I have no idea how many times I've used the words "externality" or "externalities" on this blog. I believe companies should have to pay for the externalities inherent in their products and ways of doing business, especially if they believe that markets are the fairest way of running things.
That's not how things are, of course. Instead, companies do their best to skate for free on every externality they can get away with. A major example of that is the failure of the U.S. to pass a carbon tax, or cap and trade (or anything similar, whatever you want to call it) at some point in the past 30 years.
Pioneer Press business columnist Ed Lotterman today told me about a bit of that history. I've heard/read a fair amount about the legislative aspects under and after Bill Clinton, but this was news to me.
Before Clinton, and before climate had become much of a partisan issue, there was George H.W. Bush. He had personal concern for the environment (Lotterman says), and economists and policymakers had come around to the idea of using markets as a way to address pollution and harm reduction.
Unfortunately (for all of us!) Bush was also stuck with the mantra of deficit reduction, and after he had been in office for a year, his OMB director, Dick Darman, went before Congress and concentrated on that, leaving out the idea of carbon taxes. Oops.
This accounts for why Lotterman started his column with the words, "Damn you, Dick Darman!"
I don't know if it's really that one guy's fault. Seems a bit hard to believe there wasn't more to it than that. But it has zero chance of passing now.
Lotterman ended with another fact I've never heard: "Good estimates are that [our Congressional] deadlock is costing us about as high a fraction of GDP as that raised by the personal income tax."
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