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Monday, December 14, 2009

The Libertarian Answer To Pollution

The answer to pollution is well-known in the economics literature: internalize negative externalities through Pigovian taxes, as in a Green Tax Shift.

"Free" markets systematically fail to internalize negative externalities.  A market isn't truly free unless aggression in it is policed, and negative externalities are naked aggression.

Market prices should include the measurable costs that products and actions demonstrably and physically (not psychologically or sociologically) impose on non-consenting third parties.

To a minarchist, this means setting the default court-contestable penalty for pollution microagression to its estimated average cost, and then letting markets find the most efficient way to reduce aggregate pollution.

To an anarchist, this means setting the default court-contestable penalty for pollution microaggression to zero, and wishing that markets won't systematically ignore polluting acts whose damages are less than the cost of suing the polluter.