SUSTAINING OUR PLANET

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What do you think would happen if one day people woke up and discovered that gasoline was $3 a gallon?

PH: What I'm saying is that the marketplace is wonderful at setting prices and terrible at recognizing costs-to future generations, ecosystems, habitats, and exploited workers. Those costs are not recognized in market prices. If tomorrow we woke up and all our prices reflected fully all externalized costs-costs of the actual damage industrialism causes-it would be a disaster because the economy would go into a tailspin. Real income would drop, industries would collapse, and layoffs would occur. You'd have a depression.

So what I said in my book is that we have to create a price-cost integration system that does not affect individuals' real income. We need a market where people are rewarded for internalizing costs, as opposed to externalizing them. If you have a market in which the rewards are for the lowest price, in effect, you're saying to the company: "Put as many costs as you can off to the future or some other people or some other third-world country. We'll reward you with a lot of sales and high stock prices and you will become rich:"

That's upside-down. If we're going to have a restorative economy, we should be rewarding producers, companies, farmers, and loggers who internalize their costs.

I propose getting rid of the existing tax system. Phase it out over a 20-year period. We now tax the things we supposedly encourage: jobs, income, profits, entrepreneurship, innovation. And why? Well, because the government needs money. I am suggesting we phase in green fees, or so called Pigovian taxes. For example, a gallon of gas costs us between $4.50 and $7 a gallon, but we don't pay for it at the pump. We pay for it in terms of air pollution, acid rain, toxins, etc. I propose that we do pay for it at the pump. If you have a system that places a high tax on fuel, then the consumer has a powerful incentive to save money. They will turn to more restorative, sustainable ways to run their cars because it will be cheaper.

Look at organic farming. It's cheaper to farm organically than with chemicals. Organic farmers internalize their costs. They're not putting pesticides into the waterways or aquifers. They are not destroying their topsoil or creatures. They are not using toxins. But they are punished when they go into the marketplace because they have to compete with producers who don't take care of their land or water or crops. So they have a price disadvantage.

When chemical farmers have to pay the true costs of chemical-intensive farming and the actual cost of carbon-based fuels used to rip up the soil, then the organic farmer will have the price advantage. Chemical farmers will want to learn how to farm organically, because it will be less expensive.

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