The Eco-logics of Economics

By Derrick Mains, CEO of GreenNurture

The concept of economics, in general, is about how one action affects another and the idea of tracking the consequences of action and inaction into every aspect of the economy. The challenge is that our economy, and capitalism itself, is changing from a purely financial view to one that takes into consideration effects on people and the planet.

One of the core lessons of traditional economics is explained through the Broken Window Fallacy, a story of a shopkeeper’s broken window and slew of unintended consequences. A modern day example of this story might be of a juvenile delinquent that starts a fire at a convenience store and runs off. Now the shop owner must have the building replaced at a cost of $250,000. Bystanders note the benefactor of this action is a contractor that will rebuild the shop, and byproducts of his good fortune might be felt by the lumberyard, quarry, excavation crew and many others whose business is connected to the success of the contractor. So the logical conclusion from the bystanders might be that the delinquent actually made a contribution to the economy that day, creating a widening circle of jobs and opportunity for the community.

The fallacy is that the bystanders only saw the positive effect of this equation on the contractor and failed to see the negative effects on the business owner: lost revenues from the store, lost jobs of his employees, and the effects on the people in the community who purchased their gas, bread and lottery tickets there. (Think of your poor grandmother who walks to that store every day and would have bought next week’s winning Powerball ticket there.) And what about the increase in insurance premiums all businesses in that area will see in order to cover the costs of the loss? If we look at the ever-growing circle of impact, we will likely come to one conclusion: the true end result was that there was no financial gain to the community as a whole.  Money was simply redistributed. But to the bystander, their opinion was formed, based on a surface analysis of the parties at hand.

The bystanders are very much like the average consumer. We see a product, place it on our cart, take it home, and in the past, we used that product and then shipped it off to landfill. Today we have added a few new elements to this equation, namely recycling and eco-consumerism.  This is a type of consumerism that wants to be “green” but is heavily influenced by packaging and manufacturer claims, which make them overlook the rest of the story.

Modern accounting, and thereby economics, is now focusing on the triple bottom line—looking at these issues while wearing the new glasses of consciousness. Because of this enlightenment, the story must also include the negative impact on the people who were displaced from their jobs, the carbon released into the atmosphere by the fire, the runoff of contaminated water from the fireman’s hose after it mixed with chemicals and carcinogens in the burning building (and the people and ecology that affects), the trees that need to be logged in order to rebuild the frame of the structure and on and on.

Ecology is like the convenience store. Yes, we can cut down a tree and haul it from the woods and only see the benefits, but there is an impact—even if we, the bystanders, would like to convince ourselves that cutting down that tree was a good thing.

Of course this isn’t saying that all consumption is evil (we still have to survive and thrive), it is about admitting that our culture is, namely, self-centered, only seeing our own sphere of influence and line of sight. So our thinking must evolve around our own lives and business in the same way that economics is evolving to include outside variables—to include the rest of the story.

Fortunately with the advent of the internet, blogging and social media networks, finding and seeing the big picture is clearer now than ever before.

The reality is we are humans, and we recite sayings like “Out of sight, out of mind,” “What you don’t know can’t hurt you” and “Ignorance is bliss.” We say these things tongue-in-cheek because we know that these are fallacies. We know that we should be more conscious, but it is much easier to react to what we see that what we don’t.

Taking the first step in investigating your impact is looking at your output. If you are a business owner, this is usually seen in the dumpster. Just taking a peek can awaken you to the problem. Basic principles one is faced with when staring at a mountain of garbage is how to reduce, reuse and recycle, but hopefully it will also lend itself to the idea of refuse. Not ref-use like garbage, but re-fuse like saying no. No is a four-letter word in the age of consumerism. But refusing to buy products that contribute to the problem (oversize packaging, unrecyclable elements and one-time-use products) will not only reduce your impact on the planet, it will decrease your garbage hauling and disposal costs. And if you lease a space or reside in a place where you don’t control the cost of disposal, don’t be a bystander. Recognize that the landlord or property management does care and challenge them to reduce your costs as you reduce theirs.

The byproduct of refusal goes far beyond the bystanders (you, your employees and the landlord); it affects natural environments and the people who reside in the places where raw materials come from.

Next time you make a purchase, ask yourself about the rest of the story. What is that purchase’s influence on people, the planet and its ecology, and finally, on the end cost to you, society and future generations?

Yes, we may be bystanders, but it is easy to see we aren’t innocent.

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Derrick Mains is the CEO of GreenNurture, the corporate sustainability software company. GreenNurture helps companies incorporate the value of sustainability into daily practice, catalyzing corporate culture and harnessing the collective intelligence of employees to drive greater long-term financial, social and environmental performance.

Mains is also the host of “Your Triple Bottom Line,” a national green talk radio show that is focused on the business of sustainability.

Mains can be reached at Derrick@greennurture.com and followed on Twitter at @enviralmentalst.

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