Free enterprise and pollution

Sometimes a column leaves me positively speechless. This is one of them. It was written by a local developer, Rob Dickson, who went to New York to march against climate change…presumably he walked.

In his article, Dickson calls for “a no-pollution economy.”

He also states that people in business, who claim to support “free enterprise” and “political freedom,” should object to “free” pollution because it:

1) Makes others pay a cost, not of benefit to them.

2) Misallocates resources. Pollution is waste. Waste costs all of us.

3) Is generally the result of corrupting influences at all levels of government.

4) Squashes innovation by mispricing the products and services we buy and sell.

Needless to say, I disagree with Dickson. My responses to each point follow:

1) If carbon is a pollutant then we are all “polluters” by our very existence. Assuming that he is speaking to something beyond carbon emissions (real pollution if you will), we all benefit from the activities that cause pollution: goods produced in factories, food grown on farms, transportation of that food and those products, etc. These goods are taxed and regulated every step of the way. I’m not sure how this would work.

2) Yes, pollution is waste. That is why businesses works relentlessly to reduce waste. UPS drivers, for example, do everything in their power to make only right turns because it saves time and fuel. Compare a modern plastic bottle with one that is 10-20 years old. The reduction in plastic usage is incredible.

3) No. Sorry. Pollution is a reality of human activity. Nothing more, nothing less. Pollution can take many forms and it is often nothing more than dirt and nutrients that have been moved from one place to another associated with human activities.

4) Mispriced according to whom? According to Dickson? According to the marketplace? According to the government? How do we set up a regime that accounts for ALL pollution? Is he saying “cap and trade?” He never states that if that is his belief, perhaps because the European scheme has failed.

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2 Replies to “Free enterprise and pollution”

  1. Paul, the original title of my article was “Is Pollution Killing Our Economy Too?” I would like for you to answer that question, rather than attacking my answer.

    You hold yourself out as a free market advocate. When the parties to a transaction pollute, and that creates a cost to citizens not a party to that transaction, is that not a violation of free enterprise?

    Freedom is both the right to act legally as one chooses, and also the right not to be harmed by the actions of others. Pollution harms others. Your saying we all do it is irrelevant; the issue is that parties to all transactions should pay their own way. This includes paying for pollution. Free enterprise should not allow transaction costs to be externalized to others.

    I suggested taxing pollution, then reducing taxes on labor by the same amount, to set some kind of pricing signal in the market place for pollution costs. “Tax pollution, not work.” I said nothing about “cap and trade.”

    I look forward to your answer to the question I posed – “Is Pollution Killing Our Economy Too?”

    1. Rob,

      Thanks for your note of response. I understand the concept of externalities and the fact that pollution can be considered a negative externality. I suppose that in lieu of the current regulatory model, some kind of taxation model might be considered. The classic case would be a carbon tax vs. the cap and trade model. All I’m saying is that such a model might work for some pollutants some of the time, but it is not a viable model for addressing all forms of pollution due to complexity and administrative challenges, not to mention conflicting values that different people may place on different pollutants (you may believe carbon is very dangerous and should be priced highly while I may believe that carbon is largely harmless and should be priced at a low price).

      One area where we may agree is that property owners should have the ability to sue those who pollute/degrade their property. That is quite a ways from taxing pollution instead of labor, but it is one way to address the issue.

      In summary, I think your system sounds great, but would be extremely difficult/impossible to actually implement and administer.

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