Arguing with economics (economists)

  • #26
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Perhaps, I'm unenlightened; but, I don't see how that conclusion follows. I would think the point made in this thread is that nuclear is the only available choice at our disposal at this time to actually combat AGW.

First of all, I dispute the notion that nuclear is the only available choice at our disposal to actually combat AGW (or more correctly, anthropomorphic climate change).

There is this fallacy out there that somehow energy sources can only come from one source. As if somehow, encouraging the use of wind and solar power or investing in improvements in these renewable energies must necessarily come at the expense of nuclear power.

As I see it, to effectively combat climate change would involve both research in and active investment and deployment of multiple different cleaner energy sources (and yes, including nuclear) to reduce and ultimately fully replace fossil fuels. In addition, we haven't really discussed in this thread the need for R & D in battery technologies (to store power, among others), or about energy conservation, all of which are also key components in the fight against climate change.
 
  • #27
StatGuy2000
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This is oversimplified. The need of policy proposals requires more than just acceptance "that climate change is real." It also requires acceptance of several other propositions:
1) "Climate change is harmful." This is a big question, but in the context of an economic discussion it may be simplified to the proposition that "Climate change will cause net harm to the economy."
2) "Climate change is anthropogenic and dominated by carbon emissions."
3) "The course of climate change can be altered through public policy on carbon emissions."
4) "The course of climate change cannot be altered through education or voluntary private action without public policy change."
5) "The best public policy is to try and arrest climate change rather than planning for it."

Let me break down each of the 5 points you raise above.

My understanding is that there is a consensus across climate scientists, economists and others that point #1 is indeed correct. As an example, here is a report published by the chief economist of Schroders (a multinational asset management company) regarding what the real-term impact of climate change is on the global economy.

http://www.schroders.com/en/sysglobalassets/digital/us/pdfs/the-impact-of-climate-change.pdf

Similarly, my understanding is that there is a general consensus among the scientific community regarding point #2. See the following essay in Science magazine:

http://science.sciencemag.org/content/sci/306/5702/1686.full.pdf

I think it follows through logic that if we accept point #2 (that is, the climate change is anthropogenic, i.e. caused by human activities), then human actions are required to alter this, and thus we must conclude that point #3 should follow.

I'm confused by point #4 above, because you seem to be suggesting that education and voluntary private action is at cross-purposes with public policy change. By contrast, I see both education and voluntary private action as complementary to public policy change.

I'm similarly confused by point #5 -- you seem to be implying that trying and arresting climate change through public policy necessarily must come in opposition to policies to plan for it. It stands to reason that a global concerted effort to alter the course of anthropogenic climate change to the extent that it is impossible should be a priority, with subsequent policies to plan for existing change for adaptation also be considered to mitigate the costs associated with such change.

This give rise to another necessary proposition:
6) "Policy proposals on a subset of carbon emitters the size of the US can have a significant impact on climate change."

Good economics views expensive policy proposals in terms of cost-benefit. I don't think I've seen a compelling economic analysis that the benefit of most US (state or federal) policy proposals relating to climate change are worth the anticipated costs. It's as if there is an unstated presupposition that the benefits are guaranteed to outweigh the costs.

Point #6 is valid given the size of the US economy, as well as the fact that the US is among the leading carbon emitters in the world, so if the US is seen to be leading on this front, it is much easier for other nations to follow suit.

As for the economic analysis of current US policy proposals (whether at the state or federal level) relating to climate change I will say this:

(a) I'm not aware of all of the specific proposals, so can't comment on the economic impact of these,
(b) It may well be the case that not all proposals have been carefully thought through, or will be effective to address carbon emissions
(c) As for cost/benefit analysis, perhaps a better way to think about this is that costs of inaction on climate change will far more severe than the costs of action.
 
  • #28
First of all, I dispute the notion that nuclear is the only available choice at our disposal to actually combat AGW (or more correctly, anthropomorphic climate change).

Yes. Sorry for making nuclear sound like the only viable option. That isn't true, as you've pointed out and I agree with the rest of your post.
 
  • #29
Dr. Courtney
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I think it follows through logic that if we accept point #2 (that is, the climate change is anthropogenic, i.e. caused by human activities), then human actions are required to alter this, and thus we must conclude that point #3 should follow.

The proposition in my point #3 was not "human actions are required" but rather

"The course of climate change can be altered through public policy on carbon emissions."

You seem to be presuming both that public policy is both necessary and sufficient to alter human actions on the scale needed to alter the course of climate change. Public policy is often ineffective in modifying human actions in the desired manner: the war on drugs is a powerful counter-example.

(c) As for cost/benefit analysis, perhaps a better way to think about this is that costs of inaction on climate change will far more severe than the costs of action.

Even if we accept this, the reality is that there will never be willingness to write a "blank check" for the costs of action. You may not intend it, but a lot of those bearing the costs of action hear this as "we're gonna keep asking for more money" (or otherwise increasing the economic burden) until some group of authorities is satisfied. That group of authorities is a hodge-podge of scientists, politicians, and bureaucrats in whom many in the general pubic do not trust sufficiently to write a blank check trusting that they will be satisfied and stop asking for more at some point.

What happens when untrusted authorities keep increasing an economic burden beyond what many are willing to bear is that significant subsets of people simply stop complying. (What was the non-compliance rate with the Obamacare mandate?) So, in addition to the limits of US public policy to change human actions outside the US, you have the limits of public policy to change human actions even of the subset of humans who should be subject to it.

You have to solve the trust problem, which probably means you also have to greatly improve science education problem in US.
 
  • #30
StatGuy2000
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The proposition in my point #3 was not "human actions are required" but rather

"The course of climate change can be altered through public policy on carbon emissions."

You seem to be presuming both that public policy is both necessary and sufficient to alter human actions on the scale needed to alter the course of climate change.

Necessary, yes. Sufficient, no.

Public policy is often ineffective in modifying human actions in the desired manner: the war on drugs is a powerful counter-example.

I am well aware of ineffective public policy. There are also many examples of public policy that have been shown to be effective in modifying human actions. For example, the use of seat belts when driving. Another example would be the overall fall in the consumption of tobacco in both Canada and the US.

At any rate, if the goal is to make significant decreases in carbon emissions and to accomplish this at the national (and ultimately international) level, public policy must play a critical role to establish the framework.
 
  • #31
Dr. Courtney
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Necessary, yes. Sufficient, no.



I am well aware of ineffective public policy. There are also many examples of public policy that have been shown to be effective in modifying human actions. For example, the use of seat belts when driving. Another example would be the overall fall in the consumption of tobacco in both Canada and the US.

At any rate, if the goal is to make significant decreases in carbon emissions and to accomplish this at the national (and ultimately international) level, public policy must play a critical role to establish the framework.

But whether or not the public policy will work (as with cigarettes and seatbelts) or fail (as with Obamacare compliance and the war on drugs) ultimately needs to consider the economic cost-benefit without assuming that the benefits are worth any cost.

The public policy changes for seatbelts and cigarettes were relatively cheap and the benefits were great with respect to the lives saved and injuries/disease prevented (and associated cost savings). I have not seen the cost-benefit economic analysis for anything related to climate change that is anywhere near as compelling in terms of realistic expected tangible benefits for comparable costs.

Even today, the relative costs of injury prevention systems (seatbelts, antilock brakes, air bags) are a small fraction of the overall cost of an automobile - less than 10% on most models. If you could realistically predict comparable savings of lives and health by only increasing energy costs by 10%, you'd probably meet very little resistance, But asking for a blank check on energy costs and offering much less than seatbelts in terms of benefits is going to meet resistance and ultimately, widespread non-compliance.
 
  • #32
I have not seen the cost-benefit economic analysis for anything related to climate change that is anywhere near as compelling in terms of realistic expected tangible benefits for comparable costs.

Here's a paper you might like. It's a cost-benefit analysis conducted by a neo-classical economist. This sort of shows that the very neo-classical and classical economists I was bashing in the OP might not be so myopic about climate change.

In case there are issues with copyright infringement here's the paper linked.
 

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  • #33
Dr. Courtney
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You have correctly answered your own questions, but the last is for me(short version):
1. Government needs to stop violating the law and open the Yucca Mountain Repository. I think this is happening.
2. Limit or end subsidies on "renewables" that can't do the job.
3. Provide a nationally directed and funded program to do what France did decades ago.

That's our part, and if we do it, yay for us. But we'll still need those new dikes in New Orleans and New York.

Some great ideas there.

Here's a paper you might like. It's a cost-benefit analysis conducted by a neo-classical economist. This sort of shows that the very neo-classical and classical economists I was bashing in the OP might not be so myopic about climate change.

In case there are issues with copyright infringement here's the paper linked.

It is irresponsible to take any economic analysis seriously that does not give due consideration to nuclear power as a carbon-neutral alternative to fossil fuels. Ignoring nuclear power demonstrates a strong bias so that it cannot and should not be taken seriously. It is not economics as any kind of science, but as a political means to manipulate toward a specific end.
 
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  • #34
russ_watters
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It is irresponsible to take any economic analysis seriously that does not give due consideration to nuclear power as a carbon-neutral alternative to fossil fuels. Ignoring nuclear power demonstrates a strong bias so that it cannot and should not be taken seriously. It is not economics as any kind of science, but as a political means to manipulate toward a specific end.
Do you know something about the book that isn't discussed in that review? I did a quick search and found neither the word "solar" nor "nuclear" in the review. It seems to be entirely about economics, not specific mitigation technologies.
 
  • #35
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Do you know something about the book that isn't discussed in that review? I did a quick search and found neither the word "solar" nor "nuclear" in the review. It seems to be entirely about economics, not specific mitigation technologies.

There is a chapter on mitigation and a chapter on policies and institutions for slowing climate change. Nuclear gets short shrift and no real consideration as a viable option for reducing carbon emissions without (or with reduced) need to raise prices of fossil fuels. The focus is on economics, but there is definitely the context of the economics of various mitigation strategies. Most of the "renewable" technologies get careful consideration: solar, wind, etc. There is zero discussion of nuclear as a means of reducing carbon emissions with lower total costs than various carbon tax schemes.
 
  • #36
One sad thing that I concluded from this thread is that nuclear is often not classified as a "renewable" despite GEN IV reactors being more than capable of producing their own fuel through breeder reactors or the fact that uranium gets replenished in oceans if we could find a viable technology to extract it from seawater. The discussion nowadays seems to be of the sort:

Either we invest in "renewables" or face a perilous future of climate change. This comes from liberals(!), predominantly, rather than conservatives(?). Strange world.
 
  • #38
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Regarding the book review in post #32, the authors of the review report that Nordhaus
argues forcefully that if the phrase "scientific consensus" has any useful meaning, there is a scientifc consensus that the earth is warming, that we are responsible, and that the consequences of continuing on our current course will be somewhere between costly and catastrophic.
There is general agreement that the earth has been warming, which it has been doing since the end of the last ice age about 12,000 years ago, with periodic variations. For the other two claims -- that we are responsible and that the cost of doing nothing will be somewhere between costly and catastrophic, there is not a consensus.

Regarding this "consensus" see this Youtube video of Dr. Judith Curry, Professor and former chair of the School of Earth and Atmospheric Sciences at Georgia Inst. of Technology. In it she is testifying before the US Senate Commerce, Science, and Transportation Subcommittee -- https://www.bing.com/search?q=Comme...-50&sk=&cvid=57F1CA9CCD8741C2A960CC6A42FAECC7

In addition, during 2017 there were at least 485 scientifc papers published that call into question one or more facets of the "consensus" that Nordhaus mentions in his book. This page contains links to all of these papers - https://wattsupwiththat.com/2018/01...with-485-new-papers-in-2017-that-question-it/

Some of the papers listed discuss flaws in the computer models that are used in long-range climate predictions. One particularly egregious prediction comes from NOAA, which in October of 2017 predicted the outlook for this winter as being warmer than normal for a vast swath of the US, including all of New England, the entire East Coast, all of the South, and large stretches of the Plains and Rocky Mountain states. Clearly their projections were way off. See https://www.climate.gov/news-features/blogs/enso/winter-coming-noaa’s-2017-2018-winter-outlook

Predictions that are so far off in three months don't give me much confidence in predictions that go out 50 and 100 years.
 
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  • #39
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Arguing with economics (economists) --
And with a conservative for the matter...

How do you argue with economics? Let's take the example of fossil fuel production. If fossil fuels get the job done cheaper ....

So, what is the conceptual gap I am missing in understanding this issue? Is it simply a matter of 'ignorance' or an uninformed or even misinformed public?

I think your premise (as I understood it) is flawed. I don't see this as a problem with economists. Any economist worth his/her salt can make an estimate that includes the externalities. Granted, externalities can be difficult to measure, there are many variables and interactions, and assumptions, but that isn't the economist's fault. I've seen plenty of papers (and can provide links if needed), where there have been an estimate of the cost of externalities of various forms of energy production (and in many other areas as well).

I think you are asking a different question - why don't people and businesses routinely take these externalities into account? I think the answer is simple - it's hard. And it does not have an immediate effect. So people and businesses generally look at what they can easily see, and make a quick decision based on the available information, giving precedence to the immediate.

If you go to the store to buy meat, and see that all the beef costs much more than you expected, you check out the pork, or chicken, or veggies/pasta, etc. You make your purchase and go home and cook dinner, because your family is hungry. You don't stop to think about the total cradle-to-grave environmental impact of beef vs chicken vs pork vs grain vs veggies. You get on with your life.

Business does the same thing, focused on providing products for their customers that will provide a profit for them and shareholders. Externalities come second for them as well, in most cases. I don't think that is hard to see.

And it's not all doom & gloom. In the US, our air and water are cleaner than they have been in decades. People rallied around regulations, people and companies made an attempt to be 'green' (business uses it to attract customers, sometimes it's just window-dressing, often serious though).

It works both ways. It's common to see self-proclaimed environmentalists promote the "eat -local" movement as being environmentally friendly. But the studies I've seen (and evaluated), show that often, it takes far more energy and waste to get local products to the consumer than the big agribusiness products (economy of scale applies to the fossil fuels used in cradle-to-grave production of our food). Trains and semis move tens of thousands of pounds of produce at once at maybe 5 mpg (or better for rail), the local farmer moves a few hundred pounds, at maybe 15 mpg. Then consumers make a special trip to a farmer's market, to pick up a few pounds, and still need to go to the "supermarket" for other staples. It all adds up. Maybe they prefer the taste of fresh, heritage varieties of produce (it is worth a premium to me), but are they taking these "externalities" into account? Have you ever heard anyone at a farmer's market ask "How much fuel was used to deliver this product to this market on a per pound basis?". Are you surprised at that?
 
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  • #40
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My issue is using economic 'common sense' in the opening post to justify continuing utilizing fossil fuels as a means to produce energy. As I think most people know, which I am hinting at the obvious here, that is detrimental to the economy as a whole via climate change. As to why this is the case, that people use 'common sense economics' to justify a self-destructive means of energy production, baffles me. Maybe people like easy answers or something? As if negative externalities didn't exist?

Hope that clarified it.
Are you saying that you use zero fossil fuels? I asssume not, so there's your answer. Look within.
 
  • #41
I think you are asking a different question - why don't people and businesses routinely take these externalities into account? I think the answer is simple - it's hard.
It seems to me that it's easier to not take into account all externalities generated by some activity than rather hard. Please keep in mind, that with this mindset, that *we simply can't calculate all externalities*, then scenarios like the tragedy of the commons are all the more likely to happen.

There are some ways to tackle the tragedy of the commons and I think the idea goes along with the no free lunch idea. Here it is:

Privatization works when the person who owns the property (or rights of access to that property) pays the full price of its exploitation. As discussed above negative externalities (negative results, such as air or water pollution, that do not proportionately affect the user of the resource) is often a feature driving the tragedy of the commons. Internalizing the externalities, in other words ensuring that the users of resource pay for all of the consequences of its use, can provide an alternate solution between privatization and regulation. One example is gasoline taxes which are intended to include both the cost of road maintenance and of air pollution. This solution can provide the flexibility of privatization while minimizing the amount of government oversight and overhead that is needed.

I would argue that it's poor and bad economics to not factor in the generated externalities (both negative and positive) by any sort of economic activity. It distorts decision making, and endangers the future, along with distorting cost-benefit analysis'. Not to mention that this is the morally responsible solution to profess also, instead of imposing regulations or privatizing everything or having negative externalities transferred to social costs.
 
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  • #42
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I think you are asking a different question - why don't people and businesses routinely take these externalities into account? I think the answer is simple - it's hard. And it does not have an immediate effect. So people and businesses generally look at what they can easily see, and make a quick decision based on the available information, giving precedence to the immediate.

Another way to look at it is that businesses that work to take into account the cost of externalities and factor that into their pricing are likely to be out competed in the short term by those that do not, likely because their product range gets limited and/or the price goes up. Consumers may make a choice that the more expensive, externality costed version is more desirable but, issues of information aside, consumers face a similar issue of competing with each other (buying a suit ten times more expensive than the standard because its environmentally friendly might be great on a macro level but if you're snubbed for only owning one suit there's a real cost).
 
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  • #43
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It seems to me that it's easier to not take into account all externalities generated by some activity than rather hard. Please keep in mind, that with this mindset, that *we simply can't calculate all externalities*, then scenarios like the tragedy of the commons are all the more likely to happen. ...

I have trouble formulating a meaningful response to you, when you make disjointed jumps like this. You go from "it's easier to not take into account all externalities" (and I agree, it must be true on its face, it's always easier to not do extra work), to "with this mindset, that *we simply can't calculate all externalities*,". That just doesn't flow. Who says we "can't" account for externalities? Huge difference between "not easy" and "impossible". Take some time to think this through before you post please.

... I would argue that it's poor and bad economics to not factor in the generated externalities (both negative and positive) by any sort of economic activity. It distorts decision making, and endangers the future, along with distorting cost-benefit analysis'. Not to mention that this is the morally responsible solution to profess also, instead of imposing regulations or privatizing everything or having negative externalities transferred to social costs.

It's not necessarily bad economics, which is what I said earlier. As @Ryan_m_b just posted, it might be good economics for a company to not factor in externalities. Now, that may be a bad decision for mankind in general, but that is two different things. Conflating the two will make it harder to come to any understanding.

Maybe you didn't see my follow up post yet, but if you can explain to us and reflect on the cases where you personally do not take externalities into account (I assume you use some of the products of fossil fuels - energy, plastics, etc), I think you will gain a lot of insight as to why other people/industries do not always take externalities into account.
 
  • #44
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As @Ryan_m_b just posted, it might be good economics for a company to not factor in externalities. Now, that may be a bad decision for mankind in general, but that is two different things. Conflating the two will make it harder to come to any understanding.

Actually I'd still say it was bad economics in the global sense but short term incentives in many economic systems force non-optimal decisions. A lumber company that strips a forest until there are no more trees is going to be able to sell more wood in the short term because they don't have to factor in the cost of replanting in their pricing strategy. But once the last tree is gone there's no more money for them.

Unsustainable short term choices aren't unique to the market (replace "lumber company" with "easter islander" and it still makes sense) but they aren't necessarily insurmountable either. My point above was that unless all agree to act as one its difficult-to-impossible for the system to change because any one actor making a different decision loses out in the short term, which in many cases means failing completely.
 
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  • #45
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Actually I'd still say it was bad economics in the global sense but short term incentives in many economic systems force non-optimal decisions. ....
Agreed. What I'm trying to get across (mostly to the OP) is that for a meaningful discussion, the context must be included. "Good economics" for an individual/business is often different from "good economics" in the broader/global sense. If this isn't distinguished, it's hard to discuss meaningfully. Even in your example "non-optimal" for who?
 
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  • #46
It's not necessarily bad economics, which is what I said earlier. As @Ryan_m_b just posted, it might be good economics for a company to not factor in externalities. Now, that may be a bad decision for mankind in general, but that is two different things. Conflating the two will make it harder to come to any understanding.
Then perhaps we can agree that laissez-faire economics is just a terrible economic system for mankind, as a whole, as that can be seen as a point that I think is abundantly clear in terms of climate change. If we can't value sound long-term decisions over short-term gain, then something is fundamentally wrong with economics in general(?)

Hence some need for government regulation as a third party needed to evaluate these negative externalities and impose the appropriate taxes or means to valuing sound long-term economic decision making over short-term gains.

Even in your example "non-optimal" for who?

I think the argument can be made, that for people in general. If negative externalities aren't accounted for, then the buck gets passed on to the taxpayer to address whatever arising issue.
 
  • #47
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Then perhaps we can agree that laissez-faire economics is just a terrible economic system for mankind, as a whole, ...

Sorry, no, I won't agree to such a broad-based statement. Too broad to be meaningful.

... If we can't value sound long-term decisions over short-term gain, then something is fundamentally wrong with economics in general(?) ...

No, I don't think so. Economics is economics. It isn't wrong or right, it just is. Again, I think you are questioning how people and businesses respond to economic incentives, and that is something different. Water is water. It's bad if you are drowning, good if you are thirsty. You can't judge water, or economics as good/bad.

You have not answered my previous question that should clear this up for you. Why do you use the products of fossil fuel?


... Hence some need for government regulation as a third party needed to evaluate these negative externalities and impose the appropriate taxes or means to valuing sound long-term economic decision making over short-term gains. ...

No argument form me as long as you put that in broader terms. It can be self-regulation, it can be 'regulation' from popular demand, and it can be government regulation. But sure, business and people will try to do things they see as good for them but are harmful to others. So we need controls - does any rational person think other-wise? I've seen people who don't leash their dogs, and it causes problems for others - but the dog owner 'likes' having the dog free, and doesn't care about others. We have endless examples of regulations like this, to promote the common welfare (from the US Constitution).

Did you know a very common regulatory agency, that so many of us depend on, was created totally voluntarily, and has no government connections? That is UL, the label we see on electrical items in the US. It is a not-for-profit organization that was developed so that at the beginning of the age of electricity, manufacturers could submit their products for testing, so that consumers had some basis for knowing if this new tech was safe in their homes or not. Insurance companies started demanding it I think, but as far as I know, it is a completely self-regulated, yet viable and useful thing. I feel this could be a model for many other things, and would probably be more efficient than many governments attempts at it. The answer is not always "more government". More here: https://en.wikipedia.org/wiki/UL_(safety_organization)
 
  • #48
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Then perhaps we can agree that laissez-faire economics is just a terrible economic system for mankind

Your complaint isn't with laissez-faire economics, it's with people making their own decisions. Fortunately, there are political systems that solve that problem.
 
  • #49
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Then perhaps we can agree that laissez-faire economics is just a terrible economic system for mankind
And with that, you're veering away from economics, and into politics, which I believe was your original intent.
Thread closed.
 
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  • #50
Understood. I'll review the thread sometime and see if I can present a better economic argument for the need to account for negative externalities, which is the whole point in retrospect I was trying to make.

Thank you for the posts everyone.
 

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