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Your theory sounds nice but is not borne out by either basic free market economics or the facts. The reason companies can get away with not being "responsible"

by pdonis 2y ago

Your theory sounds nice but is not borne out by either basic free market economics or the facts. The reason companies can get away with not being "responsible" is that the market is not free. The government has its thumb on the scale in all kinds of ways. For example, the reason companies can get away with discharging polluting substances like PFAs into the environment is that the government effectively owns the environment, not the people, and the government sucks at protecting what it owns. The government then steps in with further "regulation" to "fix" this problem, but does it badly (regulatory capture is a thing), so that companies aren't actually forced to be "responsible", just to look on paper like they are "responsible" enough to satisfy the regulations.

rtkwe 2y ago
"Basic free market economics" are a convenient lie to make trying to prognosticate on the economy easier. It's built on a set of flawed axioms based around perfect information, extremely low barriers of entry, long time horizons of investors and capital [0], and ignoring things like natural monopolies and network effects. It's a toy model that doesn't match our experience. Your environmental example is equally bad even when people have easy direct damages they can show like the Exxon Valdeeze spill the cost of litigation is massively skewed in favor of the company who can afford to drag cases out for a decade or more until the plaintiffs simply run out of money and have to take a smaller settlement. It's even worse with a lot of pollutants where the effect is more minor but drastically worsens a person's life but happens to so many people it's in aggregate a huge cost. Usually those take the form of an increased risk or prevalence of disease and the company gets to argue endlessly about their culpability for poisoning people because it's hard to prove the negative that they wouldn't have gotten cancer/breathing problems/etc in the absence of the pollution... [0] to allow long term profitable companies to weather short term undercutting by larger companies who can take the losses to kill a competitor for example)
- pdonis 2y ago
  > to allow long term profitable companies to weather short term undercutting by larger companies who can take the losses to kill a competitor This doesn't work in a free market. Look up David Friedman's discussion in, IIRC, Price Theory of competitors to Standard Oil. > the Exxon Valdeeze spill This was a product of ineffective government regulation, not a free market. In a free market Exxon would have been bankrupt after one such spill--and knowing that would be the outcome, they would have taken better steps to prevent it. Similar remarks apply to, for example, the Deepwater Horizon spill. > the cost of litigation is massively skewed And why? Because governments made it that way.
beej71 2y ago
I'm struggling to think of a case where the free market came up with an environmentally-friendly solution. Sometimes they jump on a save-the-whales bandwagon in a token sense for additional sales, I guess. The environmentally friendly solution is rarely the most profitable, and if it happens to be, the companies are definitely doing it. The cheapest way to make things is to hide the waste until it becomes someone else's problem. Look at some of the mining Superfund sites. Are you voting with your dollars by not buying mined products? The company that made the mess you didn't even know about and are now paying for was dissolved years ago. Or the owner of a gas station lets their tanks rust out causing well water to be ruined in a mile radius. He abandoned the station and moved to another city in shame. And opened another gas station. It sounds kinda like you're underestimating the lure of the bottom line in the free market.
- pdonis 2y ago
  > I'm struggling to think of a case where the free market came up with an environmentally-friendly solution. Ronald Coase would beg to differ.

by pdonis 2y ago

rtkwe 2y ago

"Basic free market economics" are a convenient lie to make trying to prognosticate on the economy easier. It's built on a set of flawed axioms based around perfect information, extremely low barriers of entry, long time horizons of investors and capital [0], and ignoring things like natural monopolies and network effects. It's a toy model that doesn't match our experience. Your environmental example is equally bad even when people have easy direct damages they can show like the Exxon Valdeeze spill the cost of litigation is massively skewed in favor of the company who can afford to drag cases out for a decade or more until the plaintiffs simply run out of money and have to take a smaller settlement. It's even worse with a lot of pollutants where the effect is more minor but drastically worsens a person's life but happens to so many people it's in aggregate a huge cost. Usually those take the form of an increased risk or prevalence of disease and the company gets to argue endlessly about their culpability for poisoning people because it's hard to prove the negative that they wouldn't have gotten cancer/breathing problems/etc in the absence of the pollution... [0] to allow long term profitable companies to weather short term undercutting by larger companies who can take the losses to kill a competitor for example)

pdonis 2y ago
> to allow long term profitable companies to weather short term undercutting by larger companies who can take the losses to kill a competitor This doesn't work in a free market. Look up David Friedman's discussion in, IIRC, Price Theory of competitors to Standard Oil. > the Exxon Valdeeze spill This was a product of ineffective government regulation, not a free market. In a free market Exxon would have been bankrupt after one such spill--and knowing that would be the outcome, they would have taken better steps to prevent it. Similar remarks apply to, for example, the Deepwater Horizon spill. > the cost of litigation is massively skewed And why? Because governments made it that way.

beej71 2y ago

I'm struggling to think of a case where the free market came up with an environmentally-friendly solution. Sometimes they jump on a save-the-whales bandwagon in a token sense for additional sales, I guess. The environmentally friendly solution is rarely the most profitable, and if it happens to be, the companies are definitely doing it. The cheapest way to make things is to hide the waste until it becomes someone else's problem. Look at some of the mining Superfund sites. Are you voting with your dollars by not buying mined products? The company that made the mess you didn't even know about and are now paying for was dissolved years ago. Or the owner of a gas station lets their tanks rust out causing well water to be ruined in a mile radius. He abandoned the station and moved to another city in shame. And opened another gas station. It sounds kinda like you're underestimating the lure of the bottom line in the free market.

pdonis 2y ago
> I'm struggling to think of a case where the free market came up with an environmentally-friendly solution. Ronald Coase would beg to differ.