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Government Needs No Money to Curtail Pollution

Summary:
People often complain that government isn’t spending enough money fighting pollution.  Even many economists repeat this complaint.  That’s very odd, because standard market failure theory tells us that governments don’t need any money to fight pollution. Why not?  Simple: In standard market failure theory, governments are supposed to tax pollution!  Such taxes simultaneously reduce pollution and collect revenue.  As a result, fighting pollution is one of any efficiently-managed government’s top profit centers. If you object, “Virtually no government pays attention to standard market failure theory,” I couldn’t agree more.  But I still don’t understand why activists keep asking for taxpayer money instead of loudly advocating the negative-cost remedy that appears in

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People often complain that government isn’t spending enough money fighting pollution.  Even many economists repeat this complaint.  That’s very odd, because standard market failure theory tells us that governments don’t need any money to fight pollution.

Why not?  Simple: In standard market failure theory, governments are supposed to tax pollution!  Such taxes simultaneously reduce pollution and collect revenue.  As a result, fighting pollution is one of any efficiently-managed government’s top profit centers.

If you object, “Virtually no government pays attention to standard market failure theory,” I couldn’t agree more.  But I still don’t understand why activists keep asking for taxpayer money instead of loudly advocating the negative-cost remedy that appears in every intro econ textbook.

Bryan Caplan
Bryan Caplan is Professor of Economics at George Mason University and Senior Scholar at the Mercatus Center. He has published in the New York Times, the Washington Post, the Wall Street Journal, the American Economic Review, the Economic Journal, the Journal of Law and Economics, and Intelligence, and has appeared on 20/20, FoxNews, and C-SPAN. Bryan Caplan blogs on EconLog.

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