Sophie Gunderson, Chapter 3, Question 4

In Chapter 4 of Naked Economics, Charles Wheelan focuses mainly around the extrernalities and how the government can deal with them in various ways. An example that was highly focused on by Wheelan and thus stuck out to me was the proposition of raising taxes on gas-guzzling cars to raise the production and driving of fuel-efficient cars. Not only are the people who are driving Hummers on the daily basis adding more onto the existing pile of emissions in the atmosphere, but they are also creating negative externalities for most of the world. However, the government would need to implement these taxes and that's something that is difficult for the government to pin down. How much would they need to tax exactly and if this tax is put into place, would it damage the people who need these trucks the most? Although solutions to these problems seems obvious, the actual success behind them seems difficult to achieve.

Overall, this chapter brings up the largest (global warming) and seemingly smallest (shared walls) negative externalities that exist in this world and discusses the challenges that the government and economists face I'm trying to fix them. In the long run, these problems should be addressed no matter how difficult because the present, no matter how important it seems at the time, is not always the most helpful thing to focus on.