Externalities
Costs or benefits of a transaction that fall on people who were not part of it.
What the essays say
The capitalism essay asks whether some costs are being imposed on people who never chose to bear them, and where those costs eventually land.
What I do know is that we can’t meaningfully judge prosperity if we count the benefits while ignoring major costs simply because those costs show up somewhere else, fall on somebody else, or come due later.
Where people disagree
- Many economists favor pricing externalities directly, for example through taxes or fees, so the cost shows up in the transaction.
- Others prefer regulation, or argue that clear property rights and bargaining can resolve many of them without government.
- There is also real disagreement about how to measure costs that are spread out, uncertain, or fall on future generations.
