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Who Pays, Who Profits?
Reading a fantastic book, The Ecology Of Commerce, by Paul Hawken. Here are a few quotes:

Gasoline is cheap in the United States because its price does not reflect the cost of smog, acid rain, and their subsequent effects on health and the environment.

As a capitalist Advice Goddess, I object to subsidizing the gas companies with what amounts to involuntary socialism. The same goes for cigarette manufacturers.

...In an economic study of the costs associated with cigarette smoking borne by Californians, the University Of California at San Francisco identified $7.6 billion in yearly expenses, mainly in lost wages and higher health care costs. This was equivalent to $3.43 for every pack of cigarettes sold in the state. Even though individuals smoke, society shares the cost.

Thanks, but no thanks.

The problem is that these costs are shared unevenly, just as the profits from selling them are garnered disproportionately.

Harken points to a solution in the work of the late English economist A.C. Pigou:

Pigous argued that competitive marketplaces would not work if producers did not bear the full costs of production, including whatever pollution, sickness, or environmental damage they caused. Pigou's solution was to impose a "tax to correct maladjustments" on producers, a tax that would be comparable to the avoided cost or unborne expense. Pigou cited prematurely peeling paint on a house near a cole-fired mill as an example of an external cost that should be paid by the producer. He theorized that when the producer was forced to bear full costs, it would have incentives to reduce its negative impact, thus lowering those costs.

It comes down to this:

The measures we use to determine which companies get our money is completely removed from how those companies affect human and natural life. In fact, if there is a connection, it may be inverse. The more able a company is to externalize its cost of doing business and be ruthless in its practices, the greater return on capital it may achieve in the short term.

That's not capitalism. It's free-ride-ism.

Posted by aalkon at September 6, 2004 8:35 AM


These arguments are the underpinning for the tobacco tax in California -- ie, some portion of the price of a pack of cigarettes goes to state-sponsored health programs like breast and prostate cancer treatment. Because the higher price should also, in theory, reduce demand for cigarettes, this policy not only finances treatment, but can also work as a kind of preventive intervention.

I don't know if there are similar taxes placed on gasoline. What's happening with the governor's proposal to allow hybrid cars unconditional access to carpool lanes?

Posted by: Lena at September 6, 2004 2:43 PM

True, but what about all the extra money smokers throw into Social Security without claiming? That helps fund society. Are you proposing that rock climbers get taxed for their risky behavior? How about hikers, who we end up spending millions on for rescue work?

Besides, lots of times we don't fully give someone the full value of the benefit of their product. Microsoft doesn't get extra money that a company makes because they are more efficient than they were with typewriters.

Posted by: Mo at September 8, 2004 2:50 PM

Indeed, I am. I think everybody should pay for what they use or how much they cost society: for example, go ahead and ride that motorcycle without a helmet, but pay big in insurance costs to scrape your head-turned-huevos-rancheros off the side of the road. If you don't, we should feed you to the fish, not pay for your je ne sais quoi approach to the dangers of biking. Regarding the smokers paying into Social Security, we can't predict when these idiots will die from their willful ignorance of science, or how much it will cost the rest of us, so...let's think of it as an idiot tax. Oh, and don't forget the cost of those of us who breathe in smoke without choosing to, thanks to people walking around belching out stinky, cancer-causing fumes. Air-fouling vulgarians!

Posted by: Amy Alkon at September 8, 2004 3:02 PM

Dear Amy,
I was introduced to Hawken over 20 years ago. His book, The Next Economy, was an eye-opener for me that long ago. You should read his bio and see what an incredible individual he really is.

Posted by: Tim Cross at September 10, 2004 7:09 AM

Did you also know that Paul Hawken is the "Hawken" of Smith & Hawken? Fantastic gardening supply shop.

Posted by: Tim Cross at September 10, 2004 7:10 AM