Incentive structures

When it’s profitable (and cheap) to trash the environment, we push the costs to someone else. Sometimes that person isn’t even born yet.

The problem with capitalism is that we have decided to measure it using numbers like GDP, which doesn’t reflect the well-being of the people who make up the economy, just the money spent. GDP goes up when there are wars, when everyone has a car, when healthcare is expensive, and so on.

Part of the challenge we face is fixing the incentive structures so that bad behavior isn’t rewarded. But it’s easier said than done.

The state can ban a major corporation from buying housing. But it doesn’t stop someone from opening up 20 different LLCs to purchase 20 houses and build a mini real estate empire.

We meet a second problem once we recognize the first. We run into the system of obscurity, rules, regulations, studies, and so on. We lose momentum, get lost in paperwork, or get lost in red tape or laws.

In the long run, the incentive structures will shape how we behave. The short run is difficult to endure because we are not on the same timeline as when we see this change finally take effect.

We inherit the world we build.