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Air pollution and its unexpected solution
My family is currently staying in a rented apartment in the south of France. We're a mere 30 meters from the sea, and everything is pretty much perfect - except for the incessant noise and air pollution.
There are so many vehicles, there's almost a traffic jam all the time, and this continues well into the night. Sleeping requires closing the windows, which is somewhat uncomfortable with no air conditioner in 30 degree heat. All because the motorcycle users, who remove their exhaust silencers, seem to make disturbing other people a point of pride.
I've known motorcycle users who would push their bikes along the street if they arrived home late, not to disturb the neighbors. The guys here are mostly the opposite.
The noise is so bad that most of the time, I can't even hear the birds. You know that sound the sea makes when the waves crash against the shore? Yeh - you can forget about that too.
All along the coast, for miles in either direction, there is a two-lane road. And since this is France, bicycles aren't allowed on the sidewalks either. The current system creates disincentives for bicycle use, and prioritizes polluting vehicles at the expense of both clean forms of transportation, and every person staying here on holiday.
There are so many vehicles causing air pollution, the air smells more of gas than the salt that can benefit our lungs so much.
So what's my point?
That this is a perfect example of government failure.
Free markets can solve air pollution
If this city was operated along free-market principles, the locals, especially those people who actually own apartments overlooking the sea, could create a fund to buy out the road, close it off, and make it a pedestrian and cycle only zone.
Since there's a much wider road running parallel to this one, right on the other side of the buildings, no real accessibility will be lost. A few more traffic jams will be created, yes. But that's only because people are using cars to do their shopping when they're too lazy to go on a five to ten minute walk.
What about the free rider problem?
This is a classic argument leveled against free market solutions, and it rests on taking the limits of one's own worldview for that of the world.
It's also classically anti-entrepreneurial. Anyone who's in my experience ever argued that this or that can't work never really tried to find a solution. They didn't sit down and think about how they could solve the problem, or create a business around it to make money. They immediately tried to criticize and destroy it.
It's almost like people don't want to solve problems, they just want to defend why the problems are there in the first place. It's odd, but understandable - public education doesn't teach true problem solving and critical thinking skills. It teaches memorization and regurgitation of set theories during exams. There's no room for originality, initiative, or thinking outside the box.
What is the threshold pledge system?
A project's likely expenses are planned, and the approximate amount is set as a fundraising goal by some entrepreneurial fellow. If the target is reached, the project is funded, and everyone else who benefits without contributing can be thought of as a positive externality. Although in many cases it's even possible to exclude others from the benefits, or increase benefits for those who participate.
Until the funding goal is reached, nothing happens. Participants' money is merely pledged, it is not immediately donated. That way people have an incentive to put money towards the project, since they lose nothing if the project fails to meet its funding goal.
There's also the social aspect. Those who don't participate despite being able to can be labeled as social pariahs and ostracized for their free riding. On the other hand, those who participated will gain respect and credibility in the local community.
So, an enterprising fellow contacts whoever the owner of the road is (currently the government), finds out a price they are willing to sell for (currently impossible absent a free market system), and sets up a project with that sum as the funding goal. Perhaps some expenses can be added for fencing off the area, or improving the roads for pedestrians, though that can be a later project.
The benefits are obvious. Not only will there be less noise and air pollution, but the value of everyone's property that was erstwhile affected by the noise and air pollution will go up, thus justifying the expenditure on the fund.
How free markets can solve water pollution
This system can be extended to all sorts of situations. Factories polluting downstream externalize their costs because nobody really owns the river. By default the government does, but the relevant officials within the government can easily be bribed since they don't themselves own the river - they only administer and manage it.
Government ownership of property always ends up no better than if the property wasn't owned at all. The result is always the tragedy of the commons.
If portions of the river were purchased by the people living alongside it, they could then sue the factory upstream for ruining their drinking, fishing, and swimming water.
This is an excellent example of property rights forcing a pollutant's costs to be internalized, by forcing that factory to feel the true, full costs of its own pollution.
An environmental activist group could even come together to buy out the entire river, and make sure that nobody could pollute it without being sued into oblivion.
What about other ways to deal with air pollution?
If we had true property rights and a free market to deal with air pollution, it might even be possible to take people to court for raising the level of air pollution on one's property. Say I own a home near a factory creating heavy air pollution.
I buy an instrument that measures the levels of concentration of various pollutants in the air in the house, and if they're beyond levels that are safe for my health, I can preemptively sue the people responsible. That is to say, before my health is actually damaged. If enough people do this, it begins to make more sense for a factory to deal with their pollution problem in-house, rather than just dumping it out into the environment.
Free markets and true property rights give power to the people
We no longer have to wait for some government busybodies to take action and start fining these companies. As victims of the pollution we can sue them ourselves. Not only are we, as victims, not going to be as easy to bribe as government officials who probably don't even live near the affected area, but only free markets and property rights would result in the correct fine for the corporation's pollution.
Any fine designated by the government is bound to be arbitrary, and probably too small. Or too big, putting the company out of business altogether, rather than just providing the incentive to clean up their act (pun intended).
These kinds of arguments demolish idea that free markets are at fault for the pollution we have in the world. Free markets can't be at fault for air pollution - since free markets don't currently exist! Moreover, free markets would provide an ideal framework for solving air pollution, water pollution, and all sorts of other environmental problems.
As it stands, when I close my eyes on the balcony, I don't feel like I'm 30 meters from the sea - I feel like I'm in the middle of Paris on a busy street. And that's got nothing to do with market failure. It's because France doesn't have a free market, that these solutions to air pollution are never taken advantage of.
p.s. For anyone who thinks we live in a world of true property rights, consider that you can't actually own a piece of property without paying a tax on it. In other words, you're only renting the property from the government.
Furthermore, what you actually do with your property is contingent upon various arbitrary government laws on zoning, and other restrictions. You can't simply add a structure to your house - odds are you need to ask for permission from an apparatchik. You don't own your property - you are merely given the illusion of ownership, because that makes the tax-paying population more productive.
After all, taxation is the ultimate protection racket.