"most economic externalities are perhaps better viewed as issues rather than rights. Most activities can be viewed as impacting economics but they are often difficult to qualify and they are difficult to weigh--plus and minus.
"Economics certainly affects collective quality of life but
this is difficult to incorporate into a "rights" paradigm."
It's not difficult at all if one understands what is meant by "externality" and is familiar with the Coase Theorem. An externality is a "spillover" of involuntary, unavoidable costs or free benefits onto others from one's choices. The economic actor does not bear this social cost, nor can he charge for or exclude anyone from the social benefit, but rather only bears or receives the private costs and benefits. The problem is that the thing resulting in the negative externality (social cost) will tend to be overproduced/overconsumed while the thing resulting in the positive externality will be underproduced/underconsumed.
Pollution is the most commonly understood negative one, while the positive effect of your beautiful landscaping on your neighbor's property value would be a positive one.
The Coase Theorem says, basically, that as long as property rights are well defined and transaction costs are small, bargaining between the economic actors producing and suffering/benefiting from the externality will always result in a socially optimal outcome.
But property rights are the key. If they are not well defined - for example, if there is no law that says the paper mill up river from you can't use the river flowing through its private property as a waste dump because you have a right to clean water downstream - then bargaining is unlikely to resolve the conflict. The mill owner's right to use his stretch of river as he sees fit conflicts with your right to use your stretch as you see fit - i.e. for fishing, swimming, whatever.
This is just one example of how one of the "inalienable" rights can be in conflict between people.
PS: If, in the example above, his rights and your rights are clearly defined (regardless, BTW, of whether he has a legal right to pollute or you have a legal right to clean water), and assuming the cost of bargaining is small, bargaining will result in an efficient outcome. |
