How would there be a capitalist incentive not to do these things? Do we really need regulations? Why do these things happen? Why do people think it is acceptable to pollute?
Yes. You need to read on industrial history if this is not obvious to you.
The nature of business and industry is such that they prefer local short term optimizations. In this context an environmental hazard is not considered a concern for various reasons, including, it incurs no immediate negative impact on the factory, the impact of one factory would be insignificant because everyone else is doing it and cutting chemical X would give competitors a financial edge, etc.
The only way to curb culture which creates negative externalities is to pipe those externalities back to it's source. Regulations and fines are a one way to make sure there is a feedback from negative externalities back to their source.
Think of it as an algorithmic problem - local optimization seldom leads to a global optimum. Hence, sometimes global tweaks can benefit an entire system.
The good news is that regulations work, and damage can heal.
See for example how CFC:s destroyed ozone layer before banning them.
> You need to read on industrial history if this is not obvious to you.
I'm asking questions to learn something from the discussion. Currently, my opinion is that regulations are necessary, but perhaps they aren't, and I would like to hear why.
> Think of it as an algorithmic problem - local optimization seldom leads to a global optimum. Hence, sometimes global tweaks can benefit an entire system.
To me, this sounds as if the power of the government needs to be huge and centralized? Because obviously local agents cannot come up with globally optimal solution (if the problem is not structured in a way they can).
For example, the huge use of insecticides and pesticides enables the industry of cheap meat and dairy. Regularizing insecticides and pesticides will most definitely increase the costs for the producers and the price of the product will increase. On the other hand, there are enormous subsidies in farming and will these subsidies now increase to keep the prices low?
These regulations, at least that's how it looks to me, are directly impacting the tax payer, not the industry players.
EDIT: I'm out of discussion. Getting to many downvotes for no particular reason.
> I'm asking questions to learn something from the discussion. Currently, my opinion is that regulations are necessary, but perhaps they aren't, and I would like to hear why.
Trying to recall what they taught us in business school. Regulations of the kind I think you mean (i.e. ban pollution) are one way to combat externalities, but there are others, in theory.
Econ. researchers stipulate property rights as one way:
If I own the river, and the right to fish in the future, my incentives will shift toward not polluting today. If the river is public and I have no guarantee of future yields, then the game theoretically smart thing to do is pollute as much as I can get away with.
As always, the devil is in the implementation details.
Pre-emtping useless word thinking: I am aware that "property rights" can fall under regulation, depending on definitions. If that bothers you, feel free to s/regulation/bans in the paragraphs preceding this.
> Regularizing insecticides and pesticides will most definitely increase the costs
It will decrease costs but also decrease yield.
If only one farm does this, they lose money.
If it's imposed across an economy and imports of non-compliant produce are taxed, then the reduced yield drives up prices. This is effectively the EU approach.
Pollution generally involves a tragedy of the commons type situation. Ownership over air in the atmosphere and water in a river is fluid and diffuse, and benefits to polluting can acrue to specific persons while the costs of pollution are externalised and spread across everyone.
Sometimes I wonder if future generations will be sickened by the idea that individuals thought it was ok to drive cars that simply released poisonous gasses and particulates into the air rather than trapping and storing them for safe disposal. After all, we know it has already led to society wide increases in violence due to retarded brain development.
A libertarian/hardcore capitalist approach might be to try to actually codify ownership rights over these things and give them to persons who could exert them against polluters.
I and I suspect many others would find that pretty disturbing. I think the idea of being forced to pay rent for breathing someones air is shocking, but if nobody stands to benefit from providing good quality air, there is no clear capitalist incentive to spend effort creating and ensuring it. Without that we need some other mechanism to force polluters to pay for the costs of their behaviour instead of forcing them onto everyone else.
One idea would be that if there were enough detailed, trustworthy information that consumers might hold companies accountable for their abuse of community resources, and vote with their wallets but empirically speaking this kind of safeguard seems to work very patchily when it works at all.
Once those two possibilities are eliminated I'm struggling to think of anything that doesn't end up looking like regulation.
The capitalist incentive is that failing to comply with regulations is more expensive than complying and potentially gets in the way of earning revenue (due to being banned from operating in the market, for example).
The evidence seems to point very strongly toward the need for regulations. This is notable in examples such as China which has stepped into the developed world recently and has not yet caught up with the same level of regulations. Resulting in excessive and dangerous pollution throughout the country. While on the flip side we've seen the rapidity and efficiency with which solid regulations can result in cleaner air, safer waterways, species brought back from the brink of extinction, and so forth. Regulation works. Period. It may not be perfect, but it does work and is an economically viable solution.
Why do these things happen? Why do they think it's acceptable to pollute? Because they perceive a short-term gain in profits and without being forced to consider the negative externalities of their actions they simply won't (or can't while operating competitively with their competition).
Take a look at the third paragraph talking about free rider and negative externalities. This is a strong intuitive explanation of the need for larger bodies to step in and regulate.
this isn't just an issue of capitalism, pollution in communist countries was as bad if not worse as controls were either non existent or just ignored.
it mostly occurs because industries move faster than the science to study the effects of the by products and the desire by politicians to push economic growth and in some cases self enrichment. then the next generation down gets the results and ends up fixing it provided their method of government allows for it.
I'm never sure whether people making posts like this are:
- really this naive
- just bright high school kids
- simply trolling
- completely blinded by doctrine ("capitalism is the supreme good, so how is it possible that it is producing a bad outcome? Something must be wrong with the universe")
- actually a google AI trying to learn about the world from first principles
Whichever it is, we have to give credit for asking the questions about what they don't understand instead of just blindly believing what they think they know.
>How would there be a capitalist incentive not to do these things?
Not sure what a capitalist incentive is, but we have plenty of ways to potentially regulate this. Are you asking about technical feasibility of finding the actors responsible for it?
>Do we really need regulations?
Yes.
>Why do these things happen?
Greed/profit motive.
>Why do people think it is acceptable to pollute?
Greed/profit motive.
> Not sure what a capitalist incentive is, but we have plenty of ways to potentially regulate this. Are you asking about technical feasibility of finding the actors responsible for it?
I was thinking, in the framework of capitalism, what would the incentive be, other than regulation, to not pollute? Why does it not work, is the incentive missing?
For example, there are companies like Clean Harbors that earn billions from recycling toxic waste, oil etc. Are they earning money because regulations need to be met, or is there a profit to be made?
If latter, how come no one is trying to make profit by capturing pesticides/insecticides?
Would deregularization make these billion dollar waste collection companies bankrupt?
> Are they earning money because regulations need to be met?
Yes? If there aren't regulations, then waste will be disposed of by the cheapest method, which usually involves dumping it into the atmosphere and/or water. This is how it used to be until environmental campaigning in the 70s and 80s got the regulations introduced in the West, and far more recently in China.
> the cheapest method, which usually involves dumping it into the atmosphere and/or water
The ironic thing is that we behave exactly like bacteria and animals and all other life, which have no choice but to expel their waste products directly into the environment. Properly adapted ecosystems have mechanisms for recycling all waste.
The difference with humans is threefold:
1.) We are too many, so the capacity of the environment into which we expunge our waste products can no longer handle the volume of waste we produce, forcing us to handle it with industrial processes.
2.) We produce waste types that the environment has no natural recycling mechanisms for, such as plastic, metal, and thousands of industrially produced chemicals, not to mention nuclear waste. We have only barely scratched the surface for recycling some materials, and the rest we literally just dump into giant holes or the oceans.
3.) We are busy destroying all the ecosystems that would naturally support us and recycle our waste, not only through loss of habitat, but mass dieoffs of insects, fish, etc.
Almost all natural ecosystems are death-limited, usually through some combination of predation, disease, or starvation. This was the case for humans up until about the 19th century. We've killed our predators and have to a great (but not total) extent achieved victories over disease and starvation. But if we're not to become death-limited again we must become contraception-limited.
Well, yes, the difference between "waste" and "feedstock" is whether there is some valuable use for the thing and whether it can be easily collected. Insecticide once used cannot be easily collected again.
Much of the history of the petrochemicals industry is trying to find valuable things to do with less-valuable fractions and non-oil stuff that comes up from wells. Of course, if it's not valuable it tends to be flared off and contributes to global warming.
> Wasted food is ground into powder and given to animals
.. although since the CJD epidemic I think this is extremely limited. By regulations.
Capitalism optimizes for the impact it has on the actors involved in the transaction. The party offering the service/product, and the party paying for it. The impact of other parties is not part of that equation.
So if you want create an incentive, have the health impact on society as a whole, impact the profits of the parties involved in creating the pollutants.
So you could for instance bind their taxes to some health measurements. Then you would have a market for capturing pesticides (if that's even possible).
Much simpler and probably more efficient is just to regulate.
Sure greed/profit motive, but it is accepted by the general public because it is local direct benefit (less crop failure) vs diffuse harm to a large area.
Pollution is usually a side-effect, not a goal. For example, people didn't mine and burn coal for nothing, they used it for heating and energy generation. Look at the Industrial Revolution for another vivid example.
Yes. You need to read on industrial history if this is not obvious to you.
The nature of business and industry is such that they prefer local short term optimizations. In this context an environmental hazard is not considered a concern for various reasons, including, it incurs no immediate negative impact on the factory, the impact of one factory would be insignificant because everyone else is doing it and cutting chemical X would give competitors a financial edge, etc.
The only way to curb culture which creates negative externalities is to pipe those externalities back to it's source. Regulations and fines are a one way to make sure there is a feedback from negative externalities back to their source.
Think of it as an algorithmic problem - local optimization seldom leads to a global optimum. Hence, sometimes global tweaks can benefit an entire system.
The good news is that regulations work, and damage can heal.
See for example how CFC:s destroyed ozone layer before banning them.