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ZAPP: Making decisions to benefit future generations

A central lesson of introductory economics is called the “Tragedy of the Commons.”

When public land was available for farmers to graze their livestock at no cost, the grass was quickly ravaged and soil depleted of its nutrients. Since access was free, farmers overused the valuable resource.

When any resource is free, we humans overuse or spoil it. A strength of a capitalist system is that most resources such as land are owned privately. Private owners (usually) have financial incentives to use their resources wisely.

Some resources, however, such as air and water (in lakes, rivers and oceans) cannot be owned privately. To protect them from being wasted or spoiled, we have learned that we must impose financial penalties or disincentives for anyone who might be tempted to do so.

These situations are called market failures. The market economy itself fails to provide incentives needed for our actions to be directed toward human need satisfaction.

Financial incentives (and disincentives) are effective in a market economy because, as Adam Smith asserted, humans are greedy. Market competition helps to redirect this greedy desire for money or profit toward the supply of goods and services society needs.

Today we face a different situation. We now understand that actions that were legal and not discouraged in the past will have unexpected, negative consequences for society in the future.

The evidence is painfully clear. The globe is warming, the polar ice cap is melting, sea levels are rising and our use of carbon-based sources of energy is a prime cause. The problem is the worst of the consequences will not be realized for some years and actions to prevent or mitigate them require sacrifices today.

Though this is yet another market failure in which the market alone does not provide incentives for reducing behavior that contributes to the problem, some Americans seem unwilling to accept that any change is necessary.

Business owners, corporate managers and most economists share at least one common trait: We believe decisions are best made when they are based on empirical evidence.

We are better able to solve problems, make profit or develop effective policies when we use the most accurate information available. Making decisions even based on what may be bad news is preferable to decisions stemming from false information or wishful thinking.

Therefore, as an economist, I want to understand how so many Americans, often influenced by politicians, do not believe in making change in the present to prevent serious environmental problems for our children and grandchildren.

Do they (or you) choose to believe pundits who disparage scientific reports because they want to believe current actions have no long-term impact on our environment?

Are they suffering from anxiety caused by changes in the economy or proposed policies that may impact their well being?

Do they dislike our president so much they choose not to believe whatever he says?

Or are they simply unwilling to make minor sacrifices today for a better future?

What will it take for us to make decisions that will benefit, or at least not harm, future generations?

 

Kenneth Zapp is a professor emeritus at Metropolitan State University and a mentor at SCORE Savannah. Contact him at Kenneth.Zapp@metrostate.edu.

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