Capitalism's Big Lie

If You Build It, Someone Else Will Come and Clean It Up

In 2008, New York City passed a local e-waste law requiring makers of electronic equipment to provide for its recycling or re-use. The law has never been fully implemented because of — surprise! — a lawsuit by several trade associations representing electronics manufacturers. Evidently, captains of industry do not feel they are responsible for the trail of debris they leave behind in the waters of free enterprise.

The official reasons why the electronics industry opposes the law concern the city's jurisdiction over industries beyond its boundaries, the cost to smaller manufacturers in particular who will allegedly find the costs of compliance too great to bear, and the additional cost to consumers. In an act of breathtaking chutzpah, the groups bringing the lawsuit also claim that the city's laws would increase pollution by requiring the pickup of discarded electronics. Never mind that several states have already enacted laws based on the radical concept that companies that make things should be responsible for what happens to them when they are no longer usable. This is going to be a big, uphill struggle.

Despite decades of public consciousness about the noxious effects of industrial pollution, we remain in thrall to a model of economic life that, if left to its own devices, would ultimately render the entire planet an uninhabitable wasteland. It's been close to 40 years since the famous "Crying Indian" public service commercial was made, and still we cling to the idea that industry is not only fundamentally good, but, as an engine of economic growth, superior to other forms of human activity. Maudlin and unsubtle that commercial may have been, but it certainly achieved its effect, at least to the degree of helping to make people aware that pollution was a serious problem. I, for one, have never understood where anyone gets the idea that throwing their trash out the window of a car is an acceptable thing to do, let alone how a company could release its toxic waste into a river or lake without regard to the ill effects it may have. Based on the large quantities of garbage that line the highways where I live, and on the tenuous state of the air and water upon which the lives of every living thing depends, I can only conclude that I am obviously in the minority.

While federal and state government has established the basic principle that polluters should be responsible for cleaning up their mess, it is still a constant struggle to hold them accountable. The cleanup of PCB's in the Hudson River, for example, is only just now beginning, after an epic, decades-long struggle with General Electric. It would seem self-evident that a company should have to prove that a chemical it plans to dump into a body of water is not unsafe. We demand this basic level of safety from pharmaceutical makers, who must go to great lengths to demonstrate that their products will do no harm; why not from other industries? Yet, the onus in fact is on the rest of society to identify the problem and find its source, to verify that the hazard exists, document the extent of the damage in excruciating detail, and finally try to prove that a particular entity is responsible for causing it. Good luck. Capitalism's apologists expound a deeply entrenched myth that the benefits of industry are so essential a part of the American way of life that to argue for stronger regulation is tantamount to being unpatriotic. Holding manufacturers responsible in advance, as New York's e-waste law proposes to do, is labeled by its opponents as anti-industry, and therefore inherently un-American. You won't find "capitalism", "company", "corporation", "industry" or "free enterprise" in the Constitution, but that doesn't stop a large and vocal part of our population from believing that business is the most characteristic aspect of the American ideal. Even the word "business" refers only to the business of the Congress, whose workings most people in commercial business consider detrimental to their aspirations of wealth.

It is clear that the time has come for a dramatically different way of thinking about the relationship between business and government. We have too long thought of ourselves primarily as consumers instead of citizens, too long derided government as an incompetent enemy of enterprise and glorified commerce as a hyper-efficent path to personal and national fulfillment. But even in our moment of crisis, it is equally clear that, despite overwhelming evidence that both of these views are grossly oversimplified, we are most decidedly moving in precisely the wrong direction.

The Engines of Wall Street

It is a mystery why, during a period of our history in which business has let Americans down in the most profoundly destructive fashion, more enmity has been directed at the government than at the greedy perpetrators of the financial meltdown. Granted, the unpopularity of Wall Street bankers would be difficult to overstate at this moment in time. And also granted is the dismal failure of government agencies charged with the oversight of the financial industry. But how very peculiar, in our hour of greatest need, that we should heap such scorn upon the only meaningful check that exists against the excesses of the private sector. Can anyone say with a straight face that he truly believes the cause of the global economic crisis was too little unfettered capitalist greed? It is never a surprise to hear such nonsense spouted by bankers, corporate chiefs and their paid defenders in the Congress and the media; but why ordinary Americans should believe a word of it is incomprehensible. If your car breaks down in the middle of nowhere, you do not exclaim, "Damned government regulators!" But if the capital markets collapse as a direct result of overly risky bets made with other people's money (i.e. yours and mine), we are all prone to demand, "Where was the SEC? Where was the Fed?" These questions are valid, but they are not fundamental to the problem. At least the manufacturer of your unreliable car offers a warranty (which, thanks to government regulation, is far more generous than it would otherwise be). Its profit is contingent on the vehicle's ongoing performance. No comparable method of accountability exists in the financial markets, even though systemic failure there poses a far greater risk to the overall economy than any comparable failure in manufacturing, and where profits are pocketed neatly without regard for the after-effects of how they were made.

Why, then, shouldn't the makers of a product, whatever its purpose or nature, be responsible not only for its sale and delivery, but also its disposal? If a company profits from the manufacture of an electronic object — say, a mobile phone — why should it not also be responsible for the safe handling of the toxic metals and plastics that are necessary for its creation? The words "caveat emptor" are also absent from the laws of the land. Then why is its considered right and proper that every time you open a package and find yourself with a pile of useless cardboard, plastic and styrofoam that it should be the responsibility of the local taxpayer to take it away and either burn, bury or recycle it? If there is a social compact in which one person's garbage is allowed to become another person's problem, please present it for examination.

Therein lies the heart of the problem: we are led to believe that government regulation is an obstacle to free enterprise, that taxation is an unnecessary burden on economic progress and freedom. And yet, when a developer builds a residential community, sells the homes and walks away with his profits, the problems of roads, water, sewage, garbage, schools and crime remain the responsibility of the taxpayer in perpetuity. To add insult to this injury, more often than not businesses are given tax breaks to locate themselves in a particular municipality. Indeed, cities, counties and states fall over one another as they compete to offer the best terms, and without any say on the part of voters. Not only does the public treasury suffer from a long-term loss of tax revenue for a factory, shopping center or office building, but then it has to foot the bill for all of the public services that will be required to sustain those corporate entities for their useful lives. But, you may argue, what about the jobs created? What about the increased opportunity for a higher standard of living for the local community? What about the taxes this additional wealth will generate? It is inarguable that capitalism is indeed very good at wealth creation, and that the benefits of prosperity are far preferable to endless poverty, but that is beside the point. The real question is, what are the actual and entire costs of doing business, and who is actually paying them? How sustainable is industry without the support of government — without tax abatements, without police and fire protection, without contracts and property rights enforced by the courts? Who pays for the patent office, and the register of copyrights? When are the costs for these public provisions ever calculated into the cost of doing business? Only, it would seem, when the biggest banks and companies are bailed out, only when everything goes south. How profitable would a company really be if it did not have the taxpayer to rely on as its de facto service provider, and its insurance policy of last resort against the ultimate risk of failure?

Those elected officials who ardently defend the capitalist model, but who find no contradiction in condemning the "moral hazard" of allowing companies to unload their bad decisions on the taxpayers, ought to be asked how many tax breaks and other publicly financed goodies they voted "yea" for without the taxpayers' consent. Those politicians who spend their careers arguing against the government's extension of public entitlements for such sundries as pensions for the elderly, food assistance for the poor and health care for all, but who see no inconsistency in supporting agricultural subsidies and myriad other forms of corporate welfare, ought to be asked whether they think that expending the taxpayers' money on non-public entities qualifies as taxation without representation.

After 40 years of celebrating Earth Day, we are no closer to acknowledging that economic growth, ecological safety and government action are not mutually incompatible but deeply intertwined functions of a single social construct. We can no more do without the benefits of the first two than without the protections of the third. If a small electronics manufacturer truly believes that recycling its products when they are no longer usable will put it out of business, perhaps it is only right to question whether they should be in business in the first place. The question is not one of industrial freedom versus government regulation, but one of paying the total cost of a potentially polluting product from its manufacture to its demise. Bailouts of car makers and investment bankers are an easy target, but they happen only rarely, while the taxpayer's pocket is picked every day for the benefit of companies big and small. The idea that unfettered capitalism lets the taxpayer off the hook is only true if a company is not allowed to profit from its business while passing the costs of cleaning up its mess onto the government. Anything less is a dangerous illusion, and one that is truly unsustainable.

Postscript

This essay was written without reference to the oil spill in the Gulf of Mexico, as it was just beginning at the time and its catastrophic effects were not yet apparent. It offers a coincidental example of how the private sector responds when government cedes its responsibility for oversight and disaster management. Regrettably, there is no shortage of how the large oil companies behave when they are allowed to regulate themselves: read about the environmental and human calamities visited upon the people of the Niger delta and the rainforest in Ecuador, in countries where government regulation is weak, unenforced or nonexistent.