Why are questions of following sort not subject matter of economics or science?
“What about rain? How will the market handle this?”
“What about earthquakes? How will the market handle them?”
“What about ugly housing, unpleasant lawns, ugly babies, ugly people, unkillable bacteria, and so on”
What do these questions have in common?
Point 1.
Whatever is not capable of being produced is not any economic good. How does government or anyone else “provide” “rain” when people want “rain” and cute babies instead of ugly ones? It does nothing of this sort; on the other hand, people can produce more or less potato chips and computers.
Potato chips and computers are goods. Rain, ugly babies, antibiotic resistent diseases and so-called “externalities” are disasters.
No; rather government does something else when it claims to “provide” externality-related “goods” (point number 2.)
Point 2.
There are no things with effects external to the whole world and all its people, says Mises. This is merely most famous saying in all economics: there is no free lunch. Someone pays. Guyot said it earliest: somebody always pays.
In all cases, somebody already pays for goods on market: people who buy them, if they are sold, or people who produce them, if they fail to be sold.
In same way, somebody already pays for disasters, in our whole world.
In all cases, effects external to cause are paid by somebody; always. In most cases, these effects are not even caused by people, e.g., bacteria or rain or earthquakes or ugly babies.
Government merely uses force to change who pays, say, by causing other people totally unaffected to pay costs of someone losing their crops to floods. Government contributes absolutely nothing to “correcting” problem of disasters, because neither government or markets have disasters under their control.
So what? So why should other people pay? We can affect quantity of goods and who pays for them. We cannot affect quantity of disasters, merely who pays for them. But why should government change who pays for disasters?
What you “externality needs government to correct”-people are arguing about is:
who pays, which is value judgment.
Why, you say, government can provide pretty building and cute babies and rain, because it can:
a) tax companies in favour of tourists.
b) tax mothers in favour of onlookers
c) tax all people, instead of letting costs of flood or dry season fall exclusively on farmers, as they normally would.
This does not produce anything. This merely says some people must pay instead of other people who would otherwise pay, depending on whose votes are more numerous.
Science does not deal with value judgments. Values are just A, B, C, …
Markets do not fail, if people you like have to pay for disasters, as opposed to people you dislike. Maybe your making the value judgment, personally, when you say markets fail to provide for disasters?
Gravity does not cease to apply to objects in physics when a baby is falling out a window as opposed to when a rock falls out a window. Neither imply gravity is “bad.” In both cases, these things go “crunch” when they hit the sidewalk. No more. No less. (William Sumner’s famous example).
Scientists do not say this is good or bad, they merely say it will happen if things get chucked out of windows. Scientists do not “side” with the babies against gravity. Since: gravity is neither “good” nor “bad;” rather, scientists say: “don’t throw babies out of windows, dummy.”
When rain, cute babies, pretty lawns, sunrise, earthquakes can be actually produced or not produced, as opposed to something merely endured by humans, i.e., when technology–additional capital–makes these things themselves capable of being actually changed, then the market deal with them and they enter the province of economics. When this happens, they are treated as economic goods just like computers and potato chips. By markets. Not by government. Government redistributes, but never produces anyything, either way.