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Out of context: Reply #71729
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- cherub0
This guy stutters more than anyone I know. Can someone explain to me what he's talking about at 7:20? What benefit? What harm to society? Give concrete examples plz?
- An externality is an economics concept that basically means: an output that isn't reflected in the cost of the goods.nb
- Example: a coal energy plant produces energy (profit) and uses up coal, which costs money. It also produces air pollution, but there is no cost to pollute.nb
- The coal company doesn't pay anything to pollute the air. An externality! But there is a "cost" to society: the air gets worse the more energy they produce.nb
- Using his argument, the energy produced is a "benefit" overall even with the cost of coal. But the pollution is a "harm" because it's not accounted for.nb
- He also says this situation ("unreasonable profit") encourages more pollution (in my example of the coal plant.) He calls it a forcing function, but that's notnb
- really the right term, in my opinion. It's just an "incentive", not a "forcing function." But that's just nit-picking.nb
- As he says "this is basically Economics 101"nb
- Hmmm I guess he's saying that if you make a tax to create the incentive or the disincentive then that counts as a forcing function. Which is true, I suppose.nb
- Maybe he's stuttering because this is a painfully rudimentary talk to be giving at the Sorbonne??nb
- ok, so the "harm to society" is the burning of coal, which cost €4 as an example. I had completely forgotten it costs money to go extract the coal and pay somecherub
- pay someone a wage to burn it.cherub
- thxcherub
- What? No! the production of energy counts as a benefit. The harm is that society (or the market) has not placed a value on the externality.nb