Libertarianism and externalities

[LokeRundt]

Way to put the "BS" in "BS-degree"

[1715065872]

1715065872

[AyeYo]

you keep saying "he", but pronouns are notoriously fickle on forums. . .who asked what?  I did not see anyone asking me specifically anything

We're all lol'ing as you cop out of answering direct questions.

[praxeologist]

Someone generally would have only acquired the "right to pollute" in one of two ways:

- the land being polluted was unowned (any government land is effectively unowned)
- the polluter made a contractual agreement with a landowner to be able to pollute

So how does that then become "some guy can't use his property the way he always wanted to down the road"? It either wasn't his property yet, he agreed to the pollution, or the pollution is a rights violation. (He owned the property before the pollution occurred, therefore no "right to pollute" actually exists.)

In that case, how do you solve the factory owner blackmail problem? I can buy land near a multi-million dollar factory and use my land in a way that creates arbitrarily high damages. Say, for example, the pollution is highly toxic to bees. I can bring in the world's most valuable and sensitive bees, wait for them to die, and then make him pay my full cost. I can keep doing this until he pays me millions to stop, or he shuts down his factory.

The real problem here is that the existing system is horrible... so it creates some issues when we try to change it. There's no real place in libertarian law for nations and wars, but that is what we are faced with at the onset.

I don't understand your hypo about just going and buying land. If you are buying land from someone, did the seller have a preexisting agreement with the polluter allowing the firm to keep polluting? When that person homesteaded the land were they the latecomer in comparison to the polluter? If the answer to either of these questions is yes, then the ability of a 3rd party to pollute is part of the title to the land and would be transferred along to you when you buy it.

Since no system like this really exists today, yes there will be some winners and losers when the dust all settles. It has to happen eventually though. There's legal mechanisms to prevent the type of gouging scheme you want to run, even if you would otherwise legitimately be owed damages.

You're confusing what I am talking about with a "Pigovian system". Pigou suggests a tax. Necessarily a tax involves a government, and the socialist calculation problem is no less insurmountable in the case of environmental policy than in any other. A main point in Block's refutation of Coase (and Demsetz) is that psychic profit is ignored, a very common mistake for those with the mentality of central planners.

My objection applies to any scheme were polluters pay for all the damages, whether the payments are imposed by taxes or otherwise. While the pollution is the fault of the polluter, the damage the pollution does is the fault of the relationship between the pollution and the thing damaged. That is not something entirely under the polluter's control.

I don't understand what your objection is... here's what you wrote:

Right, that's the problem. "The polluter pays for his damages" seems really simple and elegant (the Pigouvian system). You almost think, "oh, it's that easy!" Well, it's not, Coase rained on that parade. And the idea that someone who pollutes might acquire the right to pollute and then some guy can't use his property the way he always wanted to down the road is much less intuitively appealing.

Normally, you get rights to someone else's land through usage that is directly adverse to them. It has to be something a person would see, know about, and choose to ignore. But pollution can be invisible. And the idea that someone might gain free reign to pollute simply by nobody noticing is not very attractive.

Again, it's a hard problem. No system known (other than pure authoritarianism with a dictator who really hates externalities) handles it well.

"Coase rained on that parade"? Not much of an argument.

Nobody just goes and acquires the right to pollute by paying off most of the homesteaders which were first. If you don't want to accept payment from some industrial plant that wants to come do business in your area, but they come and start dumping mercury in the stream running to your fishing pond, it's an ongoing rights violation whether or not anything is done about it.

If you didn't notice the mercury in a river before you decided to move there and start farming fish, too bad, you need to do due diligence. If somebody all of a sudden moves in and starts polluting your land though, they don't "get free reign" just because you don't notice right away. You would be able to seek pretty severe damages if it were found out. There's plenty of environmental monitoring tools available nowadays. The market can sort it out. I don't really see what the problem is or how any state system somehow solves it.

You're calling the nature of the thing getting hit with pollution into question... Okay, well that is true that the damage depends on what is damaged, but that is all the more reason for polluters to be careful. I don't see why this is a problem or how it follows that authoritarian systems somehow handle things better.

[LokeRundt]

you keep saying "he", but pronouns are notoriously fickle on forums. . .who asked what?  I did not see anyone asking me specifically anything

We're all lol'ing as you cop out of answering direct questions.

See those cute little buttons at the top-right of each post that says "Quote".

When you're composing a message, you can scroll down through the discussion and click "Insert Quote". 

I'm not going to review entire threads looking for where someone asked me a direct question, my eyesight is terminally fucked due to MS.  If you could KINDLY quote the question you keep referencing (or for fucksake at least mention WHO asked the question so I can ctrl+f the username), it has a lot better chance of being answered.

[JoelKatz]

I don't understand your hypo about just going and buying land. If you are buying land from someone, did the seller have a preexisting agreement with the polluter allowing the firm to keep polluting?

No.

When that person homesteaded the land were they the latecomer in comparison to the polluter?

No, but it doesn't matter either way.

If the answer to either of these questions is yes, then the ability of a 3rd party to pollute is part of the title to the land and would be transferred along to you when you buy it.

Since no system like this really exists today, yes there will be some winners and losers when the dust all settles. It has to happen eventually though. There's legal mechanisms to prevent the type of gouging scheme you want to run, even if you would otherwise legitimately be owed damages.

And what would those mechanisms be?

A legal scheme were the polluter pays all damages just doesn't work because the polluter doesn't have control over the damages. Yes, it pushes all the problems in the other direction, but they're equally serious in either direction.

Either the factory can stop me from starting a beekeeping business. Or I can start a beekeeping business and blackmail the factory. Neither answer is satisfactory. This is simply a hard problem -- for any system.

If you didn't notice the mercury in a river before you decided to move there and start farming fish, too bad, you need to do due diligence. If somebody all of a sudden moves in and starts polluting your land though, they don't "get free reign" just because you don't notice right away. You would be able to seek pretty severe damages if it were found out. There's plenty of environmental monitoring tools available nowadays. The market can sort it out. I don't really see what the problem is or how any state system somehow solves it.

The problem with our system is what you're solving in the paragraph above. But in exchange you create the opposite problem on the other end.

If you want to argue that a polluter can homestead the right to pollute then you also have to give people who are not direct victims of the pollution the right to sue. If a polluter makes it so that I cannot run a beekeeping business on my land, that reduces the value of my land even if I have no intention of operating a beekeeping business as I might sell to someone who wants to do that. So can I sue over hypothetical damages for every possible future use? Or do I just have to sit back and watch as a polluter drops the value of my land drastically just because I'm not currently using it?

There is no easy solution. The Pigovian solution (polluter pays) doesn't work for the reasons Coase explained.

[NghtRppr]

Either the factory can stop me from starting a beekeeping business. Or I can start a beekeeping business and blackmail the factory. Neither answer is satisfactory. This is simply a hard problem -- for any system.

If I start an airport next to some unowned land and then you move there and tell me to shut down my airport, that's absurd. I was there first. I homesteaded the rights to pollute. If, however, I build an airport next to some previously owned land then you have the right to tell me to stop the noise. It's all about who was there first.

So can I sue over hypothetical damages for every possible future use?

You can sue over every form of pollution if you were there first.

[JoelKatz]

If I start an airport next to some unowned land and then you move there and tell me to shut down my airport, that's absurd. I was there first. I homesteaded the rights to pollute. If, however, I build an airport next to some previously owned land then you have the right to tell me to stop the noise. It's all about who was there first.

Say we reach the point where pretty much all land is owned. You want to buy some land to build a factory. Surely it has to be possible to put land to new uses. I submit that you will never come up with a set of rules that handles the types of cases I'm describing. For example:

1) You want to operate a factory. It causes no direct damages to any current uses. But it means the people on land adjacent to the factory cannot ever open a beekeeping business. Do you have to compensate them for the loss of potential use? If not, do you gain the right to continue that pollution even if they do wish to open a beekeeping business?

2) You want to operate a factory. There is a beekeeping business that will suffer slight damages. You pay those damages. Then they add thousands of super-expensive bees and demand you pay for the harm to them all. Do you have to pay unlimited damages as they add to them? Or do they lose the right to expand their business just because you opened a factory?

And so on and so on. Again, this is a *hard* problem. Fair solutions to many of these cases simply are not known. Read the article by Coase that I cited. It explains why there aren't going to be simple solutions -- in any system.

[myrkul]

Say we reach the point where pretty much all land is owned. You want to buy some land to build a factory. Surely it has to be possible to put land to new uses. I submit that you will never come up with a set of rules that handles the types of cases I'm describing. For example:

1) You want to operate a factory. It causes no direct damages to any current uses. But it means the people on land adjacent to the factory cannot ever open a beekeeping business. Do you have to compensate them for the loss of potential use? If not, do you gain the right to continue that pollution even if they do wish to open a beekeeping business?

2) You want to operate a factory. There is a beekeeping business that will suffer slight damages. You pay those damages. Then they add thousands of super-expensive bees and demand you pay for the harm to them all. Do you have to pay unlimited damages as they add to them? Or do they lose the right to expand their business just because you opened a factory?

And so on and so on. Again, this is a *hard* problem. Fair solutions to many of these cases simply are not known. Read the article by Coase that I cited. It explains why there aren't going to be simple solutions -- in any system.

1) No, if they want to start a bee-keeping business, they can move. Even in a 100% owned environment, there will always be someone selling.

2) No, that's a clear case of extortion, and no rational Arbitrator is going to let that fly. If you want to expand, Buy land elsewhere. You knew when you agreed with the factory (the damage assessment came from somewhere, yes?) that expansion, at least here, would be difficult or impossible. If you knew you wanted to expand, you should have asked for the cost of moving, in the initial damages.

And no, I don't think it's hard, I don't think fair solutions are impossible, All it takes is a little common sense.

[JoelKatz]

1) No, if they want to start a bee-keeping business, they can move. Even in a 100% owned environment, there will always be someone selling.

So a polluter can deprive property owners of any value in their land that comes from uses they aren't currently exploiting, and they're entitled to no compensation. That doesn't seem fair. The value of land comes from the value of all of its possible uses. A polluter who makes some uses impossible reduces the value of other people's land. Why shouldn't he pay for that?

2) No, that's a clear case of extortion, and no rational Arbitrator is going to let that fly. If you want to expand, Buy land elsewhere. You knew when you agreed with the factory (the damage assessment came from somewhere, yes?) that expansion, at least here, would be difficult or impossible. If you knew you wanted to expand, you should have asked for the cost of moving, in the initial damages.

So I can force a polluter to pay to relocate me merely by claiming I wanted to engage in a conflicting use? And I have a deadline to figure what future damages I will suffer from his future pollution. If I have to predict my damages before I suffer them, then he has to compensate me for damages I may never have suffered. If I don't have to predict my damages before I suffer them, then he may have to pay an endless stream of increasing damages as he continues to pollute and I continue to grow my business.

So far as we know, no set of simple rules will work. Many economists have tried to figure out such rules and they have all failed. If you really know a solution to this problem, you should set it out in full detail and share it with the world. Maybe you'll get the Nobel prize for solving the problem Coase got the Nobel for finding.

Seriously, read The Problem of Social Cost. You can find it at http://www.sfu.ca/~allen/CoaseJLE1960.pdf

[myrkul]

So a polluter can deprive property owners of any value in their land that comes from uses they aren't currently exploiting, and they're entitled to no compensation. That doesn't seem fair. The value of land comes from the value of all of its possible uses. A polluter who makes some uses impossible reduces the value of other people's land. Why shouldn't he pay for that?

See the absolute value thread. Value comes from those who value something. if the owners of the land don't value it for it's bee-keeping use, then it's bee-keeping value is 0.

So I can force a polluter to pay to relocate me merely by claiming I wanted to engage in a conflicting use? And I have a deadline to figure what future damages I will suffer from his future pollution. If I have to predict my damages before I suffer them, then he has to compensate me for damages I may never have suffered. If I don't have to predict my damages before I suffer them, then he may have to pay an endless stream of increasing damages as he continue to pollute and I continue to grow my business.

Hmm... I don't believe I said 'force'. Did I say force? Let me check. Nope, I said 'ask'.

So far as we know, no set of simple rules will work. Many economists have tried to figure out such rules and they have all failed. If you really know a solution to this problem, you should set it out in full detail and share it with the world. Maybe you'll get the Nobel prize for solving the problem Coase got the Nobel for finding.

It's really not that hard. You get the two people in a room, with someone to guide the discussion, and you let them come to a decision themselves. This is called 'Mediation'.

[JoelKatz]

It's really not that hard. You get the two people in a room, with someone to guide the discussion, and you let them come to a decision themselves. This is called 'Mediation'.

That will not work. As I've been trying to explain, we have no idea what a fair solution would be. There is no way a mediator can help the parties reach a fair solution unless we have some theoretical basis to understand what would be fair. We do not. Read the paper.

[myrkul]

It's really not that hard. You get the two people in a room, with someone to guide the discussion, and you let them come to a decision themselves. This is called 'Mediation'.

That will not work. As I've been trying to explain, we have no idea what a fair solution would be. There is no way a mediator can help the parties reach a fair solution unless we have some theoretical basis to understand what would be fair. We do not. Read the paper.

Dude. What is so hard about "Party A and Party B both agree that the solution is fair, ergo the solution is fair"?

[praxeologist]

When that person homesteaded the land were they the latecomer in comparison to the polluter?

No, but it doesn't matter either way.

Ridiculous... Sorry but it is hard to take anything you say seriously if this is your outlook on things. If I set up a huge rock stadium out in a field, you do not have a right to try and set up a sleep clinic nearby then bitch about me ruining your business.

Since no system like this really exists today, yes there will be some winners and losers when the dust all settles. It has to happen eventually though. There's legal mechanisms to prevent the type of gouging scheme you want to run, even if you would otherwise legitimately be owed damages.

And what would those mechanisms be?

Hmm, not sure what the legal term would be offhand. What you are saying just flies in the face of reason and justice though. You see that your neighbor is committing a minor trespass like his sprinkler is shooting over the fence into your backyard. You go grab that Picasso you wanted to get an extra few mill. for but didn't want to pay auction fees and lay it where the sprinkler is shooting. The neighbor now owes you the value of the Picasso? Is this your argument?

Seriously, read The Problem of Social Cost. You can find it at http://www.sfu.ca/~allen/CoaseJLE1960.pdf

Seriously, read the refutation. I'll link you again. https://mises.org/journals/jls/1_2/1_2_4.pdf

[NghtRppr]

1) You want to operate a factory. It causes no direct damages to any current uses. But it means the people on land adjacent to the factory cannot ever open a beekeeping business. Do you have to compensate them for the loss of potential use? If not, do you gain the right to continue that pollution even if they do wish to open a beekeeping business?

I've already answered this in my above post. If you were there first, you win. If they were there first, they win.

2) You want to operate a factory. There is a beekeeping business that will suffer slight damages. You pay those damages. Then they add thousands of super-expensive bees and demand you pay for the harm to them all. Do you have to pay unlimited damages as they add to them? Or do they lose the right to expand their business just because you opened a factory?

No company is going to reach a settlement unless it includes conditions that disallow you for suing from further damages. In that case, the company will just have to shut down their operation.

And so on and so on. Again, this is a *hard* problem. Fair solutions to many of these cases simply are not known. Read the article by Coase that I cited. It explains why there aren't going to be simple solutions -- in any system.

I'm well aware of Ronald Coase. I'm an avid follower of Walter Block. He's got an hour-long lecture critiquing Coase.

Watch it here: http://www.youtube.com/watch?v=Id6glPCLm0E

If you don't want to watch it, I'll explain the flaw with Coase in my own words. Coase ignores the prior-latter distinction. All he sees is that A harms B and B harms A. But that's like saying that if you kick me in the shin, even though you're hurting me, my shin is also hurting your foot. For Libertarians that's just too bad! You shouldn't have kicked me!

This problem isn't hard at all. Who was there first? The other person? Then you lose. My shin was there first. Don't kick it and you won't hurt your foot on it.

If I set up a huge rock stadium out in a field, you do not have a right to try and set up a sleep clinic nearby then bitch about me ruining your business.

Exactly. I don't understand why we have to pretend this is such a subtle and difficult issue. It's not.

[JoelKatz]

If you don't want to watch it, I'll explain the flaw with Coase in my own words. Coase ignores the prior-latter distinction. All he sees is that A harms B and B harms A. But that's like saying that if you kick me in the shin, even though you're hurting me, my shin is also hurting your foot. For Libertarians that's just too bad! You shouldn't have kicked me!

This problem isn't hard at all. Who was there first? The other person? Then you lose. My shin was there first. Don't kick it and you won't hurt your foot on it.

There is no person who is there first in any meaningful sense. For all intents and purpose, all land is owned and has always been owned.

If I set up a huge rock stadium out in a field, you do not have a right to try and set up a sleep clinic nearby then bitch about me ruining your business.

Exactly. I don't understand why we have to pretend this is such a subtle and difficult issue. It's not.

The problem is, even if I haven't set up a sleep clinic nearby, part of the value of my land is the ability to set up a sleep clinic on it. When you set up your rock stadium, I am already enjoying the value of my land due to the future possible uses of it. If you deprive me of those future uses, you are depriving me of value.

Say I have an apiary that occupies one acre of my 50 acre plot. Does a factory that kills my bees have to pay only for the value of my one acre apiary? Or does he get to steal the value of my future expansions?

Sorry, there is simply no way to deal with pollution on these principles. It's not even remotely close to sensible.

[NghtRppr]

There is no person who is there first in any meaningful sense. For all intents and purpose, all land is owned and has always been owned.

We're talking about who was there first with the pollution vs. the need for there not being pollution. Let's say that a doctor and a machine shop are next to each other and the machinist starts with his grinding and other noise and the doctor doesn't complain because the doctor has his office on the other side of the building where it doesn't affect him. Now let's say, the doctor later decides to relocate his office to a point where the noise is now a problem. That's too bad, the machinist was there with his noise first.

The problem is, even if I haven't set up a sleep clinic nearby, part of the value of my land is the ability to set up a sleep clinic on it.

That's too bad. We don't protect possible futures. You have to have something that will be damaged before the noise is in place and something that is damaged after the noise is in place.

Say I have an apiary that occupies one acre of my 50 acre plot. Does a factory that kills my bees have to pay only for the value of my one acre apiary? Or does he get to steal the value of my future expansions?

If you were there first with your bees then I have to stop but I only owe you for your current operation. I don't owe you for your future expansion or if you suddenly decide to buy only ultra-expensive rare bees.

[myrkul]

That's too bad. We don't protect possible futures. You have to have something that will be damaged before the noise is in place and something that is damaged after the noise is in place.

To put it another way, When I sell you a sandwich, should I have to compensate you for the cup of coffee that you now cannot buy, because you spent the money on the sandwich?

[AyeYo]

you keep saying "he", but pronouns are notoriously fickle on forums. . .who asked what?  I did not see anyone asking me specifically anything

We're all lol'ing as you cop out of answering direct questions.

See those cute little buttons at the top-right of each post that says "Quote".

When you're composing a message, you can scroll down through the discussion and click "Insert Quote". 

I'm not going to review entire threads looking for where someone asked me a direct question, my eyesight is terminally fucked due to MS.  If you could KINDLY quote the question you keep referencing (or for fucksake at least mention WHO asked the question so I can ctrl+f the username), it has a lot better chance of being answered.

Keep copping out, man.  I'll keep laughing at your struggle to answer simple questions.  I'm not going to play into the distractionary game.  You were asked direct questions on the last page and you intentionally bypassed them.

[myrkul]

So assuming a free-market and the pollution problem.  You mention a multi-million dollar factory. . .which is going to need investors and some form of insurance.  The large-scale factory is only ideal/preferable within the confines of the capitalist/statist system (like our current one).

So there are no computers in your ideal world?

Is this the one you're talking about?

He answered here: http://forum.bitcoin.org/index.php?topic=20254.msg286882#msg286882

[AyeYo]

That's too bad. We don't protect possible futures. You have to have something that will be damaged before the noise is in place and something that is damaged after the noise is in place.

To put it another way, When I sell you a sandwich, should I have to compensate you for the cup of coffee that you now cannot buy, because you spent the money on the sandwich?

You really are the king of bad analogies.

Try this more accurate analogy:

If I buy a plot of land, many aspects of not just the property, but the surrounding area as well, go into determining the value of that land.  If, when I buy the land, it is located in the center of nothing but green, grassy fields, that is factored into the value.  If you come along and put a sewage treatment plant right next to my land or run a railroad right past it, you have now massively decreased the value of my land.  You have robbed me of value.