Exter…. what? Externalities


As promissed, here comes the second post from the series “Red Pill”. The subject, externality, is fundamental to the comprehention of the problems that humanity faces today and for each one to comprehend its part in a less disastrous future.

Externality is the impact, positive or negative, in any part not directly involved in a negotiation. For better understanding, I´ll give an example. You buy a saltier that costs 1 “money”. It comes from China and you even ask yourself how it can be so cheap, as a saltier produced in Brazil costs at least 5 “moneys”. What you don´t know is that the factory that produces this saltier uses slavery/infant workforce, pollutes a river with heavy metals and the air with poluents. You and the merchant are not being, in any way, prejudiced in the process. He paid 50 cents, sold for 1 “money”. You have what you wanted and paid little for that and the merchant concluded a sell and had his little profit. But, not realizing, you caused an impact back in China. In other words, for making the best deal possible, you had your purchase decision cause a problem to someone else.  It´s the perverse logic of capitalism. 

Then you tell me: but this is in China, not in Brazil. Then I ask you to look at the newspapers and you´ll notice that, every once in a while we have some news about work conditions similar to slavery in some farm here in Brazil. The deary Ethanol  is produced by millions of “bóias-frias” (a nomad farm worker in Brazil. Bóia is slang for lunch and Fria means cold lunch. This is because they get paid too little and bring their lunches from home – thus cold-lunch.). And it´s a really heavy work, unhealthy and pays really badly. 

Externality is an economical issue, because the interested parts involved in the business are not paying the real cost of the product/service. You don´t pay the real price of the saltier, so the society as a whole pays the difference. It may not be your country’s own society, but be sure that someone will be paying for it. 

Another example of externality is the automobile. 

Ok. Here’s where it gets ugly.

The automobile is a private good that utilizes the public space (street) and polutes everyone’s environment. This way, if I am in a bus, the automobile causes traffic jams and negatively interferes in my way, it causes externality. More: As the cars are responsible for 50% of all atmospheric pollution in Sao Paulo, a driver pollutes the air I am breathing. This pollution is an externality to which you and me are exposed due to some people having cars. And for only some people I mean a lot less people than you can imagine. In São Paulo, only 30% of the trips are made by car. The rest is divided between public transportation, walks, bikes and motorcycles. And people still say that the bus is the traffic villain. The automobile doesn’t pay its entire bill and society subsides its use. But this discussion will be kept to another red pill.  

But what can I do about that?

What we are doing today is not only exporting a lot of pollution and devastation to countries ever further. We are also doing this to future societies. You buy a saltier and, along with that, implicit in that acquisition, is the capacity of your sons and nephews to survive. Did it hurt? Yes, indeed, it hurts. It’s not for those of weak heart, but this is the naked truth. In that matter, the most important question you can ask when buying something is not how much it costs. Is where it comes from. How it was produced. 

So ask. Your questions are important, because they show to the seller that you are not a nobody and he’d better start offering you better products, or he’s in risk of losing you to other players. Or even loose his business. Brazilian society is funny, because all researches show we understand some environmental issues, but we just don’t take that into consideration at the moment of purchase. So, now you know. At least, look at the products labels. And avoid xing-ling (smuggled eletronics goods from China, Korea and more).


Picture courtesy of pfala via Flickr.



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