Asymmetry Between Positive and Negative Externalities
[Cross-posted on the parent blog]
I want to discuss an asymmetry between positive and negative
externalities which I think might be important when thinking about how
to use the enforcement of justice to determine which actions should be
permitted. Sometimes, we let individuals impose costs on others,
provided compensation is payed, because their actions produce net
social benefits. As Nozick writes in Anarchy, State, and Utopia,
"The reason one sometimes would wish to allow boundary crossings with
compensation...is presumably the great benefits of the act; it is
worthwhile, ought to be done, and can pay its way." In its Climate Change 1995: Economic and Social Dimensions of Climate Change,
the IPCC elaborates on this idea, explaining that if an action
"...yields positive net benefits, then those made better off could
compensate those made worse off with something extra left over. As long
as the compensation is paid, the result is an unambiguous gain in
welfare, without the necessity of weighing effects on different
individuals."
It's worth pointing out that this is not entirely
uncontroversial. Nozick writes, "...a system permitting boundary
crossing, provided compensation is paid, embodies the use of persons as
means; knowing they are being so used, and that their plans and
expectations are liable to being thwarted arbitrarily, is a cost to
people..." For this reason, Nozick suggests that "Any border-crossing
act which permissibly may be done provided compensation is paid
afterwards will be one to which prior consent is impossible or very
costly to negotiate...But not vice versa." For our purposes, however,
we will ignore this problem, and limit our discussion to only those
compensated boundary crossings which are not problematic in this way.
So
what's the asymmetry? It should be clear that the preceding discussion
was directed only at negative externalities. That is, cases where I do
something that results in costs being imposed on other people, where I
haven't obtained their consent in advance. An entirely different
framework applies to positive externalities: cases where, without being
asked or promised anything, I do something which results in positive
outcomes for other people.
Where we think of negative
externalities as demanding of compensation, we generally don't think
that we are entitled to payment for the positive outcomes we have
generated for others as a result of positive externalities. So when we
impose costs without consent, we owe compensation, but when we "impose"
benefits without "consent," we are not entitled to payment. This is the
asymmetry.
But on the surface, this doesn't seem to be
problematic. If I unilaterally decided to do something which had
positive consequences for you, then it doesn't seem like you suddenly
take an obligation to compensate me for my trouble; I'm the one who decided to do the thing that I did, and presumably I would have decided to do it, even if you weren't around. On the other hand, if I unilaterally do something that has negative consequences for you, then I do take on an obligation to compensate you; you didn't decide for me to do what I did, and presumably you wouldn't have in the absence of compensation. The asymmetry seems simply to reflect the idea that we are not entitled to make people worse off without their consent in the execution of our plans.
However,
there are two implications of this asymmetry which might be worth
noting. The first can be shown by the following illustration. Imagine
that on Bill's roof, there is a machine which produces laser light
shows on the bottoms of clouds at night. Bill lives in a large town,
but most of the people don't really care one way or the other about the
laser light shows; they're typically asleep when they're going on. A
few people do enjoy the shows, but not to a huge degree. If put on the
spot, they would probably pay a small sum to allow them to continue,
but tracking these people down and collecting money from them would be
relatively difficult, and they probably wouldn't respond to mass
mailers, newspaper ads, or other public fund raising efforts.
On
the other hand, Bill's laser machine generates a certain kind of green
smoke which is not a health hazard in any way, but which tends to drift
into Terry's yard and stain his house a particularly ugly color. The
stain can be cleaned, but doing so is somewhat costly, and as Terry
does not typically watch the laser light show, he is rightly irritated
by Bill's behavior. Being a reasonable person, Terry takes Bill to
court to demand that he either pay for his house to be cleaned
periodically, or else stop putting on the show.
Now, perhaps the
people who enjoy the show would be collectively willing to pay enough
to completely cover the costs of cleaning Terry's house. But without
their contributions, Bill would not be willing to pay this amount. What
would end up happening is that Bill would put a stop to the show, and
though they'd be disappointed, the people who enjoyed the show would
likely not be motivated enough to get together and pay the amount
necessary to get it going again.
Let's imagine that Bill knew who these people were. Even though he knows that they were benefiting from his show, the burden is on him to convince them to voluntarily
contribute to getting the show going again. The effort necessary might
be prohibitive. On the other hand, this burden does not seem to be on
Terry; Bill has the obligation
to compensate Terry for whatever costs are done to him. This
illustration shows that if we say that one is obliged to compensate for
negative external effects, but one is not entitled to payment for
positive external effects, then the costs of organizing people would
result in the cessation of an entire class of net beneficial effects.
Confronted
with this possibility, we might shrug our shoulders and say, "That's a
shame, but we're not particularly concerned." We might point to the
fact that our alternatives are somewhat limited. We can try to
calculate net benefits and then either fine or tax
alleged beneficiaries in order to pay compensation to harmed parties,
or else we can simply allow allegedly "net beneficial" acts to be
undertaken without any compensation for the victims.
Both of
these alternatives seem objectionable. As we said before, my decision
to do something which benefits you doesn't seem to generate an
obligation in you to pay me. And as Nozick writes, "Using...[someone]
for the benefit of others, uses him and benefits the others. Nothing
more. What happens is something is done to him for the sake of others.
Talk of an overall social good covers this up...To use a person in this
way does not sufficiently respect and take account of the fact that he
is a separate person, that his is the only life he has. He does not get some overbalancing good for his sacrifice, and no one is entitled to force this upon him..."
We
find ourselves in a situation where we are forced to choose the best of
a set of evils. Nozick writes, "Because great transaction costs may
make the fairest alternative impracticable, one may search for other
alternatives...These alternatives will involve constant minor
unfairness and classes of major ones." As far as "unfairnesses" go, the
ones we face here seem rather minor.
[It has come to my attention that I'm
an idiot and apparently can't tell the difference between the word
"defendant" and "plaintiff." I apologize to anyone who may have been
confused by the rest of this post.]
But this leads to the
second implication of the asymmetry between positive and negative
externalities, which I find significantly more troubling. This problem
arises from an interesting fact about the way that rights are enforced.
In his essay, "Science, Public Policy, and Global Warming: Rethinking the Market Liberal Position,"
Edwin Dolan writes, "Certain defenses are allowed against a charge of
assault or trespass. Consent of the victim is one. Also, if no causal
relationship can be shown between the action of the defendant and the
offense to the victim, the tort is not proved. However, certain
attempted defenses are not recognized as legally valid..." Of these,
one is "A showing that the defendant gained benefits from the tort, the
value of which exceeds the costs to the victim."
This means that an individual can perform an action which is beneficial to everyone, and still be required to compensate people for any individual negative effects
resulting from the action. It is important to note that the issue is
not whether it could be proven that the action produced beneficial
consequences for the victim that were more significant than the costs
imposed. Rather, even if this were proven, the boundary-crosser would still be required to pay the victim.
I'm
struggling to figure out what I think about this. I need some time to
think; any thoughts or opinions would be very welcome.