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Comment by rayiner | Hacker News Reader

Nobody ever seems to realize how un-economic arguments like these are. Say there had been a coal tax from day 1 in England that internalize the external costs of coal. Saying the market wouldn't have still gone through the industrial revolution is tantamount to saying that industrial society is not economically efficient! Because that's exactly what things like coal taxes do--let the market manage the externality to allow an efficient equilibrium to be reached.

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Exactly, he externality argument is about economic efficiency, and does not value environmentalism at all. It's about discovering the dollar cost that a single entity is extracting from others property. Many environmentalists hate it because of that; it's an argument that inherently trusts in free markets, instead of environmental purity.

A lot of environmentalists hate it not because of the trust in the markets per se, but because they see policy makers tend to discount the economic value of the environment. If you show that something is causing $100m in externalized costs, even if the government acts to mitigate it might only shift $20m in costs (because "jobs"). Which is un-economic, of course.

Saying the market wouldn't have still gone through the industrial revolution is tantamount to saying that industrial society is not economically efficient!

Isn't that rather like saying that there wouldn't have been a strictly monotonic route from the pre-industrial society maximum to the industrial society maximum? There might have been, or might have not been, but a priori it's not absurd to postulate that with coal tax from day 1 the road to a more efficient final state wouldn't have been blocked.

It's not absurd, it's uneconomic. Under conventional economic theory, internalizing an externality will lead to a better final equillibrium, not block the achievement of that equillibrum.

Why can't there be multiple equilibria?

There are multiple equilibria, the question is whether they are efficient. Whether or not you internalize the environmental costs of say coal power, the economy will reach an equillibrium. If the negative externalities of coal are not internalized, that equillibrium will involve a higher than efficient level of coal usage.

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