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. People in other places, in the present, as well as in the future, must pay the costs that we defer to them.

The result: vast unfunded externalities are not on the balance sheet. All kinds of horrible effects have not been accounted for. Our system of economics encourages us to turn a blind eye to what must be paid by others — we privatise profits and socialise costs to the commons. We have, in a sense, cheated our way into a nice, comfortable life — for some of us, anyway — by not paying our dues.

For example, the legacy of tetraethyllead and lead-based paint chips is still damaging the brains of inner-city children today, decades after we stopped using them. The behaviour has reformed (thank goodness), yet the pollution remains, and will stay there for generations to come.

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 the authorities cannot be bought off.

We have mastered the art of producing things of terrific complexity at immense scale, cheaply. The art of consuming in clean and fair ways lags behind. We must do better.