Coase On Understanding Polluting
There's a terrific interview by Thomas W. Hazlett of Nobel-winning economist Ronald Coase, who died recently. It's from a 1997 issue of reason, and is great at explaining Coase's thinking -- on rights, resources, and regulation.
For example, Coase on "the pollution problem":
The pollution problem is always seen as someone who was doing something bad that has to be stopped. To me, pollution is doing something bad and good. People don't pollute because they like polluting. They do it because it's a cheaper way of producing something else. The cheaper way of producing something else is the good; the loss in value that you get from the pollution is the bad. You've got to compare the two. That's the way to look at it. It isn't the way that people today look at it. They think zero pollution is the best situation.
More from Coase:
Reason: Though you are now known as a leading free market economist, you started your intellectual career as a socialist. Why and when did your political views change?Coase: They changed gradually. What was most important was the work I did on the economics of public utilities at the London School of Economics. I studied the results of municipal operation of utilities and the effects of nationalization, particularly in the post office. This led to grave doubts about nationalization. It didn't produce the results people said it did. My views have always been driven by factual investigations. I've never started off--this is perhaps why I'm not a libertarian--with the idea that a human being has certain rights. I ask, "What are the rights which produce certain results?" I'm thinking in terms of production, the lives of people, standard of living, and so on. It has always been a factual business with me. I discovered that municipal operation didn't work as well as people said it would, and nationalization did not either.
Reason: You said you're not a libertarian. What do you consider your politics to be?
Coase: I really don't know. I don't reject any policy without considering what its results are. If someone says there's going to be regulation, I don't say that regulation will be bad. Let's see. What we discover is that most regulation does produce, or has produced in recent times, a worse result. But I wouldn't like to say that all regulation would have this effect because one can think of circumstances in which it doesn't.
Reason: Can you give us an example of what you consider to be a good regulation and then an example of what you consider to be a not-so-good regulation?
Coase: This is a very interesting question because one can't give an answer to it. When I was editor of The Journal of Law and Economics, we published a whole series of studies of regulation and its effects. Almost all the studies--perhaps all the studies--suggested that the results of regulation had been bad, that the prices were higher, that the product was worse adapted to the needs of consumers, than it otherwise would have been. I was not willing to accept the view that all regulation was bound to produce these results. Therefore, what was my explanation for the results we had? I argued that the most probable explanation was that the government now operates on such a massive scale that it had reached the stage of what economists call negative marginal returns. Anything additional it does, it messes up. But that doesn't mean that if we reduce the size of government considerably, we wouldn't find then that there were some activities it did well. Until we reduce the size of government, we won't know what they are.







I dont think its that complicated, my theory is most people are just lazy and dont think as opposed to doing a quick cost/benefit analysis
lujlp at September 4, 2013 12:50 PM
I CAN point at regulations that DO produce benefits, and right away: the NHTSA HAZMAT shipping regulations.
Most people, including this fellow, have no idea that so many millions of tons of toxic materials are in transit in the USA today. That's why they can't name the regulation.
The facts - that some regulators abuse their powers, that some regulators are craven, incompetent, ignorant or some combination of the three does not invalidate the idea of having shipping standards for, say, dynamite, or gasoline, or spent reactor fuel cells, or hydrofluoric acid.
Just as it doesn't mean meat should just be, you know, trusted.
To extend this to another post in search of consistency: aren't some people calling for standards in detection apparatus at airports? Well, what the hell is the inspection requirement called?
Radwaste at September 4, 2013 2:35 PM
Don't make me ill. Polluting isn't about making something good and making something bad. It's about making something that will make you money, and saving more money by not cleaning up.
A polluter could be manufacturing slot machines. That doesn't make slot machines good. Oil refineries don't make something good. We are long past the point where we should be fueling our cars with fossil fuels. Yet they are huge polluters, and the use of their products make more pollution.
The Pollyanna who wrote this stupid article needs to be slapped in the face with an bag of asbestos fiber.
Patrick at September 4, 2013 3:20 PM
Amy Alkon
http://www.advicegoddess.com/archives/2013/09/04/coase_on_unders.html#comment-3892049">comment from RadwastePeople are calling for removal of the bullshit "detection" apparatus at airports.
The government is pretending to protect us.
Far too many regulations do what the TSA does -- provide power-mad mites of people with a platform to thug out on the rest of us.
And thanks, I would like to shop at the now-closed Rawsome, in Venice, that sold unpasteurized cheese, etc. If you wish to have your cheese examined by a government worker and you think this makes you safer, well, you're a bit naive and you're missing out on some really tasty cheese.
Amy Alkon
at September 4, 2013 3:24 PM
"A polluter could be manufacturing slot machines. That doesn't make slot machines good. Oil refineries don't make something good. We are long past the point where we should be fueling our cars with fossil fuels. Yet they are huge polluters, and the use of their products make more pollution"
Feel free to give up all use of processed petroleum products Patrick.
When you do, you wont be part of the problem anymore, and when others join you, demand will go down.
Oh, and make sure, that the products you substitute for processed petroleum dont actually create "more" pollution than refining petroleum. Most of those earth friendly alternatives only pan out with heavy government subsidies, and ignore the environmental costs of both mining, processing and then, the disposal of the toxic material that goes into making them.
Isab at September 4, 2013 4:52 PM
"Oh, and make sure, that the products you substitute for processed petroleum dont actually create "more" pollution than refining petroleum."
Like the hybrid car. That main propulsion battery has serious environmental costs. That's one reason they are so expensive.
The public will have what they want, though.
Radwaste at September 4, 2013 6:27 PM
Those stacks of regulations do make sense on the surface. But then when you dig in they have some stupidities that just get beyond the pale.
For example, if an 18-wheeler flatbed were to get into an accident, by avoiding hitting a car. If it hit the guardrail and punctured the tank with a 20 gallon diesel spill the cleanup requirement along an interstate is to take 12 inches down of dirt and treat it as toxic waste. That is about $10K+ of equipment and inconvenience for a firetruck and about a $0.005 match.
And it gets worse. What if a train tanker filled with molasses spills in the middle of nowhere in Ohio? Let the bees, ants and birds do the majority of the cleanup? Hell NO! You have to call in the EPA. I can't find a link to it but it happened.
So I'm not saying all regulation is bad -- but it should not be encouraged. Especially when the Obama is against coal and uses the EPA to do it.
Jim P. at September 4, 2013 6:29 PM
Jim P - gonna cite exceptions? You can do that for anything - but it's lazy.
Diesel in soil doesn't burn. Its resistance to spark and flame ignition is one of its advantages over other fuels. So much for your match.
And what about repeated spills? You apparently would excuse 20-gallon spills. How about letting truck stops leak their inventory once a day, so long as it doesn't happen more than 20 gallons at a time?
A big molasses spill should be taken care of by wildlife? You really want a rugby scrum of insects and animals on the road where the spill happened?
Dig deeper - as you said - and you find the Emergency Response Guidebook.
The HAZMAT regulations are a solid example of regulations that work. That Guidebook is also a pretty good indicator of how stupid we are about other countries' possession of WMDs. Here's a quote from the Guidebook: "For a material with a protective action distance of 11.0+ km (7.0+ miles), the actual distance can be larger in certain atmospheric conditions."
Yep. We ship stuff like that. Industrial nations do that. Breathe deep! No need for regulations here!
Radwaste at September 5, 2013 7:36 AM
We are long past the point where we should be fueling our cars with fossil fuels.
Exactly!
Damn straight!
Wait, what are we going to use?
Unix-Jedi at September 5, 2013 12:38 PM
Amy Alkon
http://www.advicegoddess.com/archives/2013/09/04/coase_on_unders.html#comment-3893626">comment from Unix-JediWe are long past the point where we should be fueling our cars with fossil fuels. Exactly! Damn straight! Wait, what are we going to use?
Bubble Yum and a prayer.
You first!
Amy Alkon
at September 5, 2013 1:09 PM
Unicorn farts aren't the way to go?
Aw, man...
Unix-Jedi at September 5, 2013 2:22 PM
What are going to use? Gasoline. We will always use gasoline. No matter what gets developed.
Gee, Amy, I thought you used to give out cards telling SUV drivers that they could use hybrids and electrics. Since you're answering Unix-Jedi's truly idiotic question with sarcasm, you obviously don't truly believe that electrics are in any way practical, and you were just being a hypocrite when you were promoting them.
Right?
We already can power our cars with something other than fossil fuels, poor, intellectually challenged Unix. There was a car that was powered by hydrogen that made a big splash for a while. Literally, since its only emission was water.
But I can see current events is just a little bit above you. Why do you go find a nice shiny ball to play with? Would you like that? You can just leave this boring old discussion to the grownups.
Patrick at September 5, 2013 3:44 PM
Amy Alkon
http://www.advicegoddess.com/archives/2013/09/04/coase_on_unders.html#comment-3893826">comment from PatrickPatrick, I was just joking. I've been twisting my brain around complicated stuff all day and it's a little tired and in need of levity.
Amy Alkon
at September 5, 2013 4:20 PM
A big problem with the idea of 'green this/green that' is the presumption that, "If its not fossil, it must be good!', but everything has a cost. Absolutely everything.
Then there is the presumption that the 'alternative' can produce enough energy to meet demand. Yet even the best electric cars take time to charge and don't go nearly as far as their gas using alternative.
And the infrastructure to support that doesn't grow up over night. Are there enough charging stations off highways criss crossing the country? Nope. Are there even enough cars on the road to justify it in confined cities? Not most places.
And what is going to generate that kind of power, nothing even comes close to current power sources.
This isn't to say money should not go into alternatives...it absolutely should. This is one of the few areas where I support government funded research because advancing this knowledge is in the long term interest of every man woman and child not just in this country, but in the whole world over.
The private sector is just to likely to not put the time or the money into this that is needed to get results until there is literally no other choice, simply because there is such a low probability of a return on the investment for most of the research. Charitable donations and foundations can only go so far and are dependent on a fickle public, government can afford some losses and dead ends, and has a greater incentive and higher probability of sharing the results with multiple private sector industries to stave off any potential monopolistic anticompetitive activity.
Perfect on all of it? No, but that is the best way to go.
Robert at September 5, 2013 6:50 PM
Since you're answering Unix-Jedi's truly idiotic question
Truly idiotic?
How about you do some math and we'll decide who is the "idiot", Patrick?
We already can power our cars with something other than fossil fuels
We can power a fraction of our cars with something else.
I presume you don't intend to be one of the vast majority unseated. People usually don't.
We cannot power "Our" cars with anything else. Not practically.
To claim we can is the true idiotic comment - and while I was being funny, obviously, you're intent on doubling down on your math failure.
You can just leave this boring old discussion to the grownups.
How about we leave it to people who can do some basic math and have science and engineering knowledge?
Or, you know, we can leave it with my comment about "unicorn farts", because that is literally on par with your "grown up current event knowledge".
There was a car that was powered by hydrogen that made a big splash for a while.
Yes. With the people who failed math. I have to presume that's including you.
Just in case, why don't you walk me through the costs involved with the initial hydrogen production? And then storage? And then the issues and costs with transferring to vehicles?
... You know. Like a grown-up.
Right?
One of the sucky things about growing up is learning that's what's desirable isn't always possible, and what's possible, isn't always practical.
Unix-Jedi at September 5, 2013 8:11 PM
There was a car that was powered by hydrogen that made a big splash for a while.
Yes. With the people who failed math. I have to presume that's including you.
Yes, basic physics tells us that extracting hydrogen from water or air and compressing it enough to put in a fuel tank uses far more energy than you can get out of it when you burn it.
Learn the first law of thermodynamics. There is no "free" lunch.
Im just guessing here, but Patrick probably thinks that the reason we are not all driving around in hydrogen powered perpetual motion machines is because of a giant conspiracy between stupid republicans and the greedy oil companies.
Isab at September 5, 2013 8:48 PM
The problem with regulations is that requiring the government to do something rarely makes sense.
The point I'm trying to get to is that treating an oil spill on the side of I-45 away from most things to a spill in your front yard is a waste of time.
The molasses spill being treated along a railroad track is a waste of time. Luckily the EPA stepped back from regulating spilled milk.
The point is why is the Federal Government involved in any of this?
Jim P. at September 5, 2013 9:49 PM
The point is why is the Federal Government involved in any of this?
Jim: Otherwise, the Terrorists will have won!
Unix-Jedi at September 5, 2013 9:56 PM
"But I can see current events is just a little bit above you."
Patrick, you clearly do not know anything about Hydrogen. Since I've run machines that make it and I heard enough about this and that scheme from people outraged about reality, I posted this.
Maybe it's time to quit believing you have a "high horse" from which you can look down on people.
"The problem with regulations is that requiring the government to do something rarely makes sense."
So far, you haven't supported this point, at least w/r/t HAZMAT regs. Here's why:
"The point I'm trying to get to is that treating an oil spill on the side of I-45 away from most things to a spill in your front yard is a waste of time."
No, because treating them differently does two things wrong: it requires location assessment in the regulation (an added regulatory burden), and you presuppose that your yard is more or less important a spill site than that Interstate. If you drop a ton of waste off I-20 near the Savannah River, you can kill a whole city's water supply. Your yard? Maybe not. Read the Guidebook. It makes sense.
"The point is why is the Federal Government involved in any of this?"
Gee. You picked a discussion largely about the ONE set of regulations totally about interstate trade to bring this up.
Radwaste at September 6, 2013 8:08 AM
Cousin Dave's Three Fallacies of Regulation:
1. If a little bit of regulation is good, a whole lot is better.
2. Regulation is always applied in a fair and even-handed manner. Regulators never have ulterior motives.
3. Regulations only capture what a conscientius person would do anyway.
Discuss.
Cousin Dave at September 6, 2013 10:17 AM
The biggest problem with government regulation is mission creep, and empire building.
I wish there was some way to scale it back, but I haven't seen a good way to do it at the federal level.
The EPA is totally out of control, and will remain so until someone has the balls to cut their budget in half.
Isab at September 6, 2013 10:49 AM
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