Reflections on the intersection of economics, history, politics, psychology and science

The Tautological Externality

2008 was a big election year for the U.S. and for California specifically. In addition to the presidential contest between Barack Obama and John McCain as well as many state and local office elections, Californians had to vote on 12 state initiatives that covered issues as diverse as high-speed rail, criminal justice reform, redistricting, and even the treatment of farm animals. But no initiative was as well-known or as divisive as Proposition 8, which if passed would ban same-sex marriage in California.[1] Proposition 8 was closely watched around the country and was certainly debated heavily inside the state.

Like most communities, our town had its share of the political debate, most visible by the presence of lawn signs for a period leading up to the election. There were signs for candidates as well as signs for and against specific initiatives. At the time, my then nine-year-old son was certainly aware there was an election, but he probably knew more about the U.S. presidential election than the series of other matters on the ballot. However, after looking at all of the lawn signs on display while we were driving through town, he decided to ask me about one of them. 

Son: "Dad, what is Proposition 8?"

Dad: (trying to explain in the most neutral and age appropriate way): “Well, it’s a proposal of a new law that people can vote for or against on election day. It says that boys can only marry girls, and that girls can only marry boys.”

Son: (after thinking for about 10 seconds) “So…if it doesn’t pass, does that mean I have to marry another boy?”

Dad: “No, if it doesn’t pass, it means you have a choice. You can marry another boy, or you can marry a girl.”

Son: (after another pause) “Then why does anyone care?”

Dad: “That’s a very good question. I don’t know.”

Expressing with amazing clarity the befuddlement as to why anyone would care about something that didn’t affect them, it took one minute for a nine-year-old to figure out what took the U.S. justice system almost five years. In Hollingsworth vs. Perry (2013), the U.S Supreme Court found that the proponents of Proposition 8 didn’t have standing to appeal a lower court ruling that the initiative was unconstitutional. The court wrote:

For there to be such a case or controversy, it is not enough that the party invoking the power of the court have a keen interest in the issue. That party must also have “standing,” which requires, among other things, that it have suffered a concrete and particularized injury. Because we find that petitioners do not have standing, we have no authority to decide this case on the merits, and neither did the Ninth Circuit.[2]

In other words, the court was telling the supporters of Proposition 8 that they can’t make any claim (to reverse the overturning) because they weren’t harmed in any way by it being struck down.

The gay marriage controversy is a perfect example of a tautological externality. A tautology is generally a formula in logic that is true in every possible interpretation and is often represented by a statement made obvious through redundant language, such as “it will rain, or it will not rain” or “what will be will be.” 

Proponents of Proposition 8 and those against gay marriage generally often struggled to find a true externality – how they were being harmed by a transaction between two other parties. Had there been such a material externality, then it may be appropriate for government to somehow regulate that activity, internalize that externality, or compensate the ones harmed (see Chapter 1). But because gay marriage opponents couldn’t really find concrete evidence of specific harm to themselves, they tended to fall upon religious arguments[3] or a notion of harm to their sentiments. Essentially, their argument boiled down to “it bothers me because it bothers me.” And although it took centuries of cultural evolution and years of legal battles, gay marriage eventually became lawful across the U.S. because, as the Supreme Court noted, no one sustains any concrete or particular injury by allowing two men or two women to marry.[4]

As made so clear by this example, often U.S. policy is based on these tautological – essentially fake – externalities, where citizens and lawmakers demand regulation of another person’s rights or economic activities only because it somehow harms their feelings. 

Another persistent example is Americans’ attitudes around patriotism and the U.S. flag. Patriotism is fundamentally a sentiment, and people disagree on what constitutes patriotism. Yet despite this ambiguity, many people also seem to take offense at what they perceive to be someone else’s lack of patriotism or patriotism expressed in a different way. Taking offense at something is just another form of a tautological externality – it “bothers me because it bothers me” even if it doesn’t actually harm me or others in any way. For example, although Americans have burned flags – normally in some form of protest – for hundreds of years, states and other governments have taken actions to ban this expression. It took until 1990 for the Supreme Court to finally rule that governments cannot prohibit the desecration of the flag as it is a form of free speech.[5] And despite the fact that many legislators have since proposed flag desecration amendments to the U.S. Constitution, they have struggled with the argument as to why it matters, other than to say it’s not “patriotic” or “American.” The tautological externality trap exposes the inability to articulate a true and material externality to others from one individual burning a flag (assuming it is his/her own property). 

More recently this same phenomenon was evident when San Francisco 49ers quarterback Colin Kaepernick first refused to stand during the national anthem in 2016. Despite the fact that he claimed he was protesting racial inequity and police misconduct, many saw his actions (and later, the actions of others who joined him) as somehow “disrespecting” the flag, U.S. troops, or the country in general. He was the target of relentless attacks including by many politicians, with many arguing there should be laws against this kind of conduct.[6]However, a grievance of being disrespectful – whether it was true or not – belies the claim that any real harm was done. Had no one chosen not to be bothered by it (let alone listen to it and even debate the underlying point), the claimed harm would not have existed. Another tautological externality.

Even if the U.S. founding fathers didn’t use the term, they were essentially guarding against the tautological externality in the enshrinement of the many rights in the U.S. Constitution, most notably the rights to free speech and religious exercise. They understood that although someone’s speech or religious beliefs could offend others’ sentiments (and even be something detested by a majority of the public), those actions didn’t cause any real harm and therefore shouldn’t be regulated. As in the Proposition 8 example, the U.S. court system is designed so that a plaintiff must show a specific and material injury. Naturally, there are exceptions where such otherwise protected actions do create real externalities, such as the overused but apt example of yelling fire in a crowded movie house. 

Certainly, there can be debates over whether certain actions have real or tautological effects. Does a comedian’s racist or sexist joke only create harm to our sentiment or does it, perhaps combined with other similar actions, contribute to a structural racism or sexism in society? These are certainly areas of healthy debate. Additionally, we tend to think of externalities as things that harm other persons not party to a transaction, but what about animals? Someone eating a steak would view a vegan’s potential disgust as tautological, but the vegan may argue the harm to the animal is real and should be taken into account. So, it’s perfectly fair to believe that one person’s real externality is perceived as another’s fake externality. This can be represented in everything from having statues of confederate generals to outlawing public nudity. In a strict sense, there actions don’t create an immediate and definable harm to another,[7] but ultimately as a society we make political choices that certain actions are or are not consistent with our values. We also must distinguish between private actions (which are largely protected)[8] and public actions (which are instantiations of those political choices). 

Notwithstanding the many gray areas that can be debated, the irony here is that American history is littered with examples of an exorbitant amount of energy spent on these fake externalities with insufficient time and energy addressing real externalities such as the effects of pollution, climate change, or even a ten-story building in a residential neighborhood. Policymakers must understand the concept of the tautological externality and be able to distinguish them from true externalities that cause legitimate harm to others. Only through this distinction can we develop policies to manage these true exceptions to free market dogma and therefore create the most societal and economic benefits for the most number of people.  

[1] The initiative did pass with 52% of the vote. 

[2] Supreme Court of the United States, No. 12-144, June 26, 2013, Dennis Hollingsworth et al vs. Kristin M. Perry, et al, page 2.

[3] Which, in theory, should never be considered as per the U.S. Constitution, even though historically we have.

[4] There have actually been multiple studies showing an overall economic benefit to allowing gay marriage.

[5] It also exposed the irony that banning flag burning was contrary to the rights symbolized by that very flag.

[6] There is a separate issue as to whether Colin was or should be “permitted” to take the action he had. He was not arrested or otherwise prohibited to do so by the government, but he was subject to the rules of a contract with a private employer, of which there was disagreement as to its interpretation. In 2017 Colin filed a grievance against the NFL, accusing them of colluding to keep him out of the league. The parties reached a settlement in 2019.

[7] Although every symbol has both denotative and connotative meanings, it is the latter which is more nuanced, less objective, and subject to discussion about the potential real harm or other effect.

[8] Private companies may make choices that have public policy or political implications, but they are ultimately in service of their own business interest.