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Comment by helmholtz | Hacker News Reader

85% of all animal life, receding glaciers, acidified, deadened oceans, plastic bag islands the size of Texas, depleted drinking water, dwindling natural resources, global uncontrolled rise of temperature, soil erosion, anti-microbial resistance, pandemics, factory farming animal abuse, forest fires, nuclear waste, asbestos in the lungs, lead in the veins, mercury in the nerves, global obesity...

ETA: looks like you edited your comment. The original (and rather tone deaf) comment was: "I'm curious what is lost by people doing what they want to do."

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I edited it to make it easier to answer.

Your examples are not examples of a properly set up market system. They are spinning off what are called "externalities", which are costs not born by either the buyer or the seller. A properly set up market would apply those costs to the producer.

An example of this is CO2 emission should be taxed, not regulated.

Ah, indeed, no true scotsman would pollute the planet, don't be daft!

We are not blessed to be living in a perfect world that can be set up for an ideal market system. For the last four decades, these externalities have gotten ramped up to fever pitch. I'm interested in your take on how, in this world, we get to a point where ALL of the above consequences can be forestalled through HN's favourite hard-on: deregulation and market forces run amok.

I have no idea how you're going to accomplish this with centralized economic planning, but there's a much better shot at it with a free market approach.

Basically, taxing the externalities is the market based solution. Banning is a ham-fisted inefficient method.

How would price discovery operate on externalities? Who decides what's an externality? It seems like you're suggesting centralized planning under a different name.

The government decides what is an externality and determines the tax rate.

Two things governments are good at: taxing, and starting wars. Why not take advantage of the first?

It even has the advantage of being a revenue source for the government, rather than a revenue sink. The government has to tax something, why not externalities?

Around here, the government decided to tax plastic shopping bags. Geez, just put a tax on it instead. Raise the tax until plastic shopping bags become scarce enough. Then if someone really wants a plastic shopping bag to use, say, to clean up after their dog, they can if they're willing to pay. Much better than being charged with a crime.

Introducing taxes on externalities is a form of central planning. And I agree that it's a very valuable tool. (Regulation is a very valuable tool as well. Which one works better depends on the particular situation, e.g. regulation is superior when levying the tax is difficult in the real world.)

Also, many people will argue that if a market is subject to such taxes, then it is no longer a free market. Perhaps you're not one of them and would consider such people misguided ideologues (we'd agree on that). However, the existence of such participants in the discussion needs to be acknowledged, and it very quickly feels like you're pointless talking about semantics.

> Also, many people will argue that if a market is subject to such taxes, then it is no longer a free market.

Well, yeah.

“Free market” doesn't mean “free of regulation of which I personally disapprove”. If government has a thumb on the scale deliberately skewing outcomes, it's not a free market.

> Perhaps you're not one of them and would consider such people misguided ideologues

What does ideology have to do with that? One can oppose l’aissez faire capitalism (which Info, heartily) and recognize that Pigovian taxes are contrary to it.

> Introducing taxes on externalities is a form of central planning.

It isn't considered that by economists. It's a means of internalizing the externalities, not deciding what, when, how and by whom to provide goods and services.

> many people will argue that if a market is subject to such taxes, then it is no longer a free market.

They're wrong. Externalities are pushing costs onto other people without their consent, which is not free market.

Maybe we're just getting hung up on the word "free". Some people like to use it and so it slips into the discussion easily, but usually it distracts more than it adds to the discussion.

Every market has rules, and the term "free market" tends to degenerate into "market with rules that I happen to like", which isn't particularly useful.

Same for the "central planning" thing. It's always a matter of degree.

> I have no idea how you're going to accomplish this with centralized economic planning, but there's a much better shot at it with a free market approach.

1989 called, they want their dichotomies back.

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