Most agree that the global economic system is in the midst of unprecedented changes. The Global Risks 2012 report is a survey of 469 global experts. It identified chronic problems with government finances and severe income inequality as the most prevalent risks over the next decade. The report notes that the growing number of young people with little chance of finding a job, the increasing number of elderly people dependent on states deeply in debt, and the expanding gap between rich and poor were all fuelling resentment worldwide.
The managing director responsible for the report is quoted as saying that “For the first time in generations, many people no longer believe that their children will grow up to enjoy a higher standard of living than theirs…This new malaise is particularly acute in the industrialized countries that historically have been a source of great confidence and bold ideas.” At the same time, I am among those who have a positive outlook. There is so much discussion of solutions and many new, exciting ideas. Ideas are not aimed at patching the existing malfunctioning global economic system but fresh paradigms based on fairness, equality, and sustainability principles. These are exciting times to be alive, I say!
One facet of these fresh paradigms is the need for new economic models that encourage private sector initiatives to shoulder their fair share of social and environmental costs. Too many social costs are externalized under the present economic model. When I speak of cost externalization, I am pointing to instances when a company or an individual transfers some of its “moral responsibilities” as costs to the community directly or as a degradation to the environment. It is relatively easy to see this issue of social costs manifested in price differences for consumer goods sold in the US and the EU. White goods and consumer electronics sold in the EU are often more expensive than in the US because, within the EU, the trading system encourages European made goods over Far East imports where factories do not necessarily have to adhere to higher standards for pollution control and worker health and safety. Firms that are cognizant of worker and environmental issues have higher cost structures and, therefore, often have higher selling prices for their finished product. Federal Tax Singapore
As more countries adopt this model, consumers will need to accept that the prices they pay for everyday goods and services may have to increase. Of course, this is a tough sell for politicians, but there is a little alternative given the consequences of our present path. In Trinidad, I once heard that there are over 200 non-functioning water and sewerage treatment plants. Many of these were privately built for private residential communities but subsequently allowed to fall into a state of disrepair or not built to the capacity required by the housing development. A second and obvious example would be the sludge in the waterways outside certain manufacturing plants. A third one would be unregulated and irresponsible agriculture and housing developments on hillsides that lead to flooding during heavy rains. I am sure we can add many more examples, but hopefully, the point is made. The private and private sectors ignore the extra costs needed to conduct themselves in an environmentally / socially sensitive way. They shift the cost burden to the state and/or the wider society.
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Activist Annie Leonard has created a website called http://www.storyofstuff.org/, in which she supports the notion that cost externalization is how many corporations hide the true cost of making and selling cheap goods — costs never recorded on the balance sheets, and consumers see. These costs never truly go away. The site has free movie clips and a link to their lively Facebook page.
It is easy to point out these issues, but it is often hard to convince electorates or shareholders to accept the need to shoulder higher production costs and higher selling prices at the cash register. Hayden, my father, is very fond of reminding me that most of us like to get something for nothing, blissfully ignorant that most things in life are not free and that someone must repay at some point in time. Fortunately, some countries are forcing both firms and consumers to acknowledge these costs even though it means higher prices. Every day I see evidence of progress.
My name is Derren Joseph, and I love the Caribbean region. Despite our current challenges, I continue to have the audacity of hope that we will all enjoy a brighter tomorrow.
Read more on derrenjoseph.blogspot.com.
Note: The blog that used to be here is now at https://www.mooresrowland.tax/.