 Okay, well I guess we'll go ahead and get started. I was listening to Peter Klein doing his talk, I believe that was yesterday, and he had the unenviable position of standing between students and lunchtime, and at least I don't have that position, but I do have you right after lunch, which means you're all drowsy and you're thinking about your, I don't know, digestion or something instead of thinking about anything of intellectual value. But I don't know that there is a real optimum time for students to sit in a classroom. Early in the morning they haven't had their coffee, they're still waking up, and late in the afternoon they've got other things to do. I think there's always an excuse for any time period. So I'll try to keep this interesting, but I've taught at the college level for I guess now 14, 15 years, something like that. I started when I was a graduate student here at Auburn, went through the Mises program, went through Mises University just as you're doing here, and I can tell you it made a big impact on me and has been ever since then something that I've looked back on as a way for me to pick up on some things I would not have picked up in the classroom myself. So I think you're definitely doing the right thing. Being here, going through these classes this week, I know that as Professor Hoppa mentioned on the first, I believe it was Mark Thornton mentioned on the first night, you have to explain what you're doing this week to your friends and family that probably will not understand why you would choose to do something like this. But I'm sure by this point in the week you recognize the value. I have always been interested in environmental issues and that's one of the areas in which I worked when I was in graduate school. In fact, my dissertation was on environmental regulation. And I think that if we can tackle this and understand it from an Austrian perspective then we'll be able to answer some of the toughest challenges that are presented to free market advocates. It's a difficult set of issues I think, but it really boils down to two basic subsets of issues. One is environmental resource use. How are we going to use trees and fisheries and coal deposits and oil deposits and that kind of thing. And then also externalities, what's commonly called externalities are spillover effects. What happens when you engage in some kind of consumption or production activity and that has a side effect that you may not have intended on a bystander. I'm not going to spend a lot of time on the environmental resource use issues here, although that is interesting and I think that there's a lot to be said for our understanding of how markets can handle resource questions. But you see a lot of the discussion of this and I'd encourage you to look into this further. I mean, for example, we have the current proposal to ban incandescent light bulbs and more or less force people to use these little spirally compact fluorescent light bulbs or LED light bulbs or whatever. I was in Lowe's the other day and was shocked at the price of some of these things. But apparently our intellectual betters in Washington know better what kind of light bulb we should be using and that we should front load the cost of our lighting. That's basically a resource use question. How much energy should be used? And of course, when regulation enters into that picture they're making these decisions without any appeal to prices or the vital information that prices provide. Or we could talk about deforestation and the concern that people have about chopping down all the trees in the forest. I have students who will tell me that we should go green. We should use fewer, use less paper, recycle the paper that we do use, print on both sides and that kind of thing. And I say, well, why would you want to do that? I thought you like trees. I get this kind of, I say, well, I print out my tests on lots of paper and hand out lots of blue books for these students to write their essays in and use up lots of paper. And I always tell them, I'm handing you lots and lots of paper so that the tree farmers will plant more trees. And of course, if you recycle your paper then that's slightly reducing the demand for virgin timber, which means that farmers will go plant something else besides trees. So I really don't understand some of this, I guess, where some of this is coming from. If you want more trees in the ground and it would make more sense to use trees so that farmers have an incentive to plant more of them. But I always get the slightly stunned look when I bring this up that recycling is actually going to result in fewer trees. We could talk about endangered species and that's really another resource use question, what happens to endangered species? Well, it looks like the Endangered Species Act has not helped. Species that land on that list tend to stay on that list. They don't seem to have a whole lot of success getting off the list. And a lot of that is because once a species is on the Endangered Species list, it's forbidden to own the property. And of course, we know that a lot of the resource use problems result from an absence of property rights. There's a tragedy of the commons problem that we might mention later. Once something is removed from the private sector and the private property rights are eliminated, then very few people have an incentive to conserve the resource. And of course, the law that regulation that dates back to the 1970s on fuel economy and every so often you'll see Congress debating again whether or not to raise the corporate average fuel economy limits. And we might talk about that a little bit later if we have time. Basically, that has resulted in hundreds of thousands of deaths and injuries, if not millions of deaths and injuries, since the institution of that law simply because that incentivizes automakers to make cars lighter than they otherwise would. So we end up with cars that may get better gas mileage, but they get very bad human mileage. That is, you consume a lot of human lives driving on the road, even while you're consuming less gas. And so those are all valuable and I think important considerations. But what I'd like to spend more time on here is understanding the role of the state, which is key to both of these issues in dealing mainly with problems of side effects, pollution and so forth. Governments suffer from basically two problems, two key problems. There are others I suppose, but one is the socialist calculation problem. One of the lectures here earlier this week mentioned Mies' 1920 article on economic calculation in the socialist commonwealth. And that's where he lays out this argument that socialist economies cannot calculate, they cannot decide how to use resources, how much and what quantities, what production processes to use and with the absence of price information that calculation is impossible. The other problem is what I would call incentive incompatibility or you might hear this referred to in a classroom in some context as a principal agent problem. That is, if you send these people off to your state capital or national capital or wherever that you expect them some sort of wildly optimistic frame of mind to do something on your behalf, the politician or bureaucrat, anybody else working in government has not dispensed with his incentive to do things that benefit himself as a person. And so we have individuals who are in office basically for themselves and they tend to do things that get them reelected or get them some sort of appointment to a board of directors or get Johnny Jr. Senator into law school or enhance their law practice or whatever it is that they would like to do for themselves. And it seems that this approach to understanding political behavior explains a lot more of the laws and regulations that we have to live under. Some of the thinking on environmental issues assumes that politicians and bureaucrats are directing their efforts to do something for the environment. I think this is a problem. Economists have shown that a lot of environmental intervention can be explained a lot better if you simply assume that these people are not disinterested philosopher kings. They have campaigns to fund children's into college careers to further and other things. One example I like to use of this is a regulation that appeared in 1976 called the Resource Conservation Recovery Act. And what this regulation did is essentially require firms that created hazardous waste to dispose of this waste through incineration. And the incineration industry grew largely as a result of this particular law in 1976. Well basically what they do is they take hazardous waste, a lot of which is flammable, petroleum derivatives and that kind of thing, paint thinners and that sort. And they'll subject this stuff to very, very high temperatures and break it down chemically so that it's some sort of inert ash or gas or something that's less harmful than the original material. That's basically the idea. Well it turns out that the cement industry, which also uses very high temperatures to create cement, they found that since they already had these very high temperature ovens they could simply pipe in some of this hazardous waste and incinerate it along with their production process and do so at a much lower cost than the incinerator industry. And the incinerator industry at the time I was looking at this was charging a price that was almost three times the price that a cement kiln would charge for essentially doing the same thing. And so the cement kilns began to run the incinerators out of business and they had captured over 60% of the incinerator industry's market by the early 90s. And here on the slides I've got a picture of a cement kiln, the yellow pipe that you see there is piping in some hazardous waste in the cement kiln. On the left you see, I'm from South Carolina, we've got cement kilns there, both states do and that's one in Holly Hill, South Carolina, and these cement kilns are making a pile of money on this kind of side business of burning hazardous waste. Well what the incinerator industry decided to do was not innovate to reduce their costs or go quietly out of business because of this process of creative destruction that Joseph Schumpeter mentioned, but they decided to fight this by using the state, the coercive hand of the state. So they decided what they would do is they would launch a series of lawsuits against cement kilns complaining that cement kilns were polluting the environment by burning hazardous waste and try to get them shut down. And they did not do this directly, but they ended up doing this more or less under the table by funding supposedly grassroots citizens organizations giving them money to go off and sue these cement kilns as if they were some sort of concerned citizen group. Well that's political behavior for you, that's political behavior that is aimed at reducing competition rather than doing something that was beneficial to the environment. There was not a lot of evidence that cement kilns were any worse for the environment than the incinerators were. In fact, I don't often quote people from the Sierra Club, but here's a Blakeman early who was from the Sierra Club and argued that the commercial waste industry had an interest in improving, they call it improvement, but improving regulations sufficiently to drive mom and pop operations out of business, in other words, reduced competition. Now where I'd like to spend most of my time is an article, a fairly lengthy article by Murray Rothbard, called Law, Property Rights and Air Pollution. And this is where you start to see the real distinctives of the Austrian approach to environmental issues. It's a very long article, which is only fair because Ronald Kose's article from 1960, which is the, I think at least it used to be the most cited article within economics, and it was 44 pages which was considered to be quite long for an article, most of that's historical cases and so forth. But I'd like for you to understand why it is that Austrians tend to think differently about environmental issues. The Austrian libertarian approach to environmental problems is based on a tort law approach. That is, if someone aggresses against another person by invading their property or affecting their person with pollution, then they can be held strictly liable in a court and required to stop. So, what is a tort other than a nice little dessert thing? This is tort without the E, and in the law of torts, a harm to another individual is understood as a physical invasion of a person or property. And as we'll see a little bit later, we'll talk about this in a little bit more detail, tort law requires the threat or the invasion to be near and imminent, to be personal, to affect a particular person. Not some sort of, well, I felt bad as I drove over the bridge over the creek because I knew that the plant five miles upstream had dumped something I don't really know much about into the stream and my knowledge of this chemical in the water made me feel bad and therefore I'm suing. Well, under the traditional understanding of how to bring a lawsuit or what the rules are of standing to sue, that's not typically permitted. I'd be happy to talk about standing later if I had more time, but I think I'll pass on that now. The cozy approach, if I can get my slide to change, there we go, there's Coase, who is by the way, 100 years old now, seems like economics is the field you want to go into if you want to live a very, very long time. Hayek, he says, people tend to live a long time in economics for some reason, especially if you win the Nobel Prize, as Coase did, and Coase is known for several things. He did some work on, he's famous for an FTC paper that he did before this 1960 paper that I want to talk about here, and Dr. Klein mentioned Coase, not unfavorably in that other context, but Austrians don't think so highly of Coase when it comes to environmental issues or the Coase theorem. The Coase theorem basically says that in the absence of transaction costs, the outcome in contact to pollution is to be the amount of pollution. The outcome will be the same regardless of the initial assignment of property rights. Now, I'll take a minute to try to explain why that is said to be so, but we all know in Coase knew that in fact, transaction costs aren't zero, so Coase would have to, under his thinking, would have to balance costs and benefits to both sides and make a determination of what was the appropriate use of the resources who should have the right to pollute. Sometimes people make the mistake of saying, well, in a Coasean world, transaction costs are zero. Well, no, Coase didn't say that transaction costs were in fact zero. He said if they were, then these things would happen. I'll get my slide to change again. It's not changing. Why is that? There we go. Okay. This is Harold Demsets. If you're not already overburdened with reading from this week, there's a very interesting exchange between Walter Block and Harold Demsets that appeared in the review of Austrian economics some years ago. And I believe one or two elements of that exchange occurred elsewhere, but that's a good exchange to look at. Demsets was defending the Coasean approach. Block was defending the Austrian approach, of course. And he was saying that the Coasean approach is neglecting the problem of the subjectivity of costs and of benefits. Coase and Demsets have asserted that it doesn't make any difference how property rights are allocated in cases of conflicting interests provided that property rights are assigned to someone and then defended. So they would say, well, the basic problem is that property rights don't belong to anybody in particular. And so there's this problem of pollution that will exist until property rights are assigned to somebody. And the main problem is that the courts need to make these property rights determinations. Well, there's a problem with this, several. Coase and his article, which if you haven't read, I would encourage you to read. It is 44 pages. Just promise me that if you read the Coase article, you'll also read the Rothbard article, Law of Property Rights and Air Pollution. The Coase article goes through a number of cases where there was some kind of dispute over property rights. Brewery that's got vapors that are flowing as somebody else's building or one of the most famous examples was a railroad back in the days of coal-fired locomotives that was spewing embers onto someone's field, burning the field. And then whose fault is this? Is it the fault of the farmer for planting crops too close to the tracks or is it the fault of the railroad for spewing embers? And of course this goes to court. And we have this sort of Coasean argument that if there are zero transaction costs or at least very low transaction costs, then the farmer and the railroad could come to some sort of agreement after the court makes its decision. So let's think about this a little more carefully here. Let's suppose you've got a, I'll use an orchard, because Block and his exchange with Demsets mentions what he called Austrian pure snow trees, if I remember correctly. And so let's suppose we have this grove of trees or an orchard and the orchard is being damaged by this passing railroad back in the days of coal-fired locomotives and this embers are falling on the orchard, burning the orchard, damaging the orchard and the farmer, the orchard grower complains, takes the railroad to court and says, look, you're burning my trees and the court then says, well, we're going to have to assign the property rights to somebody. Either we're going to assign the property rights to the railroad and allow them to continue to spew their embers and you're just going to have to do something, build a wall or move your trees or something to get the trees out of the way of the embers. Or we're going to assign the property rights to the orchard grower and say that the orchard grower has the right to be ember-free and the railroad then has to stop. Well, let's suppose the court looks at the market value of the orchard and the orchards and the court says, well, looks like the orchard is worth about $60,000. And let's suppose the railroad would have to incur a cost of $80,000 to install some sort of device on its trains to prevent sparks from flying out from trains. So the court, let's say, gives the rights to the farmer. Well, the farmer's very happy and the railroad then has to incur this $80,000 cost to install this device to prevent sparks. And the railroad might come back to the farmer and say, looks going to cost us $80,000 to deal with the sparks. You won the case. We don't want to have to spend this $80,000. So would you take some kind of payment in exchange for putting up with our sparks? And the railroad may be able to entice the farmer with some sort of payment. Say the farmer says, well, yeah, if you pay me $60,000, then that'll satisfy me. You know, you can go ahead and throw your sparks. The railroad would rather pay $60,000 than pay $80,000. So the farmer gets paid off and the sparks continue to fly. Well, suppose the court case goes the other way. The railroad wins. And so now the farmer says, oh, well, I'm at a loss here. Maybe I can afford to pay the railroad, even though the railroad won. Maybe I can pay the railroad to stop their sparks. And so the farmer thinks, well, how much is the damage to me from having my orchard burnt? However much that damage is, that's the limit that I would pay the railroad to stop. And Coase would say, well, if the farmer's field is valued at or orchard is valued at $60,000, the farmer would go to the railroad and say, well, would you accept a payment of, say, $59,900 to stop your sparks? The railroad, of course, would say, well, no, because it would cost us $80,000 to stop our sparks. So $59,000 is not going to be enough. And so Coase is pointing out that in either case, whether the farmer wins or the railroad wins, the sparks continue to fly because in the Coasean view, that's the most efficient outcome. That's the lowest cost outcome. Now, maybe you caught the problem with this. I mentioned something a few minutes ago, and maybe you caught it, I hope so, after a few days here. Maybe you've done some reading on this. Not the transaction costs, it's the subjective costs. Remember, I said that the courts look at the farmer's orchard, and the farmer's orchard is valued by the courts at $60,000. The court says, well, comparable orchards in your area, or we'll do a little appraisal here, worth about $60,000. If you were to sell your orchard on the open market, it would bring about $60,000. So the court will then say, and we're assuming the court is trying to do the right thing, which I said earlier is not necessarily a good assumption. Let's suppose the court's trying to do the right thing. So they say $60,000 is the market value. For most of us, the market value of our assets is less than the value to us of those same assets. How do I know? Otherwise, we would put them up for market, up to the market. We'd try to sell them. The minute my house becomes less valuable to me than it is to the rest of the market, assuming low transaction costs, then I will sell it. The fact is that my house is worth more to me than the rest of the market, therefore, I keep my house. Of course, transaction costs can be a problem, but suppose the orchard is sacred to the farmer. And that may sound a little silly. I don't know. I don't know a whole lot of people who worship trees, but it's... The point is that you could have a value to you, a subjective value that is considerably higher than the value to the rest of the market. It may be that the farmer thinks, well, if I allow one of these trees to perish, I will spend an eternity in torment as a consequence. Now, we may say, well, I don't believe that. That's not... Why would any court accept that as an explanation of the value of the orchard and what? It doesn't matter. Farmer has a value on that orchard. It could be very much higher than the $60,000 to the market. Let's say it's a million dollars. For a million dollars, he will suffer whatever divine consequences accrue to the cutting down of the trees or the burning of the trees by the railroad. So now the court comes to the farmer and they say, well, look, we're going to rule on the railroad's behalf. I'm sorry, but your railroad made a good case or whatever. And so now we have farmer goes to the railroad and says, look, please stop throwing sparks on my orchard. The railroad says, well, look, it's going to cost us $80,000 to stop. What have you got to offer us? The farmer says, well, look, I can't sell it because it's only worth $60,000 to other people, but it's worth a million dollars to me. Your $80,000 cost of mitigating your sparks is nothing compared to my million dollar loss if you continue to throw them. The railroad says, well, okay, but that's not sufficient to induce us to do what we what you want us to do. But this is the problem. A problem. I say it's a problem because in this case it's produced this massive inefficiency. It's causing the farmer to lose a million dollars while the railroad saves $80,000. So there's an efficiency problem here, but there's another problem beyond this. It's an ethics problem. One of the problems, and this is key, the coast dimsets approach by pretending to be value free is in fact importing an ethical norm of efficiency. They're asserting that property rights should be assigned on the basis of this efficiency, but even if this concept of social efficiency were meaningful, they don't answer the questions of why efficiency should be the overriding consideration in establishing legal principles or why externalities should be internalized above all other considerations. Now we're in the realm of these unexamined ethical questions. Why is it that the right of the farmer to homestead a piece of acreage and keep it from intrusion by others is now tossed out in favor of efficiency? And that is an ethical question. What right do the courts have to ignore such questions? Yes, this is normative, but it's no less important. Efficiency implies a goal, a car that is efficient might be fuel-efficient or it might be efficient in the use of the materials used to manufacture it or efficient in some other way. But what's the goal here? Is it lower dollar costs? Is it liberty? Is it the efficient use of some other resource? Rothbard said we cannot decide on public policy, tort law, rights or liabilities on the basis of efficiencies or minimizing of costs. This is in a chapter out of Marty Rizzo's book, Time and Certainty and Disequilibrium. He said economists will have to get used to the idea that not all of life can be encompassed by our own discipline. A painful lesson no doubt, but compensated by the knowledge that it may be good for our souls to realize our own limits and just perhaps to learn about ethics and about justice. You may remember from the talk just before lunch by Gary North. He's made reference to the fundamental problem in our human hearts. Well, now we're starting to talk about things outside of our discipline, but do not make the mistake of thinking that economics can explain everything. It cannot. Well, one of the arguments against Rothbard's position, against what I would call the Austrian position, is that over the years, common law judges will always arrive at the socially efficient allocation of property rights and tort liabilities. So we get this kind of evolution of the common law toward something that is efficient. Well, Rothbard responds by saying that law is in fact normative. He says whatever positive or customary law has emerged cannot simply be recorded and blindly followed. All such law must be subject to a thorough critique grounded on such principles. So if there are discrepancies between the actual law as it has emerged through the common law process, if there are a contrast between that and principles of justice, as there almost always are, then it would be wise to take steps to make the actual law conform to the just principles. Now, in contrast to the Causian approach, which basically says it doesn't matter if your family has held this property for five generations, or you arrived on this unclaimed property many years ago, you staked it out, you farmed it, you built a house, you buried your family members on it when they died, and you lived here for five generations, and the Causian approach would say, well, so it's not necessarily efficient for you to continue to stay there, why should any of that matter? Well, Rothbard would say we need to allow people to homestead unclaimed property and beyond the obvious homesteading of taking a piece of property and blending your labor with it in that Lockean sense and working land, making it yours by that process. Homesteading can be interpreted in a much broader sense than this. This could include homesteading a certain level of environmental cleanliness or dirtiness if you prefer to look at it that way. So if another party alters that level of environmental cleanliness without permission, then the property owner can sue for cessation of that intrusion. So Rothbard would say that no action should be considered illicit or illegal unless it invades or aggresses against the person or just property of another, and that includes particles that float over your property into your airspace, noxious vapors or something that would affect your ability to enjoy your property. Now let's be clear here because there's a lot of confusion on this. If something happens as a result of another person's actions that reduces the market value of your property, this is not the same category of behavior. This is not an invasion. People talk about this often in reference to say Walmart. Well, Walmart appeared in the neighborhood and the property value of the hardware store and local grocery store and whatever else fell because Walmart arrived. Now you're in school and you're learning about externalities and so forth, they'll call this a pecuniary externality. The value of your property fell as a result of somebody else's actions. The Walmart appears, the Home Depot appears or whatever, and as a result, your property is now less valuable. That is not an invasion. You do not have title to other people's minds. You do not have title to the valuations that other people put on your products. So if a Walmart appears in my neighborhood and reduces the value of my store because the customers that I might have thought of as my customers, they're not really my customers. If those customers decide that Walmart's offering something that they prefer better than what I am offering, then they are perfectly free to do that. I did not own my customers. I did not own their minds or their valuations or their continued business. And when people say that Walmart forced another business to close or shut down somebody else's livelihood, Walmart did not do that. Walmart simply offered people something that they preferred better. The customers shut down the local hardware store. If in fact that's happening, and of course there's a big debate about whether in fact these are cases made up by labor unions who have it out for Walmart or what, but if that in fact is happening, and I'm temporarily granting this, that as a result, Walmart's appearing, some other stores are shutting down. This process of creative destruction is inherent to the market process and does not constitute some sort of intrusion on somebody else's property. No one has the right to protect the value of their property because the value is simply the reflection of what people are willing to pay for it. Nobody has a right to their customers. Walmart has done nothing ethically wrong from the libertarian perspective in opening a store. Well, libertarian theory adopts a strict liability approach. It says that even if you did not intend to hurt somebody else, and I mean a real, a direct action of yours that trespasses on somebody else's property and harms that other person, even if you did not intend to harm that other person, you are strictly liable. So, for example, if Jones assaults and attacks Smith and Smith then in self defense pulls out a gun and shoots Jones or tries to shoot Jones, but in fact the shot goes wild and accidentally hits a bystander named Brown, should Smith be liable for the injury to Brown? Well, under the libertarian approach, most definitely. One way to look at this is to say, well, what if Brown could have foreseen this, this accidental shooting and in his own self defense pulled out a gun and shot, I'm losing track, Smith to prevent Smith from shooting him. Would that be permissible? Well, of course, everybody has a right to self defense, not just Smith, not just the person who accidentally shot somebody else. Unfortunately, the courts do not hold that doctrine. I'm not going to spend a lot of time on that here, but I'll basically say that anyone has the right to defend their property, according to Rothbard, against an overt act initiated against it. We can take this into the realm of property crimes. A victim, according to Rothbard, should be entitled to use any force, including deadly force, to defend or recover his property so long as the crime is in the process of commission. That is, until the criminal is apprehended and duly tried by legal process. In other words, you should be able to shoot looters. Now, you may say, well, that's not very nice. And it also makes it risky for potential victims because you can't say, well, that person was about to do something to me, so I shot him. Well, you have to wait until the crimes in the process of commission. You can't just preemptively strike. Well, that person was making an ugly face at me. My kids do this all the time. He was making an ugly face at me. Well, I'm sorry. But you can't preemptively do something to somebody because you think they're about to do something to you. You think, well, that makes it very risky, makes life risky, because then you have to actually wait until something starts to happen before you can do anything about it. Well, it also makes life less risky in one other way because as a non-aggressor, you're more assured that no, some excited alleged victim is going to pounce on you to perform some supposed act of self-defense. There's a burden of proof on the victim or potential victim to show that there's been some kind of crime committed. Now, just to be clear, I'm speaking in terms of what the theory is on this, not how law actually is. So in any of this, I don't want you to go out and say, well, you know, Dr. Terrell said it was okay for me to do whatever. So I'm not an attorney. I'm not giving legal advice. Please, please, please don't hurt somebody and say that I told you it was okay. I'm embarrassed that I have to say this, you know, really. You also have to establish under this libertarian theory that I'm talking about here, you have to establish a burden of proof between the aggressor and the victim. And that connection has to be beyond a reasonable doubt. You have to show causality in the common sense concept of proof that A hit B. Not some probability, not some statistical correlation, you have to be able to show causality. Now, let's think about homesteading and pollution. I mentioned earlier that homesteading can be seen much broader than simply plowing land and building a barn, digging a well, and calling that farmland yours. You can homestead a decibel level, according to Rothbard. You can say, well, now I built my house and there was an airport nearby and the airport was generating occasional bursts of sound from the takeoff of airplanes and under the Rothbardian sense of homesteading, you wouldn't have any grounds to complain about the airport because the airport was there first. They homesteaded this right to continue to emit this volume of noise. Of course, if the tables returned and I built a house and then an airport appears three miles away and airplanes are flying low over my house and creating all this kind of noise, then I would be able to sue the airport and say, well, look, I homesteaded peace and quiet. I never have had any noises on my property above X number of decibels until you appeared on the scene and started creating all this noise. Air pollution can be homesteaded. You can use air as a dumping ground for your pollutants. You can use air to breathe. You can use air for all kinds of things. And that use, if it's previously unclaimed, then becomes yours. There's a case here that I mentioned, which I believe is referred to in the Rothbard paper, Bove versus Donor-Hannah Koch Company from 1932. Actually, I want to say this is in the coast paper. In any case, it's a case where Koch and Rothbard would come down two different sides of the issue completely. So it's a good example of how the Austrian approach to this differs. The plaintiff in this case had moved into an industrial region where the defendant was operating a coke oven on the opposite side of the street. I don't know what you know about coke ovens, but coke ovens, especially in 1932, were not particularly pleasant places to be around. They emitted gases and noises and fumes and so forth. Well, the plaintiff then tried to go to court to enjoin the coke oven out of existence. So the court then rejected the plea and Rothbard would say, this is perfectly acceptable. This is the right thing the court should do. Court said, with all the dirt, smoke, and gas, which necessarily come from factory chimneys, trains, and boats, and with full knowledge that this region was especially adapted for industrial rather than residential purposes, and that factories would increase in the future, plaintiff selected this locality as the site of her future home. She voluntarily moved into this district fully aware of the fact that the atmosphere would constantly be contaminated by dirt, gas, and foul odors, and that she could not hope to find in this locality the pure air of a strictly residential zone. She evidently saw certain advantages in living in this congested center. This is not the case of an industry with its attendant noise and dirt invading a quiet residential district. This is just the opposite. Here, a residence is built in an area naturally adapted for industrial purposes and already dedicated to that use. Plaintiff can hardly be heard to complain at this late date that her peace and comfort have been disturbed by a situation which existed, to some extent at least, at the very time she bought her property. Rothbard would say, well, in that case, the court did the right thing. Trespass. Trespass is an invasion of the plaintiff's interest in the exclusive possession of his land. Nuisance is an interference with his use and enjoyment of it. The difference, Proser says, is that between felling a tree across the boundary line and keeping the neighbor awake at night with the noise of a rolling mill. Well, Rothbard asks us to consider other ways in which a person's activity may emit something onto our property. And here, he's saying we have to consider whether or not this invasion actually adversely affects the person whose property it is. He says, consider the case of radio waves. We're bombarded by radio waves all the time. These are invisible. I can't detect them. I don't feel worse because of them. There are some people who will say, well, you know, if I live too close to a high voltage power line, it's going to cause some kind of health problem. But difficult to establish that your cell phone or your Bluetooth or your Wi-Fi connection or whatever is going to cause me some sort of harm. We're all bombarded with these things all the time. Are they invasive? Should they therefore be illegal? Simply because we can detect their passage through or around our bodies? Are we then to outlaw all kinds of radio emissions? Well, Rothbard says no, of course not, because these boundary crossings don't interfere with anybody's exclusive possession or use or enjoyment of their property. I'm not hurt. They're invisible. I can't detect these radio waves by my senses. We don't think they do any harm. I mean, I know there's this running debate about whether cell phones held close to your skull can cause some sort of damage over time. But I don't have neighbors walking up to me and holding their cell phone against my head. Other than that possibility, I'm not really concerned about it. I don't have people beaming microwaves into my house. So Rothbard says that the proper distinction between trespass and nuisance between strict liability per se and strict liability on the proof of harm is not really based on whether you exclusively possess this property, but whether you can continue to use and enjoy it. So he says the proper distinction is between visible and tangible or sensible invasion of property, which interferes with your possession and use of it versus the versus the invisible insensible boundary crossings that do not cause you any harm and therefore should not be outlawed unless new information comes out that they do in fact harm you. A related issue is whether my property, my little quarter acre of land in my house sits on, whether I have those rights that extend up into outer space or down into the center of the earth. And of course I have no ability, and Rothbard would say properly so, I have no ability to sue the airlines flying out of the airport five miles from my house or flying over my wedge of airspace. They're not reducing my enjoyment of the property and even if they did, the airport was there before my house and they've homesteaded that right to do that. So there's a difference between use and enjoyment and some sort of absolute ownership. Now what we have in fact is a legal system, it's quite different. Let's talk a little bit about principles of liability. In order to be liable for pollution, the polluter would not have established some sort of homestead easement. Plaintiff must prove actual harm. Now if my neighbor is burning leaves in his backyard on a daily basis or something and this is floating over to my house and I'm coughing and I can't see and my eyes are watering, this, you know, I don't have to go prove that there's actual harm that's readily obvious. But the burden of proof does rest on the plaintiff. Fourth, the plaintiff has to prove strict causality from the actions of the defendant to the victimization of the plaintiff. Again, it can't be that I got sick and you were driving back and forth in front of my house every day on your way to work and so your air pollution from your car caused me to get sick so I'm going to sue you. You know, I can't do that. I've got to show strict causality and this causality and aggression must be proved beyond reasonable doubt. Finally, and this is somewhat more controversial because you see class action lawsuits all the time, there's no vicarious liability, there's only liability for people who actually commit the deed. Only the victim can press a lawsuit. Other people like district attorneys have no standing to sue. You have to show that you personally were harmed. Now, I did some work on this years ago where I showed that a lot of our environmental regulations, in fact all of the major environmental statutes except for I think one or two, dispensed explicitly with the conventional law of standing. And they basically said if you see that the law is violated you can sue the company that's allegedly violating the law. You don't have to actually be harmed by this violation, you just have to see that it's violated. And so this made attorneys and environmentalist groups piles and piles of money over the years because all they had to do is go through the public records of these firms, find where they were making some sort of paperwork violation and they get the firm to pay up or settle with the EPA and then the environmentalist group would often make some money off getting reimbursed for their attorney's fees. I want to say well how can you get money off of being reimbursed? Well, reimbursements were considerably higher than the actual cost of some of these attorneys fees. Some of these attorneys were doing this more or less pro bono or at a low cost to benefit these organizations. And so the organizations had a kind of money mill running for a while by the fact that they did not have to show that they were personally harmed by these violations. Rothbard would just say, look, every statute, every administrative rule is illegitimate in itself invasive and a criminal interference with the property rights of non-criminals. Rothbard is not one to mince words, but this is the view of regulation. You start taking away that the court based tort law approach in replacing it with a statute based approach and you're going to run into all kinds of ethical problems. Any statute, any administrative regulation necessarily makes actions illegal that are not over initiations of crimes or torts according to libertarian theory. So this is why Rothbard is saying you can't make some sort of blanket pronouncement. Nobody can emit more than X amount of sulfur dioxide from their coke oven because you haven't shown that that emission has damaged anybody. Now, if you can, then more power to you, but you cannot impose a blanket regulation assuming damage without showing strict causality. Now, I only have about four or five minutes left. I don't want to run over time, but I did want to mention a couple of things. BP oil spilled. This last year, you know, everybody was concerned about this and a wide variety of opinions on what really happened, what the damage was, and so forth. Let's just look at this for a minute. I think it's interesting as a way of thinking about some of these problems. Matthew Novak had an article that appeared to me this day last year which I would recommend in which he said that the government specifically passed laws that gave the oil companies incentives to drill far offshore in deeper water where the risk is presumably higher. Now, this is an example of government with statutory types of regulation and tax law altering the incentive structure in such a way as to create more environmental damage or at least create the potential for more environmental damage. And yet I have students who continually come to me with some sort of underlying assumption that whatever the government does to regulate with regard to the environment is going to improve the environment. In many, many cases, that is simply not so. So you have oil firms that are drilling farther offshore where accidents are more likely and where the accidents that do occur far more difficult to deal with. This is a map of offshore oil wells that Novak included in his his article. And one thing that I saw on this that was little strange and some people have pointed this out. It seems to stop at the Florida border. I seriously doubt that the oil deposits stop at the Florida border. There's a ban. So by artificially restricting the access to these deposits in shallower water off West Coast Florida. We're encouraging firms to drill further out into deeper water where accidents are more likely and again more difficult to deal with. This is what happened from 1995 to 2003 according to the Energy Information Administration. Also from the Novak article. It's a lot that's been written on this, but Novaks was a good summary. Over this period of time, 95 to 2003, there was something like a five times increase in the amount of oil that firms could pump royalty free that is without having to pay the government in deep water. So there was something like a 250% increase in the percentage of the oil coming from deep water reasons of the Gulf simply because the government has set things up essentially charge lower prices for deep water drilling and higher prices for inshore drilling. So looking at after tax prices, there's a lot of problems here. Another article that you might want to consider is by William Shugart in human events, July 2010. I believe that's posted on Independent Institute website. And he mentions that there's a tragedy. The commons problem here, the ownership of the oil is under the auspices of the federal government, which occasionally auctions these things off. And since the bureaucrats can't benefit personally from the decisions they make, unlike a private sector entrepreneur, they have no incentive to consider the values of the alternatives that are given up whenever drilling is done. Recreational uses, commercial fishing, exploiting other mineral resources or simply maintaining a pristine ocean environment, none of that ever enters into their calculation. And so we would expect to see lease is auctioned without much attention being paid to safety concerns in the process. There's also a federal capital liability, another intervention that probably reduced the incentive that firms had to pay attention to safety problems. While I'm out of time, we'll have to leave these lovely issues for some other discussion. Café DDT, Endangered Species, talked to Jeff Tucker about his new chemical that he discovered that is great for your washing machines and your dishwashers and all these wonderful inventions that are being progressively rendered illegal by people who know far more about things than we do, I guess. All right, well, I will be happy to talk to you afterwards. I'm done.