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Originally posted by Spanky
If you use your property to harm others something is exiting your property and effecting someone elses. You are responsible for your property and everything that exits it. If smoke is leaving your property and going into your neighbors property you are infringing on his property rights. The stuff I was talking about is if the government decides that your property is a wetland and says you can't build on it. That is a taking without just compensation. Or if you own a shop and the government decides your area is now not zoned for commerical use. These things should be compensated (not prevented - I believe in the power of eminent domain - just compensated).
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We now understand in a way we did not when the common law was developed that the destruction of wetlands harms us. That is why I'm drawing a comparison between wetlands regulation and smoking out your neighbor. The principle is the same.
You can pull a Pombo on me and try to pretend the science is otherwise, but that's a different story.
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If regulations are instituted to make the markets more efficient I have no problem with them. For example information usually makes a market perform better. But the market is almost always a better determiner of price, demand and need than the government is.
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And this is why the government rarely dictates price or requires certain levels of consumption. Most regulation takes a different form. An obvious counterexample is the situation of a regulated monopoly, where any college freshman who's taken Ec 101 can explain why the market will not yield optimum results. But that's usually not what government regulation entails.
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Again - making the markets more efficient. Sometimes the government intervens for reasons other than making the markets more efficient. When this is done for health, safety or environmental reasons, that is fine, but any other reason is usually bad.
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OK. If you want to talk specifics, I'm game.
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Your problem is that you equate free markets with anarchy. They are two different concepts. The term market implies that you have a functioning market that requires a system of government. Without a government to enforce the rules of the "market" you don't have one. The strongest simply gets the goods. You need a respect for private property and contract law which the government needs to enforce. The first step in creating an efficient market is a respect for property rights. Without property rights you get no market.
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My point is that a so-called "free" market relies on quite a bit of government regulation. Property law, contract law and tort law are all ways in which the government regulates the market.
Perhaps you have something else in mind when you refer to "free" markets, but it seems to me that you are referring to the process by which the market is regulated -- i.e., by private actions brought in common law rather than other forms of government action -- rather than the substance. If we want to protect wetlands, judges (a government actor) can construe the tort of nuisance to prevent you from doing all sorts of things with your wetlands that will have an effect on your neighbors by ruling that they have a property right to be free of the effects of your actions.
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Externalities are an infringement on property rights. The most basic rule of markets. If you are dumping stuff off your property (be it a gas, liquid or solid) you are infringing either on your neighbors property rights, the public's property rights or both. The government needs to start enforcing property rights for individuals and for public property.
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I get the principle, but I'm not sure how you can say that I'm infringing someone's property rights (under present law) if I light a fire in my fireplace. And yet burning wood creates some pollution. If those costs are internalized, the wood should cost more.
