The official doctrines suffer from a number of familiar “market inefficiencies,” among them the failure to take into account the effects on others in market transactions. The consequences of these “externalities” can be substantial. The current financial crisis is an illustration. It is partly traceable to the major banks and investment firms’ ignoring “systemic risk” – the possibility that the whole system would collapse – when they undertook risky transactions.
Environmental catastrophe is far more serious: The externality that is being ignored is the fate of the species. And there is nowhere to run, cap in hand, for a bailout.
In future, historians (if there are any) will look back on this curious spectacle taking shape in the early 21st century. For the first time in human history, humans are facing the significant prospect of severe calamity as a result of their actions – actions that are battering our prospects of decent survival.
Those historians will observe that the richest and most powerful country in history, which enjoys incomparable advantages, is leading the effort to intensify the likely disaster. Leading the effort to preserve conditions in which our immediate descendants might have a decent life are the so-called “primitive” societies: First Nations, tribal, indigenous, aboriginal.
The countries with large and influential indigenous populations are well in the lead in seeking to preserve the planet. The countries that have driven indigenous populations to extinction or extreme marginalization are racing toward destruction.
Thus Ecuador, with its large indigenous population, is seeking aid from the rich countries to allow it to keep its substantial oil reserves underground, where they should be.
Meanwhile the U.S. and Canada are seeking to burn fossil fuels, including the extremely dangerous Canadian tar sands, and to do so as quickly and fully as possible, while they hail the wonders of a century of (largely meaningless) energy independence without a side glance at what the world might look like after this extravagant commitment to self-destruction.
This observation generalizes: Throughout the world, indigenous societies are struggling to protect what they sometimes call “the rights of nature,” while the civilized and sophisticated scoff at this silliness.
This is all exactly the opposite of what rationality would predict. [++]