Essays-Letters-Articles

NOVEMBER 29TH, 2009
By ADMIN

We’ve Got It Backward On Energy and Environmental Cost and Reward

This idea is based upon a very simple premise.

It is intrinsic to our nature to view an increase in an expense of an item as a “cost.”

This is because we can easily see and understand that cost, and even do so in a very tangible, measurable, non abstract way.

We can not do this with respect to the real costs that any “increases in measurable costs” – due to sensibly addressing environmental concerns may provoke — will more than offset. Thus the latter — these immediately measurable “costs” as opposed to the hidden and more often far greater costs — are almost invariably — by all of us, looked up as a real cost and thus a negative or “harm.”

Such increased costs, in turn, are naturally viewed as “punishment.”

These two phenomenon tend to throw not just our environmental and energy policy making, but our entire conventional environmental and energy discussion, completely out of whack.

Let’s take the example that effectively changes our world, and keeps us, repeatedly, from sensibly changing it for the better — in a way which increases overall true (and not just 20th century defined “economic”) freedom more than it impinges upon it.

Take a random product. Say gasoline. It pollutes. It relies upon a finite fuel source. It relies upon a fuel source which is roughly 60 percent imported, often from volatile global regions and areas that we do not necessarily want to be pouring money into. It contributes heavily to greenhouse gas emissions.

Let us say that a lawmower is invented that does not pollute. (There have been some for centuries, they consist of a rotating blade that is powered by arm and body strength, but they take effort, strength, are slower, and can be a bear in higher grass. But they will save you money on a gym membership!)

Here is the way that most of us, reasonably, because of the above expressed tendencies — but incorrectly — would tend to look upon a tax upon the gasoline powered mower. (For simplification purposes we will use the dreaded “tax” word): That is, as an actual cost. As an actual punishment.

But that is actually not reality:

The gas mower, because most of its real costs are not integrated into its price, is in effect heavily subsidized, but in a way that is, tangibly, hard to grasp. So, mostly, we don’t grasp it. But that does not change the fact that our policies (or lack thereof) are in effect enormously subsidizing it. Which is,in reality, an enormous cost.

One alternative is to simply give rebates to those who buy lawn mowers that don’t pollute. This is often more politically appealing. But is it efficient?

No, because it requires Washington to become involved in arbiting what the better market alternatives are, and how much to “reward” them, rather than consumers. And, ultimately, such a “reward” is the same as a tax, since Washington does not pick money off of trees. What comes from somewhere needs to be borrowed and paid back — with interest, or taken from another source.

Thus in essence we look upon anything which addresses an environmental imbalance as a “cost,’ when the real cost is the environmental imbalance in the first place. The latter is simply hard to conceptualize and comprehend, the former very easy, so we naturally gravitate toward the former.

And thus, we tend to think (okay, we are obsessed with the idea), that we are “penalizing” industry when harmful practices rightly result in higher costs, when in essence what we are doing is rewarding all other industry. Just not choosing which ones from a bureaucratic perspective — but again letting the market place decide.

Why can’t the marketplace decide which practices are harmful to begin with?

Simple. Most are not immediately known. Most of the costs are not borne by the specific end user, but by society as a whole — via that which we share, and must always share no matter how pared down our government (which unfortunately has been moving in the other direction this entire decade) becomes. There is no incentive. (But for “consumer good will” which for the same reason communism does not work — though it’s always a good motivation to do what one thinks is “right” for the environment –will also never solve the issues alone. )

Another reason is that most of the costs are hard to fathom, and abstract. And still more of the costs assimilate over time, whereas markets, on the other hand, operate on a quarterly basis (as well they should); and can often make billions, disband and reincorporate, before any of the harm is even known. (If it even ever is fully, such as in the case of many carcinogenic materials that we can easily expand our economy and job growth potential by seeking sensible alternatives to.)

If there is any role of government in a free society at all (and see here how Meet the Press’s David Gregory completely mangles that question and plays into long standing and highly misleading stereotypes), beyond the securement of national defense, the promotion and achievement of justice, and perhaps, to some degree sensible public infrastructure (bridges, for example) — it is to assess the harm from individual for profit practices that directly inure to us all over time whether we partake in the activity or not, and set policies to reward marketplace behavior that mitigates such effects.

When a behavior does not destroy, but helps our environment, it is being harmed by policies that do not take into account the deleterious and destructive environmental effects of competitive practices that do; and thus which leave it at a distinct competitive disadvantage, in turn leading to excessive underproduction and under emphasis, in favor of the more environmentally destructive practice.

Again, it is easy to think of imposing legitimate costs upon the modes of production for such environmentally destructive practices as an unjust or even “anti business” imposition, but in reality it nothing of the sort, and is merely offsettting — at least somewhat — the imposition that these practices are having upon all of us and our collective world — our environment. And, at the same time, by increasing their competitive advantage, it is rewarding all other competitive practices and modes of production that are in fact far less destructive. It is simply the most efficient, and at the same time, most market friendly, way to do it.

We just think of it as “punishment” because it is so easy to grasp the idea of the “increase” in “price” of a particular resultant product (say, energy produced from coal fired electricity), as opposed to the decrease in real cost by comparison of far better alternatives, which will in turn help move us off of overemphasis on the most destructive practives, and off of underemphasis on the most non destructive ones. Thus in reality it is not punishment, but a far more efficient and less onerous way to dole out reward, to all competitive practices which don’t produce the same destructive effect.

So those that buy human power push mowers, instead of just buying a novelty, should be able to take the savings that they get — because power lawn mowers should be more expensive thus raising revenuse and decreasing the overall tax rates – and buy other things. The economy is equally invigorated, personal choice is as or more respected, and environmental quality if far better protected, all at the same time.

But because we are stuck on this archaic and seemingly intuitive idea of “cost punishment” we tend to miss this, and so continue to engage in the same long term counter productive policies and arguments.

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