Its not Austrian, but this is the best paper I've read all year:
http://www.sp.uconn.edu/~wwwciom/Dahlman.pdf
In a nutshell, the author shows how the effects of many externalities are pareto-effecient, and thus really aren't externalities at all. Put another way, externalities aren't the problem, transaction costs are.
Looks interesting. I'll probably give it a read later.
-Jon
Freedom of markets is positively correlated with the degree of evolution in any society...
If I read this correctly, it remains a matter entirely of judgment whether to use government or not in order to deal with externalities. It leaves a lot of subjectivity to the reader. However, why would transaction costs be a problem? Transaction costs are private endeavors that are profits for some microeconomic entity, so somehow those transaction costs should be an addition to domestic product.
Art transcends ideology.
http://mises.org/Community/blogs/ruben
Read it. It's an interesting article, very Austrian at certain points (especially in how it treats "transaction" costs as a cost like any other, to be incorporated in valuations of the good.) I don't agree with the author's solution to lowering transaction costs (obviously), but the rest of his points don't rest on it anyway. He basically does reaffirm one Austrian tenet: that implicit in all public goods theories is the smuggling of the theorist's normative preferences.
Jon Irenicus:I don't agree with the author's solution to lowering transaction costs (obviously), but the rest of his points don't rest on it anyway.
Well, the author makes no assertions that government can in fact reduce transaction costs in a cost-effective manner, he simply acknowledges it as a possiblity. His last comment about treating government as an endogenous organization instead of a dues ex machina suggests to me that he is skeptical.
Jon Irenicus: He basically does reaffirm one Austrian tenet: that implicit in all public goods theories is the smuggling of the theorist's normative preferences. -Jon
He basically does reaffirm one Austrian tenet: that implicit in all public goods theories is the smuggling of the theorist's normative preferences.
That is so true! These authors of mainstream economics textbooks are really skillfull in hiding this fact and most people when first introduced to the study of economics (and who are not familiar with the austrians) don't notice this "smuggling".
Yeah, his conclusions were pretty tentative. Anyway, I think he hit the nail on the head by treating the topic of externalities as a matter of transaction costs. It's basically how I approach the topic as well, at least by drawing out what is implicit in Hoppe's work. He seems skeptical of mathematical approaches to economics as well.