I'm interested in your take on how, in this world, we get to a point where ALL of the above consequences can be forestalled through HN's favourite hard-on: deregulation and market forces run amok.

WalterBright 6y ago
I have no idea how you're going to accomplish this with centralized economic planning, but there's a much better shot at it with a free market approach. Basically, taxing the externalities is the market based solution. Banning is a ham-fisted inefficient method.
- wcarey 6y ago
  How would price discovery operate on externalities? Who decides what's an externality? It seems like you're suggesting centralized planning under a different name.
  - WalterBright 6y ago
    The government decides what is an externality and determines the tax rate. Two things governments are good at: taxing, and starting wars. Why not take advantage of the first? It even has the advantage of being a revenue source for the government, rather than a revenue sink. The government has to tax something, why not externalities? Around here, the government decided to tax plastic shopping bags. Geez, just put a tax on it instead. Raise the tax until plastic shopping bags become scarce enough. Then if someone really wants a plastic shopping bag to use, say, to clean up after their dog, they can if they're willing to pay. Much better than being charged with a crime.
- atq2119 6y ago
  Introducing taxes on externalities is a form of central planning. And I agree that it's a very valuable tool. (Regulation is a very valuable tool as well. Which one works better depends on the particular situation, e.g. regulation is superior when levying the tax is difficult in the real world.) Also, many people will argue that if a market is subject to such taxes, then it is no longer a free market. Perhaps you're not one of them and would consider such people misguided ideologues (we'd agree on that). However, the existence of such participants in the discussion needs to be acknowledged, and it very quickly feels like you're pointless talking about semantics.
  - dragonwriter 6y ago
    > Also, many people will argue that if a market is subject to such taxes, then it is no longer a free market. Well, yeah. “Free market” doesn't mean “free of regulation of which I personally disapprove”. If government has a thumb on the scale deliberately skewing outcomes, it's not a free market. > Perhaps you're not one of them and would consider such people misguided ideologues What does ideology have to do with that? One can oppose l’aissez faire capitalism (which Info, heartily) and recognize that Pigovian taxes are contrary to it.
  - WalterBright 6y ago
    > Introducing taxes on externalities is a form of central planning. It isn't considered that by economists. It's a means of internalizing the externalities, not deciding what, when, how and by whom to provide goods and services. > many people will argue that if a market is subject to such taxes, then it is no longer a free market. They're wrong. Externalities are pushing costs onto other people without their consent, which is not free market.
    - atq2119 6y ago
      Maybe we're just getting hung up on the word "free". Some people like to use it and so it slips into the discussion easily, but usually it distracts more than it adds to the discussion. Every market has rules, and the term "free market" tends to degenerate into "market with rules that I happen to like", which isn't particularly useful. Same for the "central planning" thing. It's always a matter of degree.
- yrimaxi 6y ago
  > I have no idea how you're going to accomplish this with centralized economic planning, but there's a much better shot at it with a free market approach. 1989 called, they want their dichotomies back.

WalterBright 6y ago

I have no idea how you're going to accomplish this with centralized economic planning, but there's a much better shot at it with a free market approach. Basically, taxing the externalities is the market based solution. Banning is a ham-fisted inefficient method.

wcarey 6y ago
How would price discovery operate on externalities? Who decides what's an externality? It seems like you're suggesting centralized planning under a different name.
- WalterBright 6y ago
  The government decides what is an externality and determines the tax rate. Two things governments are good at: taxing, and starting wars. Why not take advantage of the first? It even has the advantage of being a revenue source for the government, rather than a revenue sink. The government has to tax something, why not externalities? Around here, the government decided to tax plastic shopping bags. Geez, just put a tax on it instead. Raise the tax until plastic shopping bags become scarce enough. Then if someone really wants a plastic shopping bag to use, say, to clean up after their dog, they can if they're willing to pay. Much better than being charged with a crime.
atq2119 6y ago
Introducing taxes on externalities is a form of central planning. And I agree that it's a very valuable tool. (Regulation is a very valuable tool as well. Which one works better depends on the particular situation, e.g. regulation is superior when levying the tax is difficult in the real world.) Also, many people will argue that if a market is subject to such taxes, then it is no longer a free market. Perhaps you're not one of them and would consider such people misguided ideologues (we'd agree on that). However, the existence of such participants in the discussion needs to be acknowledged, and it very quickly feels like you're pointless talking about semantics.
- dragonwriter 6y ago
  > Also, many people will argue that if a market is subject to such taxes, then it is no longer a free market. Well, yeah. “Free market” doesn't mean “free of regulation of which I personally disapprove”. If government has a thumb on the scale deliberately skewing outcomes, it's not a free market. > Perhaps you're not one of them and would consider such people misguided ideologues What does ideology have to do with that? One can oppose l’aissez faire capitalism (which Info, heartily) and recognize that Pigovian taxes are contrary to it.
- WalterBright 6y ago
  > Introducing taxes on externalities is a form of central planning. It isn't considered that by economists. It's a means of internalizing the externalities, not deciding what, when, how and by whom to provide goods and services. > many people will argue that if a market is subject to such taxes, then it is no longer a free market. They're wrong. Externalities are pushing costs onto other people without their consent, which is not free market.
  - atq2119 6y ago
    Maybe we're just getting hung up on the word "free". Some people like to use it and so it slips into the discussion easily, but usually it distracts more than it adds to the discussion. Every market has rules, and the term "free market" tends to degenerate into "market with rules that I happen to like", which isn't particularly useful. Same for the "central planning" thing. It's always a matter of degree.
yrimaxi 6y ago
> I have no idea how you're going to accomplish this with centralized economic planning, but there's a much better shot at it with a free market approach. 1989 called, they want their dichotomies back.