Do you want your pension fund to get you the highest return?
It seems like a silly question, doesn't it?
But...
And this is the problem, because investors are obviously going to make their decisions based on ROI, and this includes pension funds. And, that means putting the investment into what brings value, which is going to be what people consume. And now and especially over the last couple years, this is going to be in the very companies that we are told not to consume from - yet we are also forced to consume from them, because of price.
While we as consumers aren't allowed to use plastic straws anymore, more coal-fired plants are opening up to combat the energy "crisis", which means that money isn't going into clean tech. This makes the argument of "going green being too expensive", self-fulfilling. There is no way to scale and no way to secure significant funding for innovation, when the vast majority is going into maintaining status quo.
This means we are paying both the costs to maintain the current situation and the financial and social costs of change. But the investment into the change is not high enough to make a significant impact any time soon, it is just a façade. And, regardless of whether you believe in climate change or not, nor can agree to the causes, no one wants to live in a polluted world.
This means that the wellbeing incentive is to reduce all forms of pollution, but the economic incentive is to maximize financial growth. Because of the history of the world, these things aren't aligned, because at scale, the best way to maximize wealth, reduces wellbeing. And while this benefits established big business and industry, it is the economic incentive as us as consumers who enable the process, because we are the ones demanding and we are more price sensitive, than wellbeing concerned. This is especially true because as individuals, the financial impact of our actions is personal and significant, but the impact me make as individuals on global wellbeing, is miniscule.
We are incentivized to spend and we have limited resources, so we are also incentivized to save. This means that we have to make decisions on what to demand, so if there is a product that does the job we need of it and it is cheaper, we are more likely to buy that than the one that does the same job, but is significantly more expensive - even if the difference is that if enough people paid more, we would have cleaner air, for example.
What we do know though, is that if the gap in price is smaller, more people will make the change and consider that general wellbeing level, even if it is only for bragging rights.
Around 20% of all cars in Norway are electric. However, they are also an oil producer and export it abroad as much as they can, because they are also looking for the best ROI - and they needn't get high off their own supply. The fact is, that the Norwegians are pretty savvy investors. They generate wealth from their natural resources, and invest it to generate more.
Venezuela "may have" mishandled their financial opportunity....
The fact is, that we are all incentive driven, and whether we like it or not, we are going to think more about ourselves as individuals, than ourselves as part of a society where all our fates are intertwined. We might want to have a cleaner environment and we might want improving innovation that supports our wellbeing, but we will still look short, because that is where we live.
If I buy a full electric car which is already more expensive, the current cost of electricity means that it will also be more expensive to run than a combustion engine. Then, I would have to spend on all the infrastructure associated, like charging points that are expensive to install. If I do this, I won't be able to feed my family.
Decisions, decisions.
So, the status quo maintains control, because the economic incentives are aligned to keep it in control. And, even if some of us wear the cost and make the shift, it isn't at a scale large enough to make a difference in the timeframe needed. This means that even if quite a few made the change, the effects still likely wouldn't be seen in my lifetime. So, the incentivize is set up to kick the can down the road.
However, if the economic incentive was switched to support wellbeing over wealth, the effect would be that wellbeing-related business activities would also be the place wealth is being generated, b cause that is the incentive. Wealth is driven by demand, and if everyone was demanding clean tech products for example, those businesses would boom. Supply and demand.
This is economics.
The "too expensive" argument doesn't hold up at the macro economic level, because it will balance due to the nature of economics. While one industry is reduced, it is replaced by another. It does however hold up at the individual level, because spending has direct effect on our current lives and will impact on our immediate sense of wellbeing. If that economic incentive flipped that gap the other way however, things would rapidly change, and innovation would skyrocket as companies compete for market share.
For example, Finland recently ordered some fighter jets for about 10 billion dollars. The change over rate for cars in Finland is about 10%, around 200,000 cars sold a year. There could have been a 20% rebate offered on EVs for the next five years, instead of spending on military. That would have replaced half of the cars with electric vehicles.
However, this can't be a standalone event, because they need electricity and that will mean producing more of that in increasingly efficient ways, as well as solar panels on rooves and all the other supporting products and services required to facilitate it. It would be expensive yes, but for about 10% of a year's GDP, the entire fleet of Finnish cars could be electric and it would have generated a massive amount of jobs locally to build the infrastructure required.
Better for the economy or worse? Better for the people, or worse?
Rather than punishing punishing bad behavior to increase good, they should be incentivizing good behavior to reduce the bad. Good and bad are just terms being used here, where "good" increases wellbeing in some way, and bad, doesn't.
If it doesn't improve us, why are we doing it?
But it does improve us financially, or economically, so those benefiting will of course do all they can to maximize their financial wellbeing, even if it costs us human wellbeing.
We all want the best ROI.
We just need to invest into wellbeing instead.
We can do it at an individual level to some degree, but we are going to be heavily affected by our resource availability. It could also be incentivized at a government level, but they are going to do what keeps them in power, not what is best for the people. This translates in policies that ensure we don't have enough resources or organization available combined, to threaten their position.
Are we going to change?
Taraz
[ Gen1: Hive ]
