The market does not reflect the true activity based costing that accounts for all of the effects of a product - if we could factor everything in this would prevent the skewing of the market that currently occurs. The majority of the life cycle product costs are not included such as recycling, disposal, environmental effects, etc. these costs are borne through the general tax pool via. subsidised roads, dock, airports, landfills, recycling centres, etc.
For example society is starting to take this approach with cigarettes (though not intentionally) which are approx. $9.50 a pack in Ontario. This cost and the lowered life expectancy of a smoker are a financial net benefit to society since the smoker pays a significantly higher portion of tax during their life and are far less likely to collect services when they retire since they are more likely to die of a debilitating disease at an earlier age thus reducing their use of social services and the large expenses via health care and pensions, etc. that are collected later in life. Though very morbid this has been studied in Denmark and Canada and appears to show that smoking at high costs can be a net financial benefit to society. Not that I am advocating smoking (though I still smoke myself) it was an issue that partially proves the cost model.
Simliar examples
- dipsosible diapers are an enviornmental and biological hazard and use 2-3% of landfill space. The cost of the disposable diaper should include the recycling/remediation of the material and all of the costs associated with the chemical and pathogens incvolved. Currently the consumer only pays for the cost of production and not the full life costs which are borne by society at large.
$this->bbcode_second_pass_quote('', '
')Disposables and Public Health & Landfill Concerns
About 5 million tons of untreated body excrement, which may carry over 100 intestinal viruses, is brought to landfills via disposables. This may contribute to groundwater contamination and attract insects that carry and transmit diseases. In 1990, 18 billion disposables were thrown into United States landfills. Is it wise to use 3.4 billion gallons of oil and over 250,000 trees a year to manufacture disposables that end up in our already overburdened landfills? These disposables are not readily biodegradable. The paper must be exposed to air and sun to decompose. Thirty percent of a disposable diaper is plastic and is not compostable. Even if the rest of the diaper could be composted, these plants could only handle 400 of the 10,000 tons of diapers tossed in landfills EACH DAY, assuming they didn't have to process any other compostable garbage. Biodegradable diapers have cornstarch added to the plastic to break it into tiny pieces. The pieces still end up in landfills.
PeakOil is You
THE Free Market Thread (merged)
Re: losing faith in free markets?
by Canuk » Thu 17 Jul 2008, 13:00:20
- fast food wrappers and consumer packaging are also an environmental and diposal borne by society benefitting one industry.
$this->bbcode_second_pass_quote('', '
')The Southern forests of North America supply 60% of US and 15% of global paper demands. Deforestation for wood and paper products, along with urban sprawl, has resulted in a total decline from 356 million acres in colonial times to 182 million acres today. The South contains more threatened forest ecosystems than anywhere else in the US. A major perpetuator of deforestation in the South is the fast food industry.
If a the full costs of the replanting of forests, recycling of materials, landfilling, transportation, etc. could be applied to costs I am sure the market would respond with more reuse, repair, lower packaging, etc. but as long as society bears these costs we subsidise the consumer at the detriment of those who do not consume - hitting pensioners and low income groups dipropotionately.
Last edited by Canuk on Thu 17 Jul 2008, 13:02:24, edited 1 time in total.
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Canuk - Peat
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Re: losing faith in free markets?
by coyote » Thu 17 Jul 2008, 13:01:38
$this->bbcode_second_pass_quote('MrBill', 'I')f you want to call political interference in the market economy the third way, fine. I will call it what it is. Go back to school and learn something useful before coming here and defining these terms however you (and your professor) choose to interpret them.
Thank you for that, MrBill.
I have learned the basics of ecomomics in college courses in the past, but it's true that it has been a while since then. Perhaps I will go back to refresh and improve my knowledge on the subject. Although at this point I have my doubts about just how "useful" classical economics is to us. Those market mechanisms are proving far too slow to effectively meet the challenges that are piling on us. Ten times better than command economies have done, yes, at least - but still not nearly up to the job. As the polar cap melts, oil companies are fighting for the rights to drill there for more of the hydrocarbons that caused the melting. At the same time, our government is gearing up spend hundreds of billions of fake dollars on a housing bailout, instead of addressing the actual issues of our time. Capitalism? Command? If there is no third way, then that's effectively the end of our story. I hope that's not true.
Lord, here comes the flood
We'll say goodbye to flesh and blood
If again the seas are silent in any still alive
It'll be those who gave their island to survive...
We'll say goodbye to flesh and blood
If again the seas are silent in any still alive
It'll be those who gave their island to survive...
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Re: losing faith in free markets?
by chrispi » Thu 17 Jul 2008, 13:07:35
There is a "third way." It's called collapse.
"When the world is running down, you make the best of what's still around."--The Police
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chrispi - Peat
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Re: losing faith in free markets?
by emeraldg40 » Thu 17 Jul 2008, 13:15:30
$this->bbcode_second_pass_quote('MrBill', 'T')he problem as I see it - and I got into this debate on the weekend with a developmental economist either from the UN (or working for an NGO that works with the UN) - is that finance and economics simply are. They are totally objective. The biggest mistake I can see is to apply subjective criteria to an objective subject.
Almost like blaming the climatologist for predicting manmade or natural global warming and climate change. Or blaming the Center for Disease Control for roadmapping an outbreak of human to human transmited avian influenza virus and its effects. Someone might say, but that is horrible. How can you support such a dreadful outcome? It just is. If you want to avoid that outcome you have to take the necessary precautions and treat outbreaks (or climate events) as they happen. But the treatment has to address the underlying problem and not the symptoms.
The market economy is the most efficient way to allocate resources within an economy using price. However, we can also use economic modeling - based on hard science and physical limits - to forecast whether our current use of resources is sustainable or unsustainable. Once we have that information we can create market mechanism to encourage conservation and discourage over-consumption. A command and control economy has no such feedback mechanism. And we cannot rely on the goodness of human nature to achieve these results either.
If proposed economic changes using price - either the price of a good or taxes on it - are unpalatable to the consumer then how should we expect them to voluntarily adapt to a new reality of resource scarcity if, for example, they are not prepared to pay 25% more for their power, so that utilities can employ the latest carbon capture or scrubbing technologies? Sure the government can mandate it, but then there will be backdoor lobbying to get this or that group excluded or subsidized. That defeats the whole purpose, which is to change behavior by sending a price signal that says this is scarce (or has a cost to the environment) therefore use less or find alternatives.
A social-democracy with a market economy is simply the best system we have ever invented. It is the pinnacle of our evolution. However, it is not perfect. Because we are not perfect. Therefore, good government is often selling unpopular policies by making constituents see that it is in their own best long-term interest to change their behavior. You can only do that with good science, hard arguments and an objective view of economics. Feelings and emotions are best left-out of the equation.
UPDATE:The worst housing slump since the Great Depression is slowing the economy and adding to the nation's budget deficit.
$this->bbcode_second_pass_quote('', '[')b]``People obviously don't want higher taxes,'' said Torricelli, who earlier this month hosted a fundraiser for Corzine's 2009 re-election effort at his Delaware Township home. ``They never want spending cuts, and no one is lining up to make sacrifices. That's what makes governing at this point in American history a challenge.''
Almost like blaming the climatologist for predicting manmade or natural global warming and climate change. Or blaming the Center for Disease Control for roadmapping an outbreak of human to human transmited avian influenza virus and its effects. Someone might say, but that is horrible. How can you support such a dreadful outcome? It just is. If you want to avoid that outcome you have to take the necessary precautions and treat outbreaks (or climate events) as they happen. But the treatment has to address the underlying problem and not the symptoms.
The market economy is the most efficient way to allocate resources within an economy using price. However, we can also use economic modeling - based on hard science and physical limits - to forecast whether our current use of resources is sustainable or unsustainable. Once we have that information we can create market mechanism to encourage conservation and discourage over-consumption. A command and control economy has no such feedback mechanism. And we cannot rely on the goodness of human nature to achieve these results either.
If proposed economic changes using price - either the price of a good or taxes on it - are unpalatable to the consumer then how should we expect them to voluntarily adapt to a new reality of resource scarcity if, for example, they are not prepared to pay 25% more for their power, so that utilities can employ the latest carbon capture or scrubbing technologies? Sure the government can mandate it, but then there will be backdoor lobbying to get this or that group excluded or subsidized. That defeats the whole purpose, which is to change behavior by sending a price signal that says this is scarce (or has a cost to the environment) therefore use less or find alternatives.
A social-democracy with a market economy is simply the best system we have ever invented. It is the pinnacle of our evolution. However, it is not perfect. Because we are not perfect. Therefore, good government is often selling unpopular policies by making constituents see that it is in their own best long-term interest to change their behavior. You can only do that with good science, hard arguments and an objective view of economics. Feelings and emotions are best left-out of the equation.
UPDATE:The worst housing slump since the Great Depression is slowing the economy and adding to the nation's budget deficit.
$this->bbcode_second_pass_quote('', '[')b]``People obviously don't want higher taxes,'' said Torricelli, who earlier this month hosted a fundraiser for Corzine's 2009 re-election effort at his Delaware Township home. ``They never want spending cuts, and no one is lining up to make sacrifices. That's what makes governing at this point in American history a challenge.''
source: Balancing budgets is balancing expectations
Since you brought up re-election in your well thought out post that I agree with 100%.....There is a talk show host in Dallas who has put together a website called Blow out congress dot com.....his wish is for EVERY Congressmen to be jettisoned out of his/her seat and new people given a chance to lead. Just food for thought.
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emeraldg40 - Lignite
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