[derobert]

It's not doublespeak, it's actually a fairly widely accepted solution to externalities amongst economists.

The basic idea is that some actions you could perform impose costs on people who aren't consenting parties to the transaction. E.g., if Widgets, Inc. dumps the waste from producing widgets into a river, this imposes a cost on everyone downstream.

This would make their widgets cheaper—they're only paying part of the cost of the widget (the folks downstream are paying the rest). With a lower price, they'll sell more widgets.

Markets thus tend to overproduce (vs. what is socially optimal) things with externalities.

There are a couple of ways we take to solve this problem. When the externality is high enough, we prohibit it. E.g., we prohibit murder.

When the externality effects few enough people, and is of a suitable size, they can actually negotiate and resolve it themselves. E.g., if Widgets, Inc. wanted to take water from that river instead of polluting it, thus depriving the downstream farmers of some irrigation, maybe they'd be OK with that for a payment of $X/mo. By making them consenting parties to the transaction, it is no longer an externality, and Widgets, Inc. is now paying the full cost of producing widgets.

Of course, when the externality hits a lot of people, each for a small amount (e.g., air pollution), negotiation is impossible. That leads to the final option:

Do your best to calculate the size of that externality. Then impose that cost as a tax. This is called a Pigovian tax, and also has the effect of making Widgets, Inc. pay the full cost of producing its widgets.

Externalities do not have to be negative; they can be positive as well (e.g., you could clean up a public park). Markets tend to under-produce these, and a similar argument suggests offering a Pigovian subsidy.

Obviously, administering and complying with taxes is not free, and that limits the applicability of Pigovian taxes and subsidies.

Wikipedia has more: http://en.wikipedia.org/wiki/Pigovian_tax

[vy8vWJlco]

Not to disagree with the idea, but I would add that any such tax is at the discretion of the taxing body making it susceptible to difficulties like abuse or negligence. (That makes me wary.)

I would prefer a mechanism without such a centralization of moral authority (ex, Kickstarter rather than taxes). That's the big conflict in free societies: the cohabitation of different moralities. (What is a benefit and what is an externality are decided individually rather than by decree or in the average. I think our desire to average things leads us to think we can work backwards from an average to collective behaviour in cases like these, when not everything is a bijection...)

[foobarbazqux]

How would crowd-funding make a company pay for negative externalities?

[vy8vWJlco]

If we are only interested in punitive measures, Kickstarter is just as able to fund prisons and buy guns and pay for legal offensives as any government program (I don't think most forms of damage need a new law as such). (My point from another comment though was that government actions have a strong tendency to be a punitive, and I do not consider that leadership.) Ideally, governments would see no money whatsoever that people didn't voluntarily commit to specific ends. When record-keeping and communication were slow, the current system made better sense - but now that those things are fast and easy, taxation feels like an anachronism.

To your comment below:

> Those 100 people have nowhere near the resources required to take on the company.

I don't see a big difference between appealing to the public for the resources to mount a legal offense and lobbying campaign to revise the law to better support a cause, vs appealing to the government for the same ends. In the former, the individuals affected retain the moral authority and in the latter, the government is cast as a parent figure which I find patronizing and undesirable (not to mention highly susceptible to corruption and self-interest of officials, with access to a bottomless purse). While we may need the latter in times of extreme duress (war), I wouldn't recommend using it that way unless we actually want government interference to be the norm. (IMHO governments should not even have the capacity for selfish behaviour, so I am trying to think of ways to minimize it.)

[foobarbazqux]

I deleted my comment mostly because I'm not interested in debating libertarianism, it's not personal.

[vy8vWJlco]

FWIW, I didn't think I was (I don't identify with libertarianism). I'm just looking at alternatives.

[foobarbazqux]

Oh, well I jumped to conclusions then. The stuff about dramatically reducing taxes (and thus government) and privately funded prisons and gun ownership and individual control over public money is basically economic libertarianism. I was assuming by that point that you believed in private police forces too. Another key feature is the primacy of property rights (which you didn't mention), although that also gets you into social libertarianism.

You made a remark about the government being like a parent figure. For me it was always too easy to focus on government waste and abuse because I grew up with abusive parents. As I learned to separate myself from them as much as possible and heal from the damage, it was easier for me to make some kind of limited peace with the current system, as non-ideal as it is. I now see it as the least bad viable option.

I don't know if that makes sense, but I guess that's why I personally don't really want to go down the road of debating highly alternative societies, libertarian or not. I guess I'm just tired of it.