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What could such a question possibly have to do with economics?

Quite simply. I am assuming that some of you value a clean and neat house. But I sure bet there are some times when you are in  rush to get to work, or are not feeling well or some such other thing tells you that it doesn’t “make sense” to make your bed. In this case, you are affirming something that is actually quite hard for many people to appreciate. And what is that? That there is an “efficient” amount of “pollution.” It should be obvious to you that zero pollution is not a problem. But what should also one day become obvious is that there are no such things as pollution problems in and of themselves. Coase obviously understood this.

We mean this for two reasons. First, we only have “pollution” problems when outside agents are negatively influenced by your actions. You may think of a factory in the North Slope of Alaska emitting nothing more than water vapor as not being a polluter. Had a fruit drying factory set up shop next door, then it is the case that the humidity from the water vapor starts to cause problems.

BUT … and this is a huge but … it’s obvious that “it takes two to tango.” But doing the tango STILL does not mean we have a “pollution” problem. It only becomes a problem when the pollution is not paid for. This makes perfect sense to folks who understand the difference between costs and emotions. Pollution is a cost like any other – like electricity, like labor, like wood, nails, glue, paper and computers. When you are firm deciding to use paper, you use as much as is “worth it.” In other words, it is wasteful to use paper that is not making your firm better able to produce things of value. The same exact thing is true of a pollutant. 

Understood properly, there is either efficient pollution or inefficient pollution. A good economics student understands that pollution is a cost, and that it makes sense to bear this cost when the emission of such pollution imposes smaller costs than the value generated. Pollution is only a “problem” insofar is someone can emit it without paying for its full costs. And in this case, when we say that we have “solved” a pollution problem, we do not mean that no pollution is emitted, or that pollution costs are not falling upon someone, perhaps even a third party. Not at all. What we are saying is that the pollution that is being emitted is paid for. It is contributing efficiently to something else that we value – no differently than a laptop, a lightbulb or an assembly line worker. To think of it any other way is to be employing an entirely different set of ethical values. There’s nothing wrong with that, but it certainly cannot then take the claim of being a scientific position.

So, sometimes it makes sense to keep your bed messy. The messy bed is not itself “good” but merely a cost that is required to enable you to do other things that are, at the margin, more important.

Have a nice weekend, will be tuning out for a few more days.

3 Responses to “Did You Make Your Bed Today?”

  1. RIT_Rich says:

    Your points are obviously well put. The problem, which I discovered a few days ago as I was trying to explain to someone why recycling certain goods was counterproductive…is that the person you are trying to make such points to usually doesn’t have the 1) patience or ability to sit through an explanation of this caliber, or 2) is basing their opinion on an emotional appeal against which no logical argument can prevail.

    Either that, or we are terrible at explaining such things to such people.

    Whichever is the cause, it seems unlikely to me that the majority of people will ever be able to understand such a simple argument. If they did, they would understand a lot of other much simpler economic arguments, which most people don’t.

    • Harry says:

      Well put too, Rich.

      I can share your and Wintercow’s frustration with the crickets’ attention span, barely enough to contemplate a tweet. The more troubling problem is that people like YOUR senator Chuck, who scored as we all know 800’s on his boards and must have paid attention in school, willfully ignores facts to serve what he feels are higher goals, like redistributing property from some to others.

      Best wishes to WC for his off-the-grid time.

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