When Big Business Is Not Good for the Environment

A direct contrast to this piece about how big business can use its scale for social and environmental good, this post points out the inherent problems in getting businesses to do the right thing. The simple truth is that – in general and in the short-term view – an emphasis on green policies is not necessarily good for business. Take regulations. Until the cost of pollution and other negative externalities are included in the market price for a good or service, businesses will not directly reflect those costs in the prices they charge. Nope, companies would not police themselves. And so you get pollution, irresponsible lending, and cutting social and environmental corners in pursuit of a fatter bottom line.

But one could argue that the maze of regulations, battles with the U.S. Supreme Court, and inefficient big organizations like the EPA actually stifle companies from becoming more environmentally responsible. An already established department or part of government – Congress (oh, it is currently barely working), Treasury, or some other organ – could curb behavior. A simple, fair, modest “externality contribution” or “clear air bonus” or some other phrase to get around the word “tax” would be so much easier, faster, transparent, and effective than the mazes of regulations, while still allowing the true cost of economic activity to be taken into account. Such regulations often have loopholes that tax savvy companies can exploit anyway.

Companies currently do not police themselves or directly pay for much of the pollution their operations produce. Therefore, it is necessary for an outside organization with clout (i.e. the government, in the guise of an efficient EPA perhaps) to provide the framework and policy implementation to help the common good. This is not perfect, but like democracy it is the best of the options we have. In order for big business to coincide with a clean environment, there needs to be something more than the invisible hand of the market; something like the very light hand of government.

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