Footprint Theory

Milton Friedman preferred to call micro-economics Price Theory. That made great sense but perhaps we should now call it Footprint Theory. Prices are footprints. And moderns may need this label to focus their full attention. The NY Times' William Safire recently offered a brief history of the modern usage of Footprint.

The Carter-era energy footprint advocates forgot that all resources (not just energy) are scarce and that we have to account for all of them. We also have to be ready to acknowledge that ever changing scarcity signals prompt us to adopt economizing substitutions -- in production and consumption. It's all about change. Where resources are unpriced, there are three choices: (i) adopt open institutions that allow insitutional entrepreneurs to find ways to bring them into the exchange economy (also about change); (ii) allow a politicized process to price them ("Pigou Club") or somehow ration them; or (iii) let the politicians devise other creative "solutions" (e.g., ethanol).

In the Februrary 25 New Yorker, Michael Specter writes about "Big Foot: In measuring carbon emissions, it's easy to confuse morality and science." Tesco, it appears, wanted to label everything it sells in terms of its carbon footprint but found that to be daunting. One researcher was even "a little bit shocked" at the immensity of the task.