Expecting "The Market" To Solve Climate Disintegration Is Like Trying To Pound Nails With A Saw

[hatrack]

The massive wildfires that have been rampaging across the American west this year are not purely natural disasters. They are partly products of the unnatural disaster of climate change – “unnatural”, in that the ultimate responsibility for global warming belongs not to physics but to our economic system. Nicholas Stern, the former chief economist of the World Bank, calls climate change the “greatest and widest-ranging market failure ever seen”. Sadly, climate change is only one – albeit a whopper – of the countless market failures that degrade our lives.

Though it sounds like a generic phrase, “market failure” is actually a technical term. It doesn’t refer to scams like insider trading or corporate fraud. A failure occurs when the marketplace allocates resources in a way that does not optimally deliver wellbeing. We understandably focus a lot of attention on the depredations of greedy tycoons and corporations, but many of the most consequential market failures stem from innate characteristics of our current market system.

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Take the flooding that drowned parts of coastal Louisiana and Mississippi in 2005 when Hurricane Katrina thrashed the Gulf coast. More than 1,800 people died, cherished communities disintegrated, and the price tag swelled to more than $100bn. Much of the devastation occurred because oil and gas development had decimated the coastal marshes that previously had tamed storm surges. The protection those marshes provide is an extremely valuable ecosystem service, yet no entrepreneurs hustle to produce that protection. And why would they? The market doesn’t give private businesses a profit motive to produce public goods. For example, even if a company were to restore a marsh, they wouldn’t be able to sell that service because they couldn’t exclude anyone living on that coast from using that protection for free.

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More broadly, environmental and social projects happen when a great many somebodies vote for candidates who support such efforts. Such purposeful collective action is the overarching solution to market failures. Instead of passively counting on supply and demand to provide everything we need, we sometimes need to exert our judgment. And there it is, the J-word: “judgment”. Free-enterprise disciples view most efforts to use our collective judgment to shape the economy as central planning that will foul the gears of the market. But banishing judgment about how to allocate our resources will result in a world with plenty of video game consoles and fashionable shoes and precious little biodiversity and climate stability – and, all too soon, biological poverty and climate chaos will also cripple the economy of stuff, and video game consoles and shoes will become scarce, as well.

EDIT

https://www.theguardian.com/commentisfree/2020/nov/19/climate-crisis-markets-economic-system

[Magoo48]

1. Just like the wealthy themselves and everything they play at,

the markets must be rendered irrelevant, or at the very least, completely refocused and right-sized.