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Cost of damage, cost of repair and unruly human behaviour

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This morning I commented on JP’s blog post on Wondering about damage and repair , where he applies a useful concept of comparing the cost of damage with the cost of repair to chewing gum. It transpires that the cost of chewing gum is 3p and cost of cleaning (by councils) is 10pm and therefore the full cost born by us all as taxpayers. The question is what can be done to balance this out, as it is the balance in the right direction that keeps things ticking over – such as Wikipedia for example.

Maybe it’s time for some radical solutions. Maybe we could try something else. If a good for sale is capable of damaging “the commons” then maybe we should measure the cost of repairing that damage. If that cost exceeds the cost of damage, then we raise a tax on the good until the cost of damage is higher than the cost of repair. Half the tax is payable by the manufacturer, half by the consumer. The taxes so collected are then used to do the repairing.

chewing gum

To me using taxes to influence such things is anathema, here is why:

Hm, to me the problem with the ’solution’ to chewing gum is trying to control behaviour through taxing it – a slippery slope indeed. Apart from the fact that even if it works, i.e. in aggregate people stop or start doing more of whatever the tax is designed to change, there are _always_ unintended consequences that cause further distortion(s) in the market. Just look at financial regulations. :)

But my real objection to using any tax to control behaviour is that is it paternalistic and shifts the relationship between the state and the people from one of servant-master to master-slave.

People don’t seem to differentiate between the state and society – two separate realms that relate to the individual in fundamentally different ways. The state is political and the society, well, social. One of the features of communism (or any totalitarianism) is the explicit aim to politicise the social. In such systems, everything is political and the power is taken away from the society and individual for political purposes. Therefore, I distrust and thwart the state wherever I can. I support and strengthen society to the best of my abilities.

A bit of a political theory overkill for a chewing gum issue, however, that is the reason my alarm bells go off every time I hear proposal to tax one thing or another to change or influence human behaviour. Social solutions are always better than political and taxation IS a political solution.

The cost of repair vs cost of damange is a brilliant framework for understanding why some phenomena work and others don’t. I am with DE on how to approach it – education and lower cost of clean up. :)

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One Response to “Cost of damage, cost of repair and unruly human behaviour”


  1. Jackie Danicki » The difference between society and the state
    on Jun 19th, 2008
    @ 18:42 pm

    [...] Adriana: People don’t seem to differentiate between the state and society – two separate realms that relate to the individual in fundamentally different ways. The state is political and the society, well, social. One of the features of communism (or any totalitarianism) is the explicit aim to politicise the social. In such systems, everything is political and the power is taken away from the society and individual for political purposes. Therefore, I distrust and thwart the state wherever I can. I support and strengthen society to the best of my abilities. [...]

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