Market Prices Should Tell the Truth

Market prices should tell the ecological truth. When prices “lie” about nature they lead us to devalue and destroy the environment, which ultimately supports our existence. Market prices “lie” when they don't take into account the costs of pollution and resource extraction. More than a trillion dollars is spent globally every year on activities that harm the environment. The amount spent on protecting the environment is a ridiculously small fraction of this.

Every time a country sells or leases the right to clear-cut forests at bargain prices it is encouraging environmental destruction. Every time a country subsidizes the extraction and production of fossil fuels with tax write-offs it is encouraging runaway global warming. As it stands, tax policy and economic subsidies are overwhelmingly tilted toward the liquidation of resources and increase in greenhouse gas emissions.

Last January President Bush said: "We'll leave it to the market to decide the mix of fuels...” Bush likes to tout the free market and future technological breakthroughs as the solution to environmental problems. But both of these “solutions” don't exist in reality. The free market has never existed because every known economic system is guided by government tax and spending policy. Every legal system of property rights favours certain uses of capital over others.

And future technological breakthroughs don't exist here and now where it really counts. There are existing technologies that could significantly lower greenhouse gas emissions and lower the liquidation of resources compared to what we are doing now: railroads, bicycles, clean alternative energies like solar, geothermal and wind power; better insulation, increasing energy efficiency... the list is a long one. Sure, there could be new technologies out there, but there is no guarantee that any new technology will pollute less or have less environmental consequences than what we already have.

Waiting for the “Free Market” or technological breakthroughs to solve our problems is a mug's game. It's really about delaying significant change. It's really about pleasing the fossil fuel corporations . It's really about keeping the status quo, because a certain class of people benefit from things the way they are.

Last week the Australian electorate kicked Prime Minister John Howard out of government. Like Bush he was a global warming denier, and a delayer of action on climate change. But the negative effects of global warming: extreme droughts and more destructive tropical storms, had become too difficult to ignore for most Australians so they gave him the heave ho. The new Prime Minister, Kevin Rudd, plans to be more proactive on climate change.

Clean air, water, and earth are common property because they benefit everyone. When corporations pollute or take the tops of mountains without having to pay compensation they have an incentive to keep destroying public property.

We could shift our tax system to make polluters pay the real cost of pollution and resource extractors pay the real cost of the resource. Taxes on pollution and carbon emissions could be increased while income taxes could be reduced. This would see the cost of so-called “cheap energy” like coal increase in relation to clean energy. This would make alternative energies more competitive and encourage more investment in that sector of the economy, while discouraging dirty energies like coal and tar sands. And the decrease in income tax could free up human ingenuity to solve our greatest problems.

Future generations have no say in the way we are running our economies and liquidating natural resources, because those who are young or not yet born have no money and no votes. But they will be the ones most affected by the legacy that we leave behind. If we “let the market decide”, without changing the taxes and incentives that we now have in place, then nothing that the market does will alter the course toward our own extinction.