People who have no money are supposed to sue DuPont and pony up the money to pay lawyers and experts to prove that DuPont's emissions were harmful and caused their injuries. Then if they lose, because that's hard to prove, they're supposed to pay DuPont's legal fees and costs.

And if you do win, all the Court can do is make DuPont write you a check.

That check will almost always be for far less than the answer you would have given before the injury to the question: "How much money would I have to give you to allow me to cause this specific injury to you?".

Lawyers put the money up for a cut of profits. If legal claims could be sold then someone else could buy the claim itself and class action wouldn't be the only recourse for the poor.

Lawyers who work on pure contingency settle cases for pennies on the dollar because they can't afford the risk of going to trial. Especially in toxic tort cases, where the experts are expensive and the burden of proof is much higher than what science can easily satisfy (more likely than not, the injury would not have happened but for the defendant's conduct).

Legal claims can be and are sold to entities that aggregate them and bring the lawsuits themselves. That's probably better than the class action system but still leaves victims getting a fraction of their damages and perpetrators paying for only a fraction of the costs.

Another libertarian-ish solution to toxic torts, which I've never seen espoused, is to simply recognize that pollution is a form of violence and make it illegal. Then, people who want to pollute could transact with the potentially affected parties to pay them to shift onto them to bear the risk of harm from pollution.

In Economics, the Coase Theorem[1] predicts close to this outcome, although it speaks to efficient outcomes and not necessarily harm reducing outcomes. When strong property rights exist (and it is feasible for all parties to negotiate), then parties may reach an efficient allocation of resources regardless of how the resources were initially allocated.

To use a typical example, imagine a train track runs through a farmer's land and sparks from the train sets the farmer's wheat on fire, causing monetary harm. If the train company owns the tracks, then the farmer should be willing to pay to put spark guards along the tracks to protect his crop. Alternatively, if the farmer owns the tracks, the train company should be willing to pay for the damage to the crop to ensure that it can continue to operate.

In practice, there may be costs associated with negotiations (e.g. lawyers), it may be infeasible to negotiate between all parties (e.g. if there are many farmers affected), or property rights are not sufficiently strong for one party to bar another from producing negative externalities, all of which can lead to failures of the theorem.

[1] https://en.wikipedia.org/wiki/Coase_theorem

The sparking train analogy fails because it supposes a single obvious entity causing a large amount of damage to a single person.

To modify the analogy to fit the real-world situation, it would be more like if there were a million train tracks going all over the place, and the sparks from each train falls on millions of wheat fields, such that everyone lives in a diffuse cloud of sparks, and no single fire can be blamed on any individual train, and the harm from any single train is relatively small, even though the collective effect is extremely damaging.

The Coase Theorem assumes that transaction costs are negligible. In a many-to-many situation like real-world pollution, transaction costs necessarily become prohibitively large, because you basically have a quadratic explosion of connections between polluters and victims (many of whom are also polluters!).

Just wanted to point out that you restated what was said in the parent.

>In practice, there may be costs associated with negotiations (e.g. lawyers), it may be infeasible to negotiate between all parties (e.g. if there are many farmers affected), or property rights are not sufficiently strong for one party to bar another from producing negative externalities, all of which can lead to failures of the theorem.

Yes, I was just trying to reinforce and generalize that, not try to argue anything.

Gotcha

And, sorry, I probably could have made that a little more clear! Like it or not, the default on the internet is often to assume argument.

So is your example meant to illustrate the need for us to filter our drinking water and air if we live on the same planet as a DuPont plant?

>>Free markets when supported by strong property rights can have strong protections to prevent harm or pollution.

>Can someone explain how this is supposed to work? I don't mean to sound rude/biased but this sounds like one of those cases where the theory is sound but when it meets with reality we get unpredictable(and sometimes disastrous) results.

The example is meant to illustrate the mechanism being asked about by the parent (quoted). Nothing was said about filtering air and water in the example.

But it's implicit that if the train throws sparks(DuPont plant pollutes the air and water on the entire planet) that the most equitable thing for me to do as the farmer would be to build spark guards(filter my air and water no matter where I live). That way I can prevent my fields from catching fire(increased risk factors from Teflon surfactants).

so... the farmer gets screwed?

The farmer may achieve a more favorable outcome if assigned the property rights, but the Coase Theorem aims to address the notion of efficiency. In an efficient market, no party can be made better off without another being made worse off.

A couple of reference for further reading on the subject.

"...if a product polluted the air, victims could sue the product maker, who in turn would pass the costs of restitution onto the consumer. Higher prices would discourage use and decrease pollution..." http://www.ruwart.com/environ2.lpn.wpd.html

The only reference I know of in modern time where property rights were actually used was in Canada. Look up Terence Corcoran and clean water. He produced a documentary how Canada's waters have become polluted after property rights were abolished in 1955.

This is a good reference on the history of environmental policy. In an interesting section here, the book states how property rights in the US were purposely weakened to allow for pollution. https://books.google.com/books?id=ZqRjI6JcgrMC&lpg=PA127&pg=...