An Externality Example
It is often useful, as Prof. Henderson has done repeatedly, to use abstract
examples that bear some resemblance to the theoretical point being made to insure
that the point is fully understood. Because Prof. Henderson has not understood
or chosen to ignore one of the central goals of smoke-free laws—protecting
people from adverse health effects of secondhand smoke—we will use an example
now to fully illustrate it.
We would imagine that, while we all desire higher salaries, Prof. Henderson
believes he is more or less adequately compensated by the Naval Postgraduate
School. Any lack of salary is likely made up for in a nonpecuniary way by the
lovely location of Monterey Bay, CA. His view might change, however, if asbestos
was found falling from the ceiling in his office. Suddenly, he is made aware of a
health risk that he has been bearing for years, yet has not been compensated for in
any way. Now, since the School did not know about the asbestos either, imagine
that Prof. Henderson goes to the administration, makes them aware of the situation
and kindly asks them to remove the asbestos. Unfortunately for Prof. Henderson,
the administration is, as academic institutions tend to be, cost conscious
and responds that they simply cannot afford to remove the asbestos.
Since Prof. Henderson is a free individual, he is free to seek employment
elsewhere, so he begins to look for a new position. Imagine now though, that
there is asbestos in virtually every academic office in every institution of higher
learning in the United States. But in Prof. Henderson’s view of the world, once
this becomes known, there would be a series of institutions experimenting with
asbestos-free workplaces, so, since he prefers an asbestos-free workplace, he
should have no trouble finding an institution that was willing to experiment in
this way and bear a cost that they believe to be large.
It is possible that this imaginary world could work this way, but we do not
share the same confidence in the willingness of academic administrators to be on
the cutting edge. Instead, we see the asbestos as a clear externality that has been
imposed on Prof. Henderson without his knowledge and without any sort of compensation.
Moreover, his ability to change that situation is severely limited.
Likewise, workers in restaurants and bars are not compensated for bearing
the risk associated with high and repeated exposure to secondhand smoke. Just
as the government has taken action in numerous cases to protect workers from
unnecessary and extreme risks, we see laws that end smoking from bars and restaurants
as laws that remove an externality from the workplace.3
. Je moet maar eens nagaan hoeveel mensen volledig zonder de auto kunnen zonder heel veel tijd te verliezen of van werk te veranderen. Het feit dat de parkingen aan een station altijd vol staan op een werkdag zegt ook al genoeg.