Tag Archives: externalities

The Disneyland Model

John Semmens is an AZDOT project manager who also writes free-market oriented policy papers — he is perhaps best known locally for his vociferous opposition to Phoenix’s light rail. John is now affiliated with the Independent Institute — a free-market-leaning think-tank that I had heretofore not heard of. He had an op-ed published last Saturday in the Wall Street Journal that contained some novel, perhaps radical, ideas about how private auto insurance should be used as a lever against dangerous drivers; he dubs this the “Disneyland model”, and makes some good points. Though, he does not even mention the role of law (criminal) enforcement (as in criminal charges: homicide, assault)… perhaps he was space-limited. Also, his general idea — privatizing licensure — seems sound but how would this help the problems caused by those who  simply go without? In any event it is a welcome look at publicizing one facet of the problems created by private automobile usage.

What is the deal with the 39,000 deaths figure? Fatalities have been running around 43,000.

The full text is here:  On the Road. September 1, 2007 op-ed, John Semmens, Wall Street Journal

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High cost of free parking

A prominent “negative externality” of suburban living is the so-called free parking spot. Since the users, that is customers arriving in private automobiles, do not pay for its use economic inefficiencies inevitably result. It is normally supposed that the proprietor pays for parking facilities as a cost of business however that is often perverted by subsidies granted by government

 

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Gas Taxes (again), or WSJ duplicity

This is fairly typical of the duplicty in WSJ editorials. They denounce the Democratic leadership for not calling for a large gas tax. But apparently Republicans get a pass, even though they were the leadership before 2006 for many years (12, was it?). They also don’t really endorse the gas tax, they merely assert (correctly) that higher priced fuel would lessen demand — so they can have it both ways it seems. Continue reading Gas Taxes (again), or WSJ duplicity

Pigovian tax

Definition from wikipedia

A pigovian tax is a tax levied to correct the negative externalities of a market activity. For instance, a Pigovian tax may be levied on producers who pollute the environment to encourage them to reduce pollution, and to provide revenue which may be used to counteract the negative effects of the pollution.

The best answer to America’s “problem” with energy, and with private automobiles in particular is to simply tax (mainly fuel) to compensate for the negative externalities. Pollution, mayhem, free parking, noise — all of these have a cost which is not being paid for by their users.

See Mankiw’s ( past chairman, Council of Economic Advisers in the George W. Bush administration)  The Pigou Club Manifesto.

Money collected via such taxes would best be used to lower payroll taxes — or to lower taxes on wages and/or investment generally, as Holman Jenkins points out in his column…

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