Next week, ECON 155 Urban Economics will take up pollution.
And like every other economic good we have already considered or will take up, we will discover that this good is differentially distributed by race, ethnicity, educational achievement, and last but not least, wealth.
Our standard marginal analysis holds that in a world with many goods and limited resources, every good — including pollution — has its optimum quantity. Moreover, each consumer will display a slightly different “basket of goods” that she prefers and among these goods will display a slightly different indifference curve, the curve that measures how many of one good any consumer will exchange for some number of another good.
Like every good, the supply of and demand for pollution is constrained by forces that economists can represent as variables. So, for example, a community whose gainfully employed adult population is employed by a paint production facility will be constrained in its decisions over how to handle the toxic runoff by the fact that regulating the toxic runoff will necessarily place downward pressure on marginal returns and, as a consequence, wages may be depressed and employees may lose their employment. Along any indifference curve for any consumer in this city there will be some amount of pollution she will tolerate (the optimum level of pollution) in order not to jeopardize her employment. Her employment and livelihood are in this way constraints that shape acceptable levels of pollution.
Now let us assume that any employee (employee x) receives her healthcare through her employer. Let us further assume that employee x has no deductible. Her healthcare is essentially free. And yet on account of the toxic waste produced by her plant, the life expectancy of employee x is reduced by some measurable number of years and months. This cost, the limit on employee x‘s life expectancy, is a further constraint that would have to be factored into the marginal benefits and marginal costs associated with both her continued employment and the level of pollution she is willing to tolerate.
Now let us further assume that consumers who enjoy wealth are at liberty to purchase housing at a safe distance from the paint production facility. Because it is not subject to toxic waste, property values increase as we move away from the facility. As property values increase so too do the revenues that municipal governments raise from properties. These revenues in turn pay for superior schools, well-maintained parks, a public auditorium and public museum. The school district that falls closer to the plant is dependent on the lower property values of homes in the district. The municipality cannot raise funds sufficient for an auditorium, parks, museums, and so forth.
In real terms, this too is an “externality” produced by the paint production facility. It is a “cost” born by consumers. But, since they have “chosen” to live in the toxic district and “chosen” to work at the paint plant, marginal analysis faultlessly concludes that along their indifference curves members of this community find the costs arising from pollution — in poor health, shorter life expectancy, no parks, no auditorium, no museum, and poorly funded and staffed schools — exactly equal to the marginal benefit they derive from employment at the paint plant.
But now let us hold that toxic-free environments, good health, superior education, and safe, secure, affordable homes in livable neighborhoods are among the “public goods” citizens in a republic can impose upon their own private households. This intervention into the market, as we have seen, gives rise to both marginal benefits and marginal costs. But the public, whose sole duty it is to preserve res publica, the republic, has determined that these goods are among the goods that are non-negotiable, goods for the sake of which and in pursuit of which they are willing and eager to endure marginal losses in other areas.
So, for example, to preserve their employment at the paint plant, they might be willing to be taxed at a higher rate and designate their revenues for site remediation and technological retooling in exchange for a greater share in their place of employment and better health.
Yet, as this example illustrates, there is nothing that by its nature is either public or private. Some one — whether a public person or a private — will determine the value communities place on goods, including pollution. And, there will always be tradeoffs. Yet, some goods — liberty, for example — are non-negotiable in a republic. However high their cost, such goods will be protected. The question is, what goods enjoy this status: education? Health? Security? Leisure? Privacy? Speech? Association?
In these cases, we will not count the cost, because we recognize that the integrity of our community itself rests on these goods. Which brings us back to pollution.
Pollution — our tolerance of it and our willingness to distribute it differentially — is the clearest indication of the kind of society we are: a tyranny, an oligarchy, a despotism, a democracy, or a republic. A republic, in which all wealth is shared, will distribute pollution equally. A democracy will distribute pollution by vote. A despotism will distribute pollution privately. An oligarchy will leave only the few pollution-free. And a tyranny will impose pollution on the weak.
Economists will, in each instance, be equipped to measure the marginal cost and benefit of each distribution of goods; who benefits, who loses. But in no instance will economists be able to say which distribution is preferable. Why? Because economics, by definition, characterizes or models how decisions are, in fact, made; not how they should be made. Which means that a society that rests upon private enterprise, by definition, has no means of telling whether the direction it is moving is good or bad.
Economists can only tell us whether our policies are likely to lead to the outcomes we desire; but they cannot tell us which outcomes we should desire.
Neoliberal thinkers mistake this absence of guidance for liberty. In fact, it is the opposite of liberty. Liberty are the positive conditions that give rise to responsible action; that make it possible for us to respond knowingly, intelligently, responsibly. For 2.4M years, in all traditions — Jewish, Hindu, Muslim, Christian, Buddhist, Taoist — in all traditions, these conditions have been identical: superior learning, good health, security, and sufficient leisure to make responsible decisions.
The problem, then, that pollution presents to our current communities is that many of our communities have mistaken the absence of constraint for positive liberty. This, however, is a uniquely private, economic, understanding of liberty. By definition, it has no rudder, no guidance, no compass. It follows its nose. When we enable publics to govern themselves — when we empower republics — they are better suited than private households to reflect critically on the conditions that give rise to freedom.
We are quickly approaching and may already have passed the point where massive, systemic environmental collapse is inevitable. Should this prove true, it will be because we did not cultivate publics capable of and empowered to preserve republican values and institutions.