Part 2 (1/2)

Perhaps a few words should be said about pollution-the dumping of negative effects upon other people's property such as their houses, clothing, and lungs, and upon unowned things which people benefit from, such as a clean and beautiful sky. I shall discuss only effects on property. It would be undesirable, and is not excluded by anything I say below, for someone to channel all of his pollution effects high above anyone's property volume, making the sky a murky grey-green. Nothing is gained by trying to transform the second type of case into the first by saying, for example, that someone who changes the way the sky looks dumps effects on one's eyes. What follows in this note is incomplete in that it does not treat the second type of case.

Since it would exclude too much to forbid all polluting activities, how might a society ( (socialist or capitalist) decide which polluting activities to forbid and which to permit? Presumably, it should permit those polluting activities whose benefits are greater than their costs, decide which polluting activities to forbid and which to permit? Presumably, it should permit those polluting activities whose benefits are greater than their costs, including within their costs their polluting effects. including within their costs their polluting effects. The most feasible theoretical test of this net benefit is whether the activity The most feasible theoretical test of this net benefit is whether the activity could could pay its way, whether those who benefit from it would be willing to pay enough to cover the costs of compensating those ill affected by it. pay its way, whether those who benefit from it would be willing to pay enough to cover the costs of compensating those ill affected by it. ( (Those who favor any worthy activity that fails this test can make charitable donations to it. ) ) For example, certain modes of airplane service impose noise pollution on homes surrounding airports. In one way or another For example, certain modes of airplane service impose noise pollution on homes surrounding airports. In one way or another ( (through lower resale value, lower rent obtainable for apartments, and so on), the economic value of these homes is diminished. Only if the benefits to air pa.s.sengers are greater than these costs to airport neighbors should the noisier mode of transportation service go on. A society must have some way to determine whether the benefits do outweigh the costs. Secondly, it must decide how the costs are to be allocated. It can let them fall where they happen to fall: in our example, on the local homeowners. Or it can try to spread the cost throughout the society. Or it can place it on those who benefit from the activity: in our example, airports, airlines, and ultimately the air pa.s.senger. The last, if feasible, seems fairest. If a polluting activity is to be allowed to continue on the ground that its benefits outweigh its costs (including its polluting costs). then those who benefit actually should compensate those upon whom the pollution costs are initially thrown. The compensation might encompa.s.s paying for the costs of devices to lessen the initial pollution effects. In our example, airlines or airports might pay for soundproofing a house and then pay compensation for how much less the economic value of that house is than the value of the original unsoundproofed house in the neighborhood as it was without the additional noise. the economic value of these homes is diminished. Only if the benefits to air pa.s.sengers are greater than these costs to airport neighbors should the noisier mode of transportation service go on. A society must have some way to determine whether the benefits do outweigh the costs. Secondly, it must decide how the costs are to be allocated. It can let them fall where they happen to fall: in our example, on the local homeowners. Or it can try to spread the cost throughout the society. Or it can place it on those who benefit from the activity: in our example, airports, airlines, and ultimately the air pa.s.senger. The last, if feasible, seems fairest. If a polluting activity is to be allowed to continue on the ground that its benefits outweigh its costs (including its polluting costs). then those who benefit actually should compensate those upon whom the pollution costs are initially thrown. The compensation might encompa.s.s paying for the costs of devices to lessen the initial pollution effects. In our example, airlines or airports might pay for soundproofing a house and then pay compensation for how much less the economic value of that house is than the value of the original unsoundproofed house in the neighborhood as it was without the additional noise.

When each of the victims of pollution suffers great costs, the usual system of tort liability (with minor modifications) suffices to yield this result. Enforcing other people's property rights will, in these cases, suffice to keep pollution in its proper place. But the situation is changed if individual polluters have widespread and individually minuscule effects. If someone imposes the equivalent of a twenty-cent cost on each person in the United States, it will not pay for any one person to sue him, despite the great total of the cost imposed. If many persons similarly impose tiny costs on each individual, the total costs to an individual then may be significant. But since no single source significantly affects one individual, it still will not pay any individual to sue any individual polluter. It is ironic that pollution is commonly held to indicate defects in the privateness of a system of private property, whereas the problem of pollution is that high transaction costs make it difficult to enforce the private property rights of the victims of pollution. One solution might be to allow group suits against polluters. Any lawyer or law firm may act for the general public and sue, being required to distribute a proportion of the amount collected to each member of the included public who claims it from them. (Since different people are differently affected by the same polluting acts, the lawyers might be required to distribute different amounts to those in different specified groups. suffices to yield this result. Enforcing other people's property rights will, in these cases, suffice to keep pollution in its proper place. But the situation is changed if individual polluters have widespread and individually minuscule effects. If someone imposes the equivalent of a twenty-cent cost on each person in the United States, it will not pay for any one person to sue him, despite the great total of the cost imposed. If many persons similarly impose tiny costs on each individual, the total costs to an individual then may be significant. But since no single source significantly affects one individual, it still will not pay any individual to sue any individual polluter. It is ironic that pollution is commonly held to indicate defects in the privateness of a system of private property, whereas the problem of pollution is that high transaction costs make it difficult to enforce the private property rights of the victims of pollution. One solution might be to allow group suits against polluters. Any lawyer or law firm may act for the general public and sue, being required to distribute a proportion of the amount collected to each member of the included public who claims it from them. (Since different people are differently affected by the same polluting acts, the lawyers might be required to distribute different amounts to those in different specified groups.) The lawyers' income would come from those who do not write in to claim their due, and from earnings of the money of those who do not claim promptly. Seeing some receiving great income in this way, others would go into business as ”public's agents, ” charging a yearly fee to collect and turn over to their clients all the pollution payments to which they were ent.i.tled. Since such a scheme gives great advantage to a lawyer who acts fast, it insures that many would be alert to protect the interests of those polluted. Alternative schemes might be devised to allow several to sue simultaneously for distinct sets of persons in the public, It is true that these schemes place great weight on the court system, but they should be as manageable as the operation of any government bureaucracy in determining and distributing costs. The lawyers' income would come from those who do not write in to claim their due, and from earnings of the money of those who do not claim promptly. Seeing some receiving great income in this way, others would go into business as ”public's agents, ” charging a yearly fee to collect and turn over to their clients all the pollution payments to which they were ent.i.tled. Since such a scheme gives great advantage to a lawyer who acts fast, it insures that many would be alert to protect the interests of those polluted. Alternative schemes might be devised to allow several to sue simultaneously for distinct sets of persons in the public, It is true that these schemes place great weight on the court system, but they should be as manageable as the operation of any government bureaucracy in determining and distributing costs.z

To arrive at an acceptable principle of compensation, we must delimit the cla.s.s of actions covered by the claim. Some types of action are generally done, play an important role in people's lives, and are not forbidden to a person without seriously disadvantaging him. One principle might run: when an action of this type is forbidden to someone because it might might cause harm to others and is especially dangerous when he does it, then those who forbid in order to gain increased security for themselves must compensate the person forbidden for the disadvantage they place him under. This principle is meant to cover forbidding the epileptic to drive while excluding the cases of involuntary Russian roulette and the special manufacturing process. The idea is to focus on important activities done by almost all, though some do them more dangerously than others. Almost everyone drives a car, whereas playing Russian roulette or using an especially dangerous manufacturing process is not a normal part of almost everyone's life. cause harm to others and is especially dangerous when he does it, then those who forbid in order to gain increased security for themselves must compensate the person forbidden for the disadvantage they place him under. This principle is meant to cover forbidding the epileptic to drive while excluding the cases of involuntary Russian roulette and the special manufacturing process. The idea is to focus on important activities done by almost all, though some do them more dangerously than others. Almost everyone drives a car, whereas playing Russian roulette or using an especially dangerous manufacturing process is not a normal part of almost everyone's life.

Unfortunately this approach to the principle places a very great burden on the scheme used to cla.s.sify actions. The fact that there is one one description of a person's action that distinguishes it from the acts of others does description of a person's action that distinguishes it from the acts of others does not not cla.s.sify it as unusual and so outside the sphere of application of the principle. Yet it would be too strong to say, on the other hand, that any action falling under some description which almost every other person also instantiates is thereby shown to be usual and to fall within the compa.s.s of the principle. For unusual activities also fall under cla.s.sify it as unusual and so outside the sphere of application of the principle. Yet it would be too strong to say, on the other hand, that any action falling under some description which almost every other person also instantiates is thereby shown to be usual and to fall within the compa.s.s of the principle. For unusual activities also fall under some some descriptions that cover actions people normally do. Playing Russian roulette is a more dangerous way of ”having fun,” which others are allowed to do; and using the special manufacturing process is a more dangerous way of ”earning a living.” Almost any two actions can be construed as the same or different, depending upon whether they fall into the same or different subcla.s.ses in the background cla.s.sification of actions. This possibility of diverse descriptions of actions prevents easy application of the principle as stated. descriptions that cover actions people normally do. Playing Russian roulette is a more dangerous way of ”having fun,” which others are allowed to do; and using the special manufacturing process is a more dangerous way of ”earning a living.” Almost any two actions can be construed as the same or different, depending upon whether they fall into the same or different subcla.s.ses in the background cla.s.sification of actions. This possibility of diverse descriptions of actions prevents easy application of the principle as stated.

If these questions could be clarified satisfactorily, we might wish to extend the principle to cover some unusual actions. If using the dangerous process is the only way that that person can earn a living (and if playing Russian roulette on another with a gun of 100,000 chambers is the only way person can earn a living (and if playing Russian roulette on another with a gun of 100,000 chambers is the only way that that person can have any enjoyment at all-I grant these are both extravagant suppositions), then perhaps this person should be compensated for the prohibition. By having person can have any enjoyment at all-I grant these are both extravagant suppositions), then perhaps this person should be compensated for the prohibition. By having the the only way he can earn a living forbidden to him, he is disadvantaged as compared to the normal situation, whereas someone is not disadvantaged relative to the normal situation by having his most profitable alternative forbidden to him. A disadvantage as compared to the normal situation differs from being made worse off than one otherwise would be. One might use a theory of disadvantage, if one had it, in order to formulate a ”Principle of Compensation”: those who are only way he can earn a living forbidden to him, he is disadvantaged as compared to the normal situation, whereas someone is not disadvantaged relative to the normal situation by having his most profitable alternative forbidden to him. A disadvantage as compared to the normal situation differs from being made worse off than one otherwise would be. One might use a theory of disadvantage, if one had it, in order to formulate a ”Principle of Compensation”: those who are disadvantaged disadvantaged by being forbidden to do actions that only by being forbidden to do actions that only might might harm others must be compensated for these disadvantages foisted upon them in order to provide security for the others. If people's increased security from a contemplated prohibition would benefit them less than those prohibited would be disadvantaged, then potential prohibitors will be unable or unwilling to make sufficiently great compensatory payments; so the prohibition, as is proper in this case, will not be imposed. harm others must be compensated for these disadvantages foisted upon them in order to provide security for the others. If people's increased security from a contemplated prohibition would benefit them less than those prohibited would be disadvantaged, then potential prohibitors will be unable or unwilling to make sufficiently great compensatory payments; so the prohibition, as is proper in this case, will not be imposed.

The principle of compensation covers the cases falling under our earlier statement which involved messy problems about cla.s.sifying actions. It does not avoid completely similar questions concerning the circ.u.mstances under which someone is especially disadvantaged. But as they arise here, the questions are easier to handle. For example, is the manufacturer who is prevented from pursuing his best alternative (though having other profitable alternatives) especially disadvantaged if everyone else may pursue their best alternatives, which happen not to be dangerous? Clearly not.

The principle of compensation requires that people be compensated for having certain risky activities prohibited to them. It might be objected that either you have the right to forbid these people's risky activities or you don't. If you do, you needn't compensate the people for doing to them what you have a right to do; and if you don't, then rather than formulating a policy of compensating people for your unrightful forbidding, you ought simply to stop it. In neither case does the appropriate course seem to be to forbid and then compensate. But the dilemma, ”either you have a right to forbid it so you needn't compensate, or you don't have a right to forbid it so you should stop,” is too short. It may be that you do have a right to forbid an action but only provided you compensate those to whom it is forbidden.

How can this be? Is this situation one of those discussed earlier, in which a border crossing is permitted provided that compensation is paid? If so, there would be some boundary line that delimits forbidding people to do certain risky acts, which it would be permissible to cross if the party trespa.s.sed upon were compensated. Even if so, since in the cases under discussion we can identify in advance the particular persons being forbidden, why are we not required instead to negotiate a contract with them whereby they agree not to do the risky act in question? Why wouldn't we have to offer them an incentive, or hire them, or bribe them to refrain from doing the act? In our earlier discussion of border crossing we noted the absence of any compelling theory of just price or compelling reason why all of the benefits of voluntary exchange should go to one of the parties. Which of the admissible points on the contract curve was to be selected, we said, was a question appropriately left to the parties involved. This consideration favored prior negotiation over posterior payment of full compensation. In the present subcla.s.s of cases, however, it does does seem appropriate uniformly to select one extremity of the contract curve. Unlike exchanges in which both parties benefit and it is unclear how these benefits are to be divided, in negotiations over one party's abstaining from an action that will or might endanger another person, all the first party need receive is full compensation. (The payment the first party could negotiate for abstaining, were he allowed to perform the action, is seem appropriate uniformly to select one extremity of the contract curve. Unlike exchanges in which both parties benefit and it is unclear how these benefits are to be divided, in negotiations over one party's abstaining from an action that will or might endanger another person, all the first party need receive is full compensation. (The payment the first party could negotiate for abstaining, were he allowed to perform the action, is not not part of his loss due to the prohibition for which he must be compensated.) part of his loss due to the prohibition for which he must be compensated.)

PRODUCTIVE EXCHANGE.

If I buy a good or service from you, I benefit from your activity; I am better off due to it, better off than if your activity wasn't done or you didn't exist at all. (Ignore the complication that someone once might sell a bona fide good to another person he generally harms.) Whereas if I pay you for not harming me, I gain nothing from you that I wouldn't possess if either you didn't exist at all or existed without having anything to do with me. (This comparison wouldn't do if I deserved deserved to be harmed by you.) Roughly, to be harmed by you.) Roughly, productive activities productive activities are those that make purchasers better off than if the seller had nothing are those that make purchasers better off than if the seller had nothing at all at all to do with them. More precisely, this provides a necessary condition for an unproductive activity, but not a sufficient condition. If your next-door neighbor plans to erect a certain structure on his land, which he has a right to do, you might be better off if he didn't exist at all. (No one else would choose to erect that monstrosity.) Yet purchasing his abstention from proceeding with his plans will be a productive exchange. to do with them. More precisely, this provides a necessary condition for an unproductive activity, but not a sufficient condition. If your next-door neighbor plans to erect a certain structure on his land, which he has a right to do, you might be better off if he didn't exist at all. (No one else would choose to erect that monstrosity.) Yet purchasing his abstention from proceeding with his plans will be a productive exchange.16 Suppose, however, that the neighbor has no desire to erect the structure on the land; he formulates his plan and informs you of it solely in order to sell you his abstention from it. Such an exchange would not be a productive one; it merely gives you relief from something that would not threaten if not for the possibility of an exchange to get relief from it. The point generalizes to the case where the neighbor's desire does not focus only upon you. He may formulate the plan and peddle his abstention around to several neighbors. Whoever purchases it will be ”served” unproductively. That such exchanges are not productive ones, and do not benefit each party, is shown by the fact that if they were impossible or forceably prohibited so that everyone knew they couldn't be done, one of the parties to the potential exchange would be no worse off. A strange kind of productive exchange it would be whose forbidding leaves one party no worse off! (The party who does not give up anything for the abstention, or need not because the neighbor has no other motive to proceed with the action, is left better off.) Though people value a blackmailer's silence, and pay for it, his being silent is not a productive activity. His victims would be as well off if the blackmailer did not exist at all, and so wasn't threatening them. Suppose, however, that the neighbor has no desire to erect the structure on the land; he formulates his plan and informs you of it solely in order to sell you his abstention from it. Such an exchange would not be a productive one; it merely gives you relief from something that would not threaten if not for the possibility of an exchange to get relief from it. The point generalizes to the case where the neighbor's desire does not focus only upon you. He may formulate the plan and peddle his abstention around to several neighbors. Whoever purchases it will be ”served” unproductively. That such exchanges are not productive ones, and do not benefit each party, is shown by the fact that if they were impossible or forceably prohibited so that everyone knew they couldn't be done, one of the parties to the potential exchange would be no worse off. A strange kind of productive exchange it would be whose forbidding leaves one party no worse off! (The party who does not give up anything for the abstention, or need not because the neighbor has no other motive to proceed with the action, is left better off.) Though people value a blackmailer's silence, and pay for it, his being silent is not a productive activity. His victims would be as well off if the blackmailer did not exist at all, and so wasn't threatening them.aa And they would be no worse off if the exchange were known to be absolutely impossible. On the view we take here, a seller of such silence could legitimately charge only for what he forgoes by silence. What he forgoes does not include the payment he could have received to abstain from revealing his information, though it does include the payments others would make to him to reveal the information. So someone writing a book, whose research comes across information about another person which would help sales if included in the book, may charge another who desires that this information be kept secret (including the person who is the subject of the information) for refraining from including the information in the book. He may charge an amount of money equal to his expected difference in royalties between the book containing this information and the book without it; he may not charge the best price he could get from the purchaser of his silence. And they would be no worse off if the exchange were known to be absolutely impossible. On the view we take here, a seller of such silence could legitimately charge only for what he forgoes by silence. What he forgoes does not include the payment he could have received to abstain from revealing his information, though it does include the payments others would make to him to reveal the information. So someone writing a book, whose research comes across information about another person which would help sales if included in the book, may charge another who desires that this information be kept secret (including the person who is the subject of the information) for refraining from including the information in the book. He may charge an amount of money equal to his expected difference in royalties between the book containing this information and the book without it; he may not charge the best price he could get from the purchaser of his silence.ab Protective services are productive and benefit their recipient whereas the ”protection racket” is not productive. Being sold the racketeers' mere abstention from harming you makes your situation no better than if they had nothing to do with you at all. Protective services are productive and benefit their recipient whereas the ”protection racket” is not productive. Being sold the racketeers' mere abstention from harming you makes your situation no better than if they had nothing to do with you at all.

Our earlier discussion of dividing the benefits of voluntary exchange, thus, should be narrowed so as to apply only to those exchanges where both parties do benefit in the sense of being the recipients of productive activities. Where one of the parties does not so benefit and is unproductively ”served,” it is fair that he merely barely compensates the other, if if any compensation is due the other party at all. What of those cases where only the first condition of unproductive exchange is satisfied, not the second: any compensation is due the other party at all. What of those cases where only the first condition of unproductive exchange is satisfied, not the second: X X is no better off as a result of the exchange than if is no better off as a result of the exchange than if Y Y didn't exist at all, but didn't exist at all, but Y Y does have some motive other than selling abstention. If from does have some motive other than selling abstention. If from Y Y's abstention from an activity X X gains only a lessened probability of having his own border crossed (a crossing whose intentional performance is prohibited), then gains only a lessened probability of having his own border crossed (a crossing whose intentional performance is prohibited), then Y Y need be compensated only for the disadvantages imposed upon him by the prohibition of only those activities whose risk is serious enough to justify prohibition in this manner. need be compensated only for the disadvantages imposed upon him by the prohibition of only those activities whose risk is serious enough to justify prohibition in this manner.

We have rejected the view that the prohibition of risky activities is illegitimate, that through prior agreements and open negotiations people must be induced to agree voluntarily to refrain from the activities. But we should not construe our case merely as compensation for crossing a border that protects another's risky action, with the requirement of prior negotiation obviated by the special nature of the case (it doesn't involve any productive exchange). For this does not explain why all are not returned to the indifference curve they would occupy were it not for the prohibition; only those disadvantaged disadvantaged by a prohibition are to be compensated, and they are to be compensated by a prohibition are to be compensated, and they are to be compensated only only for their disadvantages. If a prohibition of risky acts had two separate effects on someone, the first making him worse off though not disadvantaged as compared to others and the second disadvantaging him, the principle of compensation would require compensation to be paid only for the second. Unlike an ordinary border crossing, the compensation in these cases need not raise the person to the position he was in before he was interfered with. In order to view the compensation under the principle of compensation as ordinary compensation for a border crossing, one might try to redefine or relocate the border so that it is crossed only when someone is disadvantaged. But it is more perspicuous not to distort our view of this compensation situation by a.s.similating it to another one. for their disadvantages. If a prohibition of risky acts had two separate effects on someone, the first making him worse off though not disadvantaged as compared to others and the second disadvantaging him, the principle of compensation would require compensation to be paid only for the second. Unlike an ordinary border crossing, the compensation in these cases need not raise the person to the position he was in before he was interfered with. In order to view the compensation under the principle of compensation as ordinary compensation for a border crossing, one might try to redefine or relocate the border so that it is crossed only when someone is disadvantaged. But it is more perspicuous not to distort our view of this compensation situation by a.s.similating it to another one.

That it is not to be a.s.similated to the border-crossing sort of compensation situation does not, of course, foreclose deriving the principle of compensation from deeper principles. For our purposes in this essay we need not do this; nor need we state the principle exactly. We need only claim the correctness of some principles, such as the principle of compensation, requiring those imposing a prohibition on risky activities to compensate those disadvantaged disadvantaged through having these risky activities prohibited to them. I am not completely comfortable presenting and later using a principle whose details have not been worked out fully, even though the undeveloped aspects of the principle do not appear to be relevant to the issues upon which we shall wield it. With some justice, I think, I could claim that it is all right as a beginning to leave a principle in a somewhat fuzzy state; the primary question is whether something like it will do. This claim, however, would meet a frosty reception from those many proponents of another principle scrutinized in the next chapter, if they knew how much harder I shall be on their principle than I am here on mine. Fortunately, they don't know that yet. through having these risky activities prohibited to them. I am not completely comfortable presenting and later using a principle whose details have not been worked out fully, even though the undeveloped aspects of the principle do not appear to be relevant to the issues upon which we shall wield it. With some justice, I think, I could claim that it is all right as a beginning to leave a principle in a somewhat fuzzy state; the primary question is whether something like it will do. This claim, however, would meet a frosty reception from those many proponents of another principle scrutinized in the next chapter, if they knew how much harder I shall be on their principle than I am here on mine. Fortunately, they don't know that yet.

CHAPTER 5.