"There is no such thing as a free meal," so who pays?
By Brandon weber
In regards to chapter 4 on page 82 in Tim Harford's The Undercover Economist, a topic of externality charges is presented, examined and judged. The goal of this post is to evaluate a point made in the first five chapters, and this will be the topic of my argument.
In this argument it will first be necessary to re-explain externality charges. An externality is made by making decisions, that cause cost/benefit factors to be imposed on, to those who participate in a transaction... or externalities can be seen as the extras or impacts as a result from tasks. These costs or benefits must be incurred by someone. An example of this is presented by the old saying, "there is no such thing as a free meal." Harford has a very good method of relating this topic, approaching the issue from two sides. The first side being those who oppose the charge, and the second side are those who believe the charge is necessary. Leading to a topic of who is right, who is wrong and are these externality charges aimed at the right group. In regards to Harford's fuel debate and who really incurs the final charges, I believe that it is ultimately the consumer. It is not targeted only towards the rich, and only towards the poor. The same taxes are imposed on everyone who drives an automobile. The driver must make a choice to either drive and pay the externality charges, or to find a different way to commute.
So who is right? well this is a question that will never be completely answered. Harford shows this by asking another question is it fair to charge a person who rides a bicycle, with the environmental contaminants (pollution, dirt, smells, noise, etc...)? unfortunately life is not always fair, and in economics "some interest groups will always complain the externality charges are not tough enough, while others squeal that they are draconian." Harford Page 86
My opinion is that it is not fair, however society has deemed these externality charges the best way to be tough, either way someone pays.
Does anyone have any alternatives, ideas, comments?