How Centralized Government Causes Pollution

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The following video is a satirical look at China’s pollution.

If you aren’t familiar with the channel yet, check it out. He does a great job of explaining the problems with centralized authority in a humorous way. It will help shed light on how we, as a government and culture, need to change to avoid becoming like China.

Now, let’s examine the issue with pollution.

In China, if someone is destroying your home with pollution, what can you do? Since all the power is centralized, the answer is nothing. Unless you are the son of on of the rulers running the country, your opinion doesn’t really matter. If you petition too loudly, you go to jail. If you don’t have something that the centralized government wants, they don’t care about your opinion.

In the US, under our decentralized federal system, issues such as pollution are assigned to the states and to the people by the constitution. What do you do if your neighbor is spewing toxic fumes into the atmosphere and won’t stop? You engage the state and city government to stop them. All it takes is enough people complaining and the city council and state legislature will do just about anything to keep themselves in power. The federal government focuses on international matters, and so if another country was polluting into ours, they would be your advocates.

Pollution is an economic problem. There is a financial incentive to pollute, otherwise no one would do it. There is also a financial cost, which the polluter usually doesn’t have to bear. We call this “externalities” in economic terms. Meaning, something I do makes you pay for it. External costs are a bad thing. After all, we’re all human, and if I can make an extra buck by making you pay ten, why wouldn’t I? We could rely on our good nature and appeal to logic and reason, but we all know that doesn’t work very well in the real world. Thus, wherever externalized costs exist, there is going to be problems until those costs can be internalized.

Of course, if the external cost is good, then people won’t complain. Let’s say a farmer is using a fertilizer that leeches into a lake that causes it to overflow with even more fish that are healthier. What fisher would be upset with that? So if the external cost is good, we don’t call it pollution.

In a capitalist system, where the means of production is owned by the people and not by the government, and property rights respected, when you externalize a cost, then the person whose property is hurt has a claim for just recompense from the person who did the injury. In the case of pollution, the obvious compensation is to clean up the pollution. Thus, the producer of the pollution bears the external cost of the pollution. The courts exist to provide this mechanism. Thus, the external cost of pollution is internalized. The polluter has to think whether it really makes sense to pollute, or if it will be cheaper for everyone to not pollute.

In one very special case, when a small external case is distributed among a large number of people, should government get involved a more than an arbitrator. In this case, since it is difficult to have all the hurt individuals come together to petition for redress, and difficult to fairly distribute the cost and expense, government can and should step forward and levy a pollution tax equal to the cost of cleanup and for the sole purpose of cleaning up the pollution or compensating those affected. Of course, the danger of raising taxes too high always exists, but taxes that are too high end up killing the tax revenue stream anyway so it will self-balance.

Let’s take a specific example. Say that a farmer wants to use extra fertilizer to increase his yields. However, that fertilizer is washed into the local streams, rivers, and lakes causing problems. The owner of that land would have a just claim to demand the farmer clean up the mess caused by the fertilizer. This provides the farmer an incentive to minimize the damage or ensure it is cleaned up. The economic cost will drive people to innovate in new ways of farming with less pollution or cheaper ways to safely clean it up.

Another example: Let’s say a power company is burning coal to make power. This pollutes the atmosphere, which affects a lot of people very little. Since so many people are affected, government steps in and demands that they either install a scrubber to eliminate the pollution or pay the government to do it themselves. At the same time, the government could demand that the power company pay the bill for restoring the land back to its clean state, perhaps by de-acidification of lakes and soil. Or government could simply distribute the money among the people, which they could use to clean up their own land or spend in some other way they see fit.

In China, since natural rights are not recognized and all the government occurs in a centralized body, none of these things occur. The temptation to pollute and have someone else bear the external costs of it are too great, and there is no redress for those so affected. We’ve heard the story far too many times of Chinese people asking their government to do something simple, just, and honest and ending up in jail for it, or even dead.

If you want to make America clean or rather, keep it clean, we need to continue to apply property rights and decentralized government. Having the EPA be a federal department is actually what allows pollution to continue. Having each state, county and city manage their own pollution will ensure the proper balance. When people get affected by pollution, they will petition their local agency to crack down on the polluters, and will have far more influence than they can ever have on a central bureaucracy.

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