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And Sometimes A Cigar Is A Negative Externality.

Dec 20, 2012
By .
Fun

I'll bet Duke political science professor Mike Munger's classes in political economy are a lot funnier than the political economy class I attended under Professor Whatsisname 25 years ago.

Just for fun:

You may find Professor Munger's fuller explanation of the problem of negative externalities here.

Last 5 posts by Patrick Non-White

65 Comments
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64 Comments

  1. Ken  •  Dec 20, 2012 @9:24 am

    We could argue until the end of the world — strike that, for years — about what constitutes an externality anyone should care about or that any system should account for.

  2. Grandy  •  Dec 20, 2012 @9:46 am

    Wonderful video explanation. I like this guy.

  3. naught_for_naught  •  Dec 20, 2012 @9:50 am

    @Ken

    Alright then, let's get this party started. Can we all agree that there is a netagive externality to cell phones as they are currently used in the public commons?

    Favortive moment in the clip: Freudian slip of "Sectional Pressure" => "Sexual Pressure" as an effector on the judgments of the political class.

  4. Patrick  •  Dec 20, 2012 @9:54 am

    Professor Munger would agree that cigars, cell phones, and potato chips all have potential to be or create negative externality.

    What he questions is whether an excise tax on their enjoyment is an efficient or wise means to compensate those affected.

  5. Ken  •  Dec 20, 2012 @9:56 am

    That's a good example, naught, because it illuminates one problem with defining externalities: does their cost vary with the subjective sensitivity of the third party? (That's a point also illustrated by the chips example in the video.)

    Many people are assholes with cell phones. To what extent is being an asshole an externality that ought to be addressed, and to what extent is it the human condition that we have to endure the assholitude of our fellow man so as to preserve our own freedoms?

    My concern with externality theory is that it promotes sensitivity, querlousness, and general butthurt.

  6. Patrick  •  Dec 20, 2012 @9:57 am

    Munger, by the way, ran a great campaign for Governor of North Carolina as a Libertarian in 2008, setting the party's record for percentage of the vote in that contest.

  7. Bear (Carl; really)  •  Dec 20, 2012 @10:03 am

    Patrick: "What he questions is whether an excise tax on their enjoyment is an efficient or wise means to compensate those affected."

    Well, since none of those excise taxes have ever been paid to me — and as "Carl" I assume I must be one of those unwilling participants — I'm inclined to say that particular question has been answered. Pretty much Pigou suspected.

  8. Grandy  •  Dec 20, 2012 @10:06 am

    My concern with externality theory is that it promotes sensitivity, querlousness, and general butthurt

    Mmmmmmmm, I think I have to take exception to this. It is the drive for a solution, rather certain kinds of solutions, that can lead to this. I don't think it's a problem inherent with "externality theory".

    Also Grandy + Coase 4ever.

    Munger, by the way, ran a great campaign for Governor of North Carolina as a Libertarian in 2008, setting the party's record for percentage of the vote in that contest.

    Is he a friend of yours or a friend of ours?

  9. Patrick  •  Dec 20, 2012 @10:08 am

    He is a Friend of Ours, as is his co-blogger, Via Angus.

  10. Grandy  •  Dec 20, 2012 @10:10 am

    Excellent.

  11. naught_for_naught  •  Dec 20, 2012 @10:15 am

    Fair enough, Ken. Can we say then that the existence of negative externalities which have intangible costs, based on the subjectivity of the affected, demonstrates the need for a negative-externality taxonomy? An intelligent classification system could provide the attributes necessary to intelligently address different classes of effects.

    Paging Dr. Linnaeus

    Say, for example, we begin by distinguihing between externalities with intangible costs and those with measureable costs. In the measureable category, for example, we could look at the health costs associated with obesity as a negative externality attributable in some measure to the consumption of soda pop and fast food.

  12. Wilhelm Arcturus  •  Dec 20, 2012 @10:17 am

    @Bear – Oh, but we set up a special government bureau in order to distribute money to potato-related annoyance claims. So you or Carl just have to fill out for PCA-8172-A-2012 and submit that to be compensated for your annoyance. Of course, we had the raise the tax to cover the cost to the whole government department and then again to create an enforcement arm to counteract the huge and totally surprising amount of fraud.

    Sorry, I was also thinking "how does Carl benefit in this" and that was all I could come up with.

  13. Jess  •  Dec 20, 2012 @10:39 am

    What he questions is whether an excise tax on their enjoyment is an efficient or wise means to compensate those affected.

    Often the cost of the effort to account for something is greater than any realized benefit of accounting for it. When I merge that with what Munber states “The government has a knowledge problem just like everyone else.” I don’t see an outcome that would be efficient or wise. Mostly it seems more an opportunity to try to "force" manners on people through government interference.

    @Naught_for_Naught – you brought up on of my favorite pet peeves – people who blather on their cell phones in public places where manners should generally dictate they not. The worst offenders – and it happens a lot – are those women who feel somehow “compelled” to answer their cellphone when in the bathroom stall of the ladies rom. I must admit I’ve been known to shout “Really? Really what is so important you have to answer the phone in the bathroom?”

  14. Josh C  •  Dec 20, 2012 @10:43 am

    Actuall, excise taxes "going to the right place" is completely irrelevant. It's not about penalizing behavior, or compensating victims, it's about adjusting relative costs.

    Imagine a factory which makes toxic sludge. Each bucket of sludge can be trucked away, or dumped in a river. Trucking it away costs $10/bucket; dumping it causes $100/bucket in damages to folks downstream, but no costs to the factory. If you're trying to prevent dumping, you set an excise tax at $11/ bucket dumped. It doesn't matter whether the money you collect goes to downstreamers, or to education, or if you build a tiny money-fire out of it.

  15. Jeremy  •  Dec 20, 2012 @11:09 am

    A good example of negative externalities and government regulation is prostitution.

    If the government did not regulate prostitution in any way, i.e., it were completely free of any regulation or taxes, STDs would likely become a serious cultural issue to deal with. This is obvious from history, and even present-day in 3rd world areas.

    Where you see the absolute forbiddance of prostitution, you see the oppression of women. This shouldn't be surprising, restricting women from practicing the oldest profession is oppression of womens freedom.

    Where you see the act taxed and regulated (like Nevada) You see it practiced in a safe manner, allowing the ladies to make their money, house owners to be legitimate businessmen, a large drop in human trafficking, and customers protected by health inspections.

  16. Bear (Carl; really)  •  Dec 20, 2012 @11:29 am

    Wilhelm: "So you or Carl just have to fill out for PCA-8172-A-2012 and submit that to be compensated for your annoyance."

    I was going to, but then they cut down the trees to print more forms, and spoiled my view, and now I need to be compensated for that (and I live in NH; google "NH view tax" for just why that is so… ironic).

    The tricky thing about externalities is who gets to define them. Was the "externality" a real tangible harm or — as Ken noted — butthurt?

    Or… sometimes the "negative externality" seems to depend on "whodunnit". For fun there, google the "fines for animals killed oil industry wind power".

    [-slap- Bad Bear; bad troll!]

  17. eddie  •  Dec 20, 2012 @11:39 am

    “Really? Really what is so important you have to answer the phone in the bathroom?”

    What reason do you have for caring whether someone else talks on a cell phone in a bathroom?

    Okay, fine, maybe you don't like taking calls and dumps simultaneously, but why are you all butthurt over the fact that not everyone has the same aesthetic sensibilities that you do?

  18. Grandy  •  Dec 20, 2012 @11:51 am

    There are people who do not share my aesthetic sensibilities when it comes to moviegoing.

    These people are The Enemy. One day, a real rain will come. . .

  19. naught_for_naught  •  Dec 20, 2012 @12:16 pm

    What reason do you have for caring whether someone else talks on a cell phone in a bathroom?

    The oral ain't the problem, it's the aural.

  20. Paul Baxter  •  Dec 20, 2012 @1:12 pm

    An excellent example of this sort of problem is found in Jared Diamond's book, Collapse, where he describes the problem of the clean up of derelict mining operations. By his accounting, which I have neither the inclination nor the knowledge to challenge, were mining companies made to account for all of their eventual clean-up costs, it would virtually never be efficient to start a mine in the first place.

    These types of problems are numerous, and especially problematic within our individualistic/capitalistic society since we are quite reticent to impose societal good onto individual enterprises.

  21. Bear  •  Dec 20, 2012 @1:13 pm

    I've found that the easiest way to deal with folks using their cell phones in an inappropriate location (and generally at an inappropriate volume) is to join in their conversation: Pick out a stray comment prone to the weirdest possible out-of-context interpretation and go for it. Works every time, and provides lots of amusement for everyone else.

  22. Bren  •  Dec 20, 2012 @1:18 pm

    Examples like potato chips, cigars, and cell phones may only cause butthurt. If we use other examples, say pollution causing loss of fishing revenue, or car sales causing traffic delays for other drivers, we can easily find costs that represent an actual measurable shaft received by the third party.

    Another interesting fact about externalities not discussed is that "rights" isn't as much of an issue as transaction costs. For example in Josh C's example, if the downstream cost bearers can find a way to pay the factory $11 to dump, not truck, that's just as efficient (i.e it saves the $90 deadweight loss)

    That point has bearing on the "externalities=butthurt" argument because it means that the butthurt party could, for example, pay the potato chip eater to move OR themselves move away. (this is called the Coase Theorm)

  23. Bren  •  Dec 20, 2012 @1:19 pm

    darn, I screwed up my quote tags.

  24. naught_for_naught  •  Dec 20, 2012 @1:20 pm

    Pick out a stray comment prone to the weirdest possible out-of-context interpretation and go for it.

    Ignoring the homosexual connotation of this — would you please blow-poke my muse with an illustrative anecdote.

  25. Scott Jacobs  •  Dec 20, 2012 @1:28 pm

    I've moved to stand next to the person, called a friend, and started loudly talking about the other dude's conversation.

  26. Dan Irving  •  Dec 20, 2012 @1:30 pm

    "Munger, by the way, ran a great campaign for Governor of North Carolina as a Libertarian in 2008, setting the party's record for percentage of the vote in that contest."

    @Patrick – he got my vote that year. Unfortunately we got stuck with Bev …

  27. Scott Jacobs  •  Dec 20, 2012 @1:42 pm

    Don't bitch. In Illinois we get shitpiles like Quinn…

  28. opendna  •  Dec 20, 2012 @1:45 pm

    There are university Econ classes which teach market failures without mentioning imperfect information? Ironic.

  29. Anonymous  •  Dec 20, 2012 @1:57 pm

    A theoretically easy* solution would be to prevent the transaction unless Carl accepts. At this point, you have to pay Carl an amount of money that has equal utility to the utility he will otherwise lose in the transaction. If this is more than you are willing to pay, you don't get to perform the transaction. If this is less than or equal to what you are willing to pay neither first, second or third party incurs any loss of utility from the transaction.

    *Easy in a world with only three actors, all of them rational actors with perfect information

  30. Bear  •  Dec 20, 2012 @1:59 pm

    naught_for_naught:

    Upon hearing guy pleading with girlfriend [in loud, most masculinevoice]: Oh, darling! Just hang up on the bitch and come back to bed.

  31. ru  •  Dec 20, 2012 @2:05 pm

    On the cell phones in washrooms issue. The only real reason I object to it is that it seems to make women hesitant to flush, since that telltale sound will give away to their conversation partner where exactly they are. It is bad enough working in a public library where no men flush ever. But for the women to stop flushing is *doom*.

    My elegant solution? If I come into a public washroom and someone is talking on a cell phone, I go into a stall and flush the toilet first thing (regardless of it previous state of flushed-ness). It serves the purposes of cleaning the place up a bit, surreptitiously notifying the bathroom talker's conversation partner where they are, and amusing me!

  32. Jess  •  Dec 20, 2012 @2:11 pm

    @Eddie – I suppose because of something called manners. I would say it’s because I still have this misbegotten idea of thinking I’m a lady but that would simply cause the other readers here to have a snerk attack.

    @Bear @Scott – both of those ideas work as well. Amy Alkon describes doing the same and I think she has the right idea.

  33. Ken  •  Dec 20, 2012 @2:23 pm

    Prof. Munger made a memorable appearance in the second Keynes v. Hayek rap video, too.

  34. naught_for_naught  •  Dec 20, 2012 @2:41 pm

    Bear:
    Good…very good.

  35. Bear  •  Dec 20, 2012 @2:50 pm

    I like to imagine that he had a lot of explaining to do. And that he became far more circumspect about his phone calls.

  36. En Passant  •  Dec 20, 2012 @3:07 pm

    Jeremy wrote Dec 20, 2012 @11:09 am:

    A good example of negative externalities and government regulation is prostitution.

    If the government did not regulate prostitution in any way, i.e., it were completely free of any regulation or taxes, STDs would likely become a serious cultural issue to deal with. This is obvious from history, and even present-day in 3rd world areas.

    I think this ain't necessarily so, and it ain't so obvious.

    It assumes that prostitutes are incapable of rationality.

    Paging Maggie. Maggie, to the courtesy telephone, stat.

  37. Shane  •  Dec 20, 2012 @3:34 pm

    @Paul Baxter … I am not sure if you talking about the mines being on public or private land. If they are on public lands then you need to watch the little video on tragedy of the commons, if it is on private land then the cost of the land is decreased by the difference in price before and after the mining operation.

  38. Shane  •  Dec 20, 2012 @3:37 pm

    @ru … I know pronounce you capitalist. With that kind of thinking your fortune awaits. :)

  39. Anonymous  •  Dec 20, 2012 @4:29 pm

    "It assumes that prostitutes are incapable of rationality."

    Well (1), I generally assume humans are affected by all sorts of biases when attempting to think rationally and (2), what is "Rational" may well not be "Avoiding HIV at all costs," because e.g. "Earning enough my dealer won't kill me tomorrow" might just win out.

  40. Jeremy  •  Dec 20, 2012 @4:32 pm

    @En Passant • Dec 20, 2012 @3:07 pm

    It assumes that prostitutes are incapable of rationality.

    Not all prostitutes are pimp-free. Criminal/thuggish pimps tend to make their behavior less-than-rational.

  41. En Passant  •  Dec 20, 2012 @4:59 pm

    Jeremy wrote Dec 20, 2012 @4:32 pm:

    Not all prostitutes are pimp-free. Criminal/thuggish pimps tend to make their behavior less-than-rational.

    The original assertion was

    If the government did not regulate prostitution in any way, i.e., it were completely free of any regulation or taxes, STDs would likely become a serious cultural issue to deal with.

    If a pimp is one who holds a prostitute in involuntary servitude, then regulation that prohibits pimps is not a regulation of prostitution per se. It is a regulation of pimping, or regulation of involuntary servitude.

    Likewise, non-regulation or non-prohibition of drugs would decrease the price of drugs sufficiently that their price would not create the ersatz "pimp" of drug expenses.

    As I indicated in my first response, Maggie, who sometimes comments here (and is on the Popehat blog roll), has covered the issue of prostitution regulation far better than I can expect to do here.

  42. Brandon  •  Dec 20, 2012 @5:37 pm

    Two fantastic, Patrick-style posts about the Newtown shootings within a 24-hour period. I loved the first one, and applaud the subtlety of this one.

  43. Robert White  •  Dec 20, 2012 @8:31 pm

    Biggest problem with using taxation to ameliorate the externality is that the harmed third person is never made whole.

    Since the state is paid its tax for Al and Betty's happiness in proportion to Carl's injury, the state is incentiveized to maximize Carl's injury to the degree that it can then charge Betty and Al.

    If some means is made to remunerate Carl, then not only is Carl given incentive to experience more pain; but now Dave is given incentive to approach Al, Betty, and Carl so that he can be injured and remunerated as well.

    So imagine a micropayment system where everyone uses their cell phones to document and thereby tax the misery created by Al and Betty and suffered by an entire alphabet soup of persons influenced by the attractive nuisance of Betty's happy munching.

    Would Betty then be injured by the predation of Dave-through Xavier's unwanted attendance of her own actions?

    Would Al be injured by the clog of non-purchasers blocking access to his potato chip vending operation?

    How much micro-payment charge-back would Al and Betty deserve?

    Could Yancy and Zelda charge Carl-through-Xavier for blocking their access to Betty (the crowd is getting thick by now) and preventing them their right to harvest their opportunity for payment?

    The problem with all reparations schemes is that they are recursive and disproportionate because the reparations tend to be based on subjective relativism. Apportionment of guilt and impact of exposure are never uniform. The system cannot be deterministic, therefore it can not be codified.

    Once you take the lid off the can, the "but where is _mine_?" effect makes reparation untenable.

    So only punitive activity is possible. But that is again incentive. The state (taxation authority) is not immune to profit seeking.

    So the only solution, aside from everybody growing a pair and asking Betty to STFU or just chalking things up to the fact that life is flawed, is if the taxation authority nor the involved parties gain _any_ benefit from the tax.

    Even then, the mendacious Ernie could interpose himself just for the satisfaction of causing Betty some pain.

    We know spoilsports exist… we have the internet as proof of that.

    The problem is NP complete.

  44. Robert White  •  Dec 20, 2012 @8:35 pm

    One can be a "pimp" without the "servitude" being "involuntary".

    I have been pimped out by a head-hunter for jobs. In places where prostitution is legal there are still madams and pimps, if by different names.

    The movie Night Shift was a voluntary pimping scenario, and pretty funny.

    Your predicate that "pimp is bad" presupposes that "sex work" is "involuntary servitude". This is a perceived norm, and it may well be normal, but it isn't a defined predicate.

    There is too much baby in your bathwater, please get a strainer before proceeding with this course of action.

  45. Brett Middleton  •  Dec 20, 2012 @8:44 pm

    Aside from the issue of how Carl gets his compensation from a tax that goes to the government, I see another problem. What about a buyer who is always careful not to crunch within earshot of others? She still has to pay the tax, right? So the tax is imposing the cost of the externality regardless of whether it actually exists, unlike the case where the sludge-producing company only has to pay when and if they impose costs on those downstream.

    The same problem holds for the obesity example, since everyone who drinks soda has to pay the obesity tax regardless of whether they ever become obese or impose health-care costs on others as a result of drinking soda.

  46. MathMage  •  Dec 20, 2012 @10:47 pm

    The issue I had with this video (and the other one at the Learn Liberty site, by Sean Mulholland) is that no explanation is made of how to generate the stated conditions under which the Coase Theorem will prevail. Without that, it's just a "Private enterprise will solve all problems!" argument. If private enterprise will solve this problem, why is it still there? What should be done to open the way for private enterprise to solve the problem? Who will do it? How will they make sure what they are doing is working? And so on. These are the questions I have after watching the video, and any explanations would be greatly appreciated.

  47. Anonymous  •  Dec 21, 2012 @1:46 am

    "The same problem holds for the obesity example, since everyone who drinks soda has to pay the obesity tax regardless of whether they ever become obese or impose health-care costs on others as a result of drinking soda."

    Well if the tax is e.g. Y cent for each X grams of sugar sold, you are taxed to the degree that you are likely to become obese from this sugar consumption.

  48. Anonymous  •  Dec 21, 2012 @1:47 am

    "Since the state is paid its tax for Al and Betty's happiness in proportion to Carl's injury, the state is incentiveized to maximize Carl's injury to the degree that it can then charge Betty and Al."

    Only if you assume The State, as opposed to individuals within the state, operates from a profit motive. If that's the case, get a better state.

  49. Brett Middleton  •  Dec 21, 2012 @5:10 am

    "Well if the tax is e.g. Y cent for each X grams of sugar sold, you are taxed to the degree that you are likely to become obese from this sugar consumption."

    The tax is still based on someone's guess at a likelihood rather than a certainty. At the time the tax is collected, no actual harm has been done for which anyone needs to be made whole, and that harm may never materialize. Doesn't that tax become a negative externality imposed on those payers who never incurred additional health-care costs? How do we compensate them for that harm?

  50. S. Weasel  •  Dec 21, 2012 @6:23 am

    Anyway, I'd like to see some evidence that obesity really costs money. From a taxation standpoint, the best thing you can do is live a productive life and die the day you retire. The worst thing you can do is live long enough to get one or more of the really expensive diseases, like the dementias. Bring back smoking, says I.

  51. naught_for_naught  •  Dec 21, 2012 @9:29 am

    The tax is still based on someone's guess at a likelihood rather than a certainty.

    Are you implying that because we can't be exactly certain of the dollar cost of the externality that we shouldn't do anything at all, eventhough any reasonable person would agree that there is a significant cost?

    Anyway, I'd like to see some evidence that obesity really costs money.

    Googole "scholarly articles on obesity related healthcare costs" and help yourself. Not being familiar with the research is not a credible rebuttal to a fact-based argument.

  52. S. Weasel  •  Dec 21, 2012 @10:13 am

    Yes. Because scholarly articles on controversial topics are pure, unsullied streams of unbiased research. You can tell that, because they all agree with each other.

  53. David Schwartz  •  Dec 21, 2012 @10:28 am

    You don't want the tax to compensate those harmed by the externality because that reduces their incentive to adjust their own behavior to minimize that harm. You just want the tax to balance the incentives of those who create the externality.

  54. Grifter  •  Dec 21, 2012 @10:32 am

    @S. Weasel:

    While I do not entirely disagree with what you just sarcastically said, you asked for evidence, and someone told you it was readily available…it's not really fair to just then dismiss it all out of hand.

  55. S. Weasel  •  Dec 21, 2012 @10:37 am

    "Google it" is not all that helpful, Grifter, and his tone contained about 53% more ass than I like in my responses.

    Back of the envelope calculations tell me that dying young of whatever is going to be better in a socialized medicine system than living long enough to go through several knees and hips, a cancer and its aftermath and limp all the way through to incapacity and dementia. Our cohorts at the moment are reaching the "expensive diseases" stage of life and it makes me wish I'd never quit smoking.

  56. Grifter  •  Dec 21, 2012 @10:52 am

    @S. Weasel:

    While I agree with you about the envelope calculations re: living longer, and most people would, I think, the first part of your sentence wasn't about that. You implied you didn't really believe being obese costs money.

    Is that not like saying "I'd like to see some evidence that sugary drinks and no brushing cause tooth decay", and wouldn't you expect someone to say "It's pretty obvious to anyone who has even a passing familiarity with the issues at hand", or, in snark terms "Google it"? And you response then sounds like someone who replies "Oh, sure, because scholarly articles by the dentist cabal are pure, unsullied streams of research".

    From personal experience (not of being, but of seeing): it is a trivial fact that at a certain level of obesity, you will have more problems. Where the line of "obesity" is, and where our country actually falls in relation to that, is a matter of quite a bit of controversial debate, but if you weigh 800 pounds, you will have more problems, and those problems will be more costly, than someone who weighs a reasonable amount. (Just think of how many people have to help a sumo wrestler with a sprained ankle, vs. a "normal" person, let alone the fact that despite their image as "healthy fat people" they actually often do have all the stereotypical problems).

    Perhaps you were getting at the idea that the earlier death offsets the higher cost of care, and to that I say: unfortunately not, both because we've gotten too good at healthcare, and because the shit they need is so expensive. Even a so-called "whale tarp" is hundreds of dollars, vs. the disposable $20 version that supports most "normals". But if that was your point it was unclear to me at least.

  57. S. Weasel  •  Dec 21, 2012 @10:59 am

    I live in England. I'll bet you a nickel old people are costing us more than fat people.

  58. naught_for_naught  •  Dec 21, 2012 @11:07 am

    Yes. Because scholarly articles on controversial topics are pure, unsullied streams of unbiased research. You can tell that, because they all agree with each other.

    Let's look at this piece by piece:

    1. What constitutes a "controversy" in scientific study?

    a) genuine disagreement among scientists with expertise in the area of study who through the application of scientific methods and disagree — for any number of reasons: inability to reliably reproduce results; insufficient data; erroneous conclusions based on available data, etc.

    b) crackpots and radio personalities who don't like the political implications of scientific findings and blow smoke to create the illusion of controversy.

    (Speaking of smoke, are we at least convinced that the science behind the health effects of smoking is real, or do we still give credence to the cigarette-lobbies fabricated controversy? )

    2. Is some science crap, and, if so, does that mean we can intelligently dismiss any scientific finding that we choose?

    The short answer is yes and no. There is a lot of bad science being produced. A lot of it is funded by the HIH, a sore spot for many. A good percentage of medical research published cannot be reproduced in other labs. That doesn't mean that you can condemn the science as a whole or dismiss any finding that you want to out of hand. Bad findings are part of science. That's how it works. It's something close to a process of successive approximation. Newtonian physics don't stand up in the sub-atomic world, but you're an idiot to think that his theory of gravitation is a fraud.

    3. Does consensus imply corruption or collusion in science?

    Uh, no. In fact the more science there is on a given question, the greater the probability that the conclusions are true. Is that always the case? Nope, but it is the vast majority of the time. The truth is that human beings and their institutions are subject to being both wrong and corrupt. This includes science, but science, unlike political punditry, at least has a method for checking itself.

    And to those who are plagued by an all-encompassing ennui brought on by the hard work of living in a complex and challenging world, you should know this: snarking and gassing about the uncertainty of things just makes you part of the noise that the people who do the real work have to filter out. homage to Nate Silverberg

  59. naught_for_naught  •  Dec 21, 2012 @11:22 am

    "..and his tone contained about 53% more ass than I like in my responses."

    Well then I was able to calibrate successfully, because my first response was to go the whole hog.

  60. Grifter  •  Dec 21, 2012 @11:25 am

    @S. Weasel:

    Of course, had you googled it in the first place (like I just did) you'd find that (at least in areas with socialized medicine), there is at least one study that supports your assertion, albeit for a grand total of around 30K:

    http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0050029

    However, I call shenanigans on some of its methodology (but that gets us veering into a long offtopic talk).

    (Dammit, I'll say one thing anyway: the BMI is inherently bullshit, and any study which uses it is going to be skewed. I, for example, qualify as "overweight", only because I've gained weight since I started going to the damn gym…so my "healthy activities" have put me from BMI 24 into BMI 27,and into a class that also includes people who don't do any physical exertion at all.)

    I would like to point out that I'm not advocating necessarily for taxation, but just trying to get the premises straight. If we don't know whether the externality is positive or negative, we can't have a reasonable debate on what to do about it, no? (I suppose unless we start talking about factoring in the fact that we don't know)

  61. princessartemis  •  Dec 21, 2012 @12:00 pm

    I'm really glad Professor Munger didn't choose to illustrate his point with a pack of gum. In my experience, informing someone they are eating chips loudly is a good way to get them to a. do nothing or b. eat louder. Leaving me, who has sensory issues and a movement disorder triggered by same to move away. Only to find that when I move away from Betty, Dave just opened a pack of gum, which is exponentially worse and, in my experience, even more resistant to polite suggestions to chew less loudly. Well, even if there were a department of compensating people for having to listen to gum chewing, I am pretty certain that even if it handed out $100 bills on each occasion, I wouldn't subject myself to the real physical pain the sounds tend to cause me. I am certain a whole bunch of people would suddenly "develop" my symptoms in an attempt to cash in.

    I understand the concept of externalities, but have trouble seeing how a tax can really ameliorate them.

  62. AlphaCentauri  •  Dec 21, 2012 @3:40 pm

    The problem with his argument is that the fact that you can't quantify the harm precisely doesn't mean it's better for people suffering harm to have no recourse at all. The potato chip example may be too silly to talk about other than to explain the general concept.

    Tobacco taxes are supposed to offset the cost of public costs of smoking, such as the uncompensated care of cancer, lung disease, and and cardiovascular disease. To the extent those people are on Medicare, or to the extent they are bankrupted and go on Medicaid, then the tax is paid to at least one entity suffering harm. It doesn't address the hospitals who cared for uninsured emphysema patients who showed up in the emergency room and died after a long ICU stay. It doesn't compensate the colleges that extended financial aid to the children of parents who died in their 40s and 50s of tobacco related causes. Etc. But it at least slightly reduces the tax burden on other taxpayers for those smoking related costs. And it does tend to reduce the number of cigarettes people smoke when the cost is higher.

    But the cost of pollution and runoff is a problem. Such businesses tend to be zoned to areas where they won't cause problems for their politically bounded areas. But if a shopping mall is built in an exurb, the taxes all go to the small town where it is located, but the cost of homes damaged by flooding from the increased runoff is usually borne by homeowners in a distant and less well-financed municipality. Otherwise the zoning probably wouldn't have been approved.

    The cost of deregulating drugs tends to only be evaluated in terms of reducing the cost of drug-related gang crime. But parents using crack or meth cannot parent. Their children are either cared for by family members or foster parents, or worse, they live in the parents' home while being completely ignored, finding whatever food they can find in the house and wandering out on the street at night mooching from neighbors. There is a high societal cost from the mental effects on those neglected children, who may grow up to be sociopaths. Since the movement to legalize drugs generally assumes the crime will go down because the cost will be less without the risk of arrest, how much can you tax that transaction before you drive the users back to illegal sources anyway?

  63. markm  •  Dec 26, 2012 @8:14 pm

    Alphacentauri: "But parents using crack or meth cannot parent." No, parents using crack or meth may or may not be able to keep up with their parental responsibilities – not all drug users are addicts, and not all addicts are nonfunctional in ordinary life. (Consider employment drug testing – if drugs were as bad as drug warriors claim, the users would already have been fired for non-performance.) But parents who are in jail *definitely* cannot parent.

  64. AlphaCentauri  •  Dec 27, 2012 @12:48 am

    markm — you're assuming the use will remain the same if there is no limitation on supply. Since marijuana possession has been changed to the equivalent of a traffic offense in Philadelphia, we're seeing pot users smoking quantities similar to tobacco users. Previously, smoking ten joints a day used to be very unusual. If the same uptick in use occurred with crack and meth, the users wouldn't stay functional long. People who actually live in drug infested neighborhoods tend to react with incredulity when told there are people who think crack should be legal.

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