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A more complicated challenge is climate change, which is like the CFC example taken to the extremes. Since every company uses energy the responsibility is spread among everyone. However, every group, from countries to companies stands to lose competitively from using more expensive but less damaging sources of energy – the market pressures drive towards companies that take advantage of externalities like this

So a solution could be global regulation, where we all unilaterally agree to transition to better energy sources, however this has massive resistance and is the battle of our time

This sort of regulation is certainly more subtle than don't steal or shoot people but ultimately leads to a system that's better for all the players

More immediately and on the nose, in the UK companies have been increasingly dumping waste in our rivers since a relaxation of rules after leaving the EU regulations https://www.newstatesman.com/comment/2021/09/the-raw-sewage-...




That is a common trope, supposedly free running capitalism would just waste as much energy as possible without regulation.

It is of course nonsense, even without regulations industries have an incentive to save on energy, as it is a cost factor.

Or think about cars - people would prefer to buy cars that use less energy, so that they have a wider range. Therefore there already is an incentive for car manufacturers to develop more energy efficient cars.

Also people can decide they only want to buy products that adhere to certain production standards, even without centralized government.

Overall, nobody claims externalities should have no price.


For sure, energy has a cost which you want to optimize for - no question about it. The crux is when that cost is artificially low: you can dump your radioactive waste in the river for as much as it costs to transport it, but the cost is then payed by the people downstream. Now as you say if this is tightly causally linked, the people downstream will fight back against you and then it's not so cheap. But the problem comes when the causality gets foggy; it takes decades before there's enough data gathered to connect the high cancer rates with the waste dumping miles upstream. By that time the people who made that decision made bank and exited and are beyond accountability

Where this causal disconnect occurs is where regulation is most effective

I think we agree, you want to price in your externalities, but pricing externalities _is_ regulation, so we're saying the same thing. Perhaps we're crossing wires somewhere


You keep talking about externalities. Obviously those should have a price. That is not a free market issue.




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