Ponzi Scheme? Try protection racket.

In reply to http://whatmatters.mckinseydigital.com/climate_change/time-to-end-the-multigenerational-ponzi-scheme

There's a simple reason why there has been no market solution to pollution. At the dawn of industrialism, wherein real libertarian capitalism was transformed into corporatism, the industrialists influenced governments to place a moratorium on liability for pollution. That means people, as individuals or as a class, cannot seek legal damages due to the actions of polluters in a meaningful fashion. If an industrialist built a factory down the street from my house, covering me in soot, filling the air with stench and ultimately giving my whole family lung cancer I could not sue him for damages to the value of my property or my health.

Thus polluters were given free reign to destroy public health and local environmental quality, and unknown to the people of the time to eventually set us on the path to global catastrophe. If this hadn't happened he cost of operating a gross polluting industry after legal liability would be ruinous, and thus they would not get built and would not exist and we would not be having this conversation. From the onset they would have been forced to innovate in ways that reduced pollution and used energy more efficiently, or to give up on their industrial pursuits. That was seen as a problem to be avoided at the time of course. Clean technology existed at the time; renewable energy and the chemistry necessary to burn fuel cleanly or else capture the pollution predates the industrial revolution. It's only taken the past 200 years to make that technology efficient enough to profitable when the alternative, gross environmental destruction, is protected from liability.

Note what happened here was that the state got in bed with industrialists to *bar* the natural, decentralized, market-driven solution, in this case legal liability, in order to support the desires of the few over the needs of the many. This is *not* capitalism. This is not what free-market capitalism would have engendered, because in free-market capitalism the state may not insulate a private company from liability for damages they caused.

Subsequent efforts at government intervention, such as the creation of the EPA, failed and continue to fail because we place the power in a handful of authority figures to sort out the mess and make the right decisions. Even with the best intentions the regulators act on flawed information force-fed to them by lobbyists who are working, secretly or openly, on the behalf of the industry that is ostensibly to be regulated. The outcome is that regulations favor the interests of the most successful lobbying group, always to the detriment of the competition, the public, and the environment.

So my solution is not the government; the government keeps screwing it up. First they created the problem through regulation on liability, then they deepened it by attempting to address it with more regulation and doing so poorly. I say get the government out of the way and start dividing up the liability. Let's add up the number of cars, factories, cigarettes, and other air polluters in, say, the city of Los Angeles and hold their creators proportionately liable against the costs inflicted on the public in terms of medicine, property devaluation, and the constant cleaning necessary to remove the soot and grime and repair the physical damage. The government doesn't need to help here, it just needs to leave the court system open to handle all the class-action lawsuits. It can spend all that EPA money on hiring new judges to handle the cases instead. Forget carbon taxes and cap-and-trade; forget clean energy incentives. Legal liability is far more terrifying and far more effective at keeping industry in line.