business news in context, analysis with attitude

Yesterday I had a couple of emails from MNB readers challenging some of the assertions made in the Tufts Observer, a student magazine at Tufts University, by an impressive young writer named Meghan Smith.  She argued that the benchmarks traditionally used in a capitalist society may not be appropriate or sufficient when grappling with climate change.

Not to be dismissive of dissenting views, but to me, these emails sounded like a capitalism-is-the-best-system-but-cannot-be-changed defense - not allowing for the possibility that fresh benchmarks need to be established to deal with changing realities (like an existential threat to the human species).

Another MNB reader, Craig Espelien, sent me a note linking to a short piece on the subject that he posted on LinkedIn … and I thought it was an interesting perspective that would move the discussion along.  So here it is … Craig Espelien's view:

I have been a bit too busy to publish over the past couple of weeks as a new client has landed right in the middle of my mission to change the world. The client is Phood Solutions and they (we) are focused on helping clients eliminate food waste from their stores, restaurants, hotels, casinos, colleges, universities or any other place where food is regularly and alarmingly thrown out. I am not talking about the "feel good" solution of yesterday - turning trash into compost - which is a good thing but when you think about it it is taking trash and making it better trash. It is sort of like hiding the problem without really dealing with the root cause - the fact that the food is headed towards the trash at all.

This musing is not really about Phood Solutions or even food waste but about an economic concept that I have been researching over the past couple of years - the concept of Externalities. An Externality is when one party produces something that creates a problem and another group (too often the consumer or the taxpayer) has to deal with the problem at a later date. Two "Externalities" that have received a lot of attention:

Greenhouse Gases - let's stick to something familiar as there are a lot of creators of greenhouse gases but transportation pollution (car, bus, plane, etc.) is a large contributor. Oil and gas are produced from a natural resource and the burning of these fossil fuels creates the pollution that negatively impacts our total carbon footprint. The oil company does not cover the full cost of this pollution and neither do the car companies. Quite frankly, the consumer does not either leaving it up to those probably least capable (the government) to step in and try and make things better.

Bottled Water - while not an externality itself, the vessel this product is sold in - plastic bottles - creates an alarming externality. Plastic in general is a problem but the vast number of bottles thrown away by bottled water drinkers creates a problem that someone besides the person consuming the water or someone who bottles the water has to deal with.

These are both externalities - and there is no easy solution to solving them as there is no one to point to and scream "you're to blame!!!". This means we all get to deal with it - and the cost comes from something other than the value chain where the raw product makes its way to the end user, is consumed and the result (pollution, greenhouse gases, bottles, etc.) are too often left for someone else to deal with.

As a society, we seem hell bent on refusing to take accountability for the outcomes we create. Both NFP's (not-for-profits) and government are so very focused on intent that they often fail to connect outcomes to their efforts if it is different from their intent. I believe a lot in personal accountability - an unpopular position today as there seems to be a large majority of folks who want to blame someone else for their challenges. If we all took personal accountability seriously (and in all facets of our lives) those around us would probably be happier and we certainly would be.

That's it for the brief lesson on Externalities - I recommend you take a look around you and see where your actions are creating externalities and find ways to own those yourself rather than waiting for someone else to clean up after you. Remember, your Mother is no longer responsible for cleaning up after you - you need to be responsible for your own actions and your own outcomes.