Hello! Best
saving me the classic rant about how I've been slow to upgrade and that it what a shame, and that this is no longer what it was and where we'll end up and this and that. I know that long ago should have updated, but hey, opposite is what is (besides being a great excuse for almost everything). Having said that, without further ado, we go with today's topic: the relationship (or rather, one of the many relationships) between economics and law.
The fact is that the other day we talked about when to eat (we like that), and I wanted to write something about the positive and negative externalities and their internalization by law. Take that. "But we've gone mad?", You say. Yes, to deny. But then I think a very useful for understanding from taxes on snuff and alcohol to climate change solutions. And I am also the topics of economics. In short, I do not just law that I have to get up in the mess of the economy. With a pair.
First things first, as forever. externalities are those effects resulting from an activity X that initially fall outside the cost-benefit calculation made by the agent in question when carrying out such activity (this is where economists come and destroy me by have no idea). Quick example: a smoker does not think of how much it can cost in medical smoking, but look how much it costs only package. Externalities can be both positive and negative : well, when you install a factory in a village has a positive effect (open shops and restaurants that new workers can buy and eat, so you create wealth) and turn can have negative effects (pollution, saturation of the people, etc ...). At first, the master of the factory as well as give some other, because neither will go to pay for open restaurants or you will be charged for pollution. These effects are, therefore, external to the analysis made by the employer at the time of opening the plant in question.
Well, what looks right in all this? Well, right comes into play as the primary mechanism for internalizing the externalities , which is nothing more than add to the cost (usually) or benefits (rarely) to the decisions of economic agents. Let's see how this is done with two examples.
-
The snuff: Smoking has some benefits (pleasure for smokers, say) and two types of costs: it costs you the package and what it costs doctors you need to ensure your health after years of service. The first thing you pay each one, but what the latest? In most cases we pay to all by way of public health, funded by our taxes. The mechanism used by the government to pass some of these costs to the smoker in question is, as you have already correct, put a milk tax on the one hand reduce the number of smokers and otherwise help pay medical costs in expected to be incurred to complete our friend smoking. Thus, altering the price, internalize the negative externality in the decision making of those who freely choose to smoke.
-
CO2 emissions: Air pollution is another prime example of negative externalities. When I put a factory (well, no longer today, but imagine that we are in 1920 or something) do not think about what or how I will deliver gases to the atmosphere, but calculates how much it costs the local raw materials labor, etc ... What happens long term? Because all the guys who put factories feel the same and - Alehop! - We have a change of face. What governments do here, seeing that sea level rise, extreme temperatures rise and desertification falling and a blizzard of the host in Barcelona? They could close the factories directly, but that does not say many votes. The alternatives now are two: an emissions market (who wants to know how to put it in a comment to explain step here) or a tax on CO2 emissions. In Europe we have opted for the market, but in the U.S. are still arguing over which is better. China, meanwhile ... Well, imagine that we are in 1920.
Is that clear? Two months waiting for a post for this, seems to lie. Ah! For the record, I have nothing against smokers, eh? That was just one example.
I leave because I complain about the issues that I have abandoned.
See you in April. Maybe.
