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The Eco-logics of Economics

3p Contributor | Thursday September 23rd, 2010 | 4 Comments

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.

***

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.


▼▼▼      4 Comments     ▼▼▼

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  • Tim Woodall

    I like the analogy. Sometimes we need these parables to drive a point home.

    Ideally, this type of thinking would be applied to the auto industry as well. Do we really NEED 50M new cars every year, or are there other industries that would benefit from this highly skilled workforce? (high-speed rail, wind turbines, etc.)

    Somehow we have been socialized into thinking that the auto industry is the bedrock of our society and completely untouchable. But should it be?

  • Wingnut

    Hi

    Good piece. Lets take it a step further and get to the crux of the matter.

    Readers, capitalists, you DO see the pyramid scheme symbol on the back of the USA one dollar bill, right? You DO see the servitude infestation in capitalism, right? And do you see the “pay up or lose your wellbeing” Chicago mob-like felony extortion widespread within capitalism? Do you see the “join or starve” felony extortion done to the 18 year olds… by this ugly competer’s church called capitalism? See how forcing competer’s religions onto 18 year olds… kills membership in the cooperator’s church (Christianity/socialism)?? Do you understand that AmWay (American Way) (New World Order) got “the exclusive” (legal tender) on the TYPE of survival coupons (money) accepted in supply depots (stores) and leverages 18 year olds into the organization via that felony activity as well? (It puts AmWay-coupon slaving requirements called price tags… on all the survival goods). Do you understand how farmyard pyramids work… from your childhood?? Remember?? Upper 1/3 are “heads in the clouds” while the kids on the bottom ALWAYS GET HURT from the weight of the world’s knees in their backs? Still with me? Do you see anything illegal, immoral, or just plain sick… in any of this pyramid scheme’s activities?

    Us American Christian socialists are still patiently awaiting the natural fall of the pyramid-o-servitude, or the busting of the free marketeers felony… by the USA Dept of Justice. Us Christians are VERY CLOSE to issuing a cease and desist order until the servitude and inequality goes away… which means it turns into a commune. Commune is a word we LOVE when used in the word “community”… but its one the caps HATE when used in the term “commune-ism”. Go fig. PROGRAMMED!!

    Do a Google IMAGE SEARCH for ‘pyramid of capitalist’ to see a full color picture made way back in 1911, when capitalism was first discovered to be a con/sham instigated by the Free Masons/Illuminati. Folks sure bought into the thing… hook, line, and sinker just the same. The caps didn’t even check if a string was attached! Now THAT’S easy fishing, eh?

    Time to level the felony pyramid scheme called capitalism. Abolish economies and ownershipism worldwide, and hurry. Economies just cause rat-racing, and rat-racing causes felony pyramiding. BUST IT, America! Look to the USA military supply/survival system… (and the USA public library system) for socialism and morals done right. Equal, owner-less, money-less, bill-less, timecard-less, and concerned with growth of value-criteria OTHER THAN money-value. Quit doing monetary discrimination immediately, and make it illegal. There are MANY measurement criteria of “value”… not just dollars. Try morals, efficiency, discrimination-levels, repairability, etc etc. Economies are cancerous tumors, and to cheer for their growth… is just insane. Profiting causes inflation, so if caps LIKE inflation, and if they LIKE a terrible time in afterlife when they meet the planet’s ORIGINAL OWNER before caps tried to squat it all with ownershipism, then keep it up with the felony pyramiding. I dare you. While us Christians are finally bulldozing that pyramid scheme back to level, lets make servitude and “join or starve” (get a job or die) illegal in the USA, and lets level the architecture seen in USA courtrooms, too. Right now, USA courtrooms are church simulators or “fear chambers”, by special design. Sick.

    Isn’t that back-of-the-dollar pyramid… a Columbian freemason symbol? And WHERE is the USA gov located? District of Columbia? (Not even part of the USA!) How much more blatant can ya get? The “Fed” runs a pyramid scheme called the free marketeers. If you’re using the “federal reserve note” certificates, or using no-other-living-thing-on-the-planet entitles of ownership, you’re bought into a servitude/slavery con/sham… called capitalism. Pyramiding 101.

    Yeah, pretty scolding, eh? This is a paste-o-post for the most part… a campaign poster in my strife for stopping pyramiding. Its not really meant for the demeanor seen here, but, it still explains the BASE problem. Many think I’m insane or something, but its pretty well researched. Stop pyramiding/rat-racing for enjoyments/empowerments, and the problems go away. We don’t NEED to use economies or ownership AT ALL. They are devices of empowerment… one of the most addicted-to phenomena/juice on the planet. No other living thing on the planet uses ownership or economies… its a man-made-up thing.

    Best Regards!

    Larry “Wingnut” Wendlandt
    MaStars – Mothers Against Stuff That Ain’t Right
    (anti-capitalism-ists)
    Bessemer MI USA

  • http://www.jonathanmariano.com Jonathan Mariano

    IMHO, I think the broken window fallacy is the least understood of economic logic. We wouldn’t be making certain policy decisions if it was truly understand.

    Great piece describing it, and it’s applicability to sustainability.

  • http://nickpalmer.blogspot.com Nick Palmer

    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.

    The last bit highlights how so much deception, misdirection, propaganda and simple foolishness is made – by only looking at or showing part of the picture.