I sent this letter today to the Baltimore Sun:
You again call upon government to force us Americans to reduce our emissions of CO2 (“Green and right,” November 2). And like nearly everyone else demanding further regulation of markets in the name of environmental protection, you overlook the fact that the very markets that you want to restrain save millions of lives annually by making people’s living environments
cleaner.
For evidence, read Margo Thorning’s essay that appears today just inches from your own editorial. In “Ending energy poverty,” Ms. Thorning reports that “About 1.3 million people – mostly women and children – die prematurely every year because of exposure to indoor air pollution from burning biomass for fuel.” These deaths happen routinely in developing countries because people there have so little access to electrification, internal-combustion engines, and
mass-produced consumer goods that they must burn biomass in their homes. So in developed countries – whose denizens enjoy ready access to electric heating, home delivery of fuel oil, and other life-saving wonders – the capitalism that people loudly fear might raise global temperatures a few degrees over the next several decades silently yet effectively saves thousands of lives each and every day.Sincerely,
Donald J. Boudreaux
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It's just a nit, but an important one, I might add. You said: "might raise global temperatures a few degrees over the next several decades".
From the trend, anyways–a few (2.5) degrees over the next century. (From John Christy in WSJ on 11/1.)
The environment is a common good. If government regulation has any purpose, shouldn’t it be protection of the environment? Government should not engage itself in transactions that produce no externalities (drug use, prostitution, etc.), but I don’t think anyone, Libertarian or not, would argue that rampant pollution should tolerated by market participants.
In short, no market is efficient enough to capture the effects of externalities. Government can help in this area.
But the poor people in the developing countries have exactly the type of completely free market systems you advocate.
It is the wealthy countries with major government interference in the free market that generate the wealth and lower pollution that you agree is a good thing.
The difference between good capitalism in North America, Europe and Japan and bad capitalism in the rest of the world is effective government.
Spencer,
What are those countries?
Lawlessness is not a free market.
What is this biomass they are burning? Would it be dried animal dung? Nineteenth century settlors of the West made it through the cold winters by burning buffalo chips. Nobody claimed it was killing them and it worked well for staying warm.
Skywalker and Spencer,
Please justify your assumption that specific actions by government to solve problem X do not cause problems A through W.
John Reed- I am not making that assumption, and I don’t understand why you would suggest that. I think the current government in the United States is much too large and too quick to interfere in the transactions of private individuals, but that does not mean that all government regulation is a bad thing. Let’s not throw the baby out with the bathwater. Even Milton Friedman was not an anarchist.
For the record, I completely disagree with Spencer's comment, so please don't pigeon hole me into that "pro-government" bucket.
Skywalker says "In short, no market is efficient enough to capture the effects of externalities. Government can help in this area."
Sounds like a bold assertion, Skywalker. Is this the same government currently wasting billions of dollars in Iraq or were you thinking of a different one?
Russell Nelson- with all due respect, I think your comment is so off target that it can be dismissed as a red herring. Let me ask you (or anyone else) to be more specific in your dismissal of my comments: how do you suggest that we deal with environmental externalities, if reliance on government intervention is excluded? I presume you are not suggesting externalities are acceptable, and we should simply allow the local chemical plant to dump waste products in the river, for example?
skywalker,
I accept that there are degrees of pro-government attitude, and that you may be much less pro-government than Spencer.
That said, even a regulation believed to be for a good purpose will have other consequences, anticipated or unintended. The assumption I was referring to is that these other consequences are not a concern.
I believe that government has proven itself sufficiently untrustworthy to be an acceptable regulator. I prefer to let the consumer regulate behavior by his choices to buy here, there, or nowhere. I also favor publicizing undesirable behavior so that consumers can choose wisely. In other words, I favor free markets in all things.
John,
You won't see me write this too often but, perhaps here:
"I also favor publicizing undesirable behavior so that consumers can choose wisely. In other words, I favor free markets in all things."
Is where there is a legitimate use for government, the unbiased publishing of proven "undesirable behavior", so that a consumer has a reliable source to "aid" in his decision making. Notice I said aid not dictate….dictate is what an out-of-control government like ours has become will do.
Spencer,
Please educate me, what is good capitalism? And, what is bad captialism?
John- I partly agree with you. When it comes to the FDA, for example, the government has proven itself incompetent. However, the FDA essentially interferes with private transactions between individuals. Webcams in slaughterhouses would make our food supply cleaner and more humane to animals than the FDA ever could, and people should be free to treat cancer with marijuana or even experimental drugs with the FDA arrogantly restricting their treatment options.
However, the environment, as a common good, is different and it must be protected outside of the market. Market participants do not advocate for the environment as hard as they do for their 100% owned interests.
Removing these externalities will have a negative impact, as resources are diverted towards this that would otherwise be used for production.
Perhaps for most of us, the benefits of using these resources for production is worth the environmental issues they introduce. Then again, perhaps not.
Even if we accept that the government has a place protecting common goods and keeping negative externalities under control (which is a normative question and therefore outside the realm of economics), it is only obvious that it should do in a certain situation if it can be done without diverting resources from other endeavors.
In reality, however, the only way for the state to control negative externalities is to redirect resources that would otherwise be put to other uses. In this case, then, the question is: is the benefit provided by using these resources to carry out the proposed state action greater than the benefit that would be obtained by the most productive alternate use of those resources?
So who decides this? It is a tradeoff. There is no obvious answer here.
The burning biomass in question would most likely be firewood. It's long been known that the smoke given off by burning wood is filled with carcinogens. Before mankind took to smoking tobacco, wood smoke in the domestic setting was the leading cause of lung cancer.
Well maybe spencer doesn't have the answer, so could anyone please tell me what is:
Good capitalism
or
Bad capitalism
????
Vidyohs,
According to Muirgeo, capitalism that gives Great Falls, Montana, USA (pop. 60,000) enough neonatal intensive-care beds to serve itself and Calgary, Alberta, Canada (pop. 1,000,000) is wretched, disgusting, and eeevil; while the capitalism that allows his Divine Prophet, Algore I, to buy carbon offsets to heat his humble twenty-room abode in a more 'eco-friendly' manner, is Good Capitalism.
brotio,
Amigo, while I agree with you on muirduck and his/her/its twisted nonsensical views and would dismiss anything he/she/it said out of hand because of his/her/its past performance, I am looking for a serious answer from spencer who has shown himself to be quite educated and knowledgeable of economics to the point where Don and Russ address him politely and with mutual respect.
That is why:
"The difference between good capitalism in North America, Europe and Japan and bad capitalism in the rest of the world is effective government.
Posted by: spencer | Nov 2, 2007 5:53:07 PM"
I am seriously puzzled by that statement and am asking for clarification.
I am well aware that there are good people and bad people, bad governments, and uneducated people; but, I wasn't aware that there was or could be "bad capitalism".
To me capitalism is like my blood pumping, as long as it is functioning everything is good. How could it ever be bad? The only serious problem in my life with either my capitalism and my blood pumping is if an outside force interupts it.
So, again I am wondering if spencer will explain what he meant, or if he simply mis-spoke.
vidyohs: it's impossible to explain why Don takes spencer seriously. If you read a plurality of spencer's posts, you can see that no, he really *doesn't* understand economics. Otherwise he wouldn't say the stupid things he says.
Skywalker: who owns the river, and why do they allow companies to pollute it? I've noticed some businesses next to rivers will have a sign which basically says "We have a license from the government to pollute the river, so go complain to them if you see crap coming out our pipes". That's a rough translation, of course.
Environmental "externalities" are more a problem of the government setting property rights incorrectly, and then trying to create other laws which fix the problem they created. Two screwups don't make a correction.
But the poor people in the developing countries have exactly the type of completely free market systems you advocate.
No. 100% wrong. You need property rights, and you need a rule of law to enforce them.
A free market is not defined by the absence of intervention of government in peoples' lives, if that's what you were thinking. Not that citizens of most developing countries can say that about their corrupt governments.