Matt writes:

K-Lo proclaimed a “Dubya-Love Moment” over this answer to a question about why he doesn’t support a federal energy conservation program at yesterday’s press conference:

“The American people are smart enough to figure it out. They know the price of gas. They’re already driving less and seeking smaller cars. I don’t need to tell them; they can balance their checkbook.

“This is pretty silly. When I go to National Airport, I take the Metro — an energy efficient option. That’s a personal decision I make based on assessing the relevant factors. But one of the relevant factors is that there’s a Metro station near my house and another one right by the airport. And of course more people would live near the U Street / Cardozo Metro Station were there more housing units located near the U Street / Cardozo Metro Station which there would be if more residential density were legally permitted. And I would take the Metro to Dulles Airport if there were a Metro line that went to Dulles Airport.

The point being, of course we all make decisions that are relevant to our energy consumption. But the choices we make are affected by public policy decisions in dozens of different ways. To suggest individual action as an alternative to changing policy is to ignore the fact that different policies would produce different individual choices.

Matt’s quite right, but there’s something else he doesn’t mention. When he or I make the decision to ride the train or burn coal for fun we consider the costs and benefits of those actions to ourselves only. We say, is this good or bad for me, given the costs of the activity and available alternatives? What we do NOT do is consider the social costs of our decision. When I get on the train, I spend no time at all thinking about how that decision might benefit drivers, who’ll have one less car on the road to deal with. And, for the most part, I spend no time at all thinking about how getting on the train affects my personal carbon footprint. Why should I? From my perspective, that tiny shift from driving to taking Metro has essentially no effect on CO2 concentrations and climate change.

But when no one considers social costs, these individual decisions add up to enormous problems. This is what economists call an externality, and it’s the basis for the entire national discussion of appropriate emissions policies. It’s a damn shame that our president and his enablers in the media have no freaking clue what it all means.

Americans can optimize their personal consumption decisions all day long, but without a policy in place to internalize social costs, they’ll still end up creating costly traffic jams and devastating climate change.