Externalized Costs
Everyone else pays for the stuff capitalists won’t.
[Letter #006]
Good morning, son.
Today, I’m grouchy because your mother was trying to discuss a possible name with your grandmother yesterday evening. This is a name that means a lot to me personally, as it comes from our ancestry. In fact, I believe it was my great-great-grandfather’s name. Well, despite having an extremely Scottish maiden name, your grandmother could not pronounce my proposed name at all. Even after we told her how to pronounce it, she still had difficulty. It’s not a difficult name, son. She insisted that people here in the American South would all have trouble saying it, something that your mother has tried to convince me of as well. I vehemently disagree. We’ll see how that goes.
I want to talk about something else though. I want to tell you about something called “externalized costs.” There’s this phrase that comes from back before I was born. I could cite who said it, but he was basically just a useless economic hack. The phrase went, “There is no such thing as a free lunch.” Well, the hack I’m referring to wrote his book in 1975. Apparently, some other guy named Heinlein wrote a sci-fi book with a similar phrase in 1966. I don’t know anything about Heinlein or even if he was the first to say it. Whatever, economist hack.
Anyway, what this dufus was going on about was that he considered the economy to be a closed system. That is, if anyone got anything from anywhere that it had to be paid for by somebody. The phrase was right, but not for the reasons he believed. He was actually complaining about government spending for poor people, so quite the asshole. I may talk about him someday, but it is not this day! But, do keep the phrase in mind for now.
As for a gentleman with plenty of useful things to say, John Michael Greer, in his book The Retro Future, describes the manufacture of hypothetical items called “blivets.”
Before the invention of blivet-making machinery, let’s say, blivets were made by old-fashioned blivet makers, who hammered them out on iron blivet anvils in shops that were to be found in every town and village. Like other handicrafts, blivet-making was a living rather than a ticket to wealth; blivet makers invested their own time and muscular effort in their craft and turned out enough in the way of blivets to meet the demand.
He goes on to describe how the production of these blivets does have waste involved, but that the blivet makers have a vested interest in proper disposal of that waste because they themselves have to handle it directly and their families live near where it will be disposed. The increased costs associated with handling of the waste was passed along to the end cost of the blivet to each customer. I could further suppose that the waste associated with just producing enough of these blivets to meet local demand would be fairly modest.
He then imagines that the “mechanical blivet press” is invented, immediately obviating all of these local artisan blivet makers. It can produce a tremendous quantity of blivets in a fraction of the time that handmade blivets could be made. Those who own the mechanical presses can charge far less for each blivet, drive the local crafters out of business, and make bank by not having to pay for the skilled labor involved in manufacturing. So far, this is all just the brutality of the capitalist market. Nothing to see here, right?
That’s where the externalities come in. The blivet factory owner is a capitalist, which means he makes his money by simply owning things. He might operate a blivet press personally, but he certainly doesn’t have to. And, let’s face it, he almost certainly won’t. That’s what he hires low-wage workers for. No reason to pay them any more than is necessary to do the work.
He would consider his time to be far more valuable than simply running the machines himself. Of course, his time would also be more valuable than managing the machine operators. Likewise, it would be more valuable than sitting at a desk in an office atop the factory.
He can hire people to handle all of these matters as cheaply as possible. He doesn’t even need to be in the building. Hell, he needn’t actually be on the same continent. He can use his time to, let’s say, shout his terrible opinions through media channels. He may as well, as there is nothing he could actually do to deserve the amount of money he will extract from his ownership of the factory.
There is, however, a logistical question. His factory has put every local blivet maker within a 500 mile radius out of a job. That means that each individual blivet maker is no longer taking great pains to safely dispose of the waste that comes from making blivets. Additionally, all of the waste that was spread out across the region is now concentrated at that single factory, and there is even more produced at the factory than there ever was among all of the regional crafters.
So, where does the waste go? It’s terribly toxic, so he doesn’t want that waste anywhere near him, his family, or his neighborhood. If it builds up in or outside of the factory, it will slow down production. He absolutely has no interest in handling it himself, so he’ll have to employ others to remove it. The question remains: what is he to do with all of that blivet waste?
Answer: Who cares?!
He certainly doesn’t. His singular purpose is to make the profit continue and perpetually increase.
Do whatever with the waste!
Dump it in the river.
Dig a hole and bury it.
Vaporize it and blow it into the atmosphere.
Ship it off to China and let them deal with it.
I don’t have time to think about this problem; that’s what I hire you people for!
Just make it go away!
In order to maximize the factory’s profitability and make a huge return on shareholder investments, the capitalist is incentivized to choose the cheapest option. In virtually every circumstance, the cheapest option is going to shift the actual cost onto the environment, the wildlife, and the people.
Waterways appear to be able to flush waste products away– until all of the wildlife is killed off, or the water itself starts to glow neon or catch aflame, or when everyone downstream starts getting sick and dying. The atmosphere seems to have the limitless ability to make any toxin go “up in smoke”– until the air is so thick with those toxins that it turns into a yellow fog and the midday sun looks like a dull red disc in the sky, and simply breathing while walking down the street turns the teeth and the insides of the nostrils black. Anything can be buried underground, and it’s gone for good– until the entire area becomes a sandy wasteland where even weeds won’t grow, where the poisons linger for generations.
So, with our blivet example, local craftspeople are cut off from their traditional way of living. Sure, they could work for the factory, but pulling levers on the blivet machine isn’t exactly the stimulating work that actual blivetcraft used to be. Challenging problems are replaced with mind-numbing repetition. And, of course, the pay is the cheapest that the capitalist can get away with, so it’s barely sufficient to keep the worker fed enough to get back to the factory on time each day.
Regular citizens are poisoned daily by waste processes from the factory, and because of the low pay, they can neither get the help they need, nor afford to filter the toxins from their environment, nor can they move to a safer area. Even those who were never part of the blivet-making process before now have to pay the costs associated with the product’s manufacture. As you might imagine, this is quite stressful for those affected.
The costs– financially, physically, mentally, and emotionally– are externalized onto the people and their environment, and the value is captured by the capitalist.
The economy isn’t a closed system. It’s made up. It’s just points on a scoreboard. People in powerful positions have often rigged it, tinkered with it, and sometimes completely destroyed it. They then only have to make up a new one to start it over again.
Our planet is the closed system. Nothing is lost. Everything is paid for. This is where there’s no such thing as a free lunch. The capitalist needs to do nothing at all, and yet he can live like royalty merely by owning stuff. Those who don’t own stuff are paying for his “free” lunch.
But, hang on. Aren’t there restrictions on dumping? Regulations to prevent overworking people? Laws that stop businesses from wrecking whole regions?
Sure, sometimes. I mean, there used to be, in some places. With enough prayer to Money though, a capitalist can install or bribe judges, ensure that the appropriate lawmakers are put in place, and turn away any legal enforcement that would slow business to a crawl. This divine being, who deserves a future letter all his own, is incredibly powerful in my current day. Suffice it to say that the system protects and preserves his power, and he won’t be beaten until the system goes down. With enough Money on your side, you can do anything.
Ok, well, maybe the townspeople can work together to protest the factory and unionize the workforce. If we all just band together, we’re more powerful than they are. If we all speak with one voice, we can demand better working conditions and fair pay. If we all insist on better environmental protection, we can really hold them accountable!
It’s a very noble and admirable sentiment. A real storybook plot with a happy ending. It would make for a good movie. But, this is faith in a different deity, which I’ll describe in a future letter. For now, I hope that it’s enough to say that the capitalist will simply move the factory to a different part of the world with a more agreeable population and regulations, thereby leaving the region with all of the damage, none of the produced value, and no way of supporting themselves within the system.
This is how you get a sacrifice zone. In my day, we have more than a few such places. Chris Hedges describes several examples, like Camden, NJ and Detroit, MI. Husks of buildings and cracked vacant lots that mirror the gutted population left to their misery and deprivation. These are externalized costs. Capitalism doesn’t actually solve the problems it creates. It just moves to a new location to start again. I’m sure that by your day, capitalism will have destroyed so much that sacrifice zones will be damn near everywhere.
JMG goes on to say:
[W]hole systems are stable and enduring as economies, societies, and biospheres can absorb a lot of damage before they tip over into instability. The process of externalization of costs can thus run for a very long time, and become entrenched as a basic economic habit, long before it becomes clear to anyone that continuing along the same route is a recipe for disaster.
So, blivets are wildly profitable now. Hurray… I’ll give up on the blivet example now, as it’s obvious that it’s just my stand-in for any given industry. Indeed, every single product or service that can be commodified in my day has been, and each of these industries has competed to reduce costs, increase profits, and destroy the competition to control more market share.
This is a major problem with the capitalist model. It’s inherently hierarchical, and thus its famed “competition” means that the winners will absorb the losers. The only way for a venture within the capitalist system to succeed is to conquer other ventures, growing larger in the process, and it must do this indefinitely. This concentrates and grows externalities indefinitely as well, and these are pushed off onto everyone and everything else within our finite world.
And as our useful idiot economist said above, “There is no such thing as a free lunch.”
What happens when the “everyone and everything else” can no longer foot the bill for all of the externalities that these profitable ventures depend on? What happens when the limits of the finite are reached, and yet the system still insists on infinity?
Well, you can probably see the devastation around you, son. Things fall apart, of course. The system breaks, and all of the consequences that go along with that become evident. Governments that rely on markets and taxation cease to function. Supply lines simply stop. People are forced to either provide for themselves and their newly formed villages, or they simply die off.
We’ll have to adapt to a new way of doing things that produces externalities that can be afforded by our environment. These would be ways that actually resemble very old ways, probably a lot more like people lived before industrialization. It might even be necessary to go farther back still, back to the way folks lived before colonization. Regardless, it’s going to require living in a way that externalizes only the costs that can be absorbed and recycled by nature using natural processes. It will be up to future generations to rediscover that sort of lifestyle.
You know, during my day, there was part of this faith in Progress (who I told you about before) that believed that we would simply shift away from fossil fuels and to other “clean energy” sources. We would still live our energy-intensive lives, but we wouldn’t produce the same levels of carbon dioxide anymore. They called it the “green transition.” It would be hilarious if the consequences weren’t just so damned sad.
These buffoons never considered the externalities.
Remember what I told you about appreciating the good that someone says or does and trying to ignore the bad? Well, there’s a book on my shelf entitled Bright Green Lies, and it was written by a guy named Derek Jensen. The book itself is excellent, full of amazing data and really good arguments. Just, do me a favor and don’t look any further into Jensen. For some bizarre, and likely incredibly stupid, reason… he’s really transphobic. (??) Just strangely, out of the blue, hateful toward trans people. So, he’s an asshole. Let’s try to ignore that part. The book is good.
In it, he and his colleagues go over why basically no part of the so-called “green transition” is even possible. The planet uses far too much energy already for “renewable” sources to even come close as it is. The production of solar and wind energy-producing gadgets also results in loads of waste products that can’t be safely discarded or recycled. These panels and windmills are impossible to recycle at the end of their lifetime for how they are presently designed. Recycling of pretty much any other material can’t be done without tremendous energy cost and lots of loss from waste. Green cities are essentially impossible because of the energy costs associated with even just the logistical issues of a city. Hydro power destroys waterways and reliant wildlife, and it produces far more CO2 than you’d ever guess. Efficiency just causes more consumption, not less.
Certainly, folks in rich nations would buy a whole lot fewer solar panels and Tesla cars if they had to personally thank each child who dug the cobalt from the mines for their shiny new products.
These are externalized costs. There are many more, and people simply don’t recognize them. I guess they presume that these “green” energy sources, many of which require more energy to manufacture than they’ll ever produce in their working lifetimes, are made by some magical processes that are just as clean as the gadgets themselves are purported to be.
While I’m sure that coming across data and research is much harder for you in your day, it’s available here and now for anyone to look up online. The folks who studied this stuff knew such a transition couldn’t be done long ago, but it wasn’t fashionable to discuss that. You couldn’t get government grants for your big “green” project if you admitted that the externalities made the entire thing useless, at best, or actively harmful, at worst. Example Company, Inc wouldn’t fund your PR stunt if it was widely known to the public that it wouldn’t actually accomplish anything. These are the “bright green lies” that the title is referring to.
I almost entitled this letter as another “We Knew,” but I realized that most people just don’t know about externalized costs. More and more are figuring out that things are falling apart, but they don’t really know why. Some of them are still waiting for nuclear fusion or something to come along and change everything, but I think that a lot are starting to see that it’s just more magical thinking. Fusion was always supposed to be “free energy,” more or less. Something for nothing. Free lunches for all. I’m sure you’ve seen just how grand an idea all of our tinkering with nuclear tech has been anyway.
Faith in Progress is waning, but I don’t think there are many yet who are ready to admit that the “good old days” are never coming back. I don’t mean to say that life will always suck forevermore, but certainly the “good life” that we thought was the pinnacle of human evolution isn’t coming back.
Personally, I think that’s probably a good thing in the long run, but the very real, non-green transition that we’ll endure to get to that better life will probably include a lot of tough days. Maybe a couple of tough centuries, if we’re being honest. It was all a lie anyway, fabricated using cheap, abundant, dense energy. But, the more we used, the more depressed all of society became, and the more we destroyed our only planet. Pinnacle of evolution… yeah.
I love you very much, son. I hope that you’re in the best of possible situations when you read this. I also hope that you’ll love the name we end up giving you as much as I do. I’m sure whichever we finally decide on will be great. If you end up hating it, well… fine. What would you rather we call you?
Your father,
Papa Bear
[Author’s note: This is a series of letters that I intend to print to paper and deliver to my son, probably around the year 2040. You are more than welcome to read along. The links in the article are only for you, the reader, and will include citations, jokes, asides, and links to books or other items. If you happen to purchase anything through such a link, I’ll get a small commission. Every little bit helps, right?]
