[BoiledCabbage]

I wish every single HN post regarding business efficiency explained this concept to people. It's such a basic economic concept, but I've come to learn so many people on HN just parrot "unregulated markets are more efficient therefor markets are best" without understanding at all what's going on. It's become such a basic error with pattern matching. Please understand the situation and don't just say "markets".

Regardless of the specific case here, businesses do a horrible job of accounting for the externalities of their decisions. This shows up in two ways:

1. Negative externalities - there is a large cost to society of my company doing this, but I'm not the one paying the cost. As a result I can still make money off of it so I will do it. Even though it is a net negative for society. Dumping toxic pollution into a river is a great example. You need an external force (government) to step in to ensure they account for that. Either through things like laws to make it illegal (and actual enforcement of those laws).

2. Positive externalities - there are larger benefits to society of performing the action, but the company itself doesn't get that value as a result they don't do the action. Subsidizing things like the US interstate project is a great example of this. Again markets fail to capture this so don't do it. Or if they do it's in a way that's a net negative for society and becomes a defacto tax on all economic activity making other useful businesses unprofitable. Again an example would be if all interstates were privatized and drivers were charged maximal rates. It would drastically reduce economic activity.

There are absolutely situations where markets are not the right solution to the situation and government intervention is, and they usually fall in where there are significant negative or positive externalities.

[GrooveSAN]

I’d say it boils down to the following: - humans can be selfish, or not - humans are powering businesses and gouvernement bodies controlling them, so both can think long-term, global benefits or short term, own-benefits - hence the need for control and/or transparency on decision making, whether it is a private company or a government body - we all know the fiduciary duty of a CEO ; I’m wondering whether some kind of « long-term good » duty also exists for CEO or political deciders, making them accountable of the long-term consequences of their choices.

Our economy and politics are indeed favoring short-term gains by design and that is « simply » what should be controlled to a certain extent. Not easy as this should be a global move, otherwise the long-term advocates are likely to be outperformed by their short-term competitors and not have the time to implement fully their strategies.

[drewcoo]

> businesses do a horrible job of accounting for the externalities of their decisions

Today they aren't expected to. They're expected to extract profit and then socialize any losses, externalities or otherwise.

It doesn't have to be that way.

[HWR_14]

> businesses do a horrible job of accounting for the externalities of their decisions.

If businesses account for them, they stop being externalities.