Externalized Cost

Here’s a brief lesson in economics, or to be more precise, what is wrong with the conventional systems of economics in use almost universally across the globe. 

Sometimes an aspect of doing business, often in manufacture but also in service industries of all kinds, represents a burden or negative effect that will represent a cost to someone either immediately or in the future.  For instance, it is well known that smoking tobacco has negative health effects, resulting in illness, reduced productivity, increase healthcare costs, etc.  But the companies that make tobacco products have not traditionally been require to pay for these negative effects, except in limited instances with punitive, but short lived damage awards.

Such costs, which do not get factored into the initial cost of the product or service are called ‘externalized costs’.  And traditionally, few businesses will be so principled or far-sighted as to factor these costs into their business model, and pay for or set aside funds to pay for the negative impacts down the road.  Businesses traditionally prefer to ‘offload’ such costs onto society in general, governments, future generations, degraded ecosystems, or a host of other unwitting victims.

It is usually only when they are forced to do so, do businesses step up to the plate and pay for the ‘cleanup’ involved in their externalized cost factors, that is, to internalize the particular factor or factors.  Well, CO2 emissions are the ‘mother of all externalized costs’.  The impact of this process is being felt today, and will continue to shape the destiny of human civilization and the global ecosphere for hundreds or thousands of years.

We MUST find a way, whether voluntarily, through consumer pressure, political pressure, economic boycotts, legislation, or any other legal means… to force businesses, indeed, to force our entire economic system to internalize the costs of CO2 emissions (for starters).  Once human understanding of the risks of externalizing ANY pollutant or dangerous substance is factored into the equation, it will serve as a precedent making it that much easier to do so for the host of other toxic substances (mercury, lead, pesticides, herbicides and fungicides, and processes (like genetically modified organisms) that will be required for humanity to reach sustainability on this small, fragile planet we live on.

Climate Corps
is a service mark
of Stuart Scott,
founder of ClimateCorps.org