Transcript Document
The Environment
Public and private goods
Private: my enjoyment precludes your
enjoyment
– Examples: car, pencil, pint of beer
Public: my enjoyment doesn’t preclude
your enjoyment
– Examples: beach, park, air, water
Internal and external costs
Internal costs: borne by agents of action
– Examples: buildings, materials, supplies, labor,
marketing
External costs: borne by others
– Examples: air and water pollution, noise,
government subsidies, erosion
External costs = harms to others
External costs on private goods
Person harmed may pay costs, complain, or
sue for damages
Someone has an incentive to do something
about the harm
By holding someone responsible
Parties may negotiate to have agent pay
cost, making it internal
External costs on public goods
Nobody harmed can sue for damages
Nobody has incentive to do anything about
the harm
Nobody is held responsible
Nobody is in a position to negotiate to make
agent pay costs
Tragedy of the commons
People have incentives to
impose costs on public goods
(“the commons”)
People have no incentives or
standing to make agents pay
costs
So, public goods inevitably
deteriorate
Liberal solutions
Regulation: Empower government to
protect public goods from external costs
– Preventing their imposition
Enforcement of rules
Taking over decision-making
– Making agents pay costs
Conservative solutions
Privatization: Make public
goods private, so people have
incentives to protect them
Coase’s theorem: if
transaction costs are zero,
negotiations among private
parties yield optimal use of
public goods
So, auction public goods, or at
least rights to impose costs on
them
Liberal Arguments
The Case for Government
Regulation
Costs and benefits
Problems in computing costs
and benefits
– Not always conflict between
environment and the economy
– How to put value on a life?
– Uncertainty of estimates—
harms and probabilities
– Behaviors OK for one become
dangerous for many
– How much risk is OK? People
differ
Private computations
Private computations of costs and benefits
are untrustworthy
– People act out of self-interest, not for the
good of society
– People undervalue public goods
– Randomness of harm leads people to
undervalue them (cf. highway deaths)
– Cognitive blindspots: We’re not attuned to
subtle, long-term effects
Private decisions
Private decisions are
untrustworthy
– The market prefers short- to
long-term horizons for returns
– The market prefers large- to
small-scale investments over
long periods
– Initial investments may be too
large for any private agent to
make
Market failures
Prisoners’ dilemmas: each can act to
maximize his/her own welfare, given
what others do, and produce less than
optimal outcome
Individual maximizing —/—> group
maximizing
Environmental examples: walking on
grass; driving; air and water pollution
Negligible costs add up
Market failures
This can happen even if each
acts, not from self-interest, but to
promote the good of the whole
Utilitarianism is indeterminate—
what happens if we each try to
maximize good doesn’t
necessarily maximize good of
the whole
Maximizing good requires
coordination
Government solutions
The government is uniquely able to
make environmental investments
that are
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Small-scale
Long-term
Capital-intensive
Directed at the public good
Must act to increase humanity’s
margin of error
Conservative arguments
Against government regulation
Tradeoffs
Tradeoffs: other values matter too
– Prosperity
– Economic growth
– Employment
– Farming
– Leisure
– Pleasure
– Liberty
Environmental Improvement
Necessity: the environment is
steadily improving
– As people become more affluent,
they choose environmental
goods over other kinds of goods
– Market economies produce
cleaner environments over time
Global Warming
Virtues of markets
Rent-seeking: seeking a
reward not justified by effort
People are lazy: Everyone
seeks rent
In a market economy, there is
competition
Anyone seeking rent may be
undercut by someone seeking
less rent
So, market economies
minimize rents
Resource Allocation
Market economies minimize rents
Market economies allocate resources to
those who can make the best use of
them
Market economies allocate resources
optimally
Coase: if no transaction costs, amount
of pollution would be optimal
Market failure?
Market failure: sometimes individual
maximizing —/—> group maximizing
Market allocations aren’t always optimal
Transaction costs aren’t zero
Tragedy of the commons arises
But government regulations face same
problem
Regulatory failure
Barnett’s lunch law; my corollary
Added spending and regulation may
produce benefits, with seemingly
negligible costs spread over many people
Tragedy of the Congress
But small costs add up (Dirksen: “A
billion here, a billion there, and pretty
soon you’re talking about real money!”)
The costs are imposed on other
people
Tragedy of the Congress: We
don’t get optimal amount of
government spending and
regulation; we get too much
Individuality
Regulation requires rules, to be applied
to all similarly situated agents
But often it is optimal to allow some to
pollute
– General: auto or power plant emissions
– Special circumstances: economic or other
benefits
Distributed knowledge
People make decisions every day about
tradeoffs between various kinds of goods,
including public goods
They also negotiate about external harms
Government officials can’t know enough
to substitute their judgments for those of
millions of people
Why? Public choice theory
Governments don’t act to
promote the public good
Bureaucrats act to promote their
own good
They insulate themselves from
competition, accountability
They have little incentive
– To resist special interests
– To consider private costs
– To resolve issues efficiently
Undermining accountability
No citizen has time to analyze every issue
Those with large interests at stake exert most influence
Voters assess candidates on the basis of thousands of
issues, making most risk-free for officials; many are not
elected
Environmental issues concern the future; political rewards
and punishments depend mostly on present effects
There is no tangible measure of efficiency
Political rent-seeking
If government decides, there is no competition
Nothing to minimize rents
Decisions are inefficient
Decisions are political
Public goods may be neglected or harmed
Public goods may be protected at excessive expense
Incentives
If government makes decisions, then people have
incentives to invest time, money, etc., in influencing
political decisions
Those resources could have been invested in improving
the environment or producing goods and services
People have greater incentives to weigh tradeoffs than
officials do
Government regulation makes us all worse off
Case studies
Internationally
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Soviet Union
Eastern Europe
China
India
Kyoto treaty
United States
– Hudson River
dredging
– Western forests (fires)
– National Parks
– Ethanol subsidies
– CAFE standards
Kantian Arguments
Who deserves respect?
Everything has a price or a
dignity
Human beings do not have a
price; we have dignity
What about
– Animals?
– Plants?
– Natural formations?
Land ethic & deep ecology
We must see nature itself as having dignity
Self-realization: spiritual growth— self —>
other people —> other animals —> nature
itself
Biocentric equality: All organisms have
equal intrinsic worth and so equal rights to
live and flourish
Criteria for dignity
All life forms deserve
respect
But they lack autonomy
What are the criteria for
having dignity?
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Humans
Animals
Plants
Rocks
Predators
Many life forms harm other life
forms in order to live
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Carnivores and omnivores
Herbivores
Parasites
Bacteria
Must minimize harms to other
forms
Basic principles
Biodiversity is intrinsically and instrumentally
valuable
Humans may reduce biodiversity only to
meet vital needs
Flourishing of nonhuman life requires
human population decrease
Present human interference is excessive
Basic principles
Policies must be changed to
reduce human interference
We must appreciate quality of life,
not strive for higher standard of
living
We face a crisis: population
growth, extinction of species,
ozone depletion, global warming
Ecofeminism
What gives us a right to dominate nature?
What allows us to treat nature as having a
price rather than a dignity that requires
respect?
Logic: cognitive superiority —> moral
superiority —> right to subordinate—
assign a price
The logic of domination
Argument
– We can change our environment
– Plants and rocks can’t
– What can change its environment is
morally superior to what can’t
– Moral superiority justifies subordination
– So, we have a right to subordinate plants
and rocks
Nature <—> Women
Similar reasoning justifies domination of
women
– Women identified with nature
– Men with humanity as a whole
– What is identified with humanity is morally
superior to what is identified with nature
– Moral superiority justifies subordination
– So, men have a right to subordinate women
A faulty premise
Feminists reject that conclusion
If the conclusion is false, then
– The argument is invalid, or
– At least one premise must be false
One false premise: moral superiority
does not justify subordination
But then the argument about nature falls
too
Ecology <—> feminism
These arguments stand or fall together
So, environmentalists should be feminists
Feminists should be environmentalists
We must rethink our relation to nature
We should relate to nature without
subordinating it
Conservative arguments
Against government regulation
People over penguins
Only people have
dignity. Arguments:
– Common sense view
– Only we can live
according to a rational
plan
– Only we count as moral
agents
– Only we have
autonomy
People over penguins
We depend on the health of
other species; we mustn’t
destroy them
We share interests with other
species (e.g., clean air and
water)
Penguins can’t vote; no one has
the right to speak for them
No value without humans
The Environment
Resources
We have the right to use what we need for our
own
– Survival
– Biological welfare
– Rational agency
But we must not go beyond that
We have no right to domination for its own sake
We must not do anything that would threaten our
own survival, biological welfare, or rationality
Virtue as a mean
Environmental concern is a virtue
We can have too little or too much constraint
on our desire to use resources for our own
purposes
Too little:
recklessness
Virtue:
responsible stewardship
Too much: inefficiency, ineffectiveness
Responsible stewardship
We must constrain our own drives to
– Pursue wealth and convenience without regard
to environmental consequences
– Impose costs on others
– Impose costs on the commons
– Exploit the environment for present benefits,
without concern for the future, especially future
generations
Tradeoffs
Other values matter too
– Prosperity
– Economic growth
– Employment
– Agriculture
– Leisure
– Pleasure
– Liberty
Necessity
The environment is steadily improving
– As people become more affluent, they choose
environmental goods over other kinds of goods
– Market economies produce cleaner environments over
time
– Water and air quality have improved
– Human health is better than ever
– Nevertheless, there remains much room for
improvement
Complexity
Regulation requires rules, to be applied
to all similarly situated agents
But often it is optimal to allow some to
pollute
– General: auto or power plant emissions
– Special circumstances: economic or other
benefits
Distributed knowledge
People make decisions every day about
tradeoffs between various kinds of goods,
including public goods
They also negotiate about external harms
Government officials can’t know enough
to substitute their judgments for those of
millions of people
Tradition
Burke: given complexity, competing goods,
– We must seek balance, compromise
– Judged on the basis of experience
– Without relying on universal rules
The social arrangements that evolve for
doing this are likely to be better than any we
consciously devise
They embody distributed information and
wisdom over time
Why? Public choice theory
Governments don’t act to promote the
public good
Bureaucrats act to promote their own good
They insulate themselves from competition,
accountability
They have little incentive
– To resist special interests
– To consider private costs
– To resolve issues efficiently
Undermining accountability
No citizen has time to analyze every issue
Those with large interests at stake exert
most influence
Voters assess candidates on the basis of
thousands of issues, making most risk-free
for officials; many are not elected
Undermining accountability
Environmental issues concern the future
Political rewards and punishments depend
mostly on present effects
There is no tangible measure of efficiency
Political rent-seeking
If government decides, there is no
competition
Nothing to minimize rents
Decisions are inefficient
Decisions are political
Public goods may be neglected or harmed
Public goods may be protected at excessive
expense
Incentives
If government makes decisions, then people have
incentives to invest time, money, etc., in
influencing political decisions
Those resources could have been invested in
improving the environment or producing goods
and services
People have greater incentives to weigh tradeoffs
than officials do
Government regulation often makes us all worse
off
Case studies
Internationally
–
–
–
–
–
Soviet Union
Eastern Europe
China
India
Kyoto treaty
United States
–
–
–
–
–
Hudson River dredging
Western forests (fires)
National Parks
Ethanol subsidies
CAFE standards