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

[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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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.

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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]

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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?

Despot is exactly right.

de minimus = minor, very little.

[Borodog]

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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.

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What? Your argument is that individuals are most likely not harmed enough to bother pursuing compensation, but that they need regulation to protect them from what isn't harming them?

And the remedy is not injunctive. You simply cannot get them to "not pollute," since even low emission vehicles still have emissions. Furthermore, this is not even an argument in favor of regulation, since as pvn has already pointed out, regulations set "acceptable levels" of pollution which are, obviously, non-zero.

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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".

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Wait. Lawyers are economic friction but regulatory bureaucracies are not? How is not polluting for fear of being sanctioned by a regulatory agency better than not polluting for fear of being privately sued?

Furthermore, a regulatory bureaucracy has a financial incentive to not solve the problem. If the problem were solved the regulatory agency could not generate revenue nor justify its existence.

Not to mention the inevitable corruption that arises from government regulation of private industries as competitors lobby to have the regulations written and interpreted in their favor and against the interests of their competition.

Did I mention that I worked for the EPA?

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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.

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A "low emission vehicle" still has emissions. A road owner could not provide a road without admitting liability for pollution usless the vehicles were actually zero-emission.

Furthermore I am not representing that I believe the current instantiation of American tort law is the "correct" one. In fact, it is something that I have little knowledge of the details of, so I can't really mount much of a defense (as you can probably tell). So if you're going to descend into the arcana of tort law, I guess you win.