Well, let's talk about pollution.
Now this is an example that
mainstream economists love to use as a case of market failures.
And it has a supply and demand curve and it shows that the real cost curve of producing
a podium like this, not just the wood, or the plastic or the lumber
or the insurance that was into it, but also
the fact is that you make it, what you do is
hoist pollution onto people's property and calls that a negative externality.
An "external diseconomy"
Let me tell you a story. Once upon a time long long ago, all stories begin that way
in the eighteen thirties early 1840s in the US
again I don't know what happened in Australia or other countries
I get this from Murray Rothbard and a guy named Morton Horwitz
H-o-r-w-i-t-z who was a Harvard historian of
the mid-nineteenth century
What you'd have was a little old lady hate to be sexist about it but I am
who would hang out her washing this is in days before the
electronic dryer and she hang up the washing and it would be wet and clean
and she come back two hours later and it was dry and dirty
and should go to the court
and she'd say that their factory two miles down the street
it put pollutants onto my laundry and I want two things, I want
injunction which means a ruling by the court that they cut it out and I also
want damages they ruin my laundry
and in many cases the court would agree
not all cases but in some cases the court would agree
Or you get a case of a former
who go to court and say:
I had haystacks and the railroad came
by with sporkes 300 feet in the air and I got my haystacks on fire even though
they're on my private property
and I want damages and an injunction and again sometimes
many times the courts would approve this these
what we they were called in was nuisance lawsuits
but we would now call 'em environmental lawsuits
and the fact that the courts upheld private property rights had several benevolent effects.
First of all entrepreneurs, businessmen will lead by Adam Smith's invisible hand
to use more expensive anti-sulfur coal
rather than dirty but cheaper sulfur coal
because if the use of or call
they would get the little ladies on their case
there was even some environmental forensics in those days, you know what forensics is you know
they have all the CSI shows
where they were interested in blood and semen in particles and
what's on the fingernails the figure out who the rapist for the murder was
well you had environmental forensics here's a dust particle where did it come from
let's go get him and get damages and an injunction against them
and you have incentives
when you had a smokestack to put a mesh
in the smokestack to catch most that the dust that would get our
and then everyone's while you can change the them the mesh
and me as age and things were pretty good
not perfect there is such a thing call them on de minimus
we all exhale a poison
carbon dioxide we went to say he can excel more carbon dioxide that silly
every industrial product has some sort of a little bit a pollution
I mean if you need an oxygen tent don't go to move to Pittsburgh
because you know you're gonna get something even know you can sue them
if they do these pollution type activities.
Well then came the progressive period in the ninth in the 1870s through 1910s
and during the progressive period a new philosophy overcame the courts in the US
and the philosophy was we gotta be number one
Who was number one then? Great Britain. How do you become number one?
You get battleships, cruisers, tanks guns, things like that.
So the next time this little old lady or this farmer came into court in the 1890s
The court said yeah, yeah, they're violating a private property rights,
just thinking lousy selfish private property rights the something more important
than private property rights and that's
the public good, and what is public good consisted? the public good consist in
leading manufacturers
trespass their dust particles onto your property
Well if that's the way the loss can be if you're a green businessman
on questioner somebody who didn't want to put other people
who want to use more expensive anti-sulfur coal who wanted a
take steps to keep pollution to yourself you would be a competitive this is managed
the city the other people who had no such niceties
and they would drive your business assuming equal ceteris paribus
other equal abilities.
So now the law system was working in a very perverse way
and there was the Murray Rothbard quotes
some Georgia State Court the Supreme Court of Georgia were saying that
did I say something wrong? Okay.
On the Georgia Supreme Court said something to the effect that pollution is is legitimate.
Its legal you can stop pollution well if you have that kinda legal system
of course you are gonna have pollution and then things got pretty bad in the nineteen mid 20th century
and then they had come up with the EPA
but the the problem was created in the first place by the courts not upholding property rights.
One argument against this is well we gonna do sue every automobile owner for pollutants
and you have...how many automobile owners there are in Australia or the US?
but there are plenty of...
unfeasible to sue each and every one of them in also each and every one of them only
contributes this much mainly de minimis amount of pollution
so it wouldn't work and Murray Rothbard's answer to that was
well if we had private highways a point that I'll get to in my lecture tomorrow
then you wouldn't have to sue each automobile owner what you do is to the highway
the private highway for running a bawdy house (brothel) if pollution or something like that.
And then the owner up the road with turn around his customers and say:
-Look you can ride without a catalytic converter
you can pollute a lot but we're gonna try to ten times as much
so the market within work toward reducing pollution
and then they have to have the EPA which comes up with all sorts of problems
about you know how big your toilet bowl candy in
in all sorts of stuff like that but the cause a pollution is not the free enterprise
private property rights system for cause a bit is the very application of this.
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