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.

The Tobacco Strategy

Posted November 16th, 2010 by The Environment Site with No Comments

The scientific community has established that the burning of fossil fuels is significantly and negatively changing earth’s climate; however, the fossil fuel industry is challenging this in order to protect their profits. They are using a strategy which is not new and was previously used first by the tobacco industry and then by the chemical industries with regard to acid rain, the ozone hole and DDT. Since it was used for the first time by the Tobacco Industry, Naomi Oreskes coined the term “The Tobacco Strategy” in her book entitled “Merchants of Doubt”.

The Tobacco Strategy is predicated upon buying time by sowing doubt. Given enough time, the truth must prevail so it is impossible to win these battles and the Contrarians are fully aware of this. However, if the inevitable is delayed by several decades, that is several decades of profit in the coffers of the industries that sponsor this strategy. Thus, profit is the motive and “The Tobacco Strategy” has been shown to be a very profitable strategy.

Sowing doubt is extremely easy since there is always a lack of certainty in the scientific community. Scientists state hypotheses and develop evidence to support the hypotheses but can never state with 100% certainty that a hypothesis is true. However, even when the confidence expressed by the scientific community is established to be 98%, there remains a two percent uncertainty with which doubt can be sowed among the gullible public.

The scientific community itself is manipulated to sow doubt against itself. There are always elements in the scientific community on the fringes who oppose mainstream science and these scientists, oftentimes with legitimate scientific credentials, are recruited to write pseudoscientific articles and give lectures to the unwary. Sham institutions such as the CATO Institute and the Heartland Institute are created to give the pseudoscience a facade of legitimacy.

In addition to the scientists on the fringe that are recruited, there unfortunately are those that prostitute themselves for financial gain. The financial gain is significant since these scientists knowingly embark upon a cause which ensures them of a negative legacy.

As discussed earlier, the Tobacco strategy is not new and has been used several times in the past. There is thus a wealth of experience from which to draw upon and unfortunately it is being used by the Climate Change Contrarians with consummate perfection. Unfortunately, the consequences of using this strategy to argue against Climate Change will be far more serious than past “Tobacco Strategy” campaigns.

Robert J. Guercio, October 11, 2010

*The information and ideas for this blog come from the book “Merchants of Doubt” by Naomi Oreskes

Picture Credit: http://www.flickr.com/photos/amagill/190269751

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