Sunday, October 28, 2007

Market Externalities in everything...

Routes of Infection: Exports and HIV Incidence in Sub-Saharan Africa

Free trade has externalities, including some of our most important diseases. (Also invasive species.)

Added to the Criticisms of Neoliberalism, Capitalism, and Free Markets index.

Very simply, trade has always been a substantial route for infection, including the black plague. Such externalities do not mean that trade should be stopped: rather they mean that efficiency should be improved by internalizing those costs of trade. Probably by government regulation, which may be the best of the second best alternatives.

4 comments:

Glen said...

What makes you think the negative externalities of trade outweigh the positive externalities of trade?

If, as I suspect, the positives outweigh the negatives, then anything you do to hamper trade is likely to on net do more harm than good to innocent third parties.

And that's without even accounting for the negative externalities of the government regulation being imposed...

Mike Huben said...

Glen, in the case of contagious disease and invasive species, it is very easy for even tiny amounts of trade to result in enormous costs to third parties. Recent examples have included Foot-and-mouth disease outbreaks in Britain.

Regulations aimed at preventing and reducing spread of disease are a vast improvement over lack of concern.

Your question "What makes you think the negative externalities of trade outweigh the positive externalities of trade?" is misleading at best, and stupid at worst. Misleading if you are suggesting that we consider the sum of all trade. Obviously, some regulations are aimed at specific trade with large negative externalities. Stupid if you think (for ideological reasons) that each part of trade has more positive than negative externalities.

Lester Hunt said...

So one bad thing about free trade is that as people come into contact with one another they will catch each others diseases. Isn't that an argument against trade as such? In fact, isn't it an argument against human contact as such? Honestly, that may be the worst argument I have ever seen. (Note that it is not to be found in the linked article.)

Mike Huben said...

Well, Lester, it's obvious you've never studied epidemiology.

As I wrote above, "Regulations aimed at preventing and reducing spread of disease are a vast improvement over lack of concern."

It's only ideologues who think regulation is all-or-nothing. Sensible pragmatists understand that it is about mitigation, but ideologues denounce such "halfway measures" as inconsistent and thus foolish.