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By Lucas Weingarten
Legendary venture capitalist, the world’s 540th richest person, and current member of the President’s Economic Recovery Advisory Board, John Doerr, once remarked, “Every single day, we dump 70 million tons of carbon dioxide into our atmosphere like it’s an open sewer, like it’s entirely free to do that.”
But why? Why do we do that? Well, because it is free. Free in the sense that there is no directly correlated bottom line cost associated with doing it. Thus, the tragedy of the commons is upon us. Some could rightfully argue, however, that it actually costs a lot to do this on many levels—up, down, and across—including the one at the bottom.
Doerr went on to say, “It’s really hard to change consumer behavior when consumers don’t know how much their behavior costs.” This is exactly why I answered my original question [please link] with “market economies.”
Market economies are the most efficient and effective behavior change agents known to humankind. Unfortunately, our current economic system does not value or price inputs and outputs adequately. Without proper valuation and pricing, the system is broken. Individual self-interested action within a market such as this has ensured the demise of our environment and everything in it.
Again, Adam Smith:
“I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.”
So let’s not dissuade them. Let’s simply insert market mechanisms that incent good behavior and punish bad behavior using the only consequence that can possibly occasion the desired outcome: money.
~Article provided by the courtesy of Kaplan GMAT
