… is from page 236 of Matt Ridley’s splendid 1997 volume, The Origins of Virtue :
Leviathan creates tragedies of the commons where none were before.
To the extent that the state enables Jones to spend Smith’s money, Smith to spend Jones’s money, and both to spend Williams’s money – to the extent that the state gives to Jones a say in how Smith’s property is used, Smith a say in how Jones’s property is used, and Williams a say in how the properties of Smith and Jones are used – to the extent that the state allows Jones to prescribe and proscribe Smith’s actions, Smith to prescribe and proscribe Jones’s actions, and Smith, Jones, and Williams to prescribe and proscribe Jackson’s actions, the state does indeed create free riding and other negative externalities where none were before.
The widely accepted idea that private markets are a major source of negative externalities is itself overblown. But far more overblown is the notion that the state reliably ‘corrects’ (or “internalizes”) these externalities in ways that result in an overall reduction in negative externalities.
Listen to any modern political campaign: it is a litany mostly of promises to use state coercion to transfer benefits to one group of people both by seizing the properties of other people and by unilaterally prescribing and proscribing the actions of other people. In short, politicians spend the bulk of their time promising to unleash negative externalities. Unfortunately, these promises are ones that politicians generally keep.