Adam Smith Institute

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Common Error No. 71

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common-error-no-71

71. "Business is polluting the environment, which we should all enjoy, just for the benefit of the rich."

Most people pollute the environment. Some do it with sewage, some with the smoke from fires or the fumes from petrol or diesel engines. Business which uses energy tends to pollute, and manufacturing tends to pollute more than service industries. For that matter, older industries tend to pollute more than the newer, high tech ones. It is not for the benefit of the rich, but in order that the products can be cheaper that a certain amount of pollution is tolerated.

Production could be totally clean, but it would make goods much more expensive if the clean-up costs were added to production. The rich would be relatively unaffected by this, and the poor would suffer most. Society has to balance the cost of a totally unaffected environment against the cost of producing necessary goods.

Even nature pollutes, with forest fires and natural contamination of air and water. A certain degree of pollution is tolerable in the sense that it lies within the regenerative capacity of the environment. As society grows richer, as a result of wealth-creating enterprise, it becomes more able to afford the luxury of a cleaner environment, and is able to insist on cleaner methods of production. One reason why less developed countries are taking a larger share of manufacturing is that for them, the advantages of prosperity outweigh the costs of pollution.

A clean environment is not something which costs the rich money; it costs everyone money in the increased cost of industrial processes, and the higher prices which have to be charged. As countries grow richer they become more able to afford that price and to produce cleanly. Although some urge us to cut back economic growth to secure a cleaner environment, it is only by becoming richer that more people will be able to afford a clean environment.