In the reform spirit of the "soaring sixties", with Joseph R. McCarthy in disgrace, and JFK and LBJ at the helm, Pigou's idea had a chance to flourish. Barry Commoner was a leader among those scientists who had observed nuclear energy enough to fear its dangers, a fear that overcame the deep social conservatism that neuters so many natural scientists. Commoner rose to lead the AAAS and published his brilliant conservationist manifesto, The Closing Circle. He led the AAAS in forming its Air Conservation Commission chaired by President James Dixon of Antioch College.
Dixon recruited to his Commission a number of distinguished "hard" scientists like Professor Ari Haagen-Smit of Cal Tech, discoverer of photo-chemical smog, and medics like himself and Dr. John Goldsmith. In addition, mirabile dictu, he picked two "soft" scientists, a sociologist and an economist. Hardly any economists at that time had any interest in air pollution, they dismissed it and like matters as "externalities", outside their narrow realm of markets for "commodities". So , for lack of anyone more senior, President Dixon picked this writer for that role. Possibly his natural doubts about my "respectability" were overcome by Antioch's revered Professor George Raymond Geiger, author of the monumental Philosophy of Henry George and the livelier Theory of the Land Question. And/or by friendly supportive Valdemar Carlson, Chair of Economics.
I quickly was to learn that many "hard" scientists, the kind who are now accused of abusing the prestige of science to rationalize growth of government, have a soft side. Dixon opened our first meeting by having each of us suggest a postulate on which we could all agree, as a foundation for further dialogue. I suggested that "Air is common property". Shocked silence! They didn't know whose property it is, but weren't ready for anything so, well, common, and who was I, anyway? After two years they were to let me organize a program bringing in Julius Margolis, Kenneth Arrow, Bill Niskanen and other less suspect economists to explain Pigou. I was able to slip an article in the Bulletin of Atomic Scientists (June 1965) promoting Pigovian charges. S till our group disintegrated and finally barely completed a weak and disjointed Report (AAAS #80, 1965). Members were united in their fear of nuclear warfare, but not much else.
I spent the fall of 1967 as Visiting Prof at UCLA and a potential recruit, thanks to another friend, Jack Hirshleifer. As Armen Alchian, the alpha libertarian, got to know me better he withdrew his support, because he saw Pigovian charges as "interventions" (improper meddling) in the free market, which he saw as a panacea for all problems, including pollution [1] . Alchian was reflecting and struggling to explain the Coase Theorem, published in 1960, which George Stigler and other Chicago economists had embraced to refute Pigou's notion that air (or any natural resource) is or could be made common property. By 1975 they had spread it with vigor among their disciples nationwide and worldwide. It was to displace Pigovian charges as the market-based solution to pollution.
A dangerous fallacy in Pigou, to Chicagoans, is that Pigou presumes that air is public domain, so that polluters should pay the public for dumping their gasified garbage there. Coase, in practice, is compatible with assuming that polluters have established de facto ownership of the air in the form of tradable permits, by virtue of their histories of having polluted it for years before. Bankers like this too, because to buy such tradable permits on the market calls for them to get involved in lending up front.
In 1959 I moved to Resources for the Future, Inc. (RFF). RFF was entering a new phase, having seriously concluded that we face no problem of resource scarcity, its original remit. To stay alive, RFF refocused its work on "Quality of the Environment", i.e. pollution control. The very avatar of this program was Allen Kneese. He hailed from New Braunfels, TX, an idealistic German-American colony like pre-Disney Anaheim. It had spawned Judge Emil Fuchs, conspicuous single-taxer of the prior generation, so it was no strain for Kneese to postulate that air is common property. He was a prodigious worker with an idealistic streak compatible with Pigou. He made a name by showing how effluent charges applied to wastewater in the Ruhr Valley had cleaned up one of the world's dirtiest industrial sewers. Younger staff members like Kerry Smith and Talbott Page idolized him.
This approach was making progress with Charles Schultze of the neighboring Brookings Institution, a good weathervane of liberal thought [2] , and with the LBJ administration, 1963-69. Vermont and some other States tried charging for water effluents.
It was slow going, though, so after 1969 Nixon got quicker action by turning to a third German-American, Wm. Ruckelshaus of Indiana. He took out the meat-axe and used the "command and control" approach to abating air pollution, an approach that is anathema to both Pigou and Coase. Kneese had stressed the virtues of animating polluters to modify both their products and processes, by their own chosen methods, to avoid charges and fees based on monitoring their effluents. Ruckelshaus instead mandated the use of specific devices, like electric precipitators of legislated makes and models, on smokestacks. Kneese and friends demeaned these as "tail-end Charlies", as they took effect only after the industrial process had already produced the pollutant. They also invited lobbyists to urge The Environmental Protection Agency (EPA) and other regulators to specify their particular products as the required tail-end Charlies. Several new mansions in the horsey hunt country of Maryland and Virginia testify to the high fees paid to the greediest lobbyists for this kind of pollution control.
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