Saturday, March 8, 2008

Private Market Shows It Can Promote Green Building

The city of Annapolis, and more recently the state of Maryland, have taken to the idea of legislating green building standards. Since my posts these days are harder to come by than a home victory for the Terps' men's basketball team, let me refresh my position on what the government should be doing:

1. Enforcing contracts and property rights.

2. Providing public goods, whereby 'public good' is a specifically defined economic term.

3. Promoting the free flow of information.

4. Investigating steroids in baseball.

5. Nothing else.

Most other things, if not all other things, can be provided by the private market. Not only can they be provided--they can be provided more efficiently and with better quality. Let's take the case of Green Building.

The Capital today ran an article chronicling a brief history of the growth of the green building industry in Maryland, dating back to when the mention of green building prompted responses like "I don't care what color you paint it".

"We've come a long way", remarked Joe Miedusiewski, keenly summarizing the fact that registered LEED projects have increased 3376% since 2002.

"But wait!", you are probably shouting, "how has Green building managed to grow without the help of government? Heck, they haven't even passed the LEED bills yet."

Well, my friend, the private market industry of green building has provided value to the market:
"Green buildings in general are just environmentally responsible, and also
profitable and healthier places to live and work," she said. Studies show that
inhabitants of green buildings - whether apartment complexes or offices -
experience reduced instances of asthma, take fewer sick days and are more

"A lot of people have noticed how fresh and clean the building feels,"
Belfiore said. "Kids who used to suffer from allergies don't seem to in this
building. People remark on how fresh the air is, and we've had fewer absences.
[The kids] seem healthier, and that's got to contribute to better learning."

Wow! Ok. So, green buildings save money in the long run because workers are healthier and more productive, plus energy bills are less. So the choice is to buy expensive but healthy green buildings, or cheap and dirty normal buildings. Most people will stick with the old stuff, but gradually the green building will gain ground, as long as it continues to create value. And, once enough rich people use the green construction, the green builders will figure out how to do it more efficiently and it will become more accessible to us normal folk.

Notice that I am a conservative, yet I'm not against the environment. (Notice also that the world needs rich people). Some of you don't understand that this is possible. The point is that the private market can take care of these things. Once the government mandates these standards, green builders will have no incentive to innovate because they will have a guaranteed rate of return.

Now then, let's take care of those steroids.

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