How an Accounting Error Endangers All Our Lives

Somehow, against all wisdom and all odds, we ’Merkins failed to include the debit side of the ledger when we began congratulating ourselves on being so smart. The result was that an entire half of the accounting that Nature keeps was ignored. Silly us.

It matters not the slightest whether we “believe” that cheap oil is over, or the oceans are more acidic, or that many species are becoming extinct, because facts of Nature aren’t determined by our beliefs. Such things depend on actuality, and appear on the debit side we have ignored.

Rebecca Solnit tells us how it is in her book, Encyclopedia of Trouble and Spaciousness. Take the gold rush. Yeah, a bunch of rowdy guys with round steel pans picked nuggets and gold specks out of the creek at Sutter’s Mill, and put jealous money into their bank accounts.

It was quickly realized that a deadly poison could be used to get the gold that was too small to pick out, and soon mercury left over from that process was being flushed into the waterways. Before long the salmon did not return to these places. They still haven’t.

7,600 tons of mercury settled into
the bottom of San Francisco Bay.

Not to be outdone by a crowd of funky guys in Levi Strauss’ fashionable new jeans, Big Business realized they could wrench the “free” gold from the ground with “modern” methods. And so began the industrial assault that all but destroyed large parts of California and her people. We live not just with the fiscal legacy of that assault, but with the considerable quantities of deadly poisons it left behind, from which we cannot escape even today.

A huge deposit of mercury was found in South Bay, hence the San José Mercury News. Mining it killed every living thing around. Trees, bushes, grasses died, and all wildlife on land and in the water. Poisoned workers had to be moved off the job after less than a week.

Gold-bearing soil was blasted out of the earth with great quantities of high-pressure water, whole lakes’ worth, displacing many tons of dirt and rock, which were treated with mercury for a few ounces of gold.

The scale of destruction
is utterly dwarfed
by gold mining today.

7,600 tons of mercury settled into the bottom of San Francisco Bay and every tributary, where it remains today. It even poisons immigrant families today who defy warnings and rely too heavily on Bay fish.

Horrible, isn’t it? But the scale of destruction is utterly dwarfed by gold mining today, in which the land is raped by the tens of square miles for deep gold, and the effluent is not just mercury, but deadly cyanide which in tiny amounts kills in an instant, and is found for hundreds of miles around mining sites.

Gold is not the problem. Accounting is the problem. We would never have accepted this devil’s deal if we had paid attention to the debit side of the ledger. The same accounting failure is part and parcel of every capitalist extraction endeavor in the country.

Gold is not the problem.
Accounting is the problem.

But the debit side will not be ignored. Nature Bats Last.

Practically any extraction industry serves as an illustration of this accounting failure, but Big Oil is one of the most visible and most blatantly evil. The BP blowout in the Gulf of Mexico just five years ago is the granddaddy of them all. Evil looking brown crude roared uninterrupted from BP’s destroyed Maconado well for 87 straight days, putting 4.9 million barrels of petroleum goo on the bottom of the Gulf, on the water’s surface, and on every shoreline, a third of a gallon (42 ounces, 2.6 pounds) for every watery acre of the vast 617,800 square miles of the Gulf. The wildlife devastation was unequaled, and continues today.

The greater the inequality,
the worse the effect
of this accounting error.

For comparison, here’s what happened in the great 1919 Boston Molasses Flood, which spilled two million gallons of molasses from a ruptured storage tank in Boston’s North End. Four ounces of molasses per acre caused considerable damage, several deaths, and left every inch of Boston sticky for years. A mere 4 ounces per acre. What would 42 ounces of Gulf crude per Boston acre have done?

Twenty-six years after the 1989 Exxon Valdez disaster, oil clings to every rock in Prince William Sound. In Nigeria, Shell Oil spilled millions of barrels of oil from nearly 5,000 incidents into biologically sensitive areas, where it has literally ruined the environment, impoverished the people, and driven them off their own lands.

This is typical behavior for oil or any other extractive businesses. Today the scope of utter destruction of land for shale oil and tar sands oil is beyond the grasp of the average person. The vast tailings ponds of Canadian mining are so toxic that any wildlife that strays into one of them will immediately die. This happened to hundreds of thousands of migrating ducks who landed in one two years ago. So now an air cannon is fired every few minutes to scare them off. Does Big Oil plan to blast a cannon every few minutes for the next three or four centuries?

Every big corporation fails
to pay attention to the debit accounting
that Nature never forgets,
because capitalism cares only for profit.

I deliberately pick on the extractive mineral industries here, but the fact is, virtually every capitalist corporation ignores Nature’s debit accounting. Capitalism cares only for profit. Any other feature of money is important only to the extent it serves to increase profit. But Nature never forgets. Only Nature, and the people who are killed, injured, and impoverished by the other side of capitalist grasping for money that does not appear on one-dimensional accounting books.

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3 CommentsLeave a comment

  1. Hi, John.

    The economists actually have a term of art for this phenomenon: Negative Externalities. It describes exactly the situations you enumerate: cases in which the market does not correctly price the full systemic effects of a product or service. The Tar Sands are only the latest and most horrifying example. Other “good” examples that you didn’t list are the environmental degradation caused by pesticides (no more honey bees, bummer) and run off from fertilizer use basically killing a large swath of the Gulf of Mexico.

    The question is what we do about it. I don’t see a solution that doesn’t involve some kind of government intervention. What are the chances of that in the current political environment? But realistically that is exactly what government is for: it is for things that we do together collectively as a society that we can’t do individually or through normal market forces. The normal market forces are clearly failing us.

    Regards,
    Paul

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    • Thanks, Paul. I guess my point is that these are not externalities at all, that profit often comes at huge cost from externalities that exceed any possible good. I think your point about what to do about it is one of the great unsolved problems of today’s world.

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      • John,
        You are right that it is a fundamental error of thought to view the “Externalities” as anything separate from the profit making portion, but that is how Economists view things. And it does make sense at the level that the profit part is the only part that actually counts as Economic Activity, since money is changing hands. But this just gets back to the larger point that you make so eloquently: if we can’t figure out a way to view these issues holistically, we’re basically doomed. Consider it a test of character for the human species. Are we smart enough to survive our current limitations? The jury is definitely out on that, as you point out in your new article.
        Regards,
        Paul

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