On a train journey across Austria this spring, seated in the “quiet car”, I found myself across from what I can only describe as the world’s gayest Chinese boy. Dressed in pink capris, with shiny waxed legs, he occupied a four-seater with his mother and sister and began unwinding an endless soliloquy in high-pitched Mandarin. His family sat nodding and smiling in an encouraging way as he piped his spiel throughout the carriage. After a few minutes I moved a few seats away, but his sing-songing voice continued to irritate me. I put in earplugs but they still didn’t muffle him. Finally I removed myself to the far end of the carriage where, with earplugs in, his chatter was muted enough that I could almost forget he was there.
It got me thinking about negative externalities. That’s the name economists have given to the costs of activities that are borne not by the people engaging in them, but by innocent bystanders.
The classic example is pollution. A guy builds a factory that pumps acrid smoke into the air. He enjoys the profits from the factory, but the costs of living with the pollution are borne by the people living downwind.
Another example occurred in the years running up to the 2008 financial meltdown, in which investment bankers trading in risky and poorly-understood securities enjoyed huge profits, while the costs of the resulting economic crisis were borne by taxpayers.
The thing about these kinds of negative externalities – pollution and financial risk – is that they are not entirely external. They’re shared, at least to some degree, by the people who generate them. Those people are therefore sensitive to suasion by moral or governmental authority.
The guy with the factory might not care about the people downwind from him, but he’s not enthusiastic about toxic clouds per se. They’re an unfortunate side effect of the profit he seeks. He might be convinced to sacrifice a part of his profit in order to create a cleaner atmosphere which he and his family can breathe along with everyone else.
Nor is the banker with his profitable but risky securities keen on destabilizing the whole economy. He doesn’t want vagrants throwing rocks at his BMW as he drives to work through streets lined with derelict shops. Nor does he desire the higher taxes that must eventually be implemented to pay for the bank bailouts his actions necessitated. He might be convinced to give up some profit now in order that in the future he and his children can walk the streets without fear of being mugged.
But then there’s the negative externality of noise pollution, as exemplified by that Chinese kid on the train.
The thing about noisy people is that they don’t regard noise as an unpleasant but unavoidable side effect of doing something else they enjoy. The noise is what they enjoy. They’re not just unsympathetic to the argument that their noise makes bystanders unhappy, but uncomprehending. To them it seems paradoxical. If the sound of my chattering voice is so pleasant to me, that Chinese boy would argue, how can it be unpleasant to everyone else?
If the sound of my motorcycle engine echoing down a city street gives me such a thrill, thinks the biker, mustn’t it give a similar thrill to that lady sipping tea on her balcony?
If the sound of my shrieking children fills my breast with maternal contentment, thinks the mother, mustn’t it have an equivalently heartwarming effect on everyone else in the restaurant?
If the sound of Blink 182′s Greatest Hits help me to concentrate on my homework, thinks the college student, mustn’t my stereo’s muffled reverberations be just as soothing to the folks in the apartment downstairs?
We can’t suggest, “Let’s all enjoy the silence together,” because silence is not something they would enjoy.
In the absence of arguments that appeal to their sense of rational self-interest, our only options are to wheedle or threaten the noisemakers. Naturally they’re resentful, and ignore or flout the rules whenever they can.
It’s therefore not surprising that in the last hundred years, while we’ve enjoyed considerable success at reducing pollution, and moderate success at regulating finance, the world has gotten noisier and noisier. I see no prospect of reversing the trend. As so often happens, the loudest voice wins.