The May 3rd post “Unbelievable” on our favorite local blog GossipsOfRivertown.blogspot.com caught our attention. This F.H.Stickles concrete truck dumping waste concrete next to a stream running into the Hudson River is a local demonstration of one of the central laws of capitalism.
Every company seeks to get someone else to pay for as many of its costs of doing business as possible. The laws of capitalism require this. If all of Stickles’ competitors are similarly avoiding the costs of disposing of their waste concrete they must do likewise. Otherwise their cost of doing business would be higher. In the short term their profits will be lower. In the longer term they will be forced out of business because they will have to charge higher prices. This is so regardless of the moral values or sense of community of the owners of F.H.Stickles. This how capitalism works.
In the case of concrete washout, that’s the official language for this activity, there are Federal EPA regulations as well as NY state regulations forbidding this practice. But, as can be seen at this site and others in Hudson, illegal dumping of construction materials is common.
I can’t leave this note without pointing out that the economics taught in our colleges and universities and practiced everywhere in the world treats this law of capitalism as a barely mentioned afterthought. Getting someone else to pay is referred to as an “external cost”. It is mentioned during the first week or so of Econ 101 and then never heard of again. Standard economics spends an enormous amount of time demonstrating how effective market pricing mechanisms are. How they assure the production of the right things at the right moment and guide investment decisions.
But all of that is built on a false system. How can a price be an accurate statement of value if all of the external costs are not included? The next time you buy a plastic bottle of water (or for that matter anything that comes in a plastic container) consider that you are part of a stream of billions of bottles per year. Most of these are not recycled and being almost completely non biodegradable they litter the environment, fill upland fills, and swirl around in the oceans virtually forever. Where are these costs considered? Unfortunately for us in the real world these external costs are significant and frequently it is we who have to pay taxes to regulate this behaviour and pay for clean ups. The laws of capitalism are inexorable. That is why government regulation of markets is required to protect us from the results.