From the temples of international finance to Eugene’s City Hall, the
people running the world’s economies systematically have been groomed
and conditioned to believe that the wise and invisible hand of the free
market is the most appropriate mechanism for determining how goods and
services are produced, distributed, sold and ultimately disposed of.

There is certainly something to be said for the regulatory mechanism of
supply and demand, but the trouble is that many costs are not accounted
for by this supposedly “wise hand.” Indeed, the market remains fully
oblivious of the sometimes staggering environmental and social costs of
the economic activity that it supposedly does such a good job of regulating.

For example, when we pay $3.50 for a gallon of gas, that price reflects
what it costs to pump oil out of the ground, refine it, distribute it
and sell it at gas stations. That $3.50 doesn’t reflect the cost of
global climate change, which is very likely to cost humans trillions of
dollars. It doesn’t reflect the cost of respiratory disease resulting
from air pollution. It doesn’t reflect the social cost of auto accidents
and automobile-dominated sprawl. It doesn’t reflect the cost of
occupying Iraq and its oil resources. It doesn’t reflect the fast
approaching costs of peak oil as we use up a finite resource as fast as
we can.

If all these externalized costs were reflected at the gas pump, we’d be
paying more like $10 per gallon — and the market would determine that we
live in a very different world.

This matter of externalized costs can be applied to virtually every
facet of our economy. From food to housing to manufactured goods, many
of the true costs are externalized.

There is a way to restructure our economies so as to reflect true
environmental and social costs. It involves a shift in the tax system.
When we pay taxes on our income, it’s as though we are being taxed on
our industriousness, ambition and creativity — the very things that a
society should encourage. Instead, taxes should be placed on the things
that a society wishes to discourage, such as pollution, waste and human
misery.

A good place to start would be to begin incrementally raising taxes on
fossil fuels, which would then ripple into such other sectors of the
economy as plastics, manufacturing and agriculture. While we must act
with urgency, we wouldn’t want to shock the economy, so we’d provide a
period during which industry could start to develop greater energy
efficiency and people could start to restructure their lifestyles in
anticipation of rising transportation costs. But then we’d begin raising
the new taxes yearly, while taxes on income were relieved accordingly.
Note that this would be a tax shift, not an increase.

To prevent increasing taxes on gasoline and other goods from hurting the
poor, we could exempt the first $10,000 or $20,000 of annual income from
taxation. The beauty of this is that families that choose not to drive a
car and live a relatively modest, environmentally balanced lifestyle
would be rewarded for their behavior.

Environmental tax reform could address many of our most pressing
ecological problems. For example, clear-cutting forests is widely seen
as leading to devastated ecosystems, endangered species, topsoil loss
and abuse of herbicides. A stiff tax on clear-cutting would cause forest
products that have been harvested in a gentle manner to become more
affordable than wood coming from clear-cuts. The increased labor
required to harvest trees in a nondestructive manner would create many
new timber jobs in Lane County.

Taxes also should be placed on agricultural practices that release toxic
chemicals, degrade topsoil, use excessive petroleum or harm farmworkers.
When this tax is levied, organic, locally grown food will become more
affordable than conventionally grown food transported thousands of miles
— again, creating many jobs for our local economy.

Business interests will howl at what I’m suggesting. Big business has a
long history of maximizing profit by encouraging economic growth,
fostering consumerism and externalizing costs. People will protest that
various necessities will become more expensive.

But in truth, these things will not become more expensive; they will
simply begin to have their true costs accounted for. As a result, people
will buy fewer things.

Honest accounting of costs is a hallmark of true conservatism. This
shift is essential if the free market is going to guide things in a
sensible and honest way in this day and age of coming to grips with
modern civilization’s completely unsustainable trajectory.

HHHH

Robert Bolman of Maitreya EcoVillage in Eugene is a builder specializing
in green construction.