The pollution problem exists because certain things, such as the air or the ocean, are not property. Anyone who wishes to use them as garbage dumps is free to do so. If the pollution were done to something that belonged to someone, the owner would permit it only if the polluter were willing to pay him more than the damage done. If the polluters themselves owned the property they were polluting, it would pay them to stop if the damage was greater than the cost of avoiding it; few of us want to dump our garbage on our own front lawns.
If all the things polluted were private property, pollution still would not stop entirely. Nor should it; the only way to completely stop producing pollution is for all of us to drop dead, and even that would create at least a short-run pollution problem. The proper objective in controlling pollution is to make sure that it occurs if, and only if, the damage it does is less than the cost of avoiding it.
The ideal solution is to convert unowned resources into property. One could, for instance, adopt the principle that people living along a river have a property right in the river itself and that anyone who lowers the value of the river to them by polluting it without their consent is liable to suit. Similar rules already exist in water-poor areas to define the rights of landholders to use up, in irrigation, rivers that run through their land.
Some things, such as air, are extraordinarily difficult to deal with in this way. Consider the consequence of absolute property rights by each landholder to the air above his land. If I smoke a cigarette, some tiny amount of the smoke will eventually spread very far. Does that mean I cannot smoke without first getting permission from everyone on the continent?
The simplest solution to such a paradox is to permit parties injured by air pollution to sue for damages, presumably in class actions by many victims against many polluters. I would not be able to shut down your blast furnace merely by proving that a sufficiently sensitive instrument could occasionally detect sulfur dioxide in my air. But if the concentration were high enough to be offensive, I could sue you for the damage done.
At present, pollution is controlled by governments. The governments—federal, state, or local—decide who has enough pull to have his pollution considered necessary. This reduces control to a multitude of separate cases and makes it almost impossible for the victims of pollution to tell what is really going on or to impose effective political pressure.
If pollution control is to be handled by government, it should be done in a much simpler way. Let the government set a price per cubic foot of each pollutant. Such a price might vary according to where the pollution is created; air pollution in Manhattan presumably does more damage than in the Mojave desert. Every polluter, from the United States Steel Corporation down to the individual motorist, would have to pay. If the cost of avoiding pollution is really high, the firm will continue to pollute—and pay for it. Otherwise, it will stop. If the voters think there is still too much pollution, they can vote to raise the price; it is a relatively simple issue.
Of course, the government claims that its present decisions are based on how avoidable the pollution is. But every polluter wants to keep polluting, as long as it does not cost him anything. Every polluter will claim that his pollution is unavoidable. Who gets away with it depends not on real costs but on politics. If polluters must pay for their pollution, however avoidable or unavoidable, we will rapidly find out which ones can or cannot stop polluting.
[In Chapter 64 I discuss some problems with applying the approach to government control of externalities suggested here.]