Comment by Nevermark
10 days ago
> What upsets me so much about this unnecessary waste
To the degree ethics (which I am using here to mean, accounting for negative externalities) are not incorporated into economics, with very few exceptions, every company will optimize their profits with no thought to externalities.
Shareholders might care about waste as individuals, but are not coordinated in anyway that moves corporations. And any corporations that would like to be more ethical still have to compete with those that are not. Some with large margins can do that, but most cannot.
Asking/convincing companies or individuals to be voluntarily ethical, one at a time, is not a solution. It is asking the wiser people to de-power themselves, in a way that just increases the opportunity, profits and incentives for less-altruistic actors.
What the EU is doing is good. But I would like to see a consistent economic governance effort to avoid all significant negative externalities. Both the environment and the economy's value creation and net wealth, are better off without colossal destruction of value happening off the books.
Dealing with each externality as if it were an isolated problem fritters away resources and time, and throws away the clarity and commonality that would allow consistent reforms to happen. We don't have that time to waste.
"Asking/convincing companies or individuals to be voluntarily ethical, one at a time, is not a solution. ...just increases the opportunity, profits and incentives for less-altruistic actors."
Exactly, it's why we need to reintroduce regulations many of which were removed or weakened from the late 1970s onward. Moreover, we need intelligent regulation not just gut reaction to an immediate problem. That's proving much more difficult (reigning in the excesses of laissez-faire capitalism that were let out of the bag ~50 years ago with deregulation won't be easy).
> we need intelligent regulation
Absolutely. Poorly thought out, too strict, performative, or obsolete regulations create opposition for any regulation.
I also think we need to co-opt the “enemy” to be regulated, in their terms. E.g. get all the major fossil fuel CFO’s in a room, and figure out the financials encouraging green energy, and away from polluting and geopolitically complicated energy, that would make cold business sense for them.
Include and involve the military, insurance giants, large food security/supply chain companies like Cargill, reactor companies, big enterprise customers that want rapid energy growth, and all the other major sectors that take climate change and energy expansion seriously and will get value out of a more stable world, with better energy technology in practical terms. The people that CEOs respect.
Once the biggest resisters can profit off not resisting, you will see a genuine change of heart. That can sound very cynical, but it’s just how people are. “First, I shall do no damage to my own turf.” But once they take a new position, their power doesn’t just cease it’s friction, but becomes another rocket for progress.
Whatever tax breaks and other incentives it took, to make green their best move, would be worth it. Bribe? Maybe. Better understood as the cost of faster consensus and coordination. Where the price of waiting for everyone to change due to the hardship that is being locked in, is so much higher.
On the other hand, after consensus, change itself needs to happen smoothly, not suddenly. Incentives and disincentive need to operate slower than we might want to make change practical. The most important thing is that those reinforcers are credible. Companies are forward looking. They will naturally move their investments today where the profits will credibly be tomorrow. They don’t need to feel pain, just know what to do to avoid it, and most importantly, prosper.
> include and involve the military, insurance giants, large food security/supply chain companies like Cargill, reactor companies, big enterprise customers that want rapid energy growth, and all the other major sectors that take climate change and energy expansion seriously and will get value out of a more stable world, with better energy technology in practical terms. The people that CEOs respect
Oh yeah let the corpos and MIC rule the world even more than they already do, great idea :)
We should really reform the "free market" IMO. It is way too free now. They get all the benefits and none of the responsibilities.
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Since the 1970s, some industries were deregulated, but overall legal and compliance complexity has still grown over time, according to all studies that I'm aware of on the subject of the regulatory burden.
The studies indicate that a few large early regulations aimed at clear externalities — like major air pollution — delivered substantial benefits on the balance, but many of the smaller restrictions added afterward, especially as they accumulated, mostly generated paperwork (huge compliance industries) and fixed costs (that made smaller firms less competitive) with diminishing returns.
The sensible goal should be to massively reduce the regulatory thicket, while keeping the small set of restrictions that have clear, major benefits and are straightforward to enforce, and replacing the rest with simpler standards or pricing mechanisms that prevent negative externalizations without dragging down productivity through top-down micromanagement of the economy that regiments the actions of private citizens.