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The Social Cost of Capitalism
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Few, if any, corporations absorb the full cost of their operations. Corporations shove many of their costs onto the environment, the public sector, and distant third parties. For example, currently 3 million gallons of toxic waste water from a Colorado mine has escaped and is working its way down two rivers into Utah and Lake Powell. At least seven city water systems dependent on the rivers have been shut down. The waste was left by private enterprise, and the waste was accidentally released by the Environmental Protection Agency, which might be true or might be a coverup for the mine. If the Lake Powell reservoir ends up polluted, it is likely that the cost of the mine imposed on third parties exceeds the total value of the mine’s output over its entire life.

Economists call these costs “external costs” or “social costs.” The mine made its profits by creating pollutants, the cost of which is born by those who had no share in the profits.

As this is the way regulated capitalism works, you can imagine how bad unregulated capitalism would be. Just think about the unregulated financial system, the consequences we are still suffering with more to come.

Despite massive evidence to the contrary, libertarians hold tight to their romantic concept of capitalism, which, freed from government interference, serves the consumer with the best products at the lowest prices.

If only.

Progressives have their own counterpart to the libertarians’ romanticism. Progressives regard government as the white knight that protects the public from the greed of capitalists.

If only.

Everyone, and most certainly libertarians and progressives, should read Jeffrey St. Clair’s book, Born Under A Bad Sky (2008). St. Clair is an engaging writer, and his book is rewarding on many levels. If you have never floated the Western rivers or met the challenge of treacherous rapids or camped among mosquitoes and rattlesnakes, you can experience these facets of life vicariously with St. Clair, while simultaneously learning how corruption in the Park Service, the Forest Service and the Bureau of Land Management results in timber companies, mining companies, and cattle ranchers making money by plundering national forests and public lands.

The public subsidies provided to miners, loggers, and ranchers are as extravagant and as harmful to the public interest as the subsidies that the Federal Reserve and Treasury provide to the “banks too big to fail.”

ORDER IT NOW

Progressives and libertarians need to read St. Clair’s accounts of how the Forest Service creates roads into trackless forests in order to subsidize timber companies’ felling of old growth forest and habitat destruction for endangered and rare species. Our romanticists need to learn how less valuable lands are traded for more valuable public lands in order to transfer wealth from the public to private hands. They need to learn that allowing ranchers to utilize public lands results in habitat destruction and the destruction of stream banks and aquatic life. They need to understand that the heads of the federal protective agencies themselves are timber, mining, and ranching operatives who work for private companies and not for the public. Americans of all persuasions need to understand that just as senators and representatives are bought and paid for by the military/security complex, Wall Street, and the Israel Lobby, they are owned also by mining, timber and ranching interests.

The public interest is nowhere in the picture.

The two largest reservoirs, Lake Mead and Lake Powell, are at 39% and 52% of capacity. The massive lakes on which the Western United States is dependent are drying up. And now Lake Powell is faced with receiving 3 million gallons of waste water containing arsenic, lead, copper, aluminum and cadmium. Wells in the flood plains of the polluted rivers are also endangered.

The pollutants, which turned the rivers orange, flowed down the Animas River from Silverton, Colorado through Durango into the San Juan River in Farmington, New Mexico, a river that flows into the Colorado River that feeds Lake Powell and Lake Mead.

All of this damage from one capitalist mine.

In November of last year, US Rep. Chris Stewart (R.Utah) got his bill passed by the House. Stewart is a hit man for capitalism. His bill “is designed to prevent qualified, independent scientists from advising the Environmental Protection Agency (EPA). They will be replaced with industry affiliated choices, who may or may not have relevant scientific expertise, but whose paychecks benefit from telling the EPA what their employers want to hear.” http://www.iflscience.com/environment/epa-barred-getting-advice-scientists

Rep. Steward says it is a matter of balancing scientific facts with industry interests.

And there you have it.

(Republished from PaulCraigRoberts.org by permission of author or representative)
 
• Category: Economics • Tags: Capitalism, Environment 
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  1. tom says:

    The difference between the slavery of capitalism versus the rejection of moral, ethical and political responsibility through the citizens control of their government, seems like it gets us to the same place.

  2. War for Blair Mountain [AKA "Great Battle for Blair Mountain"] says:

    You can now read Cambridge Economics Professor Joon Ha Changs’ book “Kicking away the Ladder” in PDF form online.

    There are many myths about Capitalism. Capitalists force the Native Born White American Working Class to subsidize their monumental vaulting psychopathic greed. You mention the ecological externalities. But there are other externalities. The Historic Native Born White American Working Class is being forced to subsidize the nonwhite imported scab labor at the Mexican birthing clinics known as US County Hospitals. Asian Legal Immigrants and their US born Asian geneline impose a massive property tax on The Historic Native Born White American Working Class.

    Whitey pays for the Greed of the psychopathic White Liberal Greedy Cheating Class Mega-CEO. This is Capitalism….violent CLASS WAR!!!!!! Noam Chomsky is completely onboard with this.

  3. War for Blair Mountain [AKA "Great Battle for Blair Mountain"] says:

    Some more economic externalties of Capitalism:A lone Chinese Legal Immigrant… in keeping with Ancient Chinese Tradition of releasing a pregnant Giant Asian Snakehead Fish into a River when a very sick Family Member recovers from a severe illness…released a pregnant Giant Asian Snakehead Fish into the Potomac River after his sister recovered from a serious illness. This was the first documented release of a snakehead fish into a US Riparian Ecosystem. There have been many more snakehead fish introductions into the majestic Rivers of Our America….by Chinese Legal Immigrant Scab Labor.

    Don’t fall out of your kayak on the Potomac… a vicious hungry Giant Asian Snakehead Fish just might rip your nuts off for lunch!!!

    Another externality passed off to White Nature Lovers in the form of a very painfull castration……yikes!!!!

    The above comes from a Nat Geo show I saw on TV a few years ago…

  4. Libertarians and pro free market supporters realize the existence of externalities in business operations. Their free market solution isn’t blind trust in moral ethics of businesspeople. They advocate free market institutions, such as pre agreed third party arbitration commitments and insurance policies which protect community’s paid for by the businesses. Check out Terry L. Anderson’s several books for both historical and modern free market solution, e.g., Free Market Environmentalism for the Next Generation or Greener Than Thou: Are You Really an Environmentalist? Anderson is a nature buff and also an economist who proposes that such things as the advantages= to a community of contractual (rather than regulatory) responsibility and profit motive (rather than government bureaucratic ‘failure means a bigger budget’) lead to robust self-correcting protection for environmental health.

    As to the guilt in this instance of the EPA who was there and doing things and a company who is longer active, I think P. C. Roberts is assuming a lot a villainy with no evidence. He sounds a lot like neocons accusing Russia of invading the Ukraine – an advocate in search of a villain.

    • Agree: Travis
    • Replies: @MarkinLA
    , @Bill Jones
  5. MarkinLA says:
    @John Dreiling

    They advocate free market institutions, such as pre agreed third party arbitration commitments and insurance policies which protect community’s paid for by the businesses.

    I’m still laughing. I may never stop. Would this be anything like the insurance investment banks bought prior to black Friday that gave them the confidence to be even more stupid or the insurance the investors bought on their CDOs? Wall Street is full of insurance that is consistently mis-priced with the issuer having nowhere near the resources to make good on the promise.

  6. @John Dreiling

    The core issue is the ownership of so many assets by the corrupt State.

  7. This author confuses crony capitalism and corporatism with free market capitalism, which is what libertarians desire. The examples mentioned only underscore that the government should be at the minimal possible size while maintaining functionality. Stop incorrectly defining corruption as free market capitalism. By mislabeling the problem, you miss the correct solution.

    The waste was left by private enterprise, and the waste was accidentally released by the Environmental Protection Agency…

    This implies that the waste was once contained, but was accidentally released by a government agency. While it is unfortunate that the waste existed at all, it was not until the government agency released it that it caused harm to the public.

    …which might be true or might be a coverup for the mine.

    This implies the collusion with a large government agency and a corporation. Neither of which is possible in a truly free market. Large corporations that are corrupt and power hungry look to the government to enforce laws to maintain the status quo. This is not a free market practice. There is a serious problem here, but the fault is not one of the free market.

    They need to understand that the heads of the federal protective agencies themselves are timber, mining, and ranching operatives who work for private companies and not for the public. Americans of all persuasions need to understand that just as senators and representatives are bought and paid for by the military/security complex, Wall Street, and the Israel Lobby, they are owned also by mining, timber and ranching interests.

    In November of last year, US Rep. Chris Stewart (R.Utah) got his bill passed by the House. Stewart is a hit man for capitalism. His bill “is designed to prevent qualified, independent scientists from advising the Environmental Protection Agency (EPA). They will be replaced with industry affiliated choices, who may or may not have relevant scientific expertise, but whose paychecks benefit from telling the EPA what their employers want to hear.”

    People are corruptible, and government officials are people. The government or government agency that possesses the power of enforcement or select enforcement of laws that favor one corporation over another does not need to and must not exist for a free market to function. Cronyism, not free market capitalism, is the result of overregulation or selective regulation.

    If the complaint is about corporations controlling the government, it needs to be understood that the government is acting as an enforcer for the corporations’ wishes as role of regulator. Again, not free market. The cure for this problem is not more regulation, but less. Just as one does not address a weight problem by eating more junk food, one cannot wish for less corporate control by providing stronger enforcement applied selectively as it inevitably will be.

  8. MarkinLA says:

    This implies that the waste was once contained, but was accidentally released by a government agency.

    It implies nothing of the sort it was just left where the long gone and bankrupt mine put it. The attempt to clean it up is so that some day in the future a serious flood or something won’t wash it into the watershed or the groundwater.

    This implies the collusion with a large government agency and a corporation. Neither of which is possible in a truly free market.

    Total BS most of those old gold mines existed back when the state government had no power and no people or money to regulate anything. If there was any collusion it was to keep your hands off the mine.

    People are corruptible, and government officials are people.

    And business people are people too and they are liars and thieves and have the same corruptibility as government people.

    Libertarians are living in their own fantasyland utopia where people acting in their own self-interest never cut corners or try and cheat anybody else. No somehow it is an impossibility for anything bad to happen if the market is free.

    So if there is no evil government what is to stop the saintly businessman from doing what these miners did – extract the gold and leave the mine tailings for future generations to clean up? You do realize that the EPA was involved because the free market mining company was long gone and bankrupt, don’t you.

  9. Libertarians vs. progressives. The invisible hand vs. the living document. Could be an epic comic book.

  10. MarkinLA: If you are going to use my quotes, please provide context as well. I’ll repost the entire context along with your response so that it’s clear.

    Author: The waste was left by private enterprise, and the waste was accidentally released by the Environmental Protection Agency…

    Me: This implies that the waste was once contained, but was accidentally released by a government agency. While it is unfortunate that the waste existed at all, it was not until the government agency released it that it caused harm to the public.

    You: It implies nothing of the sort it was just left where the long gone and bankrupt mine put it. The attempt to clean it up is so that some day in the future a serious flood or something won’t wash it into the watershed or the groundwater.

    I fail to see how pointing out what happened makes me incorrect. The waste was left by private enterprise, but it was contained. I correct myself here and say for the most part. Some abandoned mines leak out acid mine drainage. The effort was to mitigate it here. (It is interesting to note that acid mine damage occurs naturally as well. Obviously, that was not the case in this instance.) That being said, the disaster was due to the break in the dam, caused by the company Environmental Restoration, LLC, which was contracted by the EPA. The EPA has admitted fault for the incident.

    Author: …which might be true or might be a coverup for the mine.

    Me: This implies the collusion with a large government agency and a corporation. Neither of which is possible in a truly free market. Large corporations that are corrupt and power hungry look to the government to enforce laws to maintain the status quo. This is not a free market practice. There is a serious problem here, but the fault is not one of the free market.

    You: Total BS most of those old gold mines existed back when the state government had no power and no people or money to regulate anything. If there was any collusion it was to keep your hands off the mine.

    The author implied a coverup for the mine by the EPA as I read it. Maybe you could help me here? The EPA would be the entity covering here since they admitted fault, no? What else would the coverup be? Another question: Why would my hands be on the mine? It was not my land.

    Me: People are corruptible, and government officials are people.

    You: And business people are people too and they are liars and thieves and have the same corruptibility as government people.

    Precisely! I’m glad we agree here. My argument was that giving a government entity too much power allows these types of people to leverage the government to distort the market in their favor. By restricting government power, as was intended by the founding of this country, it also constrains the possibilities of unfair advantages of some business people of others whom are less favored.

    This leads me to a reply to one of your comments:

    Libertarians are living in their own fantasyland utopia where people acting in their own self-interest never cut corners or try and cheat anybody else. No somehow it is an impossibility for anything bad to happen if the market is free.

    Libertarians are realists, and they simply disagree that government regulation is the best solution for managing human behavior. They do not live by the paradigm that government should regulate to the point that bad things will be prevented, as this is realized to be an impossibility. Some bad things are accepted as a consequence of living in a free society that allows people the opportunity to flourish. There are no guarantees that life will always be fair, and the belief that government could achieve this through regulation is delusional.

    Of course people cut corners and lie and cheat other people. This happens all the time; no one is disputing that. Believers in a free market assert that overregulation by the government distorts the market. In fact, these types of distortions are what the lying, cheating business people favor once they become powerful enough to gain favor. These are the people that help write the regulations in many cases! They prevent others from entering their marketplace by pricing them out of entry due to burdens of regulation.

    It is the progressives who live in fantasy utopia in which the government laws prevent all bad things from happening. We do not have a free market now, and the United States of America has an uncountable amount of laws presently! Does that prevent bad things from happening? I would argue that it does not.

    So if there is no evil government what is to stop the saintly businessman from doing what these miners did – extract the gold and leave the mine tailings for future generations to clean up? You do realize that the EPA was involved because the free market mining company was long gone and bankrupt, don’t you.

    I never claimed government was evil, and I never claimed that businessmen were saintly. I also never claimed that there should not be government. Up near the top of my previous post I said, “The examples mentioned only underscore that the government should be at the minimal possible size while maintaining functionality.”

    Regardless, you asked a question, and to answer, I would say that in this future hypothetical scenario, if there is evidence of pollution–see harm–to other property from the main tailings, the owners of said harmed property have a right to sue the owners of the mine for damages and clean up efforts if they are still around. This type of lawsuit happens frequently in the United States today.

    If the proposed situation is like this one in particular, I would ask at what point ask what point did the damage (leakage) begin, and who owned the land when the damage began. It would be the land owners’ responsibility, and they could settle with the owners of the property which was harmed.

    • Replies: @MarkinLA
  11. And which economic system, in the real world, does things better? Which system doesn’t get rigged for someone’s benefit? At least this article is free of Robert’s anti-semitism!

  12. MarkinLA says:
    @Concerned Man

    The waste was left by private enterprise, but it was contained. I correct myself here and say for the most part.

    Contained? as in what way? It was dumped right where the bankrupt mine left it. Do you think 100 years ago there were any rules on mining? That nothing was contaminating the surrounding area now is just coincidence not the result of some activity on the part of the mine.

    the owners of said harmed property have a right to sue the owners of the mine for damages and clean up efforts if they are still around.

    That’s the problem and why the Superfund was created wasn’t it – the miners are long gone. That is why the EPA is cleaning it up, there is nobody left to sue.

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