An airplane pilot flies with 300 people on board. There is a clear negative externality problem here. If he crashes the plane, the individual cost to the pilot is his own death. The social cost is the death of 300 people. Therefore, commercial pilots must undergo a rigorous training, testing, and certification process, much greater than a mere private pilot who flies solo.

Consider now nuclear deterrence. The US president is in control of the nuclear button. If he starts a war, he may lose his life. This is an individual cost to him. But the social cost is far greater: billions of people will die, and the world will be poisoned for the next 10,000 years, so that even future generations will suffer.

If the president has a death wish or feels like playing a game of chicken, he might do something very rash. If only he died as a result, no one would care. The president lived by the sword, and he died by the sword. It’s very fitting. But in so doing he’ll take the whole world into the grave with him.

The voters don’t vet presidents nearly as well as airlines vet pilots. The externality problem is enormous. We’re all hostages to the mental health of a single man. Mutually assured destruction is an untenable strategy for peace according even to an elementary economic analysis.

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