Let's analyze this situation with some economic rigor. What you're invoking is Coase's theorem. The idea that if you create property rights in what would otherwise be externalities, and let people transact freely in those property rights, the end result will be an optimal allocation of rights that maximizes value.
Now, I'll get to the punchline before going further in depth. It's deeply ironic that libertarians invoke Coase's theorem in this context, because Coase himself used smoke pollution as an example of a situation that called for regulation rather than the creation of property rights.
You see, there is an important assumption underlying Coase's theorem: transaction costs are zero. But in the environmental context, transaction costs are not zero, and in fact they totally dominate the relevant transactions. A polluting coal plant might cause $1,000 of health damage to each of 100,000 people, and it isn't worth any of their whiles to litigate such injuries. Yet the cumulative impact of such activity is large--the coal plant is essentially "stealing" $100m, but getting away with it by stealing a little from a lot of people at once.
Multiply that by the hundreds and thousands of pollution sources that have a measurable impact on each person, and what you get is an unworkable system. And Coase himself recognized this and said as much in his papers.
You're attacking a strawman, and I said nothing about the Coase theorem. For some criticism of Coase by a libertarian economist see here from page 4 of the PDF: http://mises.org/rothbard/lawproperty.pdf
I said, "Pollution would be treated as a tort." Nothing really special there because all rights violations would be, viz. we do not believe in victimless "crimes against society".
I then was mentioning the idea of easement rights in pollution (for more on this cf. from 26 in the above PDF).
>A polluting coal plant might cause $1,000 of health damage to each of 100,000 people, and it isn't worth any of their whiles to litigate such injuries. Yet the cumulative impact of such activity is large--the coal plant is essentially "stealing" $100m, but getting away with it by stealing a little from a lot of people at once.
In common law tradition, people were able to sell their tort claims, no matter how small. Modern authoritarian law prohibits this, there are barriers to class action suits, and so on. We'd like to return to the common law tradition here, so if you are concerned about this, you ought to be on our side.
Besides the problem with a governments ability to simply be corrupt, polluters often pay fines to the bureaucracy rather than compensating victims. You are incorrect to automatically assign a $ amount to any claim of this sort. The punishment could involve at least a chance of death and who knows what all these minor health hazards might add up to.
Still, the impact of an individual polluter may be seen as trivial, but firms would be able to collectively pursue the torts after buying claims from the victims.
I believe in a continuation of good 'governance' after abolishing 'government'. I'm working on some interesting ways in which "municipal" service providers might utilize distributed torts against polluters into something resembling various "social welfare" programs we have today.
My main problem with Ron Paul besides the fact that he never tried to approach libertarianism as something that is useful to solve pragmatic problems that exists today and tried to develop a confrontational attitude towards other people, he was someone who always chose tribalism instead of being a good politician, the racism in his newsletters and the fact that he always appealed more to the angry white male stereotype than to the common people, mom and pops of every ethnic group who are working to pay their bills and raise their children. That and the fact that he's a firm believer in the Austrian school.
It has been fashionable since the success of the natural sciences in the 1800's to attempt to apply the methods of the natural sciences to the social sciences. Concepts like "equilibrium" are applied incorrectly because a person goes on to striving for the next thing right after achieving the first and markets are in a constant flux.
On why mathematical economics is a failure, see here: http://mises.org/daily/3540
If you wish there are plenty of refutations of why the criticism of Austrian school about modern economics is misdirected, I believe pretty much of them do a good job, Bryan Caplan was right in almost everything, you need not to accept any of them of course, I respect you, but you'll need to know that I do not accept anything that comes from mises.org and do not read them anymore.
You're either incapable or unwilling to have a real discussion though, so that is just for anyone else who cares.
As I said in the above post I am unwilling, I have more important things to do than entering in eternal ego wars on the net.
By the way: http://ycombinator.com/newsguidelines.html
EDIT: I was rude in this comment and if you felt offended I ask you to forgive me.
Either way my problem with Autrian school is that it try to rely too much on logic and methodological individualism, probabilistic CFD using some Monte Carlo methods, I'm not against first-order logic since I'm a mathematician by training and I think the Austrian use of it brought some useful and good insights into economics, my main problem is with methodological individualism, I think it does nothing to advance economics as a science, you're right that Economics is not Physics, but them ever in Physics we have Fluid dynamics and Heat transfer models that use statistics because they are complex and a complete model is unforeseeable in the near future, maybe there will be a complete model, maybe not.
A macroeconomic model is just trying to approach a complex system in the same fashion which have an additional problem, it deals with humans, mind you that generally every researcher in neoclassical economics is well aware that their models have some assumptions that breaks at some point, Stieglitz and Kahneman have shown some example and general equilibrium is a favorite target. It's also good to point out that not every economist is trying to use their models to recommend banks or governments what to do, Krugman made an essay in the past actually recommending economists to advise policy, not every economist is interested in this however.
I believe this is enough, if you reply I will answer one time but bear in mind that I'm not an economist.
: or numerical methods, my PhD thesis was in CFD
: They all generally know about this: http://en.wikipedia.org/wiki/Criticisms_of_neoclassical_econ... Generally every