Re: PEN-L Digest - 1 Jun 2007 to 2 Jun 2007 (#2007-156)

[Gar Lipow <gar.lipow@xxxxxxxxx>]

On 6/4/07, Bill Lear <rael@xxxxxxxxxx> wrote:
> On Monday, June 4, 2007 at 15:48:19 (-0400) Walt Byars writes:
> >Yeah, but his argument is that there will be externalities will
> >progressively become more and more common over time. I imagine they go
> >into more depth in Quiet Revolution in Welfare Economics but if I tried to
> >read that book at this point it would be very arduous.
>
> I think you mean "goods with externalities will progressively become
> more and more common over time", not that externalities themselves
> will.

In most (not all ) negative externalities involve putting your costs
on other people. (The term is rather bloodless because it ignores
other important things that are going on, but it does capture a rather
important problem that both capitalist and non-capitalist market
systems create.)  So products with lots of externalities are in
essence heavily subsidized and out compete products with fewer
negative externalities. Similarly business owners with positive
externalities will look for ways to capture those benefits -- charge
for them somehow. As an extreme case, businesses often demand
subsidies for moving into an area because of the employment they
provide and additional tax revenues. A ripoff  yes, but also a charge
for a positive exernality which ignores negative externalities.