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| =Description=
| | See: [[Externality]] |
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| Joshua Nelson:
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| "An externality is a unintended by-product that occurs in a market from another process. These side effects could be negative or positive. For instance, say I am a bee-keeper and I come to your neighbor’s property to pollinate his orchard. There is a good chance that some of my bees will pollinate your plants as well. You didn’t pay for my service, but you are inadvertently receiving benefit of it. That is a positive externality.
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| On the flip side, say there is a city water plant and upstream a new coal power plant is built. When that coal power plant starts leeching mercury into the river the city water planet takes it in (coal accounts for most of the mercury in our waterways). The coal power plant is not paying to filter this mercury out, nor is it paying for all the damage that could occur from the toxin leeching into the ecosystems. Unchecked, this could be a very negative externality.
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| Unfortunately, because the producer does not pay for the negative, or receive funds for the positive, externalities these are often left out of the decision of whether or not to pursue the activity in question. If these externalities are eliminated by charging or compensating for activities, then they become factors in the decision making process. This is especially important for the negative externalities – all too often these become costs placed upon the society instead of the producer (e.g. the city water plant in the above example has to filter out the mercury from its water source). If these prices were quantified in some way they would eventually make coal production to costly to be worthwhile."
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| (http://www.steadystateblog.org/externalities-and-valuing-non-market-goods/)
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| =Discussion=
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| ==Funding and costing externalities==
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| Peter Barnes:
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| "EXTERNALITIES are a better-known concept than common wealth. They’re the costs businesses impose on others—workers, communities, nature and future generations—but don’t pay themselves. The classic example is pollution.
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| Almost all economists accept the need to “internalize externalities,” by which they mean making businesses pay the full costs of their activities. What they don’t often discuss are the cash flows that would arise if we actually did this. If businesses pay more money, how much more, and to whom should the checks be made out?
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| These aren’t trivial questions. In fact, they’re among the most momentous questions we must address in the twenty-first century. The sums involved can, and indeed should, be very large—after all, to diminish harms to nature and society, we must internalize as many unpaid costs as possible. But how should we collect the money, and whose money is it?
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| One way to collect the money was proposed nearly a century ago by British economist Arthur Pigou, a colleague of Keynes’ at Cambridge. When the price of a piece of nature is too low, Pigou said, government should impose a tax on using it. Such a tax would reduce our usage while raising revenue for government.
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| In theory Pigou’s idea makes sense; the trouble with it lies in implementation. No western government wants to get into the business of price-setting; that’s a job best left to markets. And even if politicians tried to adjust prices with taxes, there’s little chance they’d get them “right” from nature’s perspective. Far more likely would be tax rates driven by the very corporations that dominate government and overuse nature now.
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| An alternative is to bring some non-governmental entities into play; after all, the reason we have externalities in the first place is that no one represents stakeholders harmed by shifted costs. But if those stakeholders were represented by legally accountable agents, that problem could be fixed. The void into which externalities now flow would be filled by trustees of common wealth. And those trustees would charge rent.
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| As for whose money it is, it follows from the above that payments for most externalities—and in particular, for costs imposed on living creatures present and future—should flow to all of us together as beneficiaries of common wealth. They certainly shouldn’t flow to the companies that impose the externalities; that would defeat the purpose of internalizing them. But neither should they flow to government, as Pigou suggested.
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| In my mind, there’s nothing wrong with government taxing our individual shares of common wealth rent, just as it taxes other personal income, but government shouldn’t get first dibs on it. The proper first claimants are we, the people. One could even argue, as economist Dallas Burtraw has, that government capture of this income may be an unconstitutional taking of private property."
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| (http://evonomics.com/dont-ditch-capitalism-tax-extractive-side-effects-fuel-growth-barnes/)
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| | [[Category:Business]] |
| [[Category:Ecology]] | | [[Category:Ecology]] |
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| [[Category:Business]]
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