The Synthetic Apriori, Market Failure, External Diseconomies, Part 2

From: Ben

To: Walter Block <[email protected]>

Subject: Re: Thoughts on the invisible hand

Dear Walter,

Thanks very much. I accept your criticism re “tautological,” and your corrective, “necessarily.” Even without getting into Kant, I can see your point clearly.

On externalities, at some point I hope to make time and really dig into some of the references you sent. I fully agree with the idea that purported negative externalities do not necessarily mean government intervention will provide any kind of corrective; the notion that “if negative externality ergo benefit from government intervention” seems disastrously wrong. But to say this does not (and I say this without yet reading your articles) mean that negative externalities do not or cannot exist. I assume you would agree with this statement of mine?


Dear Ben:

There are two kinds of negative externalities: so called real ones, and fake ones.

Fake ones: pollution. But this is not a negative externality. It is, rather, a trespass against private property.

Here, if there is a govt, presumably, it will protect private property rights. Under ancap, the preferred scenario, the private defense agencies will stop this. You must read Rothbard (1982) on this.

So called real ones: I refuse your offer of friendship.  I ignore you. I wear garish clothes you find offensive.

Here, there is nothing govt or private enterprise defense agencies should do. No rights have been violated. As an Austrian economist, I would say you have no way to register your disapproval, harm imposed by my behavior (you can whine about me, but you could be lying that you’re hurt by my behavior), so this only counts as an external diseconomy by ignorant mainstream economists.

Best regards,



3:36 am on April 18, 2023