Located in the Idaho panhandle, the Coeur dAlene mining district has the largest recorded silver production in the world. Its early history is rich with examples of how, in the absence of government regulations and mitigation taxes, private parties negotiated contracts that greatly reduced the spillover costs associated with mining and milling minerals.
For the greater part of the twentieth century, mainstream economists viewed negative (technological) externalities as a prima facie justification for government intervention in the market. Absent such government action, they argued, nothing would be done to prevent or remedy the damages third parties suffered as a result of unrestrained spillovers or neighborhood effects. For example, in the words of Joseph E. Stiglitz, without government intervention there would be an underprovision of pollution control (1988, 76). Even such staunch defenders of the market as Milton Friedman (1962, 30) and F. A. Hayek (1979, 4345) conceded that spillovers might justify government intervention, although they embraced neither the blackboard economics conclusion that government intervention is desirable and effective in all cases of spillovers nor the nirvana standard implicit in Stiglitzs use of the neoclassical welfare-economics term underprovision....
|Other Independent Review articles by Robert Higgs|
|Fall 2014||Ronald Coase, Anomalous Superstar of the Economics Profession|
|Summer 2014||The Feds Immiseration of People Who Live on Interest Earnings|
|Spring 2014||The Salmon Trap: An Analogy for Peoples Entrapment by the State|
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