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7/3/2017, 20:00

European Dissidents ALARM

 

Zeppelin: Beyond Gravity

 

Foreign intervention in Greece?

 

Η ανελεύθερη Ελλάδα

 

Η Ελλάδα καταγώγιο;

 

Αν.Επ. Π. Παυλόπουλο

  

Intangible prisons

 

Plausible deniability

 

Images of German w & s

 

Crimes against Humanity

 

"Chimera" - "Bellerophon"

 

pr. Donald Trump

 

  

Legal Notice 87

 

Βδέλλες, αποικιοκρατικές

 

Being a German

 

Legal Notice 84

 

Dirty colonial methods

 

Georgi Markov, BG - KGB

 

Samples of Barbarity

 

Ελλάδα - αποκόλληση

 

Έλληνες, στο έλεος...

 

Harvester's log 16/3/17

 

 

Legal Notice 66

 

Execrable

 

Legal Notice 62

 

  

My story

 

  

Aggression?

 

  

Η Εστία μου

 

  

Why so untidy?

 

  

Αποικιοκρατία

 

  

Εξόντωση Ελλήνων αντιφρονούντων;

 

  

Ζήτημα εμπιστοσύνης

 

  

Μεθοδικότητα

 

  

Ανοικτή Επιστολή πρέσβη ΗΠΑ

Αφορμή, U2RIT vs Ελλάδα;

Βιοηθική

A request to U2RIT

Colonial aggression - 2

Open Letter to UN S.G.

Open Letter to p.C. & p. O.

Δήλωση πρόθεσης επαναπατρισμού

 

Ο "εφιάλτης" της Νυρεμβέργης

Συλλογή Φωτογραφιών

Αίτημα προστασίας, προς Ιταλία

Chroma key, background removal

Science and Ethics

Να συμβάλει και η U2RIT

Θα ξαναφτιάξουν πολλές φορές Άουσβιτς και Zyclon B

 

Split-Screen effect

Η Ζωή είναι Ωραία.

Βόρεια Κορέα

Λευτεριά στους Έλληνες, εξανα- γκαστικά "Εξαφανισμένους"

 

Μυστικές δίκες;

Trustworthiness

Πολιτισμό, ή, απληστία;

Ακραία Στυγνότητα

Η Τέχνη της Επιβίωσης

Political Asylum 3

Επιστροφή στις ρίζες

The Human Cost of Torture

An urgent appeal for solidarity

More obvious than the Sun

Western "culture"

Political Asylum

Έννομη Προστασία

Μια μήνυση που εγείρει ερωτηματικά

 

 

 

Honor your father...

Noise

Creative Greeks

A pair of Dictatorships

The price of Liberty PDF Εκτύπωση E-mail
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Συντάχθηκε απο τον/την Χρήστος Μπούμπουλης (Christos Boumpoulis)   
Πέμπτη, 05 Οκτώβριος 2017 10:09

 

kids-in-school.jpg

 

 

The price of Liberty

 

EXTERNAL EFFECTS, ECONOMY AND DISECONOMY

Externalities

 

"The time will come when the price we shall pay for liberty will be liberty itself.",

Vlad Ţepes, Romanian ruler

 

Concept and history

'External effects' is a functional concept for the utilisation of the environment and the harmonisation with it of sustainable enterprise.

The concept is strategic for the economics approach to and the political planning of sustainable development. It is strategic and fundamental for the linking of environmental and economic issues and approaches.

External effects become definitive and are brought out in an obvious way when we come close to the point of environmental and economic saturation, or, otherwise, to the limit of the bearing capacity. This also applies to public goods and the common benefit.

To the table of categories of external effects we would add at least two further distinctions of categories: (a) of risk, and (b) institutional or operational.

First of all, we must explain why we aim to draw attention to this term of economic science in an extended framework, thus also creating a categorisation, so that this term operates in a more catalytic way in decisions and planning.

External effects is a term which, as we have said, was introduced for the first time by Alfred Marshall and then by Pigou - two neo-classical economists. Until the inter-War years, this term remained one which referred to conditions of cost and benefit within industry. It was first applied to the environment by Pigou's proposal in London in 1920 on a tax on the emission of pollutants because of the situation which had been created in London after World War I.

Up to 1960, the following were among those who concerned themselves with external effects: Meade, Scitovsky, Viner, Allyn Young, Robertson, Dolan, Sraffa, Knight, Ellis, Felner, Samuelson, Lindanl, Musgrave, Bowen, Clark, Rosenstein-Rodan, Sidgwick, Eckaus, Fleming, and Francis Bator.

They were then highlighted by Mishan, who called attention to a significant degree to the issue of the economy of the environment and of natural resources in the 1960s, a few years after the publication of Rachel Carson's Silent Spring. Since then, the dynamic of the term has been constantly enlarged, while its categories and specialisations have developed.

Definition and meanings of the term

It could be said that this is a key term for the integration of environmental economic policy and for the shaping of strategies and tools for sustainable development. This term refers to those cases where we are not able to make an integrated economic appraisal, and where we also have to do with indivisible goods or with indirect effects which the mechanism of the market cannot deal with. These cases are dealt with either by planned market regulation tools or by an operation of the market which takes into account not only the individual, but also the collective and social cost and benefit.

Many examples of external effects have been cited. Positive external effects are termed 'external economy', whereas the negative ones are called 'external diseconomy'. Each of these also has to show particular instances of categories. These categories serve as examples which help us to understand and define 'spillover effects'. For instance, the production of an impact on tourism by an industrial development zone, or the positive effects on beekeeping of the proximity of the swarm to a wood or to private property with apple or cherry-trees are among the examples which have been quoted. These examples lead us to take a more holistic approach to the issue of rights and property, the matter of the divisibility of goods and the management of indivisible goods, common or of each, as they are called, and also to approach the market in a similarly holistic manner.

Through the management of external effects, the importance of political regulation for the economy, both at the state or international, and the local level which has to do with local government and public agencies, arises again. External effects serve as jurisdictional leverage for pollution permits, for the imposition of fines, or for the costing of permits in productive activities, or for the granting of subsidies to sustainable adaptations and production activities, etc.

Categories of external effects

Let us pass on now to the categories of external effects:

(1) The external effects of property, positive and negative. Attention was drawn to this category by Meade (1952), and here we have the example of the bees. The nectar collected by the bees is not defined as an economic value in relation to the reciprocity which exists between the bees and a neighbouring property with apple-trees. The bees contribute to pollination and the apple-trees contribute to feeding the bees and to the development of the swarm. Here we have values not defined as such (e.g., the nectar and the pollination) which are connected with properties (e.g., apple-trees, hives). Life and nature are full of these values.

(2) Technical external effects, which relate to innovations, the technological and technical environment, etc.

(3) External effects of public goods. The public goods themselves and services constitute a sub-stratum for the production results of private economy actions. Public goods are strategic nodal points for the market.

These three categories are regarded as basic and predominated until 1960.

(4) The fourth triple category of external effects is that of production, consumption, and 'mixed'. It will be obvious that some external effects, economy, and diseconomy are connected with production, others with consumption, while yet others are mixed. Such a typical case is that of packaging garbage, where, if we have a better adaptation through its materials and specifications in the production process, and if we have suitable management in the process of consumption of the garbage produced by packaging, we shall have a different outcome as regards the environmental yields of the economy. Of course, the purely economic nucleus of these external effects issues in a more specialised approach to and clarification of the term of external effects, of production, consumption, and mixed.

(5) Another category is the double one of unilateral and reciprocal effects. Here we should note that this categorisation has features of grouping depending on the way in which we analyse external effects, or how we encounter them in practice.

It will be clear that unilateral effects come from only one pole. For example, industry operates as a unilateral external impact on tourism, whereas, if a statutory framework - one which involves spatial planning, regulation, and limitation for industry - is lacking, tourism operates only as a passive receiver of the external impact.

Reciprocal effects which are marked by the scaling of reciprocity are the more usual case, given that there is a statutory basis. That is to say, the political tools which are used for economic development and its regulation (spatial planning, etc.) impose a statutory regulation as to unilateral external effects (e.g., tourist activities are sited in one place and industrial activities elsewhere).

(6) The sixth category is the double category of geographically localised, that is, local, external effects, and non-localised.

However, we should note that certain effects have a different distribution: they are mixed. There is a different emphasis on locality or emphasis on non-location of their range depending on the nature of the productive activity.

Here we will note that, for example, we would say that the external impact from a nuclear accident is, of its nature, non-localised, just as wind or water-borne pollution has no boundaries. However, there is a declining scale of such transporting or spread (that is, there is a certain range) and, consequently, the emphasis on the locality of the impact is scaled in accordance with how strong or weakened the impact conveyed is in a certain place. On the other hand, however, in the case of an isolated farming activity, things are entirely different, unless this activity is directly linked to the aquifer.

In any event, the relation between the environment and the associated economic activity will be obvious. The nature of the environment plays a definitive role in the scaling of the external effect to an even greater extent when the values of the effect are at the limit of the bearing capacity.

(7) External effects are also small-scale or large-scale quantitatively and qualitatively.

(8) They are financial and non-financial.

(9) They are simultaneous. Included in this instance are those effects which show a direct chronological correlation and synchronicity. Here we have to do with effects which are on a small chronological scale and occasional. They are also intergenerational and diachronic when we have to do with situations which manifest an inflexibility, or a violation of the bearing capacity as regards the environment and the ecosystem, and in relation to the social cost of a productive activity.

(10) Effects are also internal or external in relation to a branch of the economy, that is, they operate either on the internal formation of the dynamic of a branch, as in the sphere of industry (industrial) or they are external to a branch, that is, they operate beyond it and outside it.

(11) Indirect and direct.

(12) Cumulative and non-cumulative. Here we can recognise a linkage of this categorisation with simultaneous, intergenerational, or diachronic effects. This linkage is not identification, just as its linkage with the next category is not identification.

(13) Passing, transient, non-continuous, and seasonal or periodical.

This category has points in common on a limited scale with the sub-categories of the 9th.

Tourism, for example, gives rise to a seasonal, periodical, external effect. Farming, in spite of its seasonality, has greater continuity, and the industrial formation of external effects has an even greater continuity. A special sub-category is that of occasional effects, where, depending upon their environmental colouring, they may be simultaneous or diachronic. For example, the Chernobyl nuclear accident calls attention to a fortuitous instance with a diachronic external impact.

(14) There are also those external effects which have to do with risk; they have, that is, an element of probability. A typical, extreme, instance is that of mutants as living organisms and as products.

(15) Institutional and operational effects which constitute another double categorisation of external effects.

Institutional external effects are linked with the external effect possessed by institutions in the production and consumption process and in the shaping of the terms of operation of development and the market. An example of an institutional external economy is provided by the functioning of the Ombudsman for the Environment.

Institutional external effects can be divided into effects of an institutional climate and effects of institutional application. The effects of the political climate include those effects which are exerted on those agents (entrepreneurs, citizens, local government organisations, etc.) which affect the environment through the latter's assessment of the political dynamic of environmental institutions. If, for example, local government organisations believe that they can maintain landfills, they will continue to do so, in spite of the fact that these are prohibited.

The external effects of application include those which have to do with the implementation of institutions and the observance by the administration of the provisions. For example, fines for the dumping of rubbish have an effect on behaviours.

In the case of operational effects, we have the technical terms which are a direct function of the environmental terms. Frequently we have an assessment of external effects which becomes more easily accessible by the use of technical terms which reflect environmental and economic criteria. For example, a first thematic external economy for sustainable enterprise is the setting up, on terms of sustainability, of the management agencies for the protected regions, and the development and then the extension of the regime of protection and management to the rest of the regions in the Natura network.

Operational have an obvious relation with technical effects, but they are not identical, like the institutional effects which are connected with those of public goods and of property.

External effects on economic planning

An analysis of the functioning of external effects, economy, and diseconomy (impacts) will also help in the planning of the policy of the management agencies, local government, and the state. The management agencies, through the categorisation which we have seen above, will be able to shape even the prices for the leasing of their logos and will be able to seek resources with an eradiating dynamic, with antennae for the pricing of their external positive effect. This also applies to local government organisations, which gradually develop in the direction of being a regulator and factor in sustainable management and enterprise. The same also holds good for the state centrally, as well as for the planning, strategy, and tools used by the European Union or national policy.

As we have pointed out before, we have a scale of divisibility and exclusion of goods from the individual to the common or to those which do not belong to anybody, the exclusive and the divisible, to those which are common and free. Here we should note that the stringency which is taking shape as to the good of the environment and the multifarious social cost of the production and consumption process are turning many free goods into economic goods - naturally with an intermediate character. Some of the free goods, such as, on certain conditions, water, are partially economic, while the air is still a non-economic good.

Here it is particularly important that we should see how public and free goods can operate by means of a management framework as goods which usually have the character of indivisible goods. That is: how can they operate with scope for exclusion, regulation of use, regulation of the right to use, with a profitable character in private economy terms for the management agencies and for local government, which can also intervene in the protected regions.

Scope for the planning of policies starts out from our ability to categorise and price external effects by approximation and by sampling. External effects are the cornerstone for environmental policies. Through the indivisibility of certain goods and services, attention is drawn in the end to the complexity which cannot be dealt with by the mechanistic nature of the market, which works through the divisibility of goods and from their exclusivity to their appropriation. Here the holistic character of the economy and of nature is brought out in a composite manner. It could be said that external effects are connected with added values in external economies, and, as positive effects we can link them with economies of scale and added values so as to be able to integrate the shaping of the tools for their pricing.

Up to now, in economic evaluation things have been easier in the case of operational values as opposed to maintenance values. There is no possibility of costing maintenance values, in spite of the fact that they are active in the political planning of regulations. In the past, and in the political framework of regulations, maintenance values had a limited dynamic since the regime of rights was without limits, it was a mandate of the market. However, scientific knowledge of external effects in the operational and not exactly and only in the economic field has now begun to shape a new landscape as to the limitation of rights and a different management of operational values, as also through the multifunctional concept of 'external effect' as of economy or impact, knowledge of the ignorance and weakness of the market and the deficit as to the integration and maturation of the science of the market became apparent.

The problem arises since private property limits do not coincide with the ecological limits of production and consumption activity, and, furthermore, to a certain extent the factors in production are not evaluated internally and externally, as, for example, the functions of a swarm of bees in its interior or the functions of the environment as regards the swarm are not evaluated. The evolution of economic science in this area is only at its beginning. However, the shaping of criteria and indicators for sustainable development, as well as the process of transfer of jurisdiction from the market to social regulation and institutionalisation as to the environment, has begun. Evolution is multifaceted and undoubtedly one catalytic factor as an external economy for sustainable enterprise is the non-government organisations. It is also their social economy, it is the dynamic of knowledge and of the information society as regards issues of environmental management, osmosis, institutional and legal, in the matter of the protection of the environment, etc.

The role of the NGOs and of environmental education and sensitisation acts as a catalyst upon the dynamic of the market, since knowledge and sensitisation have a positive influence on the shaping of a price for quality and the distinction between products.

A positive external economy which brings out the 'green' dimension of the economy from the passive and defensive zone of state intervention is the fact that the necessity of green products is now recognised. An integrated demand is been formed by the consumer, and the mechanism of the market has started to evaluate quality and the protection of the environment as positive and acceptable in the cost of purchase of products. Thus it could be said that the resources of sensitisation have now taken hold and have begun also to re-articulate the dynamic of the market for the private economy sector, which will operate in the future as a 'feeder' of the sustainable character of development in the sense of the protection of the environment, quality of life, and health. For the present, green products have the cost of innovation and for that reason their support must be continued, so that we see in the future the multiplicatory character of their social benefit, in a strictly countervalent way in the market.

In political terms, we could say that the environment and its quality are evolving in developed economies into a good, to some degree an economic good, which in relation to its supply cost will be countervalent collectively, but also with scope for exclusion, that is, through the capability of the market to partake of this good on the basis of the price of its supply cost. In implementing this dynamic of the tools a definitive role will be played by the possibility of the development of marketing for green products and services, the effectiveness of this marketing, and, undoubtedly, the political process of consensus on the costing and distribution of the environmental or social cost, as well as on the apportionment of the environmental and social benefit.

It is worth adding here the question of whether the position of hypercapitalism which Rifkin describes in his Age of Access as the "whole of life [as] a paid-for experience" can be legitimated. We believe that the answer is 'no', since what is free and non-financial in the relation between life and nature remains as a necessary self-generating external economy for social and economic sustainable development.

---------------------------------

Categories of external effects

1. Property

2. Techniques

3. Public goods

4. Production, consumption, and mixed

5. Unilateral and reciprocal (scales)

6. Localised, non-localised (scales)

7. Small, large - scales (quantitatively, qualitatively)

8. Financial and non-financial

9. Simultaneous, occasional, intergenerational - diachronic

10. By branch, internal and external or branch

11. Indirect and direct (scaled)

12. Cumulative, non-cumulative

13. Passing, transient, seasonal, periodical, as well as continuous and non-continuous (categorisation supplementary to the 9th)

14. Probability and risk

15. Institutional (climate and implementation) and operational

___________________________________________________________

The double external cost of conventional production

1. Reduction of overall productivity

2. Reduction of consumers' satisfaction

 

[http://www.solonsynthesis.org/index.php/externalities/26-externalities/24-external-effects-economy-diseconomy.html]

 

 

By ignoring the external economies, when we design the structure and the dynamics of our societies' economies we may jeopardize the existence of, even, those things/entities/traits which are the most precious “parts” of our lives.

For example, by irrationally structuring the medicine domain of our economies we may, theoretically and up to a certain extent exaggerating things, turn our societies' children to organs/tissues warehouses, after having let their schools to become front organizations which, selectively, deprive some of them from their Human Rights.

Also, by letting National economies to gain sizes larger than those which correspond to the free market's economies, after having let, by negligence or willingly, those economies to become militarized (e.g. by remaining unsuspected of the deployment and the exploitation of “Ritchie Boys”, instrumental, structures and dynamics) we may develop an unwanted and unproductive dependency of our societies upon those political entities which may control those instrumental structures and dynamics, while undermining, by this way, the overall Liberty of our own societies.

Science exists within historical time.

Companies exist within historical time.

Leaderships exist within historical time.

Citizens exist within historical time.

Science, companies, leaderships and citizens, interact (according to all possible combinations) with each others, all the time.

The direction, the magnitude and the sign of the magnitude, of our collective Civilization's evolution, may depend upon the dynamic choices of, the scientists, the companies, the leaderships and the citizens.

 

Christos Boumpoulis

economist

 

 

P.S.: Decadence, customarily, “prefers” to remain audacious and aggressive, just when, the combination of regretting and willing accountability, is the one and only way to the civilization. What a pity.

 

Note: The photo was found here, http://www.boysenberrykids.com/wp-content/uploads/2015/07/kids-in-school.jpg.

 

 

Τελευταία Ενημέρωση στις Πέμπτη, 05 Οκτώβριος 2017 12:35