Markets, Property Rights, and Air Pollution


I’ve gotten interested in Brink Lindsey’s project aimed at liberal/libertarian fusionism for the 21st century. But every time I read something from the Cato Institute on climate change, I can see that it’s going to be very hard to get this particular chicken to fly. For example, here’s Daniel Ikenson writing about some tensions inside the House Democratic caucus between greens and the Michigan delegation. It’s like a postcard from an alternate reality:

The Greens want to show the world that consideration of production costs and consumer demand is passé. It’s all about the product being made quietly and invisibly. Someone should remind them there were no latte stands in the Stone Age either.

Yes, that’s right. Henry Waxman, Nancy Pelosi, Barack Obama, etc. want to return the world economy to Stone Age conditions and/or force all productive activity to be done invisibly. Does Ikenson really think this? Does he realize that Pelosi is Speaker of the House of Representatives and Obama President of the United States? If I thought those people had beliefs so crazy, I’d be doing more than writing sarcastic blog posts.

In the real world, “the Greens” believe that the negative externalities associated with carbon dioxide emissions should be priced and limited in quantity.

It’s worth going back to first principles on markets, property rights, and air pollution. To have a functioning market, you need to have property rights. And property rights need to be defined in some way or other. This includes taking some view of the relationship between property rights and particulate emissions into the air. On one conceivable conception of property rights, the Sierra Club could buy up a field somewhere and then assert that its property rights over the field give it the right to exclude any form of air pollution from wafting into its field. On that definition of property rights, which is the one “the Greens” would favor if we really wanted Stone Age economic conditions, industrial production would swiftly become impossible. You couldn’t so much as warm yourself with a fire before neighbors were accusing you of tresspassing for depositing microscopic soot particles in their lawns.

So obviously we don’t define the property rights that way.

Another way would be to say the air is just a kind of free-for-all. You just dump however much of whatever you want into it and forget about it. This is, needless to say, convenient for people who are producing a lot of pollution. But it’s not so convenient if there’s acid rain falling on your roof. Or if smog is wrecking your view. Or if you develop asthma as a result of poor air quality. Or, indeed, if your gets drowned in a flood or your fields go dry or your drinking water vanishes because of climate change. A third way is a find a middle ground. You’re allowed to emit some sulfur dioxide into the atmosphere so that industrial production can continue, but an unlimited amount so as to prevent the acid rain situation from getting out of control. The “green” proposal for carbon dioxide is essentially similar to this. It’s important, economically, that we allow there to be some carbon emissions. But it’s also important that we not have unlimited levels of greenhouse gases making the world hotter and hotter and hotter and hotter with all sorts of deleterious consequences for people’s lives.

There’s nothing intrinsic to the idea of free markets or property rights that forces anyone to adopt the “free for all” view. And there’s certainly nothing intrinsic to it that forces anyone to decide that adopting the third view is an obviously batty plot to destroy the world economy.