China has decided to “do something” about its massive traffic jams by regulating the number of cars people can buy, according to this report. By taking this action, in one week, people panicked and bought 30,000 cars before the new law takes effect. This is three times the usual number of cars that were being bought each week. Like elsewhere in the world, China proves no exception to the notion that we mostly get the opposite consequences of the ones we want through legislation.
While China takes a heavy-handed approach to regulation, the west is no exception, with a tax on all vehicles bought and sold, regardless of whether they are new or used. How might we tackle large numbers of vehicles on the road and try to keep it down in a voluntary manner? That is a brainstorm our policy wonks rarely attempt. For fun, here is an idea, that I first heard in Prof. Ronald Howard’s class titled “Voluntary Social Systems” at Stanford University.
The current emission level in the air can be measured and declared the constant to hold ourselves to. Then, a right-to-emit quota can be distributed, dividing the current emission levels equally to all with existing registrations of vehicles. All those plying on the road would then be required to put on a tiny device on their exhaust, which would measure the level of emission coming out. It would light up red if the level of emission went above the individual quota. People would be free to sell unused quotas (the little device would change exhausts). That way, those who don’t drive so much can balance out those who do. As long as the market were left open, people would have an incentive to buy emission rights if their needs were not met. It would also put a price on current driving behaviors without imposing a tax.
As the reader might note, the enforcement of this would still require the traffic police. If we wanted to go voluntary all the way, then the roads should be privately owned, allowing the road owners to determine what emission level to allow on their roads (keeping in mind that they may have to compensate those who live by the roads if emission levels rise above levels acceptable to the landowners). The roadowners would then contract with private traffic police to make sure that cars comply with these rules, and also to do all that the current traffic police do.
Is this practical?
There are two parts to this. One is the device that will go red when emission levels go above a certain level. This is a technological challenge, which entrepreneurs should find interesting, with venture backing. The second is the ownership of the roads that allow the property owner to set emission rules, while being responsible for added emissions to neighbors of the road. This may rightly be considered challenging for it is so far outside our current frame of reference.
Be that as it may, current property rights regimes acknowledge the notion of not emitting to someone’s property what they don’t want. If a new neighbor has moved in, and plays loud music which others around don’t want, that neighbor is held responsible to either turn down the music, or make the others whole to the point that they don’t mind the music. If loud music (or noise) has always been a part of a neighborhood, then, it is up to the newcomers to accept what is part and parcel of the property or go somewhere else.
The emission regime would not be that different. Without needing government action, and by simply holding the road owners (likely companies) liable for the added emissions caused by their roads, the incentives would be lined up for the companies to police their roads for economic reasons. All actors will now be able to keep all other actors on their toes, with voluntary contracts and not taxation or regulation.
Will this work? I don’t know. Is it an intriguing idea? You bet! Should we experiment with intriguing ideas that take us away from coercion? I think so. It may not be easy, but it would generate a lot of learning around building voluntary social systems, even if done in a small place in a pilot.