Chris Joosse's Blag

"...when I look back at almost every "environmentally friendly" alternative product I've seen being widely touted as a cost-free way to lower our footprint, held back only by the indecent vermin at "industry" who don't care about the environment, I notice a common theme: the replacement good has really really sucked compared to the old, inefficient version. In some cases, the problem could be overcome by buying a top-of-the-line model that costs, at the very least, several times what the basic models do."

1. more efficient than the similiarly-functional alternative,
2. doesn't produce a negative externality that the alternative does produce, or
3. both.

Better efficiency is a benefit to the buyer, and is its own incentive- that Compact Fluorescent light bulb will save you money over the long term.  Under point two, however, the buyer doesn't get anything but the satisfaction of not polluting.

One example McArdle cites- phosphate-free dishwasher detergent- doesn't kill fish downstream, whereas the phosphate-based variety does.  The phosphate-based soap does cut grease better, especially if your water has a high mineral content- but is that worth the cost?  Worth the cost to whom?  To buyers of phosphate-based dishwasher detergent, which typically cost less than the 'environmentally friendly' kind, the decision is between paying less for what may get their dishes cleaner, and paying more for a product that might not work as well, and might require them to run their dishwasher more to get the job done.   Bottom line: polluting is free, being environmentally responsible is something you have to pay for. 

"Welcome to your nightmare, Wall Street.

For years and years you've been able to do pretty much whatever you wanted. Paid yourselves as much as you wanted, created esoteric products, pushed around regulators, bought politicians, took enormous risks -- risks far bigger than your companies could have ever hoped to cover by themselves.

And now you've done something incredible. You've managed to tarnish -- to bring into question, even -- the primacy and superiority of free market capitalism. That takes a special kind of stupid. It takes really smart stupid. It takes Harvard stupid. [...]

Way to go, guys.  Free market capitalism is responsible for raising billions of people out of abject poverty in our generation, perhaps the greatest humanitarian accomplishment in all of history, and now common wisdom around the globe is that it's a failure- or worse, a conspiracy to steal from them.  Way to poison the well.  You deserve all the punitive regulation you get.

I was recently asked for my opinion on how we got into our current 'market crisis', and I came up with this list:

1. Politics.  Too often, Good politics == Bad or Unsustainable Policy. (see #2 below) 
2. We live like we're entitled to that which we haven't earned, and we relate to government like it's proper function is to make someone else pay for it.  (See #1 above.)
3. We are wilfully blind to the unintended consequences of #2 above.
4. Our tax policy creates a bias against savings. (see #3)
5. Our monetary policy promotes borrowing. (see #3)
6. Our policy for the last 3 decades has been designed to keep wall street from failing, and wall street knows it.  So they've taken advantage of that implied support. (see #4 and #5)
7. The mortgage interest deduction incentivizes personal borrowing (even though it doesn't actually make borrowing cheaper, see #6 above).
8. Our regulatory regime has not kept up with the times, nor has enforcement scaled to match the economy.  Where were regulators when all that bad debt was being securitized and sold as AAA credit?  Why aren't people in jail over that?  Didn't we go through this with junk bonds in '87 and .com stocks in '99?  (see #3 above)
9. Our nation is itself the biggest debtor in the world, a mere 50 years after being the biggest creditor.  If a person had a borrowing:spending ratio like that, they'd lose their credit.  (see #2 and #3 above)
10. The average citizen does not understand economics.  As a nation we are woefully uneducated on the subject.  We want the world to be simpler than it is, and we live our lives (and vote) like it actually is simpler than it is.  (see #9 above) 

As we contemplate the fact that we just spent $700,000,000,000.00 without having addressed a single item on the list, I'm betting we won't make it another 6 months before we're being told we've got to fund another bailout.