Tuesday, January 15, 2008

Green Greed

In our own way, we are all environmentalists. Rare is the person who desires to see animals go extinct or bulldozes old growth forests for kicks. The question is not should we embolden the natural environment but how.

Enter such phrases as "free market environmentalism." Economic development and environmental protection are not mutually exclusive, though pundits often paint them as such. Polluting less can save a company money; all pollution is something the company bought, reformed, and then throws away. A power plant in my hometown sells its excess heat to an adjacent Alcoa plant instead of the Mississippi River. The plant is happy, Alcoa's happy, and the fish are happy.

Economic growth comes from fulfilling people's desires and that includes environmental concerns. Harry Smith at CBS writes to inform us of a car that runs on batteries instead of the internal combustion engine. Ok, it may not get rid of pollution if the homes are powered by coal plants or the supply chain to make the battery yields a net loss. But it does demonstrate that firms are willing to invest millions in these new technologies because they know it will attract paying customers. To paraphrase a great economist, it is not from the benevolence of the builder, the banker, and the boss that we expect a cleaner environment, but from their regard to their own self interest.

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