Bill Batt: The Nexus
of Transportation, Economic Rent, and Land Use
for pollution externalities of motor vehicle travel invites
more complex issues. One approach widely explored involves
upon what are known as Pigou taxes, after noted British economist
It attempts to recover the costs of externalities in the natural
environment and even involving health damages. Yet Pigou taxes are more
often talked about than actually implemented. Related to such designs
are those growing out of the theories of Ronald Coase, designed not
necessarily to recover the full social costs of negative externalities
but rather to foster the most efficient economic choice among options,
even if some parties are disadvantaged.(32)
Taxes recovering such costs are most easily collected at the production
stage -- at the wellhead or the refinery for oil, and from the
manufacturer for tires and other materials.(33)
Still a third approach is that represented by the Georgist tradition,
which would recover the costs of specified pollution externalities by
accepting them to the extent that the environment is capable of
absorbing them, and charging polluters for the use of the environment
as a sink for such wastes. This approach is particularly attractive as
a way to charge for the release of noxious gases in motor vehicle
read the whole article
Mason Gaffney: Economics in
Support of Environmentalism
property: from means to end
In a proper view of things, I submit, private property is a means
to an end. It is not an end in itself; it needs a functional
rationale. The end is to get land put to the best use. All the
private land in the world was originally granted by some sovereign
public person or body, mainly for that purpose, not as a welfare
entitlement. Landowners and their lawyers have slyly, over time,
turned the means into an end, a fetish they endow with "sanctity."
This is a term they borrowed from absolutist medieval theology.
"Sanctity" means the quality or state of being holy or sacred, hence
inviolable. It means property may not be challenged, or even
questioned. It has become an end in itself, its own voucher. You're
not even supposed to think about it, it is above thought. Taboo!
Neoclassical economics, historically, marked the final, total
surrender of the profession to this fetish. The modern economist's
view runs something like this: "I pledge allegiance to the 14th
Amendment, and to the overinterpretation of private landowner
supremacy for which it has come to stand." It is ironic to recall
that Radical Republicans passed that Amendment, at a time when a
"Radical Republican" was one who favored freeing the slaves. The 14th
Amendment was designed to protect the rights of freedmen. As
interpreted now, the 14th Amendment means that The Emancipation
Proclamation itself was unconstitutional! Fortunately, no one has
brought that case - yet.
The Neo-classical economists' view of their proper role is rather
like that in The Realtor's Oath, which includes a vow "To protect the
individual right of real estate ownership." The word "individual" is
construed broadly to include corporations, estates, trusts, anonymous
offshore funds, schools, government agencies, institutions,
partnerships, cooperatives, the Duke of Westminster, the Sultan of
Brunei, the Medellin Cartel, Saddam Hussein, congregations,
Archbishops, families (including criminal families) and so on, but
"individual" sounds more all-American and subsumes them all. This is
a potent chant that stirs people to extremes of self-righteousness
and siege mentality when challenged.
The resemblance between Neo-classical economics and the Realtor's
Oath is easier to understand when you learn that Professor Richard T.
Ely, founder of the modern discipline of Land Economics, was heavily
subsidized by the National Association of Real Estate Boards, the
utilities, the major landowning railroads, and others of like mind
and property interests.
When it comes to violating property
rights, air pollution today is
perhaps the greatest invader and confiscator of property. Where
economists stand? Once a few of them tried to say, following A.C.
Pigou, "let the polluter pay," and in parts of Europe they still do.
In our modern backward thinking here at home, however, it's not the
polluter who is invading the property of others, nor the human rights
of those not owning property. Rather, when you tell them to stop, the
government is invading their rights. The wage-earning taxpayers must
pay them to stop, else you are violating both the 14th Amendment and
the "Coase Theorem," a rationalization for polluting now dearly
beloved by Neo-classical economists.
... read the whole article
Nic Tideman: Improving
Efficiency and Preventing Exploitation in Taxing and Spending Decisions
Whenever a one-time redistribution is proposed, a reaction of many economists
is, "Yeah, right. Why would anyone one believe that it would be only one
time?" What would make it reasonable to believe that such a redistribution
would be a one-time event is its rationale: The recognition that some persons
have had unfairly inadequate starting positions in life, and the determination
to end that. If the purpose is achieved, there is no rationale for further
redistribution, unless, at some future time, our society attains a new
moral insight that implies that further redistribution is
With transfers replaced by private insurance and local action, and defense
pad for substantially by Pigouvian taxes on capital, not much is left for
federal taxes to support. Perhaps some international relations, perhaps some
research (though in view of the possibility of a conflict of interest on
my part, one should not take my word for it.) If I could have my way, the
little that would be needed in national spending would be paid for by voluntary
subscription by lower levels of government, as the UN is financed. ... read
the whole article
Nic Tideman: Revenue Sharing
under Land Value Taxation
The ideas in this paper can be regarded as a variation on the Pigouvian
idea of equating marginal private cost and marginal social cost. Independent
localities with free migration are inefficient because of the resulting discrepancy
between the marginal private cost and the marginal social cost of migration.
Taxation of a common base is inefficient because of the discrepancy between
the social cost of local government spending and the cost of such spending
to localities that make spending decisions. Taxation of the rental value
of land by both localities and states is inefficient because it causes the
local cost of a project to exceed its marginal social cost. Taxation of the
sale value of land by both localities and states is inefficient because it
causes the cost to the locality of being inefficient to be less than its
social cost. The system that does not have inefficiencies is one that avoids
externalities in migration decisions and makes the local contribution to
independent of actions that localities take. ... read the whole article
Peter Barnes: Capitalism
3.0 — Chapter 3: The Limits of Government (pages 33-48)
Let’s set aside for a moment the question of whether government
is inherently biased toward property and focus instead on a purely mechanical
question: is taxation a good tool for preserving gifts of nature? I pose
this question because economists have advocated “green taxes” for
over eighty years, and it’s time to move beyond this hoary panacea.
The idea of using taxes to protect nature dates back to 1920, when Cambridge
University’s top economist, Arthur Pigou, proposed it. At first blush
the idea makes sense. If pollution is free, there’ll be lots of it.
If it’s taxed, there’ll be less. Taxation forces polluters
to internalize some of the costs they’d otherwise externalize.
So far, so good. The devil, however, is in the details. For example, who
sets the taxes? What algorithm do they use? How quickly can they act? To
whom are they accountable? And where does the money go?
When the federal government sets taxes, the key players are the House
Ways and Means Committee and the Senate Finance Committee. As any observer
of Congress will tell you, the process of writing tax laws is ugly, contentious,
and time-consuming. Bills are introduced, hearings held, politics unleashed.
More than anything else, this is what keeps Washington’s lobbyists
on their cell phones.
What algorithm drives committee members when they write tax laws? Most
often, it’s what’s best for their reelection. They’re
not economists, they’re politicians. They want to please donors and
voters. Protecting nature, or future generations, isn’t foremost
in their minds. Hence, pollution taxes will never be as high as they need
Consider a real example here — carbon taxes. A tax on carbon emissions
could, in theory, reduce global warming. But in order to make a difference,
the tax would have to get extremely high. This means Congress would have
to raise the prices of gasoline, natural gas, and electricity year after
year, hitting every business and consumer in the pocketbook. That’s
an improbable scenario.
In most situations, mainstream economists would shout, “Politicians
shouldn’t set prices, markets should!” Prices should announce
to the world, on any given day, what buyers are willing to pay and sellers
are willing to accept. To the extent that government distorts or delays
this process, it leads to inefficient allocation of scarce resources, not
the least of which is Congress’s own time.
So why did Pigou and his followers give the price-setting job to politicians?
Because, in their minds, there was no alternative. Someone had
to set prices for pollution, and they thought no one else could do it.
But there are other options. ... read
the whole chapter