Externalities: costs passed on to the outside

Posted April 14th, 2011 by The Environment Site with No Comments

Externalities is a term that economist use to reference costs and benefits which are not directly carried by the company involved. They are usually passed on to the consumer, government or the environment. As with many things, they can be good or bad. The trouble is that sometimes you cannot tell until later.

You can find examples of passed on externalities in many areas. The chemical industry, the coal industry, the automotive industry, the alcohol industry and just about any business which seeks profit above all. They operate in a manner which mandates finding ways to shed costs and put them on the shoulders of those outside their system. The entire fossil fuel machine would not survive if they did not follow this principle.

There are two kinds of externalities. Economist call them positive/negative externalities or costs. Positive benefits are those that improve the lives outside the system. A prime example of a positive externality is the school system. The general goal is the creation of a smarter worker, but educating the populace is the hidden benefit or externality. The examples of negative benefits are so numerous as to be unlistable. The corporations will quickly lay claim to the positive, but will completely deny the negative.

The biggest guilty party is the fossil fuel industry. They completely avoid taking any responsibility for the current global situation and will go any extreme to deny their part. To see a perfect example look into mountaintop removal for mining coal. Across the country big coal companies are simply blowing the tops of the mountains off to get the coal underneath. They fill the valleys with waste products from the process which leaches into streams and water tables. This leads to increased health problems for those living in the area which someone else has to pay for. This is just one of multitude of costs that are passed to other people so companies can claim that coal is cheap.

If you want a bigger picture just go to any search engine and type in pollution, fossil fuels and health problems together. The external costs of oil production, coal production, combustion engine and many other things we take for granted are dumped into someone else’s lap.

Further References:
Wikipedia: Externalities
Environmental Externalities and Air Pollution
Harvard study: Coal costs US public up to $500 billion annually

Dee Neely is an avid technologist, writer and green activist. She is the Knoxville Green Activism Examiner for Examiner.com. You can follow her on Twitter as cayceedeeneely.

Picture Credit: http://www.flickr.com/photos/christianrevivalnetwork/2724218930

Scarcity: The Big Lie

Posted March 25th, 2011 by The Environment Site with No Comments

The entire economic system has its basis in scarcity, which is the idea that there simply are not enough of  things to go around.  Scarcity is defined by Investopedia as “The basic economic problem that arises because people have unlimited wants but resources are limited. Because of scarcity, various economic decisions must be made to allocate resources efficiently” There was a time when this was true but the scarcity which we see today is mostly an artificial construct. The problem is that with the increased ability of humanity to produce items through technology, the only way to effectively maintain scarcity is through manipulation.
We are told constantly that there isn’t enough energy to go around, but what this really means is that the companies which control the energy don’t want to lose control. While there are multiple means to provide energy the  arguments are all centered on cost; we are told that the cost of switching to renewable and accessible energy is simply too high. Of course, this is not true. There was a recent plan to remake the roads of America into solar power collectors. The critics answered that the thirty-five trillion dollars it would cost was prohibitive. How much do the transportation departments around the nation spend to maintain the roads we have? Forty trillion dollars every year.
The supply of crude oil is most definitely an example of manipulated scarcity. What does OPEC do when the price of oil goes too low? They cut back production and cause an artificial scarcity so they can keep their profit margins up. If you can keep the production up and you can cut it back to increase profits that is a direct manipulation of the market. This artificial method affects multiple other areas of supposed scarcity such as food.
The availability of food is manipulated all the time. In the United States we even pay farmers to maintain a scarcity of certain foodstuffs to keep from glutting the market and driving the price down.  In addition, the manipulation of fossil fuels leaves its mark on prices, for as the price of oil and energy is raised, the price of production and distribution goes up.  The price and availability of fossil fuels are also changing the availability of food in another way: in an attempt to find something to replace oil countries have turned to Ethanol. The main source of Ethanol is corn and as more corn goes towards replacing oil, the price and availability of many foods are affected.
However, none of this is really necessary because we have experienced an explosion of science and technology in the last century. Our machines are more efficient and we have the means to create limitless amounts of energy. We simply don’t. We don’t because the profit mongers and power brokers don’t want us to. It is up to us to force them to change their ways.

Further References:
Investopedia: Scarcity
Solar Roadways: A fantastic but, futile idea
OPEC Will Increase Oil Production
Wikipedia: OPEC : Economics
Wikipedia: Agricultural Subsidies
Wikipedia: Corn Ethanol

Picture Credit: http://www.flickr.com/photos/rmgimages/4881843809

 

Dee Neely is a freelance writer, avid technologist and a member of The Zeitgeist Movement.

Technology. Good or Bad?

Posted March 24th, 2011 by The Environment Site with No Comments

It is a common attitude in the environmental movement that technology is something to be avoided. I have read posts and articles by multiple people that advocate the throwing away of technology, but the truth remains that we are tool making creatures. We have close animal relatives who use tools to this day and they still manage to live in harmony with nature while using appropriate technology. Primates use sticks and rocks, birds use sticks and otters use rocks. When we observe this in nature we can conclude that using tools and technology is neither good nor bad. It is the use to which they are put along, with the way they are implemented, that makes their impact good or bad. However some people think we should just to get rid of it all.

Unless we want to return to the trees it is impossible to remove all technology. The fire we use for heat, the shoes we wear on our feet, and the clothes that cover our bodies are all examples of technology. The use of tools is a part of our existence as human beings. They have been a piece of our lives ever since our ancestors started their first intentional fire. Technology flows through our history like the golden threads of a beautiful tapestry. We have let the tapestry get dirty and now it needs cleaning up.

The dirt on our tapestry is the result of technologies use by humans. When we were a young species we didn’t know how to clean up the messes we were leaving behind. We didn’t understand that pouring stuff in the water would kill us later. We didn’t understand that planting the same crop in the same place each year affected the quality. We certainly didn’t know that burning wood was putting pollution into the air. However we have learned better. But, in the course of learning, we let people take control who didn’t care. They used the methods and products for their own selfish needs and didn’t care about the effect on other people.

It is this lack of caring that lies at the core of our environmental problems. So many of our problems from war to racism to abuse to crime find fertile ground here. It is fed by the economic system which encourages the amassing of personal profit at the expense of others. In order to prevent further environmental degradation we need to change this. Only when we have truly modified our mentality and approach to life can lasting changes be made. Any changes we make in the meantime will certainly suffer from that short-sighted approach to life. Technology will always be a part of us but we have to approach it in a rational and compassionate way.

This post has been written by Dee Neely, a member of our discussion forum.

Further References:

Picture Credit: http://www.flickr.com/photos/takomabibelot/3984413475

Competitive Intelligence: What’s Unethical About It?

Posted March 21st, 2011 by The Environment Site with No Comments

Where would you draw the line at collecting intelligence about competitors?

A new survey by consulting firm Fuld & Co. shows that while financial services firms and tech companies might be the most aggressive in collecting intelligence, other industries aren’t that far behind. As reported by the WSJ, “104 business executives were presented with hypothetical scenarios that gave the executive an opportunity to collect intel about a competitor, but straddled the ethical line. Participants could rate the scenario as “normal,” “aggressive,” “unethical” or “illegal.””

The results seem partly on target, but mostly worrying.

For example, “One scenario asked whether it was all right for the executive to remove his identification badge during a trade show, which would make it easier to speak to competitors without them knowing his identity.”

The result: “Most industries rated removing the ID badge as aggressive, while health-care and pharmaceutical executives thought it was unethical.”

But the report didn’t restrict the questions to public forum etiquette. “The executives were asked if it was alright to sign up for an interview at a rival company’s job fair to see what they could learn from a recruiter.”

Result: “Every industry thought the tactic was unethical except for government, which merely found it aggressive.”

While I’ll let you get over the fact that this scenario suggests our government has a completely different outlook on ethical behavior, overall the report seems to give health care and pharmaceutical brownie points for being squeamish about their approaches.

One factor detailed by the Journal: The level of regulation weighs heavily on the consequent level of squeamishness.

While each industry seems to be toeing its own line of ethics vs. competitive intelligence, risk for most means higher profits, and as Larry Kahaner, author of Competitive Intelligence says in the report, “The more money that’s involved, the less squeamish people become. “If companies have gotten away with stuff over the years, they don’t clean up their act.”

Is it then okay to assume that the surveyed companies probably have some sort of written guidelines on intel collection?

A third, says the report, neither have guidelines nor do they share them with employees. What you don’t know doesn’t hurt. Right?

–By Aman Singh, Vault.com

Aman Singh is the Senior Editor, Corporate Responsibility with Vault.com and the author of Vault’s CSR blog: In Good Company. Her area of work includes corporate social responsibility, diversity practices and sustainability, and how they translate into recruitment and strategic development at companies. Connect with her on Twitter @VaultCSR.

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