August
17, 2018 "Information
Clearing House"
- Ecological economists, such as Herman
E. Daly, stress that as the external costs of
pollution and resource exhaustion are not
included in Gross Domestic Product, we do not
know whether an increase in GDP is a gain or a
loss.
External costs are huge and growing larger.
Historically, manufacturing and industrial
corporations, corporate farming, city sewer
systems, and other culprits have passed the
costs of their activities onto the environment
and third parties. Recently, there has been a
spate of reports with many centering on
Monsanto’s Roundup, whose principle ingredient,
glyphosate, is believed to be a carcinogen.
Controversy about these findings comes from the
fact that industry-funded scientists report no
link between glyphosate and cancer, whereas
independent scientists do. This is hardly
surprising as an industry-funded scientist has
no independence and is unlikely to conclude the
opposite of what he is hired to conclude.
There
is also controversy about what level of
contamination is necessary for products
adulterated with glyphosate to be classified as
dangerous. It does seem to be the case that the
concentrations rise with use and time. Sooner or
later the concentration becomes sufficient to do
the damage.
For
this article, the point is that if glyphosate is
carcinogenic, the cost of the lost lives and
medical expenses are not borne by
Monsanto/Bayer. If these costs were not external
to Monsanto, that is, if the corporation had to
bear these costs, the cost of the product would
not be economical to use. Its advantages would
be out-weighed by the costs.
Last
week in San Francisco jurors awarded a former
school groundkeeper $289 million in damages for
cancer caused by Roundup. Little doubt that
Monsanto will appeal and the case will be tied
up in court until the groundkeeper is dead. But
it is a precedent and indicates that jurors are
beginning to distrust hired science. There are
approximately 1,000 similar cases pending.
https://www.cnn.com/2018/08/10/health/monsanto-johnson-trial-verdict/index.html
When we
consider these extensive external costs of
corporate farming, clearly the values attributed
to sugar and farm products in the Gross Domestic
Product are excessive. The prices paid by
consumers are much too low and the profits
enjoyed by corporate agriculture are far too
high, because they do not include the costs of
the massive marine deaths, the lost tourist
business, and the human illnesses caused by the
algae tides that depend on chemical fertilizer
runoff.
As an
exercise, pick any business and think about the
external costs of that business. Take, for
example, the US corporations that offshored
Americans’ jobs to Asia. The corporations’
profits rose, but the federal, state, and local
tax bases declined. The payroll tax base for
Social Security and Medicaid declined, putting
these important foundations of US social and
political stability into danger. The tax base
for school teachers’ and other government
employees’ pensions declined. If the
corporations that moved the jobs abroad had to
absorb these costs, they would have no profits.
In other words, a few people gained by shoving
enormous costs on everyone else.
Or
consider something simple like a pet store. All
the pet store owners and customers who sold and
purchased colorful 18 to 24 inch pythons, boa
constrictors, and anacondas gave no thought to
the massive size these snakes would be, and
neither did the regulatory agencies that
permitted their import. Faced with a creature
capable of devouring the family pet and children
and suffocating the life out of large strong
adults, the snakes were dumped into the
Everglades where they have devastated the
natural fauna and now are too numerous to be
controlled. The external costs easily exceed
many times the total price of all such snakes
sold by pet stores.
Ecological economists stress that capitalism
works in an “empty economy,” where the pressure
of humans on natural resources is slight. But
capitalism doesn’t work in a “full economy”
where natural resources are on the point of
exhaustion. The external costs associated with
economic growth as measured by GDP can be more
costly than the value of the output.
A
strong case can be made that this is the
situation we currently face. The disappearance
of species, the appearance of toxins in food,
beverages, water, mothers’ breast milk, air,
land, desperate attempts to secure energy from
fracking which destroys groundwater and causes
earthquakes, and so forth are signs of a
hard-pressed planet. When we get right down to
it, all of the profits that capitalism has
generated over the centuries are probably due to
capitalists not having to cover the full cost of
their production. They passed the cost on to the
environment and to third parties and pocketed
the savings as profit.
Update:
Herman Daly notes that last year the British
medical journal, Lancet, estimated the
annual cost of pollution was about 6 % of the
global economy whereas the annual global
economic growth rate was about 2 percent, with
the difference being about a 4% annual decline
in wellbeing, not a 2 percent rise. In other
words, we could already be in the situation
where economic growth is uneconomical. See
https://www.usnews.com/news/world/articles/2017-10-19/study-world-pollution-deadlier-than-wars-disasters-hunger
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