You cannot Always Price Externalities

Erik Engheim
7 min readJun 23, 2020

Property business and financial sector may very well benefit from these restrictions, but that is only part of the 0.1%. Many other of the 0.1% rely on cheap land for their business and see no benefit in expensive land.

And I don’t think there is anything that points to urban planners, environmentalists etc being in cahoots with the 1%. They have too many other divirging interests. In Norway e.g. the kind of parties pushing regulations and restrictions on land use are strongly disliked by the 0.1%. The financial elite all vote on the people in favor of deregulation.

The construction industry which is large, have no interest in such policies. They want to build as much as possible.

I honestly think you are on a bit think ice on this kind of specualtion. It does not add up with respect to the political constellations one normally observes. That applies even to the US. The states pushing deregulation and sprawl are typically run by Republicans. The very same people who primarily cater to the 0.1%

Are you unaware of the liberal financial support by the speculative 0.1%, of the ecological movement as a whole?

I think that is a rather speculative claim, which would have to be substantiated better. People are not mindless puppets. I support a lot of the agenda I think you are against. But not because some rich James Bond villain sitting in the shadows have manipulated me. In my opinion support for these policies naturally develop through a hollistic analysis of the situation.

As I said before, I believe the two of us have somewhat diverging opinos on this because you are talking a cool headed spreadsheet sort of approach to the problem, while I am considering it from a more hollistic perspective. I place more value on many quantities which are hard to measure the value of.

Who were the founders of the original “Club of Rome”? Of course the “producers” who might also be in the 0.1% are different; but what makes them “more evil” than cunning extractors of wealth at everyone else’s expense in return for absolutely no goods or services?

Again this is far too speculative. Intellectuals, scientists and businessmen must be able to have a genuine concern for the planet without it necessarily being a plot against the public. I this hypothis was true then big business and the financial elite should primarily be supporting the hard left. The pretty much never do. Quite the contrary they tend to support conservatives and very pro capitalism liberals.

This isn’t rocket science. Business leaders will naturally tend to suppor those with the most business friendly policies and those people tend to be on the right. They are not going to vote for people on the left pushing wealth redistribution, higher coprorate taxes, more regulations etc.

if someone achieves low consumption and low emissions living outside the urban fringe, why should we hinder them?

It was never about their consumption but their land use. I will answer from a Norwegian and Dutch perspective as that is easiest for me. In Norway if we let people setup a property wherever they wanted then we would risk loosing:

1. Agricultural land, of which we have very limited supply.
2. Nature that people enjoy hiking in, camping, jogging, picking berries or whatever. This is something of shared value. Why should we let single individuals selfishly take that away from us at their leisure?

In the Netherlands if you had no urban planning, urban areas would merge, and you would end up with enermous metropolitan areas. You would destroy what makes such a densely populated country livable. Their strict urban planning means the dutch have an accessible countryside which families can take their children biking in or groups of students can take bike trips between cities. Without this urban planning, the country would turn into a dystopian urban jungle.

It was common for environmentalists in the 1970’s to advocate “closer to nature” living; growing your own food, using air and sunshine instead of power clothes dryers, burning biomass for heating and cooking,

While I do have some fascination for some of the ideas of these people, I do think most of them are kind of idiots. Anyone analyzing the world we live in more detail will see that there is aboslutely no way that people can live “back to nature” on a planet with 7 billion people. We are doomed to modern life whether we like it or not.

But environmentalism lost its way, becoming useful idiots for speculative capitalists, and partly quasi-religious, nature now becoming so sacred that humans can’t be allowed to enjoy living in it!

Yes a lot of these capitalists have a shallow interest in a green shift. But often it doesn’t matter. It is like speed demons who get a Tesla. Do they care about the environment? No. They just want a fast and fun car. But does it matter? In the end they help propel the green movement forward. So what if you invest in wind and solar only to make money? Fake green interest is better than no interest.

I like your question “what if large numbers of people decide to do it”. If it uses little energy and creates little emissions or pollution, then what is the problem?

Because it was never about the emissions from using a plot of land but from the fact that you displace whatever was there before. Untouched nature, perhaps with animals and birds. Building a sewer system, connecting to a power grid etc will bring more enviornmental destruction and impact. Not to mention that you ruin the experience for people traveling in that nature. Imagine walking through a forrest to look at nature and then there are houses dotted all over. Yes sometimes we must take forrest area for urban dwelling. But that is a decision made at a political level where citizens can give input. Leaving that decision up to an individual is reckless. What right does a single individual have to take a part of nature enjoyed by many people?

Where space is not scarce, is where future urban growth should go, in a new “sustainable low density” form

We humans are taking away more and more land from the wild. The amount of nature which is wild is dwindling.

The internal combustion engine and automobiles actually “retired” several times more land than was “lost to urban sprawl” since.

That may be true in parts of the west. I doubt it is true all across the world. Otherwise we would not see massive expansion of areas used for agriculture in say Brazil, where forrests are burned.

The second problem is that agriculture today is far more intensive and monocultural. Large amounts of insects and amphibians are dying.

It is easy to price externalities by simply taxing the things that cause those externalities.

While this is a direction I want to go more towards, it is simply not as easy as you make it. Yes we can tax fossil fuels locally. However we have e.g. no good way of taxing airplane fuel. That would require international cooperation, which will not be easy.

Also in a free market and free trade world, anybody who taxes externalities as much as they should, would end up with a sever competitive disadvantage if not others do the same. We could tax production using a lot of fossil fuels in Europe only to see that industry move to China.

I do want to go in that direction, but that also means rolling back decades of trade liberalization, unless we can make international agreements. But countries are prone to cheat and sabotage this.

Vested interests and unholy alliances are simply pushing the “ban” and “ration” approaches too hard.

Yes as someone quite liberal minded I also think this is often a problem. But sometimes I do think that is the more pragmatic solution, because setting up the system to tax and measure usage of something is simply too difficult and impractical. Stuff like window tax back in the day was pretty stupid, by today’s eyes. But they had the practical problem of coming up with a simple way of measuring wealth in a rather primitive state aparatus. Despite our modern society, there are many things we cannot easily measure.

It is fascinating how correct he was even though the evil consequences of “rationing land” did not become visible until following decades.

It depends of course on what you value. When I look at urban development, the kind of cities you praise are the disasters, while the kind of cities you think are disasters are the ones I would praise.

You got to understand that the reason cities like Houston aren’t everywhere isn’t because evil bankers want to profit from high land value. It is because a large number of people simply don’t like that kind of city. I hate it. And when voting I will vote for anything that hinders an urban sprawl monstrosity like that from becoming reality where I live.

If you look at the essays on my own author page, starting from the oldest one and working backwards, you will see that explaining these issues has always been my focus.

I will look at some of the authors and people you references to learn more about your perspective. But the fundamental problem is that our starting point is too different. Yes I think we would both like to see more active pricing of externalities. However I don’t see it is a silver bullet. I also see a much more important and bigger role for the collective will.

It is not without reason that I drifted into democratic socialism. I started as a pretty liberal almost libertarian guy. However the more I learned about free market economics, the more I got pushed towards socialism. Prisoners dilemma, asymmetric information in the market, planned obsolesce, tragedy of the commons, manufactured need.

And perhaps the most fundamental problem of market economics: Every company is founded on the idea of increasing sales and consumption.

But I am not a diehard. I know markets work really well in many areas. I just don’t really believe in any silver bullets. I don’t think you can apply one principle to every possible problem. Sometimes you need markets. Sometimes you need planned economics. Sometimes you need nudges. Sometimes you need bans.

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Erik Engheim
Erik Engheim

Written by Erik Engheim

Geek dad, living in Oslo, Norway with passion for UX, Julia programming, science, teaching, reading and writing.

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