Art Carden  

Coase versus Pigou on Independence Day

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As I write this on Wednesday night, I hear the sounds of fireworks going off in the distance. My first thought was "maybe distant fireworks were the 'orange stuff' my son saw that through his window that 'scared [him]' earlier when he called me to his room" (it was a while ago, so it was probably a lightning bug). Still, though, this gets me thinking about market failure. Two points:

1. As a lot of people have noted, one person's trash is another person's treasure. Or, in this case, one person's non-rival, non-excludable public good--a fireworks display--is another person's non-rival, non-excludable public bad--a series of loud noises that might wake the sleeping kids.

2. This is the first time I've noticed the fireworks since we moved here just over a year ago. The noise is an inconvenience, and one that could have awakened the sleeping kids even though it didn't. Suppose it had. Am I entitled to relief as the victim of the spillover costs of others' actions?



COMMENTS (12 to date)
Greg G writes:

This is an interesting post and one that reveals (perhaps inadvertently) why the Non-Aggression Principle won't do the work that is so often asked of it.

In most disputes, both parties feel that they are the ones who are the victims of the aggression. Here the noise from the fireworks is experienced by you as a form of aggression. But we can be sure that if we told those shooting off the fireworks that they couldn't do that, they would experience that also as a form of aggression.


Resolving disputes peacefully does not consist in agreeing that aggression is bad. It consists in agreeing on how to resolve disputes where each party feels the other is the aggressor.

Now, in this case around the 4th of July, with the fireworks "in the distance" I think very few people would judge you to be a victim of aggression needing relief. But if we made the noise louder and closer and caused it to occur every night there is certainly a point where most people would change their opinions on that.

The "right" point to make that change is not there as a metaphysical principle to be discovered. It is a more or less arbitrary decision there to be chosen. It is not like deciding at what temperature water boils. It is like deciding what temperature we should set the thermostat at in a room full of people who disagree about that.

Brent writes:

I think you are better off with better insulation or ear protection. After all, there are always occasions like this - e.g., thunderstorms, road construction, city sirens, etc.

R Richard Schwietzer writes:
"Am I entitled to relief as the victim of the spillover costs of others' actions?"

Ah! judgment before understanding.

Wherein are you the beneficiary (perhaps at times at the "spill over costs" of your activities) of spill over costs borne by others?

Entitled: Every entitlement for one requires obligations on the part of others to fulfill.How would you measure or define those obligations and select on whom they should fall.

And, does it not all rest on that concept, today so common - being a victim?

Alexandre Padilla writes:

Art,

Richard Posner would use the Kaldor-Hicks compensation principle to answer your question and I bet the answer would be fireworks will still be allowed as hypothetically people enjoying fireworks could compensate you and still be better off (it doesn't mean you would be entitled to be compensated). However, I doubt you could compensate people who enjoy fireworks in exchange for prohibiting fireworks and still be better off.

However, your question is also interesting because it was raised in someway by Steven Landsburg in a post that came to raise quite some fury because of the examples he used. You should look at what David Friedman wrote about that question and the answer.

Adam writes:

You're not arguing for some inefficient redistribution, are you? Efficient solution given property rights? Buy earplugs if you must and forget about it.

Scott Wentland writes:

Spontaneously, cultural norms confine firework use to a couple days a year in the US. I would say that is about as efficient as you get. Those who like fireworks all get to see/do them each year, and those who don't like them only have to hear them on a day or two each year.

I think Ostrom probably has the more appropriate framework for thinking about fireworks in the US.

Delphin writes:

Greg G, excellent.

Scott too. Especially in view of this blog's implicit hostility to such norms!

James writes:

Greg G: This post shows a case where the NAP won't work in the absence of clearly defined property rights but it's incorrect to say that that is often asked of it. Actually, nothing is often asked of NAP. Libertarians are surely a minority and NAP libertarians are probably a minority among libertarians.

Delphin: Most libertarians explicitly deny that cultural norms should ever supercede property rights. That's not the same as hostility though. I think the same applies to the authors here. It's easier to accuse others of implicit hostility though, isn't it?

Greg G writes:

James

You still run into the same problem with "clearly defined property rights." There will be a lot of disagreement about exactly what that clear definition should be.

Even after the wording of the definition is chosen there will be a lot of disagreements on the application in specific cases. If you want to minimize violent coercion, the key is settling on how cases should be decided when people disagree. This is why constitutional democracy has (despite some undeniable failures) historically been better than the alternatives for both protecting property rights and minimizing violent coercion.

I expect you are right that most libertarians deny that cultural norms should ever supersede property rights. The problem is that property rights are themselves a cultural norm.

loveactuary writes:

Art, I think by moving into a neighborhood that was likely (in reasonable estimation) in the vicinity of loud 4th-of-July fireworks, you entered into The Social Contract of tolerating the fireworks and their noise. As Brent wrote about, the Fireworks are similar to Thunderstorms and Sirens, all three of which could be eliminated if you moved to the right place (e.g. Outside the US, a Rainless Desert, and a Mountaintop)

Delphin writes:

James you are prevaricating on hostility.i said to norms not to people. Most readers will get the difference.

And Caplan has called our society "rotten" so I think it quite accurate to note he at least is deeply hostile to a lot of the norms we have now. One such is egalitarianism. Henderson rails against deference to the government. He has argued against common norms in familial definition, and behavior.

James writes:

Greg G,

No need to make a case that NAP can't solve every disagreement all by itself. Everyone knows that already. For NAP libertarians, NAP is claimed as a necessary condition, not a sufficient one for a just society. Since your initial comment, do you still claim someone is often asking NAP to do more? Name names.

Delphin,

Property rights may be a cultural norm but that's not why libertarians value them above other cultural norms.

I never mentioned hostility to people. When libertarians object to some characteristics of a society, it's your error to attribute their objections to an emotional state like hostility, especially after they disclose their actual reasons. Do you describe yourself as hostile to libertarian norms or say that you rail against libertarian ideas?

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