Ronin of the Spirit

Because reality is beautiful.

Environmentalism and Overpopulation: The Solution, Part III

Perfect market is the greatest instrument of human freedom I know of, and the ethical cornerstone of my entire idea.  A perfect market consists of  (courtesy of wikipeida)

  • Rationality of all market actors (Rationality in meaning of the actor’s utility maximization)
  • No transaction costs (particularly no information costs and no taxes)
  • Price taking behavior – there is a sufficiently large number of participants such that no individual can affect the market
  • given rare resources
  • freedom of decision to do something or to let it be (no external effects)

People trading rationally, with all the information they need to make a decisions, with no distortions for big enough traders, something to trade, and no coercion to act or not act in anyway.   It’s something beautiful.  “Market place” doesn’t just mean the buying and selling of products, but also the grand market place of ideas.  The right to free speech is a component of the market place of ideas, as is the right to free press, and free assembly.  The right to practice religion as one sees fit guarantees numerous sects and religions competing for the hearts and minds of the people.  The right to keep arms of the US Constitution, and the right to security of person in the UN Bill of Rights are both to secure the right to act free of coercion.  Ultimately, the perfect market, be it for goods, services, ideas, or beliefs,  is the foundation of freedom.

A perfect market is, a direction, not a point one arrives at, but the more perfect a market, the more freedom for all.  I believe there is no more effective way to reduce pollution and birthrate (more on that later) than to work toward a perfect market.

In a perfect market, there is no legal theft, no  hidden payments, and no hidden costs.  I will use the existing market place of open pit coal mining to highlight an imperfect market.   No one breathes without trees, they are the lungs of the earth.   There are 6 billion people on earth.  Each tree is an oxygen factory, the output of which goes equally to each member of the population of earth.  If a person had a contract to receive a percentage of a factory’s output, then regardless of who owned the factory,the owner could not destroy the factory without consulting the person who owned a percentage of the output. (Note, I know that this example is somewhat weak, I use it because it is far easier to explain than the more correct ones.  Please feel free to argue this in the comment section.)  Property rights for the factory output are strong.  Property rights for organic oxygen output are nonexistent.

The open pit mining process begins by blasting the ground cover (largely trees) over the coal.  Stealing the future “oxygen income” of 6 billion people.  The coal industry is one of the most heavily subsidized on earth, particularly with reduced property tax.  The coal is loaded onto trains, the cost of transportation depending on diesel fuel, which is produced by other subsidized companies.  It is taken to a power plant, which if it is new, was most likely given property tax break to encourage it’s construction, and burned, putting CO2 into the air which effects everyone as much as the loss of the trees.  The worst pollutants are scrubbed out of the coal (the cost of the scrubbers often subsidized) and disposed of as industrial waste.  Due to radium as a fraction of the mass of coal, coal power plant reclaimed ash is actually more radioactive than nuclear power plant waste. Yet, it is disposed of as far cheaper industrial, rather than radioactive waste in tax supported, or privately owned and tax subsidized, waste management facilities (due to an EPA grandfather clause).

Thus, the real cost of coal would include the cash value of the lost oxygen, the cash value of the subsidy given to the extractor, the cash value of the subsidy given to the fuel producer of the transportation, the cash value of the subsidy given to the power plant, the cash value of the subsidy of the fuel for the fly ash transportation, and the cash value of the subsidy given to the waste management authority.

The complexity of calculating such a thing is made yet more difficult by the fact the subsidy would be different for each county, state, nation, company,  etc.  In reality, it is impossible to calculate such a thing.  The best numbers we have are educated guesses, on this free market phenomenon.  In defense of free market, as awful as the above sounds, it works towards the lowest price  in the end, as well as profit for the stock holders, because the company which uses the subsidies most effectively will sell the most. For the most part, this is good for everyone.  Coal is cheaper for everyone and the owners get rich.  Owners, means stock holders.  More than half of heavy industry stock is held by institutions in mutual funds.  Profit for heavy industry does not benefit primarily a small group of plutocrats.  It primarily benefits the small investor, working hard on his 401K or child’s college education fund.

The trouble is, as good as low cost products and profit for the stock holders are, (and those are truly good things) there are other important things that the free market doesn’t do so well, like resource management.  Though functioning planned economies have the worst pollution in the world (Russian and China), large free markets are a close second.  If people value resources, they can show their preference for companies that also value resources, but only in a perfect market.

In a perfect market, their are no hidden payments, so there is no subsidy.   Coal costs what coal costs.  It might be tempting to believe that subsidies do not follow market rules.  Sadly, this is not the case. Subsidies do follow market rules: companies get money from the government in exchange for providing services for members or sections of the government.  The companies compete fiercely for the subsidies.  Exxon Mobil spent 350 million on lobbying ( a form of advertising to the government decision makers) to get 3 billion dollars in subsidies in 2008 alone.

In a perfect market, the government would not be able to give any special treatment to any company, saving the stockholders of Exxon Mobil 350 million, but costing them 3 billion.  Thus, the incentive to keep the existing system is strong.   Three billion to one company is 10 times greater than the total subsidy spent on renewable power.  This leads some to say “Renewable power needs a bigger subsidy.”  I disagree.  Subsidy distorts the market, regardless of who gets it.  Money is what we exchange for our time on this eath.  The perfect market, like all other markets, is a place where human life is bought and sold, but unlike other markets it is where there is the least waste of this, the most valuable of all commodities.  As, such, a perfect market is as sacred as free speech, or free expression, for the same reason: human dignity.

Subsidies represent a lie about price.  The solution to lies is never more lies.  Humans can be trusted to make wise decisions under perfect market conditions.  To believe in human potential, to respect human dignity, means to work toward a perfect market.

All subsidy must go.  Every business must stand on it’s own.  If sounds like utopian, it’s not, at least to some.  No mater how deeply a person believes in perfect market for everyone else, few people believe it for them and their friends.  This is the reason, despite the fact people value it, we generally don’t work toward a perfect market.

A world without subsidy offers no tax breaks to religious organizations.  To allow tax free status to some service providers (churches and other non-profits) and not to others (business providing identical community assistance, lectures, concerts, elder care, and dating service) is unethical, and anti-religious.  Without tax breaks, the churches which provided the best service for the lowest tithe would immediately out compete the other churches.

A world without subsidy provides no benefit to being married.  Or owning a house.  Married people would have to compete in the open market for housing and employment just like everyone else.   Nor does it provide any tax penalty for being single, or childless.   This is the first step voluntarily reducing population.  Despite embracing the perfect market,  irresponsibility will still happen.  People will still have more children then they can afford, and buy larger houses than they need, but they can no longer profit by it.

(I am aware that these examples are controversial, and poorly supported here.  For brevity’s sake, I will argue specifics with anyone who chooses to, in the comment section.)

But how would even a perfect market deal with issues such as air pollution?  Real price cannot be calculated.  We know real price is impossible to calculate on the fly, because if it could be calculated, planned Soviet style economies would work better than free market ones. Only Adam Smith’s “guiding hand” can effectively determine price.   The fact you can rent your property freely for the price you wish and under the conditions you wish is why your living room isn’t full of toxic gas.  The fact that you cannot rent your 1/6 billionth of the earth’s air freely for a the price you wish under the conditions you wish, is why the air you breath is full of toxins.

The key to allowing the perfect market to solve the issue of pollution is obviously strong property rights, but how could 6 billion people share their air and common oceans without a tragedy of the commons?

I will address that in Part IV.

Advertisements

December 9, 2008 - Posted by | atheism, Ecology, Government, Politics, Religion, Self discovery, skepticism, Transportation, Uncategorized | , , , , , , , , , ,

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: