Is a Bank Robbery Merely a Negative Externality?
In another post, we are getting bogged down in the comments over whether there is a meaningful sense in which an alleged negative externality–such as emitting CO2–isn’t really a “bad,” even though it has negative implications. The standard claim in the climate policy debates is that taxing CO2 is penalizing a “bad,” while taxing work is penalizing a “good,” and so (it seems) a revenue-neutral carbon tax would involve “taxing bads not goods.”
Ken Green had challenged that vocabulary, and I agreed with him, since CO2 emissions are tied to (low cost) production in various lines. In the comments, Silas Barta challenged him (me), saying that we effectively eliminated the idea of a “bad” at all. Even bank robberies, Silas claimed, would then be “goods,” because the economically optimal amount of bank robberies is positive.
Even on standard, neoclassical grounds–the sort that Steve Landsburg would use, not a Rothbardian framework obviously–I don’t think this is right. Even if we stipulate for the sake of argument that the “consensus” IPCC climate models are correct, and that William Nordhaus is approaching this issue in the right way, I think there is a qualitative difference between carbon dioxide emissions versus bank robberies, such that the latter are definitely “bads” in a way that the former aren’t.
However, I do not want to type out my reasoning just yet, because I want to make sure I dot all the i’s and cross all the t’s. In the meantime, I’m hoping one of you hits it out of the park so I can just say, “Yup.”
This will probably be just a bunt, but…
The qualitative difference is that while carbon dioxide emissions tend not to be purposeful targeting of aggression against another individual’s person or property, such that we can “isolate” the act and call it an economic “bad”, bank robberies do tend to be a purposeful targeting of aggression.
Carbon dioxide emissions are a cost of living for biological organisms. After all, we exhale CO2. When we produce goods, we are likely to generate even more CO2.
This is why people talk about an optimal level of CO2 emissions, but not an optimal level of bank robbiers, even though the logic of “optimal levels” would apply to both.
Remember, economics is grounded on purposeful behavior. Economic bads are when individuals purposefully aggress against other individuals. It’s why we call gun murders, not accidental gun firings, economic “bads”. It’s why we call taxation, not accidental misappropriations of money, economic “bads”. Etc.
What about loud music then? It’s not *deliberately* there to hurt other people, and has an effect that the producer likes. Is it not a bad?
I suppose I should have written more to be more clear about the impetus for what I wrote.
For this sort of question Silas, I personally don’t look at the physicality of an event to judge whether it is a bad or a good. I look at what the purpose of it is.
I do the same thing when I define capital goods versus consumer goods. I don’t ground it on the physicality of the good, but rather the purpose. A car is a capital good if it is purchased to make subsequent sales (as in a business), but a consumer good if it is purchased not for the purposes of making subsequent sales (as for the home).
So in the case of “loud music”, I think we should look at the purpose, not the physicality of it. You might agree that it is not inconceivable that a person might use loud music in a purposefully aggressive way. I think a football stadium that you can hear across the street is not aggressive noise. But if I purposefully blared a siren in your ear, causing you to go deaf, that would be aggressive.
So I would say there is no one answer that would limit “loud music” to one or the other. In other words, loud music COULD be an economic bad, if for example there were people who wanted to hurt other people’s bodies (eardrums, etc) purposefully.
Same thing with every other “airborne” mad made phenomena.
Shining a bright light, considered in isolation, is not one or the other. But if know the purpose, we can distinguish between good and bad light. Purposefully shining a 100 billion candle power light directly in someone’s eyes, blinding them, I would consider an economic bad.
It should go without saying that this analysis is not intended to preclude unintentional harming of people through deliberate, although sloppy, activity.
…to be immoral.
I was thinking about the case of where you play music you like, which others do not, because it e.g. makes it impossible to work or come up with witty arguments about why Coase totally took care of the externality problem. I don’t think your distinction applies to that.
Would the loud music — the part that spills onto other unwilling listeners’ ears — be a bad? Is there any bad in that scenario?
“witty arguments about why Coase totally took care of the externality problem”
*eye-twitch*
Coase just muddied the waters by eliminating the market foundation to create another market entirely. It’s not an externality if I burn down your house in the process of starting a fire in my backyard. It’s property damage that I am liable for. There’s no bargaining if property rights already exist, and if they don’t, then what the heck are we supposed to be bargaining about?
You’re right, my distinction doesn’t address enforcement. I thought we were just talking about what makes X a good or a bad.
In terms of enforcement, I think to get to your point we have to clearly identify the property rights. I think that is what you are getting at when you think of whether X is a good or a bad.
If you own the airspace in your home, then I think there is an argument to be made that others do not have the right to disturb that airspace with unwanted purposeful vibrations.
Is the airspace in your ear your property, such that you have a right to force others to stop making a sound that you don’t consent to? I think for this question you’ll have to go to minds superior to my own, because I don’t know how to answer it, or establish if there is an answer at all.
But we’re not talking about my distinction, but the one Bob was referring to when he said carbon is not a “bad” in the sense that “real bads” are — do you think the distinction you described matches what Bob meant there?
Matches? Probably not. I think it might be an area to explore though. I think my initial distinction, about purposeful versus not purposeful harm, might be why Murphy thinks carbon is not a bad like murder is a bad.
Carbon is for all intents and purposes an “unintentional” byproduct of human activity. Other than fire extinguishers, dry ice, and sodapop, we aren’t producing carbon as a constitutive means or end.
By carbon I mean CO2.
What about regular ol’ SO2 pollution then? What about sewage dumped into rivers? Treated sewage?
What would you give as a perspicuous (“good”) example of a bad? As something that’s definitely not a bad? An edge case?
I think an edge case would be Ken B.’s commentary on this blog. It clearly harms innocent third parties, but is that damage a necessary by-product of something useful? It’s unclear.
That’s Kelso level burn.
I do it to stop myself robbing banks.
An interesting, because reversed, edge case then is prayer. Prayer rarely harms third parties, but in the main, and maybe always, is immoral –according to the theists’ beliefs anyway. Prayer is usually request god alter his plan –a plan created by an all good all-knowing all-powerful God to achieve the best possible result. Even prayers for faith or guidance or understanding are a request to subvert god’s presumably perfect plan and replace it with something else –by definition something lesser.
Perhaps this is why no prayers are ever answered: god knows better.
I’m pretty sure theists already thought of that one, Ken_B …
I’m not so sure Silas. I see them doing it. Of course, to link threads, if there were a Supergod who knew more than Biblegod, then this argument would no longer apply …
Maybe prayers, and answering and not answering prayers, are PART of “the perfect plan”.
I think you have to take into account the fact that humans, and everything about humans, are a part of what theists believe is God’s creation. So if you see humans praying, I don’t think you can claim that it is inherently a violation of (what they believe to be) God’s plan.
So God thought of everything at the beginning of the universe, knowing the hair on each person’s head, but He didn’t realize they would pray to Him and ask for things?
I think Ken B’s atheism is “blinding” him into defaulting to separating God from Man, such that God’s plan is independent from what humans do. After all, “scientists” like Dr. Ken B separate “theory” from “object”, and “artificial man made stuff” from “the natural world”, and so on. So to Ken B, Man trying to change the world is like stepping on God’s territory…
See, now you’re getting what I meant by “blinding” atheism, MF. You (and Silas) were both able to understand why it wouldn’t be crazy for people to pray.
In fairness, Ken, I usually tack on “…if it’s consistent with Your will” at the end of my prayers.
Not saying it isn’t crazy, just that I don’t think it reveals the kind of contradiction that Ken B claims it does…
As an Atheist, I’m well aware that any argument against God on pretty much any basis can be countered by a combination of omnipotence, God gets to ignore logic but no one else is allowed to, and God’s plan is prefect by definition, covers all eventualities, buy is way out of the reach of any human to grasp at.
There’s no value in arguing against such an all powerful opponent.
Well you are right Tel. The only value if is exposing the illogic for others to see. “With faith all things are possible” really just means “I get to ignore logic.”
Why should an omnioptent being be constrained by logic?
Because it wouldn’t be omnipotent if it weren’t.
To even claim the existence of an omnipotent being, is to logically constrain it to being omnipotent and not non-omnipotent. The omnipotent being itself would be logically constrained also, since to be anything, is to be that thing and no other.
Logic doesn’t constrain, it opens up our understanding that would otherwise be clouded.
What happened to responsibility and free will? If your prayer is part of his plan, not just his knowledge, what credit can you claim for it or any action? Same with sin. You guys are trying to defend prayer on the basis of the incoherence of other aspects of religious dogma.
That is a contradiction that has never been answered by theists problem free.
What if God knew what people would say prayers, and in advance made a plan where those people would be benefited? Look at Newcomb’s Paradox:
http://en.wikipedia.org/wiki/Newcomb's_paradox
I love Roderick Long’s talk on Newcomb’s paradox. He argues that it shows we human actors cannot coherently regard ourselves as past causally determined. That is, we cannot coherently aim to achieve something that we already think is past and settled.
From the perspective of people living in the distant future, aren’t our actions right now past and settled? Does that mean that we cannot coherently aim to achieve anything?
Only if you assume that your choices now are constrained to, i.e. determined by, past lives of people, which of course begs the question.
And I don’t know what it means for future people to HAVE a “perspective.”
From the perspective of future people is a non-existence perspective.
“Future people” is an idea, not an objective reality (yet).
By the way, if you found out right now that you are a character in a (sophisticated) video game, what would you do?
Cheat.
Tell the creator of the video game that he accidentally succeeded in programming something that programmed itself to seek to destroy the original creator.
Here’s an excerpt from the Hindu text the Bhagavad Gita that may shed light on this issue:
“BG 11.32: The Supreme Personality of Godhead said: Time I am, the great destroyer of the worlds, and I have come here to destroy all people. With the exception of you [the Pāṇḍavas], all the soldiers here on both sides will be slain.
BG 11.33: Therefore get up. Prepare to fight and win glory. Conquer your enemies and enjoy a flourishing kingdom. They are already put to death by My arrangement, and you, O Savyasācī, can be but an instrument in the fight.
BG 11.34: Droṇa, Bhīṣma, Jayadratha, Karṇa and the other great warriors have already been destroyed by Me. Therefore, kill them and do not be disturbed. Simply fight, and you will vanquish your enemies in battle.”
The context is that a warrior is hesitant to fight his enemies (who are his family members but are really evil), and a god is encouraging him to fight. By the way, the first verse is what Oppenheimer said after he built the atom bomb.
One small quibble. The Kauravas weren’t really evil, were they? After all, when Yudishtr enters heaven, he first sees Duryodhan and his brothers in heaven and is given an explanation, isn’t he? And did the gods not acknowledge that Duryodhan indeed deserved to be in heaven even while he lay injured and dying on the battlefield? Wasn’t Bheem the one who was wrong in striking Duryodhan on the thigh to fell him?
This gets into subtle issues, but it was definitely a good thing for the Pandavas to have beaten the Kauravas. The Kauravas deserved to lose the war, because they were being unjust. But that said, it is true that they fulfilled their duties as Kshatriyas (warriors) well, so in that sense they were good and thus deserved to go to Devaloka (Heaven). It’s easier to see the issue with people like Bhishma, who were unequivocally good, but fought on the wrong side of the war due to their unswerving fidelity to honor and duty.
Then there are other problems. Hasn’t god screwed those less grasping folks who don’t pray?
Anyway that doesn’t actually address my point which is the immorality of desiring to sway god in any way whatever.
This answer i think misses in another way. Believers see prayer as morally loaded, but positive. So arguments that suggest its neutral cannot satisfy believers. And i specified it should be judged immoral on the basis of their professed beliefs.
What is the reason for why you call it “immoral” for desiring to sway God in any way? Why can’t God’s way be a way of wanting to be swayed by his own creation? If God made man, and man prays, isn’t that what God wants?
So is it immoral not to pray? Or to pray too much? Or must you necessarily be praying just the right amount automatically. But then its neutral. They reject that.
But the point is not that its immoral by what you or i say but by what the believers say. They say prayer is a good, and enjoin people to pray for outcomes. But they also say the plan is perfect and most prayer is asking for a change in it.
I did not say all prayer must be immoral, which is what you seem to be trying to refute. I said most prayer is.
Maybe I’ll post on this topic on a future Sunday.
Also, I am praying for you Ken B.
Bank robbery violates justice. It is not so clear that carbon dioxide emission does. Certainly it is not a violation in itself, but if at all, only in “excess”. Every violation of justice is “excessive”, so the optimal number is zero.
Right, this is what I was trying to get at in the last thread.
While it’s true that eventually you reach a point where it costs more to stop bank robberies than it does to allow them, the point with CO2 is that some CO2 emission in general is a net benefit to humanity at large, costs be damned (according to some people, I haven’t really studied the science myself).
If we could snap our fingers and instantly eliminate all bank robberies at zero cost, we would undoubtedly do that. Eliminating all man-made CO2 emissions… perhaps not.
Okay, but even the guy in the last video would agree that regular ol’ dirty particle emission is a “bad” even though it’s not some “injustice”.
I don’t see the relevance of this debate to the larger issue at hand (whether carbon emissions should be taxed, or penalized in some way).
Assuming the consensus view on the harm of carbon emissions for the sake of argument, the economic case for a tax on carbon emissions isn’t simply that they create a negative externality, but that they create a negative externality for which transaction costs under the current legal framework are too costly to allow for Coasian bargaining.
While I think Green makes valid points (although I admit I only read your summary), as far as this facet of the argument goes, it seems to be textbook micro: yes the production processes that emit carbon as a byproduct create economic goods, but the fact that the costs of carbon are not fully internalized incentivizes too much production.
Regarding the actual argument at hand: Something can be an economic “good” from one person’s perspective while being a “bad” from someone else’s. There’s nothing inconsistent about that. I consider an economic bad anything that people would be willing to pay to have less of (assuming zero transaction costs). If one person would at least in principle be willing to pay to a firm to emit less carbon, then that carbon emission is an economic bad for that person, even if the firm doesn’t particularly care.
If there was some amount of positive Bank Robberies that actually created wealth, this would be remotely close to a valid point. As it stands it just is not.
Well what do you mean by the difference between a good and a bad? If you mean something consequentialist or utilitarian then there really is no difference in principle, just in a balancing of considerations. If you mean the violation of a moral imperative then there’s a crisp difference but you can no longer really evaluate things in terms of a balance.
IF I pumped your home totally full of CO2 while you were sleeping, would it be bad?
I think it would be bad, but not at root because of the outcome of me suffocating, which is of course bad, but at root because you infringed on my property rights. The property rights ensure that you don’t get into a position of pumping my house full of CO2 without my consent.
This is a good illustration of my point above. If theres an imperative to respect your rights this is a bad regardless of the consequences. If we have to do a utilitarian calculation then it’s less clear.
Ken B, I suggest that when you argue with Austrians, you use the term “consequentialist” rather than “utilitarian”, because Austrians tend to think that utilitarianism is flawed for other reasons entirely, having to do with interpersonal utility comparisons. (I think those critiques may be flawed, but that’s neither here nor there.)
Yes, of course it is bad regardless of the consequences.
Any ethic, for it to be able to serve as a guide for what we can do here and now, must be “a priori”. It cannot be grounded on events that may or may not occur in the future, because we have to act now. Ethics are implied in the now.
Even if I don’t suffocate due to the CO2 pumped into my house, it would still be a bad, because I wanted my house the way it was, and my interests are harmed if somsone does not ask for my permission first.
May I recommend here Carl Dahlman’s 1979 article in the Journal of Law & Economics: “The Problem of Externality”? It’s a profound – and profoundly important – contribution to this larger discussion:
http://cafehayek.com/wp-content/uploads/2011/11/Carl-Dahlman.pdf
Not unless you summarize the relevant insight so we know whether it’s worth our time to read.
Silas I just spent 10 minutes reading every other comment on this blog, and it seems you have been doing the same. You can’t be choosy at this point.
haha
I never spend 20 words demanding people read 2000
As you saw from the tax interaction effect thread, if I’m very interested in the topic, I will take the plunge and read the 2000 words — but if I do, I make sure to condense it down the critical 200 words so people know if it’s relevant or whether it’s worth reading the rest.
You know, what the original poster should have done, and should be easy if they actually understood the claim they’re advancing.
Bank robberies have a definite effect upon the present, CO2 emissions have a possible effect upon the future. Those future effects may be avoided due to technological innovations in the future and, as such, are uncertain.
…I guess that means a future bad is more preferable than a present bad.
Ah, the issue of the “social discount rate.” Seems to have been a point of contention among people who are trying to figure out just how much of the global economy we should be forced to forgo.
What discount rate? I was referring to something along the lines of inventing a co2 vacuum that sucks co2 out of the air. Thus co2 levels get returned to there pre-industrial revolution levels. Obviously the predictions based on increased CO2 can’t come about if co2 doesn’t actually increase or it decreases.
So even though the outcomes outlined in the IPCC report may be thought of as probable they are not guaranteed and may never happen because of a future invention etc.
That being the case, how can you consider a bad that has occurred the something as a bad that has not yet occurred and may never occur?
Using fuels is not a bad. Emitting the carbon is a bad. This is exactly the same as other forms of pollution – I don’t quite understand why this has become a point of discussion. If we could achieve exactly the same outcome -say producing a certain amount of electricity – at the same cost but with no CO2 emissions, then we would (or should) use the other method whether or not it involved using fossil fuels. If we could avoid emitting the carbon, then we would get the benefits without the costs. associated with emitting CO2.
To extend the analogy to bank robberies, it is probably fair to say that bank robberies are bads, but banks are goods. The link between banks and bank robberies is much weaker than between fuel use and carbon emissions, but the principle is the same. We should encourage banks, but discourage bank robberies. There is no need to say bank robberies are good because they cannot happen unless we have banks. It is the same with CO2. There is no need to say CO2 emissions are good because we cannot have them without using fuels.
The mention of animals exhaling CO2 is a red herring because this is not fossil carbon, but part of the carbon cycle. Every molecule of exhaled carbon has recently been extracted from the atmosphere by plants, and is just returned to it by animals.
^^^ Harold gets it.
Only thing I would change is the analogous situation with bank robberies: the corresponding conclusion there (as in my first remark here) is that we should be okay with bank robberies *if* we could preserve the benefit to the robber while only removing the harm to the bank and other victims.
“What is the crime of robbing a bank, compared to the crime of founding a bank?” – Bertolt Brecht
But Harold’s point is spot on.
I figure it’s best to reply to you, but this is for Harold and you two by extension for agreeing with him. The reason you are fundamentally wrong is that the statement: “This is exactly the same as other forms of pollution” is flat WRONG and displays an ignorance of the relevant literature on net impacts. There is no level of most pollutants which has a large net benefit from the pollutant itself-NOT the energy use, let’s be clear here. There is a threshold beyond which a certain amount does net harm. There is really no comparison at all. It’s really baffling actually that someone who doesn’t get this is being said to “get it” and be “spot on.”
Yep. I keep bringing this up but nobody ever responds to it. I’m not an expert myself, but I know Bob has posted videos making statements such as “depending on the discount rate you use, increased CO2 emissions have a net positive benefit to humanity up until 2050” (paraphrasing).
In other words, even if we could get all of our energy needs without emitting a single bit of carbon, we would likely choose to emit some carbon anyway, up until we reach the point where the benefit becomes a harm.
Bank robberies or “traditional pollution” do not, *in and of themselves* provide a net positive benefit to society as a whole, ever, under any circumstance. We cannot claim that taxing carbon is “taxing a bad” unless we are sure that all carbon emissions are inherently bad, and it would seem that we are not sure of that at all…
Read the post – we are assuming the IPCC assessments are correct and thus we are assuming that CO2 emissions cause net harm.
I don’t believe you have read the assessments because I am pretty sure they don’t really quantify net benefit/harm.
Now thoroughly “mainstream” analysts have in fact reached the conclusion that a certain level causes net benefits and a certain level net harm. Can you point me to where in the IPCC assessment they make their own estimate of benefit/harm?
Why are we constrained to that assumption? The IPCC isn’t gospel.
There are many credible climatologists who think that CO2, within certain parameters, is a net benefit, due to increased food output per acre, reduced illness due to elements, etc.
Not saying there cannot ever be any negatives, but you can’t just pretend that CO2 is a bad…PERIOD, end of story. That’s just wilfull ignorance.
Spatulate?
Late tips?
Supple tail?
Pistols, late?
Postulate?
Lotus plate?
I am trying to figure out what MF, Andrew and Matt are misreading stipulate as.
Once again, my understanding of Murphy’s previous posts/videos is that even WITH the IPCC “consensus” estimates, depending on the discount rate used, increased CO2 emissions will have a net positive benefit until a certain point in the future, meaning, we haven’t gotten there yet, meaning, we cannot currently say we are “taxing a bad.”
I’m not misreading anything. What a ridiculous accusation.
“Even if we [lapse still] for the sake of argument that the “consensus” IPCC climate models are correct, and that William Nordhaus is approaching this issue in the right way”
A different stipulation, actually, than that we are *currently* at or above a harmful level. But to be sure, it’s not a stipulation *I* ever made or granted. I’m not defending Bob’s argument, he can do that himself. I’m saying your view is wrong given correct stipulations.
Which it is.
TIL that to stipulate means we can say anything we want and pretend it gets us anywhere closer to the truth.
Well, you’d still be wrong on that, because of hormeses: small amounts of poisons usually *are* beneficial before they hit a threshold and reverse. So if we could get all our production wants without emitting e.g. benzene, we probably would still want a little to be emitted, since it would have health benefits.
That’s not true for all pollutants, I’m sure, but it shows that CO2 isn’t different in this respect.
And not that it matters, but this still wasn’t the original argument in the post Bob linked, in which the (very tenuous) argument was “well, shuck-a-muck, it’s just involved in so much of the economy, how can it be a bad?”
I’m not really caring at this point personally about Bob’s argument, I’ll let him defend it himself. But you are making some implicit assumptions here:
1. That hormeses applies pretty generally to pollutants-well maybe it does, in which case I would have to revise my comments, but the *point* of my comments would remain the same because:
2. Your implicit assumption is that, like traditional pollutants, the level of CO2 that would be net beneficial is very low and presently lower than where we are now. Only then could it *currently* be understood to be a “bad.”
On the latter point, the level which causes net harm exactly is uncertain, but no serious analyst who has calculate net benefits/harm expected would conclude we are already beyond the threshold.
Re 2: I never assumed any such thing.
Your argument is *not* that CO2 emissions are *currently* a “bad?” Could have fooled me.
Spill tools?
Pustulate?
Lit stipples?
The stipulation is that we are at CO2 levels were further emissions are a net harm.
What value is there is making a stipulation counter to reality?
In the post today Bob explains “According to some models manmade climate change will confer net benefits through the year 2060 or so. However, this beneficial warming is already baked into the cake… you wouldn’t subsidize carbon emissions now….The marginal emissions of CO2 right now still carries a social cost.
[…] at Free Advice, we got into an argument over this rhetorical move. In a separate post, I asked if there were a qualitative difference between bank robberies and carbon emissions, in the […]