Paying for Negative Externalities

It is not every day you come across an article entitled “Warren Buffett is Everything That’s Wrong With America”. It is a thought provoking piece that I would highly recommend you read, forcing you to think more philosophically about the mass produced, advertising driven consumer society we live in.

The author takes issue with the way society tends to idolise those who have accumulated vast wealth, arguing that while most people believe that “Buffett symbolises what is great about American society and its economic system’, he sees Buffett as the symbol of everything that is going wrong. The context is the recent announcement that Warren Buffett’s Berkshire Hathaway and partner 3G Capital will create the world’s third largest food company through the merger of Heinz and Kraft foods.

The author’s derision for Warren Buffett is not personal, his article simply draws attention to the negative externalities – negative side effects on society – which companies produce yet are not demanded to pay for. He takes aim at the food companies and their low quality processed junk that is effectively “poisoning” people. While these companies profit, the state and the taxpayer carries the burden of dealing with the obesity and diabetes epidemic. The author writes from the perspective of America and their “bulging waistlines”, but obesity is now a global problem, including Ireland. The statistics don’t lie. Look around, we’re fat, and getting fatter!

Of course the blame for the obesity problem does not lie entirely with the food companies. There is a wider debate that includes the socioeconomic factors at play and the ideal of personal freedom and the responsibility it brings. However, if a company produces explicit negative side effects, shouldn’t our economic model require that the associated costs be factored in at least? Perhaps if companies were forced to pay towards these negative externalities, they might adjust their practice. Of course lobby groups will make sure that never happens, the reality of the world we live in, shaped by the few.