Skyler gets Bogdan to sell his car wash under an elaborate ruse where it appears he is contaminating the local groundwater. While the company isn’t actually polluting the groundwater, companies that contaminate groundwater are imposing external costs on society and are not accurately accounting for that cost in their pricing. While the optimal amount of groundwater pollution probably isn’t zero, with negative externalities, firms are overproducing. Governments often take a command-and-control approach to some forms of regulation and insist that companies pay steep fines for violations.
Walter is about to leave, but Saul takes some time to advise against it. While it may seem like he’s doing what’s best for his family, Saul explains how law enforcement will come after Skyler and ruin Walter’s family. Walter is making a private decision about what to do and what he believes is best, but he may be ignoring all of the costs he imposes on other people by running. Saul suggests that if he truly cares about his family then he’ll turn himself in.
Walter takes a trip back to his old Albuquerque home to see what’s left of it. After Skyler and the kids leave, no one wants the house and so it has succumbed to vandalism. Normally, property rights would incentivize people to take care of their property and protect it against vandalism, but no one wants an old meth kingpin’s home.
After a plane crash in the city, Saul is looking for class action clients to sue the airline. While many negative externalities resulted from the crash, Saul is benefiting from the outcome of the crash.
A plane crashed in the city of Albuquerque. From damaged property to the loss of life on the ground, everybody is dealing the negative externalities brought about by the crash. One explanation is that the control tower agent was grieving and not paying attention to his job. If true, his private decision to go to work could have very large social costs.