The Case Against Freedom, Part I: What Are 'Externalities'?

Nowadays, whenever I attend a public meeting and stand alongside fellow Americans to say the Pledge of Allegiance, I look around the room and wonder how many truly believe in “liberty and justice for all.” To the extent each man or woman may claim allegiance to that sentiment, I wonder how each would define it.

Increasingly, it seems as though we find another argument against freedom every which way we turn, another push for control, another campaign for restriction or seizure. Far from the fringe exception to the libertarian rule, these arguments proliferate throughout the culture, applied to everything from healthcare to marriage, from finance to drugs.

In oh so many ways, as a people, we don’t truly believe in either liberty or justice. We modify the words to cut neatly around the areas of life where we personally prefer choice, while excluding those areas where we’d prefer to dictate the choices of others.

Unfortunately, the nature of reality is such that one cannot eat her cake and have it too. We cannot sustainably defend liberty in one area of life while suffering its compromise in another. Without a cohesive and comprehensive philosophical defense of liberty, any practical manifestation will whither under shifting political winds.

One such gust blows from the desk of Robert Kuttner. Author of a provocative article at The American Prospect, where he serves as co-founder and co-editor, Kuttner cannot fairly be marginalized as an insignificant voice. His bio boasts status as “professor at Brandeis University’s Heller School, and a distinguished senior fellow of the think tank Demos.” Kuttner has written for Business Week and the Boston Globe. This man shapes minds and influences opinions.

Kuttner believes liberty is overrated. He believes folks like me, who stand firmly upon the principle of individual rights, suffer from “The Libertarian Delusion.” His case against freedom deserves point-by-point scrutiny.

He begins with a general condemnation of the market, portraying it as a mechanism unfit to meet the needs of men:

In an Adam Smith world, the interplay of supply and demand yields a price that signals producers what to make and investors where to put their capital. The more that government interferes with this sublime discipline, the more bureaucrats deflect the market from its true path.

But in the world where we actually live, markets do not produce the “right” price. There are many small examples of this failure, but also three immense ones that should have discredited the libertarian premise by now. Global climate change is the most momentous… carbon is destroying a livable planet. Markets are not competent to price this problem. Only governments can do that. In formal economics, this anomaly is described by the bloodless word “externality”—meaning costs (or benefits) external to the immediate transaction. Libertarian economists treat externalities as minor exceptions.

Not being a libertarian economist, I can’t speak for them. From my perch as a layman intent upon upholding individual rights, externalities are often petty gripes overwrought into invalid claims upon the lives of others.

Externalities are real and come in both positive and negative forms. You build a house. Someone builds a nicer one next door. Your property value goes up. That’s a benefit external to the transaction, a positive externality, which you enjoy for the dumb luck of living next door.

Conversely, you build the same house. A bum moves in next door and trashes the joint, leaving garbage everywhere and never mowing the lawn. That’s a cost external to the transaction, a negative externality, which you suffer for the dumb luck of living next door.

Of course, in that particular hypothetical, the harm can be quantified and accounted for objectively. A case can be made against the offending neighbor, and legal action can be taken to correct the problem. We call that a tort. In situations where a particular tort can be anticipated, we craft nuisance law (i.e. mowing ordinances).

When Kuttner evokes externalities, he goes beyond torts. His particular example, anthropogenic catastrophic climate change, cannot stand as a case brought against an offending party in a court of law. In an essay for The Atlas Society addressing the topic of externalities, author Andrew Bissell explains:

Some cases [of negative externalities eroding property rights] are obvious; dumping toxic waste on a neighbor’s lawn is flagrant destruction of his property and probably poses a risk of serious physical harm. But what about driving a car that emits some small amount of carbon monoxide that, combined with the emissions of the millions of other drivers in a city, produces smog?

… These kinds of “costs” cannot really even be objectively calculated, which is one of the problems with trying to even out every single imbalance arising from externalities.

Trying to resolve every diffuse or minor negative externality would have some rather tyrannical—and economically destructive—consequences. Homeowners cannot be permitted to stall airline travel just because they dislike the appearance of jet contrails in the sky above their homes. To use a more common example, one’s appreciation of “open spaces” does not give one the right to prevent a farmer from selling his land to a developer looking to build a subdivision. It would be exceedingly difficult, in a court of law, to prove that these minor inconveniences had resulted in any significant physical or economic damage. When properly defined, property rights are not a blanket right to dictate what sorts of activities may take place within eyesight, earshot, or driving distance of one’s land.

Indeed, there are many negative externalities which one must rationally anticipate when they live in proximity to other people. Further, the type of community one chooses to live in — urban, suburban, or rural — dictates what kinds of externalities you must be prepared to deal with.

For instance, if you live in the middle of a big city, you must expect a certain persistent level of noise, light, and — yes — air pollution. Such consequences arise from living in proximity to others who exercise their rights in pursuit of life-affirming values like transportation, waste disposal, and electricity.

There was a time when people heated their homes by burning wood fires. This produced smoke and ash which choked the sky and clogged gutters. But no rational person would have argued that people should freeze to death or even just proceed uncomfortably cold for the sake of “clean air.” Further, if someone had attempted to sue their neighbor for burning a wood fire, they’d have been laughed out of court if not committed to an institution.

No doubt cognizant that any given carbon emission fails to constitute a tort, Kuttner advocates for a different process. He wants government to “price” the “problem” of climate change. How do we do that, exactly? Since the “harm” cannot be objectively calculated, any method ultimately proves arbitrary. We place a tax on carbon emissions. We create carbon credits, thus restricting essential life-affirming activities like energy production and manufacturing. We determine the “price” of these interventions through political means rather than economic ones, through the rule of men rather than the rule of law.

As Bissell indicates, externalities which do not qualify as torts are little more than petty gripes. I don’t like that my neighbor painted his house blue. I don’t like that he drives an SUV. I don’t like that gas is cheap. There ought to be a law.

As we continue refuting Kuttner’s case against freedom in future entries, we’ll see how the externalities he cites fit this mold of petty complaint. He doesn’t like that some people make more money than other people. He doesn’t like that some people succeed while others fail. He doesn’t like that words mean what they mean, and dutifully attempts to redefine them.

Catch up on his piece, and check back for more analysis in the coming days.

******

Please join the discussion on Twitter. The essay above is the twenty-fifth in volume 2 of the cultural discussions between the writers of PJ Lifestyle and Liberty Island exploring the history of counter-cultures, the future of conservatism and the role of new, emerging counter-cultures in restoring American exceptionalism. Want to contribute? Check out the articles below, reach out, and lets brainstorm: @DaveSwindle

Volume II

Frank J. Fleming on February 26, 2015: What Is the Future of Government? Why It Won’t Look Like Star Trek
Aaron C. Smith on February 26, 2015: What Is the Future of Superheroes? Why They Need To Start Killing Super-Villains
Mark Ellis on February 26, 2016: What Is the Future of Gen-X Manhood? Adam Carolla Vs Chuck Palahniuk?
David S. Bernstein on February 26, 2015: What is the Future of Fiction? You’ll Be Shocked Who’s Fighting the New Conservative Counter-Culture
Aaron C. Smith on March 2, 2015: The House Loses: Why Season 3 of House of Cards Utterly Disappoints
Michael Walsh on March 2: What the Left Doesn’t Get About Robert A. Heinlein
Frank J. Fleming on March 3: 8 Frank Rules For How Not to Tweet
Susan L.M. Goldberg on March 4: 7 Reasons Why Backstrom Is Perfect Counter-Culture Conservative TV
Frank J. Fleming on March 5: What Is the Future of Religion?
Aaron C. Smith on March 5: The Future of Religion: Why Judeo-Christian Values Are More Important Than Science
Spencer Klavan on March 5: Not Religion’s Future: ISIS and the Art of Destruction
Chris Queen on March 7: 5 Reasons Why Big Hero 6 Belongs Among The Pantheon Of Disney Classics
Jon Bishop on March 8: Why I Am Catholic
Frank J. Fleming on March 11: 6 Frank Tips For Being Funny On the Internet
Becky Graebner on March 11: 5 Things I Learned In My First 6 Months As a Small Business Owner
Frank J. Fleming on March 12: This Is Today’s Question: What Does It Mean To Be ‘Civilized’?
Mark Ellis on March 12: The Future of Civilized Society: One World
Aaron C. Smith on March 12: Why Civilization Is a Gift to Bullies
David S. Bernstein on March 12: Nihilism & Feminism for Girls: Has Judd Apatow Let Lena Dunham Self-Destruct Intentionally?
Susan L.M. Goldberg on March 15: Why I Am Jewish
Chris Queen on March 15: Why I Am Non-Denominational Christian
Allston on March 16: Counter-Culture Wars, Part 1: Why the Fellow Travelers Hijacked Folk Music
Ronald R. Cherry on March 17: How To Untangle Orwellian Doublethink: 4 Secrets To Help You Spot BS
Dave Swindle on March 18: Do Fairy Tales & Scary Stories Hide Secrets For Defeating Evil?

See the first volume of articles from 2014 and January and February 2015 below:

The Case Against Freedom, Part I: What Are 'Externalities'?

Volume II

2014 – Starting the Discussion…

January 2015 – Volume I

February 2015

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