Capitalism vs Environmentalism

Capitalism vs Environmentalism

A false dichotomy

(Published 15 Nov 2001 in the BDH as "Capitalism cannot save environment")

In his column today (``Environment needs corporate success, not regulation'', Nov. 14), Mr Mahaney-Walter sets up quite an impressive straw man to knock down; but his strict dichotomy between environmental regulation (causing widespread misery and poverty) and unfettered capitalism (causing sunshine and happiness---a result I find considerably less obvious than he) is a false one. I agree that the way to a cleaner world is through more research in alternate energy and synthetics, but I don't think businesses will do that on their own. Why should they? The only incentive to the company as a company is money, and there is currently little monetary incentive to move to cleaner resources and processes.

I love capitalism; I think it's a great system. Its problem is that (by definition) it doesn't deal well with market externalities like the environment. What we need to do is use government regulation to internalise those things. Mr Mahaney-Walter concedes some value to regulations, but dismisses them as irrelevant in the long term; I would argue that if we make the consumer cost of gasoline include the cost of cleaning up its environmental damage, it will cause people to naturally turn to various forms of mass transit when that's reasonable. If we put a tax on impermeable surfaces (parking lots), development planners will pave only the amount they need, instead of creating a vast sea of asphalt that is never used.

Examples abound. Government regulation to prohibit things never works. We need government regulation to discourage certain behaviours---then we can let capitalism do its job.

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Don Blaheta /

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