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Externalities Are Our Existential Threat

It’s the “ex’s” we need to worry about the most. Externalities that create an existential threat. The ultimate threat: Our extinction.

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An externality is defined by the Oxford English Dictionary as “a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved”. Externalities in a global context are the consequence that everyone bears for everyone else’s actions. Externalities result in us all bearing the consequences of living out of synchronization with Nature, but unfortunately in most cases the poor and the vulnerable pay a higher price, disproportionate to their contribution to the cause.

The negative externality consequences of most human economic activity are unaccounted; seemingly off loaded free of charge to the ecosphere. But Nature has a balance sheet — these unaccounted, costs of doing business, that are charged to Nature, are turned into debts. These debts will be settled at a later date and not in a manner of our choosing. The challenge for us is that in many cases the debts are slow to become obvious to everyone, remaining invisible or disguised for a prolonged period. Linking cause and effect is very complex and spans long periods of time, often not directly attributable. It is like a very slow moving train crash — you barely notice it happening but you’ll know when it hits, and then it’s too late. We are all aboard that slow train right now.

In developed countries, we are fortunate to not have to face the poverty, war, famine, diseases that affected humans in the pre-industrial and early industrial times. Capitalism has been an amazing wealth creating and poverty reducing system. Most of us cannot even comprehend how fortunate we are. However, there is a downside to the considerable progress we have made since the industrial revolution; the unintended consequences. Never before were humans able to have an impact on future generations aside from culture or knowledge that was passed on. Today that is different — our actions are determining the fate of billions of people, those currently alive and those not yet born. Unfortunately, we have been brewing trouble.

Our capitalist, modern society has raised our standard of living and life expectancy, although not always improving health, quality of life or happiness for everyone. It’s not perfect but I am certainly not an advocate for any of the alternative economic systems — there have been many failed experiments. However, capitalism can only operate in the best interests of society if it is governed well. It is the good governance part that we have been lacking — unfortunately we have a corrupted, crony capitalism that stems from problems with our democratic system. Quite simply, we seem to be unable to elect leaders who actually care about the long term interests of the people. Our entire political system is deeply corrupted by money — elected officials represent those who contribute to their campaigns, not their constituents, and that’s dominated by the very wealthy, corporations and special interest organizations, not the typical citizen. This is something that needs mainstream understanding as it is the root of all society’s problems and why they are never sensibly addressed.

The common theme is that we have proved ourselves to be incapable of acting in our collective best interests. Together we are all on that metaphorical slow train, steaming towards a cliff edge with no one in the driver’s seat attempting to steer us away from inevitable catastrophe. Those in power have a special responsibility to learn about these issues and do something about it. History will not look kindly on the failed leadership of today. There would be no greater legacy than fixing the bind that we are in, since all other accomplishments will be rendered meaningless if we do not have a future. We have to get beyond the long term blindness our short term thinking causes; beyond short political cycles, beyond the relentless focus on quarterly corporate earnings, beyond our selfish focus on only ourselves as individuals. And that is not to say that individualism is bad — many people see that as a fundamental part of capitalism — the point is that we will not be able to successfully be individualists if we are destroying the foundation on which the system is based. Collective action to secure that foundation by adjusting to a sustainable capitalist system is vital.

In our deeply specialized society, too many people are ignorant about the bigger picture, the interconnectedness of all these issues, and the consequences of our actions. I believe in the collective will of humanity when there is better understanding, but too many of us are out of touch. Most people want their children and grandchildren to have a better life than them — they care about their future. Think about how people generally respond to an imminent or just passed natural disaster. It can be seen by everyone right in front of them and they take action. But with these externalities, it is like a tsunami — you barely notice it at first out on the ocean but by the time it eventually reaches the shore it is a calamity. The externality tsunamis are already traveling — they’ll get bigger and bigger, then eventually crash. We have to do everything we can to dampen them so their effects will not be so catastrophic.

Here are the externalities.

Carbon Emissions:

The climate change problem we face is now very well known, even if not everyone believes it. Whether we can muster the collective action to do something about it is still playing out but it isn’t looking that great. For the skeptics who say that Earth has been this hot with this much carbon dioxide before, consider this: Yes that might be true, but when that was the case humans did not exist and there were no polar ice caps. (Here is an informative article for more background on this). Why take a chance to see if we can survive the same conditions? The scientific consensus is overwhelming but even if you don’t believe that, surely any rational risk manager would assess that it is worth changing our ways in case human activity is detrimental. For the sake of the existence of our species, running the risk of catastrophe does not make sense. The economy can evolve and adapt to be a sustainable, carbon neutral economy. Caring about the planet does not mean that we are advocating to go back to living in a cave.

Toxification:

Chemicals are killing us all, slowly. They are making us sick in a multitude of ways, including obesity. I believe this poorly understood issue will eventually become as well known as climate change, and it needs to be as it is a very serious problem. I consider this to be much more complex than climate change.

How does it feel to know that you are walking around with man made “forever” chemicals within you? Persistent organic chemicals like Perfluoralkyl and Polyfluoralkyl substances (PFAs) don’t ever break down or go away and they wreak havoc on your body. Bisphenol A (BPA) is another one you may have heard of — this one eventually breaks down but only after causing considerable damage. This is called Endocrine Disruption — the interference in the normal workings of our hormones. So many people suffering from cancer and other chronic diseases do not know why — this environmental exposure can be a significant contributor. The issue is so complex — it has even been found to be trans-generational, meaning that the adverse effects might not be apparent in you but they could materialize in your grandchildren. It is also particularly harmful if it occurs during fetal development, because it can have impacts that play out adversely over the entire lifetime of the affected individual. It’s a massive, ubiquitous problem yet most people don’t know much about it. We have not yet awakened to the extent of the harm we are causing ourselves.

Even if you adjust your life to touch plastic less, there is no escaping since these substances are likely in your food, especially if you like to eat from further up the food chain, and your water, even if it has been tested as “safe”. In fact, the very definition of safe is not reliable, as the science has moved forward and the testing procedures have not. Very low doses are counter-intuitively impactful. Do you think that 2.5 parts per billion isn’t much to be worried about? That amount of an endocrine disrupting compound can feminize a male frog. I highly recommend watching this talk by one of the leading scientists in this field.

Pandemics:

This year is a case in point for our political situation; a complete inability to coordinate a response for our collective well being. There is of course much discussion about the origins of the coronavirus but one thing should be clear: Our impact on Nature has consequences; strange diseases could become more commonplace. Consider this startling fact: there has been a loss of 60% of the world’s biodiversity in the last fifty years — this is the greatest loss of life on Earth since the dinosaurs were wiped out. All forms of life are there for a reason and inter-linked. This destruction has enormous consequences for humans. See the 2018 WWF report here.

Farming:

Massively industrialized farming controlled by a small number of large corporations has enormous adverse consequences. Of course it can be argued that this system feeds large numbers of people but what is rarely measured is the quality of the food produced, the environmental impact and other effects on society. It actually makes a lot of people sick. Farming needs to be local and regenerative — a distributed system not vulnerable to central shocks (the coronavirus pandemic’s effect on meat processing has demonstrated this). Intermediaries are removed, farmers earn more, consumers get healthier local produce, and organic waste goes back to the Earth, enhancing the soil. It should also go without saying that it should be fully organic. There should be no such thing as non-organic. Prior to the development of chemicals and the advent of them being sprayed on fields, all food was organic. An interesting side story here is that pesticides date back to the late 19th century. One example is lead arsenate, which from 1898 was used to fight gypsy moths in New England. (If you think that lead arsenate doesn’t sound great to have on your food, you are right). It took 90 years before this chemical was finally banned in the US in 1988.

Nature should be respected; cows should not be eating grains and chickens should not be in battery cages, just two points of concern amongst many others. Lastly, farming should be subject to a fair, well governed, capitalist system that will help make high quality organic food affordable. The enormous subsidies in the farming industry have produced perverse incentives contributing to the negative externalities that are enormously expensive for us in other ways.

Garbage:

The reality is that we produce too much garbage and we can’t continue like this. This is a packaging issue; we have to move to a circular economy, where recycling is an integral part of product design. If we do not, then today’s garbage is someone else’s problem tomorrow. The world will literally turn into a garbage dump if we don’t do something about it. The plastic problem is getting better understood amid widespread evidence of its presence in the stomachs of sea life, on shorelines and waterways all over the world. But while many of us take comfort that we recycle a lot of our waste, that system is actually broken. China stopped recycling for the rest of the world in 2018. Many items are not recyclable anyway, and the ones that are get contaminated with the ones that are not. New packaging design and materials engineering is needed so it is either biodegradable or there is better compatibility which would make a simplified recycling system more effective. The technology for this is being developed, it is the widespread adoption that is much more challenging.

Population Growth

Obviously too many of us exacerbates all the problems above. (The UN projects 9.7 billion of us by 2050). There are very strong arguments both for and against population growth — a declining population in developed countries is also very concerning. (Side note: The US fertility rate fell to a new low, below replacement, level of 1.73 in 2018 — that’s a problem and points to why immigration is important for the future of the US). Ultimately population growth is not sustainable based on the growth of an unsustainable economic system. So while we continue to grow the population and compound the issues I outlined, eventually it will hasten our demise and we will see population decline. Just one example of how we may already be doing this is via the chemical toxification mentioned above. There is evidence this is sterilizing men. One study found that sperm counts have deteriorated by 50% over 38 years. That is incredibly alarming.

Nuclear War & Nuclear Accidents:

Even unintentional mistakes happen to everyone eventually which is why we cannot be trusted to handle nuclear materials. There is also the enormous problem of what to do with radioactive waste which we haven’t properly solved, leaving behind a horrible problem for hundreds if not thousands of years to come. It is also little understood how close we have come to other Chernobyl’s. Michael Lewis mentions this in his book “The Fifth Risk” — a USAF plane accidentally dropped a nuclear bomb over North Carolina in 1961. Fortunately, 1 of 4 safety features saved it from exploding and unleashing disaster all over the North Eastern US. This article summarizes it.

So how do we solve these externalities and mitigate our risks? I urge you to consider these points and help where you can:

  1. Understand your own responsibility for civic engagement. Our democracy can only work if we all participate. Seek the facts and be aware of the vast amount of misinformation and manipulation that is out there. Look for different viewpoints — don’t exist in a filtered information bubble that results in you living in an alternate reality. We should also strive to debate each individual issue, rather than picking a one size fits all binary choice between the Republican and Democrat sides. Both of these are central to our severe political problems.
  2. Do absolutely everything you can to rid our political system of corruption. This is legal, systemic, institutional corruption: Money in politics, whereby our elected representatives actually represent their campaign donors and special interests, not their constituents. Elect representatives who pledge to reform the system (e.g. HR1) and only finance their campaigns from small donors. (Side note: A government match on small donor donations would be one of the most valuable uses of taxpayer dollars ever). Tell others about this — most people are not specifically aware that this is the root reason that we cannot solve most political issues. The long term interests of the citizens of this country are not being represented. It is a bi-partisan, fundamental issue that adversely affects all of us.
  3. Think about sustainability as a consumer and in your work; in what you do, what you buy and what you support. Make better decisions where you can. We can draw more ambitious boundaries of what is acceptable. It is hard to do — it can feel like swimming upstream against the torrent river that is our modern society. But the more of us that do it, the easier it will become. Eventually the flow of the river will reverse and push us from behind. Sustainable business will be the only business one day, either that or there simply won’t be business or human life at all. And don’t mistake sustainability for anti-capitalism as some do. If you believe in capitalism then there is nothing more supportive than making it sustainable. Unsustainable capitalism will die out, one way or another — it will by its very definition. It will be a tragedy if such a great economic system is replaced by something worse, all because we could not transition to sustainability, in time. Such a transition will require a huge burst in innovation, creating a large number of new jobs and once in a lifetime investment opportunities.

Our collective action can make a difference. It is our collective indifference that is our Achilles’ heel. If we don’t enlighten ourselves and take action per point 1 above, and if our politicians won’t solve it as outlined in point 2, then point 3 is all we have. Fail on all of these and we are doomed. Don’t let unenlightened, ignorant or malicious people slowly extinguish the flame of life on Earth.

We can make changes so future generations have a decent future. This starts with more awareness amongst everyone, and ideally a reformed political system so we can establish the ground rules on which sustainable capitalism can operate; fair for all humans and fair for the Earth. The laws of Nature are our guide.

Alastair E. Hawker

June 8, 2020

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“You must be the change you wish to see in the world” — Gandhi

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