Economics

by Handsome Matt


The major thought behind a free market is that everyone’s wants will check each other. Greed is good, because greed works against everyone’s greed.

This would work well, provided greedy people never ever became intelligent or powerful. Intelligent greedy people can figure out how to stay one step ahead of any free market checks, and powerful people can just smash through them.

Smart, greedy people have figured out that hiring their employees as independent contractors to keep from paying taxes.

Powerful, greedy people simple control the economy (or a particular industry) through their size. Oil companies have an incredibly valuable resource and they can charge whatever they want. Since all the oil companies work together, there is no real way to get around the pricing.

What ends up occurring is the creation of:

ECONOMIC DISINCENTIVES

For example, no bank wants any person to pay off their debt. It makes for “feel good” press and lets them dodge any real penalties or regulations, if they have programs to “help.”

Think about it: If a person pays their credit card off every month, they avoid any penalty fees.

Penalty fees are 100% profit for a bank. Paying off ones debt, is a lost revenue stream.

Basically, what a bank really wants is to keep the majority of their customers in a cycle. Where the customer is just a bit behind on their payments every few months. That will minimize the threat of default, and maximize the profit margin per customer.

Why is this important to sustainability?

Because clean tech and sustainable practices are economic disincentives to certain companies. MPG standards are an economic disincentive to oil companies, renewable energy is an economic disincentive to coal companies, recycling is an economic disincentive to manufacturers and miners.

Shai Agassi illustrated it best in his talk at TED. A finite commodity will become more and more “unstable” as the supply runs out and demand stays the same. Unstable equals wildly fluctuating, ever-increasing prices. That benefits a small, powerful, greedy group of individuals. And in this situation, there is no other greed to check. So in this scenario, the free market has failed.

Not to be too Marxist, but in this situation following the money shows precisely who stands to lose the most. It also reveals who is fighting back against the necessary changes.

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