The Unattributed Side Effects of Growth

When your feet grow too large, your shoes tear and your feet hurt, the damage and pain incentivize you to invest in new shoes. But what if you never paid for shoes. What if you always borrowed shoes for free, and when you destroyed those shoes you got a new pair, and the person who lent you the shoes could never track the damage back to you.

That is basically what is happening with these dead zones in the Gulf of Mexico. It is an important reminder that the negative impact of growth is often paid by the people who do not generate the growth. Most importantly, no free-market system can not properly account or repair the negative cost of that growth. Let’s examine why.

In a complex system, it is impossible to specifically identify who is responsible. Just by looking at the graphic below (courtesy of Mother Jones), you can see that the pollution that creates the dead zones comes from all of the US and Canada. The dead zones are caused by farms run off and city waste that cause chemical imbalances the water in the Gulf of Mexico. There are hundreds of cities and hundreds of thousands of farms that are contributing to the problem.

Even if a scientist could provide a relative weight to contributing factors, the complexity of the system would guarantee that counter estimates could be made putting blame in a different place. Plus as many local, regional and federal jurisdictions have oversight it is unclear how one city, state or even country could approach a solution.

Pure capitalist would provide several ideas for how the free-market could solve the problem:

·        Consumers who are not happy could demand farmers grow more organic crops.

·        Citizens of cities should influence their local governments to decrease waste

·        Entrepreneurs could invent solutions to decrease the impact of pollution in the water.

But you do not need to make specific counter arguments to demonstrate how dubious those claims are. If you just summarize the issue with the below formula, you will see the problem will not be resolved through pure capitalism or direct government intervention:

(Benefits to those polluting * number of people impacted) - (negative effects of the pollution * number of people impacted)

Problems only get addressed when the above calculation turns negative.

In the case of the dead zone, you don’t need a calculator to realize the formula is positive. The millions of city dwellers who are benefiting from lower waste disposal costs plus millions of farmers are benefiting from cheap pesticides and higher yields combine to a much larger number than the fishermen that are harmed plus the consumers who will pay more for their shrimp cocktails.

Some may argue that means there is no issue.  Once the scales tips negative, we can take action. Unfortunately, as we can see with global warming, once the overall negative impact outweighs the benefits of growth, it will likely be too late to reverse the impact.