Profs. Lee E. Ohanian and Ted Temzelides recount the story of the environmental crisis that hit cities in the late 1800s—namely excess horse manure—and how it was solved by the introduction of automobiles  They use this story to imply that free markets and innovation will lead to a transition away from fossil fuels toward cleaner technology, if only the government would get out of the way. They neglect, however, an important government intervention that encouraged the switch from horses to automobiles. A draft horse typically worked only four hours a day. During the other 20 it produced its manure in its stable, the owner of which was obligated by law to properly dispose of manure. In the early 1800s farmers would pay to get the manure, but by the end of the century there was too much […]