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> Companies pollute our environment externalizing costs on society. Interestingly, historical experiments in communism have led to vastly increased rates of en
by wyager 10y ago
> Companies pollute our environment externalizing costs on society.
Interestingly, historical experiments in communism have led to vastly increased rates of environmental destruction as compared to market economies. The reason is fairly obvious if you have a some economic background and think about it for a bit; in a market economy with resource ownership, people who own resource rights (e.g. to fell the trees in an area) will notice that they can make a lot more money if they spread the resource sales over time; if they sell all their trees now, they'll push down the market value of lumber and have decreasing marginal returns on each tree they fell. In the presence of a rich market system including market mechanisms like futures, market participants make a lot more money planning for the future than just trashing the environment as fast as possible.
Compare this to a communist state. The people in charge of resource management don't make money anyway, so they don't really care about the same optimization a capitalist would. Of course, they can buy political favor at little cost to them by pushing way down the diminishing marginal returns curve and exhausting a resource way faster than a self-interested capitalist would. Great job, commissar, look at all this wood! After all, if you can make your peers happy for a few years you'll get a promotion to a better government position (or retire early on your pension) and the fact that this area is now barren is someone else's problem.
- Someone 10y agoThat doesn't always work. If you expect demand for lumber will go down in a few years, as far as you can tell forever, it's better for you to take out your trees as fast as possible. I think that's part of what's happening with oil, where renewable sources are going to replace them as a bulk good. If you have lots of it like Saudi Arabia, your capitalism-optimal strategy may be to pump up oil now, even if it significantly drives down prices. It also may be rational to destructively mine lumber if that's the only way you can produce it competitively. Your competition might own woods closer to rivers, for example, making it cheaper for them to transport their wood to the customer.
- paublyrne 10y agoI don't know a huge amount about this. Just wondering though, if those increased rates of environmental damage could also be related to communist states tending to have restrictions on the press, which in turn makes it easier for corruption to flourish. What you're saying certainly makes sense though.
- dv_dt 10y agoI've always felt that the big arguments stacking Capitalism and Communism seem to revolve around the practical results of distributed vs centralized allocation of resources - and yet that seems to be a feature that is mostly tangential to both economic theories. Yes, many centrally planned Communist economies failed, but we seem to be approaching a centralization by concentration in the US - where we can't get broad public goods agreed upon (even though private healthcare e.g. has been a clear economic inefficiency compared to public). It's a big economic disconnect akin to the disconnect of factory workers in Communist-centralized factories not being motivated or allowed to improve the output. Wouldn't it be ironic if all the energy directed to arguing Communism vs Capitalism had completely missed the fundamental principles on both sides?