Monday, 4 November 2019

positive externalities

Though we are familiar with the concept of sin-taxes and the notion of factoring in social cost into the price regime of consumption by means of a carbon-tax which has a diverse cast of proponents (and conversely incentives to make the more expensive choices for the sake of greater society), we had never heard of a Pigovian subsidy broadly applied as the name of this corrective measure.
Conceived nearly a century ago by Cambridge economics professor Arthur Cecil Pigou (*1877 – †1959), its first incarnation was a proposal to reveal and offset the hidden costs of alcohol on civil societies by levying taxes that would help fund law enforcement, first responders and insurance underwriters who have had to foot the extra bill of accident and absenteeism from intoxication. People then and now are reluctant to find correlation outside of their immediate horizons, and Pigou tried couching the argument in more concrete terms, social benefits and ills being notoriously hard to measure in a field that lobbies in numbers, citing unregulated industry for creating the deadly smog that beset London with direct costs built-in for inaction in terms of health and sustainability. Do give the entire podcast a listen and learn more about a real-world experiment whose time has finally come around.