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Thomas E. Woods, Jr., is the New York Times bestselling author of 11 books, including The Politically Incorrect Guide to American History and Meltdown (on the financial crisis). A senior fellow of the Ludwig von Mises Institute, Woods has appeared on MSNBC, CNBC, FOX News, FOX Business, C-SPAN, Bloomberg Television, and hundreds of radio programs... (Read More)



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Critic: Free Markets Mean Pollution and Layoffs

27th October 2011      by: Tom Woods     

A critic writes:

Our entire system is based is based on profits and losses driving decision making and economic activity, but our accounting does not always capture all the costs.

If I open a new factory near a river for 5 million dollars and I make an extra 1 million dollars, but I pollute the river, clear out a bunch of trees,  etc… the market says that was a good investment and I should do it again.

What about all the dead animals, loss of entertainment value from the river, costs of eventually cleaning up the mess etc… ?

If 100 profitable companies all find a way to lay people off and make more money, our accounting says they should do it.

What about the impact on hundreds of other companies that got part of their revenue from the people that lost those jobs?

What about the human cost?

Until ALL the costs are evaluated and included in a profit loss statement, it’s impossible to know whether an investment is actually good or bad even if it is profitable by current standards.

With regard to pollution, a market economy, as opposed to what we have now, punishes pollution as a violation of property rights. Polluters could not simply soil other people’s property, or send sludge down river to invade other people’s land. Here’s what Mr. Libertarian, Murray Rothbard, had to say about pollution and the market economy, and it’s something like the opposite of what our critic would probably expect him to say.

“What about the impact on hundreds of other companies that got part of their revenue from the people that lost those jobs?”

There are lots of logical problems with this objection that I think our critic has not stopped to consider. For one thing, could we not blame this critic himself for the job losses brought on by his own changes in taste? Last year he wanted corduroys, and this year he wants loose-fitting jeans. What about the impact on the corduroy companies, and all the companies with which it does business, made by our critic’s self-centered change of fashion? Did he stop to consider the human cost of his frivolous decision?

Everything we do in a division-of-labor economy will have exactly the same ripple effects our critic rails against here. His complaint could be raised against practically all action.

For another thing, why is our critic so sure that exactly the right number of people happen to be employed in every single industry at this particular moment, such that the decision by a firm or group of firms to lay some off can be explained only by sheer wickedness? It would be a veritable miracle if that were the case. If a firm is more prosperous with fewer workers, all we can say about this is that it had previously employed more people than was optimal. How can our critic say, non-arbitrarily, that it is better for a particular firm to have 150 employees than 120? How can he know that? What unique insight does he possess to tell him that?

What if those extra 30 laborers can satisfy the consumer better in some other sector of the economy? What if demand is falling for a firm’s product, such that it is absurdly overproducing with its current level of employment? In a division-of-labor society we cannot be so self-centered that we assume our present jobs are ends in themselves. The point of a job is to do something that serves your fellow man. If you are no longer serving your fellow man in a way that pleases him, are you entitled to stay in that form of employment in defiance of your fellow man? This is deeply anti-social. And what about all the dislocation caused when the automobile replaced the horse and buggy? What about the “human cost” of that? This whole line of argument, in short, would put an end to human progress and human choice.

The very fact that the firm earns higher profits with fewer employees indicates that it had previously been misallocating scarce resources. Profits are an indication from the consumer that a firm is combining factors of production in ways that add value. The process of economic calculation, whereby a firm compares its sales revenues with its input costs, informs the firm of how well it is satisfying consumer demand at the least cost in terms of opportunities foregone (i.e., what the factors of production employed by the firm could have produced had they been in others’ hands). If the firm is losing money by employing more workers, that means the present configuration of factors of production displeases the consumers, who prefer to see them allocated in some other way.

Ludwig von Mises explained in Human Action that such critics should really be directing their complaints at the consumers, not the firms themselves:

The consumers patronize those shops in which they can buy what they want at the cheapest price. Their buying and their abstention from buying decides who should own and run the plants and the farms. They make poor people rich and rich people poor. They determine precisely what should be produced, in what quality, and in what quantities. They are merciless bosses, full of whims and fancies, changeable and unpredictable. For them nothing counts other than their own satisfaction. They do not care a whit for past merit and vested interests. If something is offered to them that they like better or that is cheaper, they desert their old purveyors. In their capacity as buyers and consumers they are hard-hearted and callous, without consideration for other people.

Only the sellers of goods and services of the first order are in direct contact with the consumers and directly depend on their orders. But they transmit the orders received from the public to all those producing goods and services of the higher orders. For the manufacturers of consumers’ goods, the retailers, the service trades, and the professions are forced to acquire what they need for the conduct of their own business from those purveyors who offer them at the cheapest price. If they were not intent upon buying in the cheapest market and arranging their processing of the factors of production so as to fill the demands of the consumers in the best and cheapest way, they would be forced to go out of business. More efficient men who succeeded better in buying and processing the factors of production would supplant them. The consumer is in a position to give free rein to his caprices and fancies. The entrepreneurs, capitalists, and farmers have their hands tied; they are bound to comply in their operations with the orders of the buying public. Every deviation from the lines prescribed by the demand of the consumers debits their account. The slightest deviation, whether willfully brought about or caused by error, bad judgment, or inefficiency, restricts their profits or makes them disappear. A more serious deviation results in losses and thus impairs or entirely absorbs their wealth. Capitalists, entrepreneurs, and landowners can only preserve and increase their wealth by filling best the orders of the consumers. They are not free to spend money which the consumers are not prepared to refund to them in paying more for the products. In the conduct of their business affairs they must be unfeeling and stony-hearted because the consumers, their bosses, are themselves unfeeling and stony-hearted.

The consumers determine ultimately not only the prices of the consumers’ goods, but no less the prices of all factors of production. They determine the income of every member of the market economy. The consumers, not the entrepreneurs, pay ultimately the wages earned by every worker, the glamorous movie star as well as the charwoman. With every penny spent the consumers determine the direction of all production processes and the details of the organization of all business activities. This state of affairs has been described by calling the market a democracy in which every penny gives a right to cast a ballot. It would be more correct to say that a democratic constitution is a scheme to assign to the citizens in the conduct of government the same supremacy the market economy gives them in their capacity as consumers. However, the comparison is imperfect. In the political democracy only the votes cast for the majority candidate or the majority plan are effective in shaping the course of affairs. The votes polled by the minority do not directly influence policies. But on the market no vote is cast in vain. Every penny spent has the power to work upon the production processes. The publishers cater not only to the majority by publishing detective stories, but also to the minority reading lyrical poetry and philosophical tracts. The bakeries bake bread not only for healthy people, but also for the sick on special diets. The decision of a consumer is carried into effect with the full momentum he gives it through his readiness to spend a definite amount of money.

It is true, in the market the various consumers have not the same voting right. The rich cast more votes than the poorer citizens. But this inequality is itself the outcome of a previous voting process. To be rich, in a pure market economy, is the outcome of success in filling best the demands of the consumers. A wealthy man can preserve his wealth only by continuing to serve the consumers in the most efficient way.

Thus the owners of the material factors of production and the entrepreneurs are virtually mandataries or trustees of the consumers, revocably appointed by an election daily repeated. [Emphasis added.]

Unlearn the Propaganda!

  • Em_pty Skin

    Good article and good timing!

    I’m studying this particular chapter of Human Action in my Poly Sci class tomorrow (today, it is 3 am).  I highlighted this section while reading because I remembered that I had said in class earlier in the semester that the market is the truest expression of democracy.  How sweet vindication will feel. 

    Some of the kids in class, when we went over “Wealth of Nations” and Hayek’s “Use of Knowledge” essay, tried to use the example of global warming as a failure of the price system.  All I could do was sigh and pout in my chair while people contest the merit of the price system versus global warming.

    Good example with the pants, as well.  I might use that in class if necessary.

  • Anonymous

    Hi Em_pty Skin,

    You wrote:

    “the market is the truest expression of democracy.”

    True. Better yet would be to say, as LvM himself indicated, that democracy is a rather imperfect imitation of the market.

    And what about Global Warming.. pardon, “Climate Change” (a strategic turn of phrase to account for any change in climate, be it warming or cooling, and blame it on CO2 – a cherished substance by plants – and them evil capitalist polluters) ..(*sigh*)..

    I wish you strength and stamina refuting the ludicrous Gorist idea that somehow, science is done by “consensus”. I fear that for many (too) good people, youngsters in particular, the fanaticism they invest in the GW belief infuses the Environmental movement (In some departments perhaps better described as “Green Khmer”) with characteristics akin to an “Ersatz-Religion”.

    Me thinks Murray Rothbard would point to the parallels between big state worshippers using war to bring more of society under the aegis of their dirigist impulses and the use of a global environmental scare to effect top-down “social change” (like carbon-taxing the air we breathe, for instance).

    Kind regs from Amsterdam,
    Richard

  • SRG

    I would ask the critic what economic system s/he thinks will do a better job?  

    The free market system exploits the true nature of humans (selfishness) to allocate resources efficiently.  While it may not always be pretty, it beats any other system I’m aware of in the long run.  The Law of the Jungle is the law of nature because it works.  We like to think we are above the animals but we are not.  The free market system is just our version of it.

    As long as people are flawed, no system will be perfectly just and benign.  The task is to find the best available option because a perfect option isn’t possible.  Haven’t we seen enough of the Statist BIG government option to realize it’s a complete failure?  The critic is making the common mistake of letting the perfect be the enemy of the good.

  • http://www.facebook.com/people/Robert-Roddis/707435410 Robert Roddis

    There are people to whom monetary calculation is repulsive. They do not want to
    be roused from their daydreams by the voice of critical reason. Reality sickens
    them, they long for a realm of unlimited opportunity. They are disgusted by the
    meanness of social order in which everything is nicely reckoned in dollars and
    pennies. They call their grumbling the noble deportment worthy of the friends of
    the spirit, of beauty, and virtue as opposed to the ignoble baseness and
    villainy of Babbittry. However, the cult of beauty and virtue, wisdom and the
    search for truth are not hindered by the rationality of the calculating and
    computing mind. It is only romantic reverie that can not thrive in the milieu of
    sober criticism. The cool-headed reckoner is the stern chastiser of the ecstatic
    visionary.

    Our civilization is inseparably linked with our
    methods of economic calculation. It would perish if we were to abandon this most
    precious intellectual tool of acting. Goethe was right by calling
    bookkeeping by double-entry “one of the finest inventions of the human
    mind.”

  • http://www.facebook.com/people/Robert-Roddis/707435410 Robert Roddis

     

    Another great LvM quote, thanks to Bob Wenzel:

    “There are people to whom monetary calculation is repulsive. They do not want to be roused from their daydreams by the voice of critical reason. Reality sickens them, they long for a realm of unlimited opportunity. They are disgusted by the meanness of social order in which everything is nicely reckoned in dollars and pennies. They call their grumbling the noble deportment worthy of the friends of the spirit, of beauty, and virtue as opposed to the ignoble baseness and villainy of Babbittry. However, the cult of beauty and virtue, wisdom and the search for truth are not hindered by the rationality of the calculating and computing mind. It is only romantic reverie that can not thrive in the milieu of sober criticism. The cool-headed reckoner is the stern chastiser of the ecstatic visionary.

    Our civilization is inseparably linked with our methods of economic calculation. It would perish if we were to abandon this most precious intellectual tool of acting. Goethe was right by calling bookkeeping by double-entry ‘one of the finest inventions of the human mind.’”

    http://www.economicpolicyjournal.com/2011/10/ludwig-von-mises-on-occupy-wall-street.html

    I think this explains our opponents. All of them. For years, I’ve been beating a dead horse pointing out that our opponents NEVER seem to comprehend the concept of economic calculation. None of them ever do. Ever. Note that with every opponent.

  • Anonymous

    SRG -

    I agree with you about human nature being flawed and all, and that free market philosophy (and practice) best suits that nature.

    I disagree however, that free markets are about what is implicated by the “Law of the Jungle”.

    That would be more reminiscent of what happens whenever a central authority first grabs our property (money) and then puts a large bag of this tax loot before the public. Then everybody tries to use government to live at the expense of his fellow men. Now there’s the “animal spirit” in the predatory forces set free by our current Western welfare state bureaucracies.

    Free market philosophy is about something that is fundamentally at odds with some kind of Darwin inspired rat race. It’s about freedom, the right to be left alone and mind your own business and individual natural rights, first and foremost property rights. This is the best guarantee for any form of civil society that accommodates human nature. The need to cooperate as free individuals in a free market is often overlooked by those who only emphasize “dog eat dog” competition and seek to revamp capitalism by using some Africanesque, Tarzan-style couleur locale.

    The free market is about civilization, not about jungle.

    Kind regs from Amsterdam,
    Richard

  • http://pulse.yahoo.com/_3OBZV7DNFXZLYSAPAN4RLMOUTI Jeffrey

    Lets assume that CO2 is causing global warming and thus is causing damage (I know this is a controversial issue, but let just assume that this is true for now).  How would the free market solve this?  I can understand how the free market can solve polluting a river, or the local air if property rights include the river or air.  But can property rights resolve CO2 and global warming?  If my house gets flooded due to global warming, whom would I sue?

  • Anonymous

    The problem on the pollution side is that not all lands or waterways are private, the air is clearly not private, and government does not always implement laws (or enforce them) to penalize or capture the costs.  If they did, it’s unlikely we would have much pollution at all.  The reality is that businesses fight these kinds of rules because the costs are large and they don’t want them on their income statements where they belong.  The idea that if everything was private we might not have these problems is “theoretical” at best. How do you privatize oceans, air etc…
     
    There is an endless list of things like these.

    If fishermen deplete the oceans and hunters deplete certain types of animals, they can profit enormously because the true costs are not on their income statement.    

    On the labor side, you are assuming that every company that lays people off is struggling and/or maintaining the same quality products and services after the layoffs. You are also assuming that those laid off can be allocated elsewhere. That’s a fallacy.  There are companies earning above average returns on capital whose primary reason for laying people off is even higher returns on capital, to get the stock price up and cash in on options, etc…. It sometimes even occurs at the expense of the quality of products/services or the remaining employees. 

    There is so much short term thinking like this because the accounting is so poor.  

  • Anonymous

    Before looking for the right place to sue in case the Ponzi-scheme of global carbon taxation would turn out to be based on actual science, you might wonder first where to reclaim your property rights, currently violated by our welfare state bureaucracies, should the GW scare prove to be totally misguided, like the environmental scare of the ’70s (by the “Club of Rome” elites).

    And in a way, everyone of us, the people, is already suing by our proxy, big government, the usual suspects found guilty and forced to pay without trial, on the premise that you presume to be factual, i.e. that CO2 causes global warming ehm.. “climate change”. Big government institutions and their lackeys are suing on your behalf to punish the job-creators for adding some very small amount of plant fertilizer to our atmosphere. Nice job.

    Kind regs from Amsterdam,
    Richard

  • http://tomwoods.com Tom Woods

    “There is an endless list of things like these.”

    That’s why it’s important to read some of the literature on this, that tries to grapple with these problems.

    “If fishermen deplete the oceans and hunters deplete certain types of
    animals, they can profit enormously because the true costs are not on
    their income statement.”

    Do you notice where things like this do not happen? Where private property rights exist. Then there is no incentive to overfish or overhunt.  Exactly the opposite.  The American Indians assigned fishing rights in the Pacific Northwest in order to preserve rather than overfish, particularly with salmon.  Same thing is true for the assignment of hunting rights in various places — it gives the owners of those rights zero incentive to overhunt.

    Yes, it is difficult to assign property rights in some cases, but with our level of technology not at all impossible. Since private property rights are the only way to ensure the preservation of these species without hopelessly inefficient bureaucratic interference (take a wild guess at how many species put on the federal government’s endangered list have been removed — seriously, take a guess), we ought to exert ourselves intellectually and figure out how they can be extended.

    “On the labor side, you are assuming that every company that lays people
    off is struggling and/or maintaining the same quality products and
    services after the layoffs. You are also assuming that those laid off
    can be allocated elsewhere. That’s a fallacy.  There are companies
    earning above average returns on capital whose primary reason for laying
    people off is even higher returns on capital, to get the stock price up
    and cash in on options, etc…. It sometimes even occurs at the expense
    of the quality of products/services or the remaining employees.”

    If the company is producing inferior products after the layoffs, consumers have no one to blame but themselves for continuing to patronize it. On the other hand, is it always the best approach to produce the longest-lasting products? Maybe consumers prefer less expensive pail-and-shovel sets that last three years instead of 50. It is another example of the critic’s arbitrariness that he substitutes his private value judgment for the freely expressed preferences of the market. If quality falls to an intolerable level, why would this not create a profit opportunity for a better company?  And if it doesn’t, on what non-arbitrary grounds can you say the consumer is unhappy?

    Why does laying off people necessarily lead to higher returns on capital?  And if it does, why is that not an indication that too much labor had previously been employed? Or is there such a thing as too much labor to this critic?

    Until we are in the Garden of Eden, there will always be work to do. If Martians started bringing us free furniture, we should not decline this gift on the grounds that it will put furniture makers out of work.

  • http://www.kennethballard.com Kenneth

    Many inventors have died penniless because their inventions were supplanted by better innovations or better methods of manufacture. The e-mail has replaced the letter, Internet audio and video chat is slowly replacing the telephone and long distance plans (and in many households, has). Cellular is replacing land lines.

    Someone potentially having a better idea is what drives people to continually innovate. What innovations succeed we determine. What jobs get created we determine. The free market economy is bottom-up, and economic evolution mirrors biological evolution in that same sense. Market pressures on manufacture and innovation mirror the environmental pressures on species in the wild. “Adapt or die off” is the name of the game in both situations, and if something comes along that has significant advantage over everything else around, better able to make use of resources and the environment then everything else around, then everything else around must either adapt to this new member of the environment or risk dying off.

    All of this happens without any one hand calling the shots, guiding or directing processes, nor does it happen randomly — though it might appear to. It happens unconsciously, needs and wants guiding the flow of money, determining which product, company or entire industry lives or dies.

  • SRG

    The free market is about competition and the fittest surviving.  It is surely NOT about cooperation and welcoming people to civilization.

    The essence of the free market (and the reason it works well) is that it plays off the basic selfish nature of people rather than working against their basic nature.  In that sense, it is NOT about cooperation and the fantasy that people will kindly look out for each other because, on the whole, they will not.  

  • Farside

    Excellent! I would title your response: ‘One Lesson’ in a Nutshell

  • Anonymous

    SRG -

    You write:

    “The free market is about competition and the fittest surviving.”

    Well, that’s indeed the crude, incomplete and slightly misleading version of free market philosophy you seem keen to advertise here.

    I’d agree on competition, for sure, and clarify the “fittest surviving” with the reminder that the ones who survive in a free market are the ones who best proved their “fitness” by serving their fellow men, meaning that they provide us with the goods and services we desire, which is quite a departure from the one-sided and rather grim picture you choose to paint. In a free market consumers cast ballots with every product they choose to favour. I think that emphasis on the democratic aspects of the free market runs a bit against the grain of your anarchistic and pessimistic take on both capitalism and human nature.

    Furthermore I’d like to point out that your animal-equivalence argument does some closely related friends (our primate “cousins” so to speak) a great disservice. At their own level of sophistication and evolution, things like cooperation, serving others and a special talent for reconciliation are also part and parcel of their everyday existence.

    Free market philosophy, as it has been put forward in the writings of, say, Frédéric Bastiat, Ludwig von Mises, Murray Rothbard and many others, is about freedom and property rights, first and foremost. That is the basis of our civilization documented by these freedom loving giants. Your pessimistic view of human nature, putting people down with the “animal spirit”, like Maynard Keynes basically did, and the off hand projection of liberally interpreted Darwinian lingo on human motivation, smacks more of the way old-fashioned Marxists and indeed Karl Marx himself used to think of human nature in economic affairs.

    Kind regs from Amsterdam,
    Richard

  • Anonymous

    I want to make clear that I am a very free market oriented person. I’m a huge fan of Mises and Austrian economics. However, outside the development of the theoretical Utopian society free market oriented like us envision, some things are not going to be privatized. So as long as that’s the case, we should at least be doing the accounting properly.

    Rivers are not privately owned.
     
    If there are 10,000 bass in a river, that’s an asset. For discussion’s sake, we can call it a societal asset, but whatever you want to call it, it’s an asset.

    If private fishermen catch 1000 of them and lower the count to 9000, that should be reflected on the societal balance sheet and should be a cost to the fishermen. Since it isn’t, he has an incentive to fish out the entire 10,000. maximize personal profit, and then move to another river.

    The idea that we should operate with preposterous accounting that creates incentives for irresponsible and potentially damaging behavior because we can’t have our own little Utopia is equally preposterous.

    Similar things occur in business regarding layoffs.

    Just because a company can lay people off and increase profits does not mean there is always a net gain for the society. Often layoffs are necessary and do lead to a net gain by allocating capital better, but not always. Sometimes there is a net gain for the owners but losses for society in aggregate. 

    I’m not saying you can account for every action that has an impact, but you want to try to capture the downsides of things that can have large impacts so the decision making improves.

  • SRG

    You incorrectly assume that I’m pessimistic and putting people down by noting that we are all part of nature and, thus, selfish.  Selfishness is a fact and it is necessary for a species to survive.  It is neither good nor bad in and of itself until you decide to label it as such.  That you label it so reveals much about you.  To paraphrase Shakespeare “Methinks thou doth protest too much.”

    Free market capitalism simply recognizes this fundamental selfishness in humans and exploits it.  Candy-coating it as something that makes you feel good about yourself doesn’t change the basic nature of capitalism.You mistake my realism for pessimism and your disingenuous attempt to link such realism with “old-fashioned Marxists” is revealing of your true nature, which, I might add, is consonant with my core point about human nature.  So, in that sense, thanks for proving my point!

  • Anonymous

    Thanks SRG -

    For the revealing exchange indeed. And thank you for the schooling about selfishness, I needed that ;-)

    You write:

    “Selfishness [..] is neither good nor bad in and of itself until you decide to label it as such. That you label it so reveals much about you.”

    That I label it so.. what? Good or bad? And do you think it’s really that interesting for people to know what it “reveals” about me? I for one couldn’t care less.

    Look, all I say is that you’re only telling half of the story, and by leaving it at that, like indeed orthodox Marxists did, you paint a rather bleak picture of both human nature and capitalism as well.
    Furthermore, I gathered from your comments that you might be interested to familiarize yourself with actual free market philosophy. Therefore, I thought I’d indicate what free market apologists like Ludwig von Mises and others thought to be the pillars of a free society. What’s so wrong about that?

    I do know that selfishness is necessary for self-preservation. We don’t disagree on that point.
    But I added that we – as humans – can do one (or two) better, most certainly in a true free (market) society. That’s what I described as the uniquely human capacity to build upon and even transcend our “nature”. Civil society, based on a free market, builds upon more than just competition and selfishness. Only to focus on these aspects means selling short the deeply moral insights of those great men who devoted their life’s work in the service of freedom.

    Kind regs from Amsterdam,
    Richard

  • David

    In a free market, people are forced to cooperate with one another, because they cannot force other people to serve them. They can’t force someone to work for them or force someone to buy their product.  Likewise, consumers can’t just take what they want without providing something in return.  And I would stress that “fittest surviving” should not be taken very literally – one reason the free market is so much better than the precapitalist systems is because it allows people to participate economically in limitless ways. People are free to exploit their talents.  Before that, if you weren’t good at farming, your prospects were generally pretty bleak.

  • http://www.kennethballard.com Kenneth

    You’re premise is a little flawed for two reasons:

    1. Fish reproduce. As such the 1,000 fish loss will be replenished (in part, whole, or exceeding) during the next reproduction cycle.

    2. No fisher has an incentive to fish out the entire 10,000, as he’d be fishing himself out of work. Instead he has an incentive to be conservative on his fishing, taking into account that if he fishes out too much he will lose his livelihood.

    But there is an answer to the issue you present: farming. Fish farms exist for the purpose of providing continued stocks of certain kinds of fish to market. We do the same with other animals as well as plants. When people want a limited resource in bulk, someone will find a way to cultivate it and farm it so that there is a sustainable stock.

    Now some animals do not handle farming and captive situations very well. I’ve read that lobsters and other kinds of popular crustaceans have been problematic, so the solution is imperfect — but all solutions are. Problems are the source of entrepreneurship in a free market. People will work to find better solutions to existing problems due to the profit motive.

  • Farside

    “The idea that we should operate with preposterous accounting that
    creates incentives for irresponsible and potentially damaging behavior”

    This is what the concept of “public property” generates. I feel like you are mixing together both sides of the argument and coming to a flawed conclusion as a result. The preposterous accounting is what we have.

    The problem isn’t that some costs are left out of the profit/loss system in a free market. The problem stems from not being able to identify where those costs actually are.

    There’s only One Lesson, but it needs to be taught over and over and over.

  • Anonymous

    I understand that it’s difficult to identify the costs.  That doesn’t change the fact that we get poor economic behavior and sometimes poor results because of it. So we should at least try to capture the costs.  There are a lot of areas of accounting that are “estimates” (like depreciation schedules)

  • Anonymous

    I was talking “net of reproduction”, but I think you are wrong about #2.  There are endless examples of hunters/fishers/developers taking entire species to the brink of extinction (let alone a single river) except for the interference of preservationists.



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