Hi Robert. I think you’ve made one great point in there (the last one) — so I’ll speak to that first. In some ways, your LED billboard is a good example of how, with the right communication and outreach to the community, you managed to try and price some of the externality. What you actually offered though, was “Do you want to pay us not to have the billboard on this building? It might go on one of these other buildings instead though”. Unsurprisingly, your neighbours didn’t feel like that was a sensible trade, and your building (cleverly) saw the billboard as a great opportunity for them to increase their quality of life. I admit this isn’t the strongest argument in the world, but you didn’t give them the opportunity to pay for the negative externality to go away — you gave them the opportunity to pay for it to maybe be built on another nearby building.

Don’t get me wrong — this was a very commendable and industrious thing that you guys did. I don’t think it proves that there was zero negative impact, it just demonstrates that you can only sell what you control.

A few of your points in the middle, such as New Orleans, I don’t disagree with. I’m not saying that all things the government does are smart — you don’t need to convince me that that’s stupid! Equally, I’m not commenting on bringing in universal health care or whatever — that’s a different argument, and I might even be on your side ;).

On to the rest…

“Incrementally”; you seemed to have missed this in reading my response. The point in speaking incrementally is that you can identify a theoretical basis for something, on sound logical grounds, and then work out the details. I don’t need to claim huge harm for my argument to stand — what if I could argue that the total discomfort caused to me by all the cars and pollution and shit was $5; that would still be a negative externality. You’ve argued against my comment on incremental negative externalities by saying that I need to prove harm — fundamentally misunderstanding negative externalities. I’ll make this simple for you, with one example.

I am a cyclist. I ride my bike in London. I sit in traffic, breathing in pollution from old vans that is so dirty that it is visible. It is unpleasant and uncomfortable. (Breathing in particulates also has significant and proven health impacts — you seem to be worrying about this, saying that “you need to show harm”, which simply isn’t true — but luckily for you, I’ve been generous and provided an example with clear harm). If you were to put a cost on this (like in your building example) I would pay it. So would lots of other cyclists. The flipside of this, is that the drivers, who are imposing this unpleasantness, discomfort, and health impact onto myself and other cyclists, should be paying for it. There is no mechanism for this. That is a negative externality in play.

Here’s one example for you: https://www.who.int/air-pollution/news-and-events/how-air-pollution-is-destroying-our-health

Other than that, please look at this. It’s a good article explaining Negative Externalities, and hopefully should put to bed your notion that harm needs to be caused: https://www.economicsonline.co.uk/Market_failures/Externalities.html