Externalities

Externalities is a word we use to refer to unpaid costs or benefits. Because we're Liberals, and because we believe in market economies, we sometimes use market-specific words to express ideas. Externalities is one of those ideas. In production, the total cost of an item produced is the total of the costs incurred in it's production and presentation at market. Sometimes, the total cost fails to include all the costs incurred in production of an item or provision of a service. When costs are incurred (or benefits are realized) by people who aren't party to the market transaction, we call those costs external costs (benefits) externalities.

The most obvious externalities are pollution. Pollution is a common side-effect of many human activities which lowers the utility, and therefore the value, of someone's property, or according to arch-conservatives, nobody's property. The producers of external costs may, or may not have been aware that they were generating external costs.

In theory, our system provides means to recover external costs through the courts. In reality, using the courts is difficult and expensive, and only the most affected will likely attempt to recover through the courts. We liberals believe our system also provides for the possibility of government intervening to address external costs. In general, we Liberals would prefer that external costs be estimated and assigned to producers (internalized) and that government use the revenues collected to mitigate the damages of the externalities. We believe that our government has the power and the responsibility to do this (not only to protect our lives, rights and our private property, but also our common rights and property), but many conservatives and of course many of the producers of externalities deny that our government has the Constitutional power.

We also believe that in the case of some externalities which affect property beyond the control of any nation or government, it is proper to find a means to internalize those externalities.