In keeping with this morning's topic, let me offer three suggestions about how we can creatively use markets to improve upon current environmental policy. It makes no sense for the federal government to subsidize environmental destruction on the one hand while establishing laws, regulations, and vast bureaucracies to mitigate it on the other. Reconsidering those subsidies would help not only the environment but the economy as well. One way, then, to make creative use of the market to control pollution is to simply not tamper or otherwise interfere with it. Second, pollution is most efficiently controlled by businessmen, not centralized regulators, and market actors should be free to figure out the best ways to achieve environmental goals.
Every facility is different.
Both common sense and experience tell us that individual plant managers are better equipped to discover the most efficient ways to control pollution at their facilities than are EPA technicians and consultants. That is not only because those managers have more direct knowledge of their facilities and the technology of production but also because competition forces cost minimization, and even the most dedicated EPA official isn't go to lie awake nights searching for new solutions to pollution control problems. We do not tell the chef how to slice the onions, grind the pepper, or grate the cheese. We do not tell the restaurant manager where to get the ingredients, how to store them, or how to train the employees. Successful entrepreneurs are experts on local opportunities for effectively combining inputs, and they compete for customers by seeking to produce the outputs that customers desire.