Comments on: Mike and Me on Externalities

By: Dirk Friedrich

Dirk Friedrich — Sat, 31 May 2008 13:55:40 +0000

I am not sure if we talk about the same thing. Tort liabilities under German law require the tortfeasor’s doing to be unlawful. However, since one cannot act unlawful if one complies with federal emission guidelines there is no tort.

So, even if one could prove that a certain polluter’s emissions have caused certain harm there would be no case that could be successfully pursued in court. Hence, there is no way for the (German) legal system to find ways dealing with polluters. Statutory law has “crowded out” judicial solutions to the problem.

By: Mike Moffatt

Mike Moffatt — Sat, 31 May 2008 13:18:47 +0000

“There is a law or federal regulation that permits the emission of air polluting stuff within certain limits. Insofar as the polluter complies with such regulation he cannot be sued successfully. At least that is how it works in the country I live.”

That sounds a lot like California’s Prop 65. Or the McDonald’s coffee case:

http://www.lectlaw.com/files/cur78.htm

But keep in mind that the basis of these suits isn’t that property rights are being violated.. it’s that companies/individuals are violating some EPA/FDA/OEHHA standard.

By: aje

aje — Sat, 31 May 2008 10:42:01 +0000

“how can I win in a court room against the guilty parties”

The purpose of a court room is to establish who the guilty parties are. If you cannot compile a convincing case that X causes Y and that the defendant has done X then it suggests one of two things. Either there is regulatory protection (as Dirk says), or we lack sufficient knowledge to understand the complexities of the issue.

By: Dirk Friedrich

Dirk Friedrich — Sat, 31 May 2008 08:11:12 +0000

I’d opt for c):
There is a law or federal regulation that permits the emission of air polluting stuff within certain limits. Insofar as the polluter complies with such regulation he cannot be sued successfully. At least that is how it works in the country I live.

By: Mike Moffatt

Mike Moffatt — Fri, 30 May 2008 21:47:26 +0000

“The fact that he doesn’t know who to sue tells us more about the problem of trying to quantify externalities than about current institutional remedies. If we accept Demsetz’s argument about externalities becoming internalised once there’s an efficiency criteria for doing so, we can view legal disputes as being a step in this process. If we don’t know who to sue it implies that either (a) it’s not a massive problem. or (b) it is hard to prove culpability. If the latter than surely that undermines the case for regulation.”

That’s not what I meant (though I can see how you got that implication).

What I meant was “how can I win in a court room against the guilty parties”.

I’ll put it a different way:

Every year in Canada there are 6,000 deaths from smog in Canada due to short-term exposure to air pollution, according to the Health and Stroke Foundation. We can identify the sourcesr of the pollution and we can identify some of the victims – go to a respiratory ward on a smoggy day and you will see them.

If using the court system to reduce air pollution would work, then why aren’t “ambulance chasing” lawyers going to respiratory wards at hospitals during smog days? Either it’s because a) common-law remedies don’t work OR b) lawyers are irrational/stupid and leaving millions/billions of dollars at the table.

Which is it?

By: Externalities . . . Again « The Everyday Economist

Externalities . . . Again « The Everyday Economist — Fri, 30 May 2008 18:39:22 +0000

[...] Klein says it best: Mike’s response, based on more detailed comments here, is interesting, but to my mind misses [...]

By: aje

aje — Fri, 30 May 2008 14:56:50 +0000

To some extent Mike’s question demonstrates the problem with Pigouvian taxes. The fact that he doesn’t know who to sue tells us more about the problem of trying to quantify externalities than about current institutional remedies. If we accept Demsetz’s argument about externalities becoming internalised once there’s an efficiency criteria for doing so, we can view legal disputes as being a step in this process. If we don’t know who to sue it implies that either (a) it’s not a massive problem. or (b) it is hard to prove culpability. If the latter than surely that undermines the case for regulation.