Polluters get a free ride. That needs to change.
Today, global GDP is $80 trillion or so. However, all of the externalities that we have created in the process are not on the balance sheet. By bringing ethics and economics together, we can begin to account for externalities, and thereby we can create a more sustainable and equitable form of market economy.
Externalities describe the effects when someone does something that affects others who are unrelated to that transaction or behaviour. When you go to the local store and you take a bottle of juice and a bag of chips, your 10-minute convenience creates a 10,000-year externality as that plastic is non-biodegradable. This is a cost to people in other places, and to the future, to people as yet unborn, who must pay the costs that we defer to them.
The result: Quadrillions of unfunded externalities are not on the balance sheet. All kinds of horrible effects have not been accounted for. We have, in a sense, cheated our way into a nice, comfortable life -- for some of us, anyway -- by not paying for externalities. This has created the situation in which we now find ourselves – a series ever-worsening environmental catastrophes that threaten to send our civilisation into a death spiral.
Good governance is concerned with the management and accounting of externalities, but it’s generally done after the fact. Somebody creates a huge mess, and then an authority declares that the offender must pay a fine. This means that only the most gross effects tend to be noticed and policed, assuming that the authorities cannot be bought off.
We must do better. The confluence of Machine Intelligence, Machine Economics (distributed ledger technology), and the emerging domain of Machine Ethics, herald an opportunity to do so. These technologies together will finally enable us to calculate and predict externality effects in a way that is transparent and accountable.
We will, in the 2020s and 2030s, be able to start accounting for externalities in society for the very first time. We can include externalities within pricing mechanisms, to make people pay for them at the point of purchase, not after the fact. Therefore, products or services that don’t create so many externalities in the world, will, all things being equal, be a little bit cheaper. We can create economic incentives to be kinder to people and planet; we can enable people to profit from being kind.