Re: [asa] Wilson's "The Creation"

*Even with all costs being borne privately, the time constant difference is
too great to elicit the effect you desire.*

This is an interesting law and economics problem. I'm not sure time is the
biggest issue. The biggest issue is that the resources in question are
essentially, in economic terms, "public goods." Public goods are resources
that are non-rival and non-excludable. "Non-rival" means that the
consumption of the good by one person does not significantly diminish the
its availability to others. Non-excludable means that it is not possible to
exclude others from consuming the good.

Considered broadly, a stable, temperate climate is a public good. The fact
that I can flourish in a stable, temperate climate does not diminish anyone
else's ability to benefit from it. And, it is not possible as a practical
matter to to exclude others from benefitting from the a stable global
climate.

In classical competition theory, public goods are among a small category of
goods that are not strong candidates for supply by markets. The problem is
that "free riding" makes it impossible to recoup an investment in a public
good. If I invest in developing a public good, I can't "sell" what I've
created to you, because you can obtain it for free, as it is non-rival and
non-excludable. This means that no rational competitor will supply the
good.

Though I'm generally in favor of market-based solutions to many resource
allocation questions, because the environment / climate has characteristcs
of a public good, I'm not convinced that markets will address the problem.
Even for someone who leans libertarian, like myself, this seems like a case
in which some government regulation is appropriate.

There is a very good essay that extends some of this economic analysis in
this week's issue of the (libertarian leaning) Economist, here:
http://www.economist.com/opinion/displaystory.cfm?story_id=7884738

On 9/6/06, Randy Isaac <randyisaac@adelphia.net> wrote:
>
> Janice, I must admit you really fooled me. I had fun speculating on what
> your comeback might be but I never expected this. Good try, but the
> fundamental problem is deeper than that and has nothing to do with
> subsidies. Even with all costs being borne privately, the time constant
> difference is too great to elicit the effect you desire. By far. I'm no fan
> of big government but neither am I a fan of no government.
>
> I do believe it is very important to realize that environmental issues are
> one arena where market forces will NEVER be adequate, by themselves, to
> prevent irreversible environmental damage. That is not a call for big
> oppressive government. Not at all. It's a call for recognition of wisdom
> and shrewd governance.
>
> Randy
>
>
> ----- Original Message -----
> *From:* Janice Matchett <janmatch@earthlink.net>
> *To:* Randy Isaac <randyisaac@adelphia.net>
> *Cc:* asa@calvin.edu
> *Sent:* Wednesday, September 06, 2006 7:57 PM
> *Subject:* Re: [asa] Wilson's "The Creation"
>
>
>
> *@ *Your examples above of what is "fundamentally wrong" is a result of
> the fact that THIS principle in # 3 has *not* been "implemented": : *"...
> **since costs are not subsidized but are borne privately*, *unwise actions
> are on a smaller scale and of a shorter duration.
>
> *Government meddling in the private markets (tax-incentives, subsidies, *
> excessive* regulations, etc.) is called interventionism and that
> subverts the capitalistic system. There will always be a bad result and
> then the clueless always blame it on "capitalism". The fact is, though,
> that without government aid such as subsidies, the American robber barons
> of the 19th century would never have succeeded.
>
> Of course, now that government has gotten so big and has its tentacles
> entwined in every corner of the private market place, it is impossible to
> pull the rug out all at once. It has to be wound down slowly by
> privatizing more and more government-run entities and stopping the
> intervention.
>
> Government is a necessary evil and it should be as small and close to the
> people as possible.. *Big *government is anathema to freedom. I will
> always oppose the Stalinist mentalities who advocate it.
>
> ~ Janice
>
>

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Received on Sat Sep 9 13:23:58 2006