Toyota: "No Financial Justification in US for Buying Hybrids"

[Ed Miller]

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I am curious, you and your wife seem to be willing to take active steps to improve the environment as you perceive it. I understand LV has a bit of a shortage of clean water. What do you do in your personal lives to help the water situation? Or is it not an issue.

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We use lots of water, and don't really do anything about the water problem. There are lots of things we could do to live a more responsible life than what we live. We could stop driving entirely. We could go vegan. We could grow my own food and eschew the entire agricultural system. We could use less water.. less power.

We could buy a small plot of land somewhere off the water and power grids and live a subsistence life and donate the rest of our net worth and future income to charities.

We don't do that, nor do I think that doing any of these things is a moral imperative. We do what we can... what fits for us in our lives. And we leave it at that.

I would never argue that being vegetarian or driving a hybrid makes me a better or more moral person than someone who isn't and doesn't. I think that's BS. I think it's basically ok if people act in their rational self-interests, and have no qualm with people who make other decisions for themselves.

What I do have a problem with is a system of laws and a market that actively refuses to internalize externalities when possible. It's the basic principle I learned when I was five, "If you make a mess, you clean it up." Or, in the case where you can't actually clean it up, you pay for it to be cleaned up. Presently our system allows people, companies, everyone to make mess after mess and then throw up their hands and say, "Wasn't me." That's what needs to change. If you pollute the air three times more than I do, you should shoulder three times the cleanup costs. Or if the air can't be cleaned, then you compensate people for their dirty windows, soot-clogged machinery, respiratory problems, etc.

It shouldn't be a voluntary choice. We shouldn't need uppity movie stars in Priuses to make impassioned speeches about the environment saving 20 mpg in their car, but burning 2000000 mpg in their private jet. The cost of pollution should be BUILT IN to the prices of things.

[Borodog]

It would be if the roads were privatized. Ad hoc taxation will not produce the result you desire.

[Ed Miller]

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It would be if the roads were privatized. Ad hoc taxation will not produce the result you desire.

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How would privatizing roads do this?

I'm not necessarily arguing that taxation is the right or best means to internalize externalities. There might be far better solutions. But to say that modest tax credits for low emissions vehicles is tantamount to stealing is a little silly AFAIC.

[Borodog]

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[ QUOTE ]
It would be if the roads were privatized. Ad hoc taxation will not produce the result you desire.

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How would privatizing roads do this?

I'm not necessarily arguing that taxation is the right or best means to internalize externalities. There might be far better solutions. But to say that modest tax credits for low emissions vehicles is tantamount to stealing is a little silly AFAIC.

[/ QUOTE ]

Well, I'm an anarchist, so all taxation is theft, IMHO, but that's a different discussion.

If the roads were privatized, their owners could be rightly sued for the pollution they create. In fact they'd be sued so often that they would probably just set up a system to just automatically pay their neighbors without going through the expense of lawsuits. The road owners of course will pass these costs on to their customers. Competition will force them to charge differential rates based on the differing emissions of the vehicles of their consumers. This will provide simple, direct market incentives to purchase lower emissions vehicles. This in turn provides a real, direct market incentive to research, design, and produce low emissions vehicles.

There are a number of other market efficiencies that would come into play that would make the roads cheaper, safer, and cleaner. For example, the technology exists (and has existed for probably a decade) to fully automate the roads, at the very least the highways. 95% of a modern road at full capacity is completely empty. Computer technology could vastly increase the packing efficiency of the roads, which is today limited by human psychological factors. A computer controlled road that is 50% empty still carries ten times the traffic of a modern road. Furthermore, computer control would allow significantly higher speeds. This means that the traffic flux that could be sustained is enormous. The economic implications are enormous. Computer controlled drafting would increase fuel efficiency and lower emissions by a significant fraction (perhaps 20%, although I don't remember the number off the top of my head).

You cannot sue the current owners of the roads for the damage that they do, hence there is no incentive to reduce emissions, other than political pressure. Political pressure, of course, is never applied in the right place to actually solve the problem. Political solutions always create more problems and make the problem worse for a number of reasons (the economic calculation problem, etc).

Currently the system is set up with the wrong incentives. Highway and road bureaucracies recieve more funding when they have more problems, not when they operate better. Hence there is really no incentive for the road bureaucracies to improve the road system. And as you've already noticed the cost of pollution is simply externalized.

By the way, thanks for SSH. Best poker book I've ever read, and I have a stack 4 feet thick.

[Ed Miller]

[ QUOTE ]
There are a number of other market efficiencies that would come into play that would make the roads cheaper, safer, and cleaner. For example, the technology exists (and has existed for probably a decade) to fully automate the roads, at the very least the highways. 95% of a modern road at full capacity is completely empty. Computer technology could vastly increase the packing efficiency of the roads, which is today limited by human psychological factors. A computer controlled road that is 50% empty still carries ten times the traffic of a modern road. Furthermore, computer control would allow significantly higher speeds. This means that the traffic flux that could be sustained is enormous. The economic implications are enormous. Computer controlled drafting would increase fuel efficiency and lower emissions by a significant fraction (perhaps 20%, although I don't remember the number off the top of my head).

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Now this is an extremely intriguing idea. It's one I've sort of fantasized about before, but never considered seriously.

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By the way, thanks for SSH. Best poker book I've ever read, and I have a stack 4 feet thick.

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I'm glad you liked it. [img]/images/graemlins/smile.gif[/img]

[Il_Mostro]

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set up a system to just automatically pay their neighbors without going through the expense of lawsuits.

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How about the people further away? Pollution doesn't stay locally. Just poking a bit, it's an interesting thought experiment.

[tylerdurden]

If the people further away have damages, let them pursue them. As it stands now, governments encourage and protect polluters by setting "acceptable standards". Anyone that pollutes below that arbitrary level is (basically) immune from claims, even if they cause actual, measurable damages. That's *exactly* how externalities are artificially created (they don't exist in a true free market).

[Il_Mostro]

there certainly is a problem with measurements in all this. many problems due to pollution isn't really measurable in the short-term. or indeed in the long run.

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If the roads were privatized, their owners could be rightly sued for the pollution they create.

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This doesnt work under American tort law for many reasons. First, as a practical matter, any individual's "injury" from pollution is likely to be de minimum, and thus individually there is no incentive to sue (even though collectively the injury might be material). Second, because each individual's injury is de minimus, any provable damages would also be de minimus. Thus even if you wanted to get lawyered up to sue, there is no economic incentive to sue. Third, thus the primary remedy you're talking about is really injunctive in nature--ie, an order from the court to the defendant "to stop polluting." This is a classic case of a situation where government intervention is appropriate--protection of public goods where a collective action problem prevents the tort law from properly functioning. Fourth, the use of lawyers to reduce pollution is an unnecessary economic deadweight loss--lawyers essentially are economic friction for both the plaintiff and defendant. A much more efficient solution is regulation, with each individual complying voluntarily with regulations b/c of the threat of being discovered and sanctioned (criminally or civilly). Economists would describe this as lowered "fencing costs". Fifth, it is not even clear that road owners could be held liable under tort law for the pollution caused by the operators of vehicles. For instance, road owners could make a rule: "Only low-emission vehicles may enter the tollway. By driving on our tollway, you represent that you drive a low emission vehicle." If it turns out that a high-emission vehicle were driving on the tollway (and thus causing a pollution "injury"), the toll road owner would probably not be liable under American tortlaw, because the injury was caused by an intervening tortfeasor. Thus, as a legal matter, your approach is contrary to American principles of civil liability.

Im all for market solutions and individual action, but your example is really horrible.

[Borodog]

Can you explain "de minimus" for a non-lawyer?