The True Cost of Goods

It’s not too hard to realize that the world is driven by the profit motive, the never ending human want to get more.  This is due in part to Capitalism, the economic system that drives profit maximizing down our throats. Capitalism is an economic system characterized by the private ownership of production, distribution, and the exchange of goods.  It exists as a worldwide system, making global capitalism a vital part to many economies around the world. Over time this has become a problem, as the externalized costs of global capitalism take their toll on our world. Externalized costs are the true cost of a good to society.  These costs can be both positive and negative, but tend to have a negative impact on our world. As global capitalism has taken over the world, increased profits have become the negative external costs of capitalism and are taking a toll on the environment around us.

Externalized costs exist as hidden costs of the goods we use everyday.  These are the costs not shown in that dollar value on the pricetag, they are the costs to society.  They don’t only cause harm to human health, but also harm wildlife, the environment, and social organizations.  While society has become much better about talking about these costs, we still haven’t done much to prevent them.  This chart even shows the constant decline in air quality:

1980 vs 2017 1990 vs 2017 2000 vs 2017 2010 vs 2017
Carbon Monoxide -84 -77 -61 -13
Lead -99 -98 -94 -80
Nitrogen Dioxide (annual) -63 -56 -49 -21
Nitrogen Dioxide (1-hour) -60 -50 -35 -14
Ozone (8-hour) -32 -22 -17 -5
PM10 (24-hour) -34 -30 0
PM2.5 (annual) -41 -18
PM2.5 (24-hour) -40 -10
Sulfur Dioxide (1-hour) -90 -88 -79 -66

 

This decline in air quality can be largely attributed to the increase in faster, cheaper, and dirtier modern production of goods.  In addition to harming the environment, these air pollutants are related to various diseases and sicknesses. A study about coal pollutants in this article even says, “A Harvard University study, which assessed the life cycle costs and public health effects of coal from 1997 to 2005, found a link to lung, cardiovascular, and kidney diseases—such as diabetes and hypertension—and an elevated occurrence of low birth rate and preterm births associated with surface mining practices”.  These are only some of the health risks associated with modern pollution. As global capitalism creates larger markets and stresses increased profits more, the true costs of production are increasing and damaging the earth more.

Externalized costs don’t just appear out of nowhere, they’re produced as a result of a decision made by firms.  These decisions are made to increase profits by any means possible with the cheapest production and the fastest distribution.  One example of this is the video we watched in class about Walmart’s intense supplier regiment. The video interviewed workers that were laid-off by a business in the United States after Walmart dropped their contract.  As the economists and Walmart executives explained, they simply could buy the same goods in Asia at a fraction of the cost. In my opinion, this is the epitome of global capitalism. Simply put, capitalism seeks out the cheapest possible goods, no matter the costs.  The only problem with that is the non-monetary costs. The externalized costs are increased greatly when production moves to less developed nations, or nation’s with less social and humanitarian based laws. As this article we got in class states, “Who paid for that $4.99 radio? Some people paid with the loss of their natural resources. Some paid with the loss of clean air, with increased asthma and cancer rates. Some workers paid by having to cover their own health insurance. Kids in Africa paid with their future: a third of the school-age children in parts of the Congo now drop out to mine metals for electronics”.  These undeveloped nations have little to no child labor laws, laws controlling work hours, work conditions, and laws controlling pollution and waste.  This allows firms to produce their goods at a greatly reduced monetary cost since their laws and regulations allow longer work days, and they’re able to pay their workers less.  This has resulted in a great deal of externalized costs affecting these nations, specifically nations in and around Asia. As stated in this article, “In 2010, 40% of the world’s premature deaths caused by air pollution were in China, the world’s largest emitter of carbon dioxide…The University of Hong Kong’s School of Public Health reported more than 3,000 premature deaths in the city in 2013…A poll by the U.S. Pew Research Center found that 47% of Chinese citizens thought air pollution to be a “very big” problem in 2013 (up from 31% in 2008)”.  The deaths labelled in this article are direct costs of modern day production in these Asian nations.  Capitalism has created a craving for increased profits, but as we can see these increased profits to one side cost the other side their lifestyle and in extreme cases maybe even their life.

Externalized costs exist in every economy, not matter the structural or social aspects of it.  While global capitalism creates some of the largest and greatest affecting externalized costs, it may be argued that not all of these costs are direct effects of global capitalism.  Some say that externalized costs can be attributed more to humans and society than to Capitalism. They believe that these costs are created in any economy and are due to firms simply not caring about the effect they have on our planet.  While this is partly true, it doesn’t cover all the information. Without global capitalism we would have significantly less international production. If most goods we used were produced in our home nation’s, we would have a drastic difference in externalized costs and global pollution.  To only touch on the subject, the nation’s using the most goods that create the largest externalized costs have the most intense labor and pollution laws. This essentially means that if global capitalism didn’t exist and international production was minimal, we would have smaller externalized costs.  The only problem is that global capitalism very much exists, and drives the world as we know it, creating externalized costs everywhere it goes.

 

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