June 26, 2008
I’ve been reading this book for a bit now. (You can download it in sections from the website and read it free online. nifty,huh?)
Anyway, one of the things I keep hearing bandied about politically these days is how the “Free Market” should be left to do it’s job. The wrench in that plan is that what we see as the “Free Market” is anything but free. This book takes on those facts and presents solutions. It is an excellent read and I highly recommend it to anyone who really wants to understand the state of our world.
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As economic decisionmakers—whether consumers, corpo-
rate planners, government policymakers, or investment
bankers—we all depend on the market for information to guide
us. In order for markets to work and economic actors to make
sound decisions, the markets must give us good information,
including the full cost of the products we buy. But the market is
giving us bad information, and as a result we are making bad
decisions—so bad that they are threatening civilization.
The market is in many ways an incredible institution. It allo-
cates resources with an efficiency that no central planning body
can match and it easily balances supply and demand. The mar-
ket has some fundamental weaknesses, however. It does not
incorporate into prices the indirect costs ofproducing goods. It
does not value nature’s services properly. And it does not respect
the sustainable yield thresholds ofnatural systems. It also favors
the near term over the long term, showing little concern for
future generations.
One of the best examples of this massive market failure can
be seen in the United States, where the gasoline pump price in
mid-2007 was $3 per gallon. But this price reflects only the cost
of discovering the oil, pumping it to the surface, refining it into
gasoline, and delivering the gas to service stations. It overlooks
the costs of climate change as well as the costs of tax subsidies
to the oil industry (such as the oil depletion allowance), the bur-
geoning military costs of protecting access to oil in the politi-
cally unstable Middle East, and the health care costs for treating
respiratory illnesses from breathing polluted air.
Based on a study by the International Center for Technology
Assessment, these costs now total nearly $12 per gallon ofgaso-
line burned in the United States. If these were added to the $3
cost of the gasoline itself, motorists would pay $15 a gallon for
gas at the pump. In reality, burning gasoline is very costly, but
the market tells us it is cheap, thus grossly distorting the struc-
ture of the economy.
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And while I’m posting from this book, I’ll also include this passage, which is basically what the book is about. Solutions:
The overriding challenge for our generation is to build a new
economy—one that is powered largely by renewable sources of
energy, that has a much more diversified transport system, and
that reuses and recycles everything. We have the technology to
build this new economy, an economy that will allow us to sus-
tain economic progress. Can we build it fast enough to avoid a
breakdown of social systems?


















