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Bryan Caplan writes:

“It has to stop sometime” was as true when our population was 10,000 as it is today. But as far as we can tell from the simultaneous rise of population and per-capita income, “sometime” is a long way off.

I love the show Arrested Development. In one episode the character Gob opens a frozen banana stand right across the boardwalk from a banana stand operated by his brother Michael. Gob hangs a sign that says “a Frozen Banana that won’t poison you” or something to that effect. The implication of course is that the competition’s will.

This is not unlike the term Sustainable Development. It implies that the free market is unsustainable. It’s the same poor reasoning that attributes the famines during China’s Great Leap Forward to the population being too large, as opposed to the lack of a free market in agriculture.

Sustainable Development policies insert third party arbiters into economic decisions. My driving to work is perfectly sustainable: the job I have pays me enough to drive there (and then some). If it weren’t sustainable, I wouldn’t do it, and therefore it wouldn’t be a problem. And this is how most things in life work in a free market.

The arbiters try to see what the externalities of my driving to work are. Think Global Warming. They say “this action is unsustainable because of the externalities” and they then disallow the activity. The problem is that all of these measures of sustainability are rather arbitrary, because they all involve hypotheses we’re not allowed to test.

My driving to work causes an externality: I’m on the road, and where I am another car cannot be. Cars cannot pass through me, and require my getting off the road or moving forward for them to move forward. If I stop, they stop. This can cause traffic and in some sense, unsustainability (gridlock). My individual action’s contribution to traffic is negligible, but the sum of everyone’s can create unsustainability.

I would say that the solution to this is not a 3rd party arbiter, but just better resource allocation. More roads could help. Technology has advanced to make tolls more easily collectible (EZPass). If easy electronic tolls could be administered, and rates assessed based on traffic (time of day perhaps), then traffic could be regulated in that manner. It’s similar to a Pigovian tax, although not the same since the fees could go to road maintenance, thereby making it just a usage fee.

Free market externalities are possible, but as of yet they’re not “unsustainable” in the sense that 3rd party interventionalists are the solution. The Population Bomb was wrong.