Principles of Finance: Unit 9, Pollution vs. Price

How do we charge for negative externalities? Poor companies in poor countries pollute - polluting lets them offer their product cheaper. What are the economics and ethics behind this conflict?

CoursesFinance Concepts
Principles of Finance
FinanceFinancial Responsibility
Personal Finance
Finance and EconomicsPrinciples of Finance
LanguageEnglish Language
Life SkillsPersonal Finance
SubjectsFinance and Economics

Transcript

00:22

our plants big and green and our corn cheap And

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we love our pork And we like our computers for

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everything from bank payments and amazon ing to downloading you

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know art films They also all happen to be super

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compay hedda tive industries So the difference of a dime

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a bag of that crap derived fertilizer massively affects the

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success or failure of that company in the real world

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Many times it's literally the difference between being a beam

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off huge and going bankrupt that diamond bag difference Big

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deal So then what happens in a world where notionally

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evolved first world western countries which don't have people on

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mass living just on the edge of starvation regulate pollution

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in these dirty industries What happens What happens when we

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do that That is a western chemical manufacturer might have

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to actually dispose of the toxins in an organized way

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Bringing in trucks that hold five thousand gallons of sludge

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or whatever you call that stuff one truck at a

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time to dump those toxins carefully in a manufactured giant

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plastic swimming pool container buried somewhere in the middle of

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the desert All that collecting and hauling in the building

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of that million gallon swimming pool holding anything and then

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overseeing that it doesn't leak or you'll get stolen by

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terrorists or whatever might happen with all that effort All

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that maintenance costs a fortune and that cost has to

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be passed on to the end customer So a truckload

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of this costs a grand to make and five hundred

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bucks and cost to deal with the disposal of the

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making of it So this total truckload costs fifteen hundred

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bucks What about the stuff made by the competitor in

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the third world country Half of whose citizens are three

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days work away from starving to death Well they're simply

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not worried about the storage of the pollutants so they

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dumped in the river with cheaper basically free And yeah

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they just don't worry about the effects but they can

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sell their bag Oh crap for your lawn competitive product

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For five hundred bucks a truckload less than the first

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world makers of the same thing So what happens while

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the world acts short term rationally that is the world

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vise the cheaper version of the same commodity It's expensive

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to not pollute that's a given being green cost green

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So where do governments then draw the line Well in

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the case of fertilizer many western countries banned the import

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of things that are bad for the environment and the

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people around it and or were made in a bad

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environment disrespecting kind of way But the banning is well

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light Like you know you probably see a whole lot

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of fireworks throughout the year Fourth of july christmas weddings

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nfl games Well guess where they're made And guess who

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makes him Yeah these guys in india they bathe in

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the poison basically all day making roman candles and sparklers

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and single shot shooters None of them need walking canes

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ever dentures or artificial hips Why while they all die

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by their forty fifth birthday or sooner so individual countries

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can simply raise the price of a given product such

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that bad polluters pay a big tax putting them equal

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To the environmentally sensitive manufacturers at least equal financially And

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how do we think about that The people polluting their

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own rivers and they're all close to starvation anyway so

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if we harm their business and they can't export to

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america well then they'll starve right So how do we

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think about that So um not an easy answer here

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What about things that harm everyone like over fishing the

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oceans or nuclear power grid leaks or carbon emissions that

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will come out of turkey but float down to australia

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and the rest of the world Well how does the

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u s tell poor starving countries tio not burn the

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very cheap coal and shiver through their winters Well we're

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not exactly shivering through our winters Yeah cole driven power

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cost about five bucks a kilowatt to produce wind power

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costs like eighty The math just doesn't work nowhere to

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go Solar nuclear politician Hot air Well they all have

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issues and none of us chief is the most polluting

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coal And oh by the way the u s is

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the saudi arabia of coal We have tons we burn

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tons We export tons we supply the arms to the

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biggest polluters and global arms and global warmers on the

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planet So what do we do about all this Tell

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all these minor guys they're out of work and just

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shut him down Or do we continue to pollute with

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cole what's our price Well if we go with solar

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nuclear wind while your monthly electric bills are going to

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go from fifty bucks to three hundred probably not something

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you really want to spend most of your annual savings

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on Well how high should we let prices get to

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then be able to migrate off of coal Lots of

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polar bears have to die off first Probably all right

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we'll do We save the planet or save our money

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Can we just do nothing and hope Superman saves everything

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for us What are we paying that guy for me 00:05:06.739 --> [endTime] No way