Goals for 2100: Accurate Valuation

10Sep07

The prices of goods and services should more accurately reflect their true costs.

Presently, for example, the price for a quart of oil is set by a merchant who, in turn, has paid a stated price to an oil company. Both the merchant and the oil company set their prices based upon relatively immediate inputs. For the merchant, there are costs of rent, wages to employees, electricity, and so forth. For the oil company, there are costs of production, storage, and transportation.

There is not presently any responsibility, built into the pricing, for the effects of consumption of that oil. If it gets burned, there is an unpriced cost to the atmosphere. If it sits in an abandoned garage until its container deteriorates with age, there is an unpriced cost to the soil, and possibly the water supply, that some of its nonbiodegradable ingredients will pollute. A different example is a bottle of alcohol. Its price should reflect the costs and benefits associated with its consumption.

In either example, somebody, someday, is going to pay a price, monetary or otherwise, for the transaction’s outcomes. That person will generally not have been party to the original transaction. His or her interests should be more fully represented in the transaction price. While it is impossible to predict all possible outcomes for a can of oil or a bottle of rum, it is not impossible to make progress toward a more responsible valuation of goods and services.

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