What is the Economic Cost of Corruption?

by Ross Hunter on January 5, 2009

I’m finding it hard to fathom the ideological basis for the last-minute rule change the Administration is enacting, to open up National Forest land to the exploitation of one development company:

In yet another potential last minute rule change, “the Bush administration appears poised to push through a change in U.S. Forest Service agreements that would make it far easier for mountain forests to be converted to housing subdivisions.” Though President-elect Obama has opposed the move, Mark E. Rey, the former timber lobbyist who heads the Forest Service, has signaled that he intends to finalize the plan before Obama’s inauguration. As a presidential candidate, Obama vocally criticized Rey’s plan while campaigning in Montana, calling it “outrageous.”
Rey is pushing a technical change that it will have “large implications“:

The shift is technical but with large implications. It would allow Plum
Creek Timber to pave roads passing through Forest Service land. For
decades, such roads were little more than trails used by logging trucks
to reach timber stands.

But as Plum Creek has moved into the real estate business, paving those roads became a necessary prelude to opening vast tracts of the company’s 8 million acres to the vacation homes that are transforming landscapes across the West.

Scenic western Montana, where Plum Creek owns 1.2 million acres, would be most affected, placing fresh burdens on county governments to provide services, and undoing efforts to cluster housing near towns.

The people of the future, looking at these times – and being used to full-impact labeling on every process, policy, entity and action -  will want to know which actions during this administration’s tenure were motivated by a prevailing market theory, which by carelessness, which by political gain, and which by simple corruption.

A clear market exists for analysis that details the true impact of a policy move, just as we need impact labeling on every economic and financial operation. Ecological-impact certification labeling has been in existence for some time now, and Grist’s interview with eco-certification expert Michael Conroy for example is well worth reading for a heartening overview.

But for measures outside of ecological impacts, I don’t know how well we’ve started to create a matrix of values in the realms of wealth transfer, social cost, etc. In the end, I suspect, this kind of work has to form part of the value system of a truly sustainable global economy.

There is a cost to corruption, usually vastly greater than the monetary gains transferred to the players. There is a cost to the exploitation of a natural resource, one that includes (hypothetical) replacement cost as well as extraction cost. And politically, there is a cost to carelessness that allows these kinds of collateral costs to accrue.

We do seem to be in a zero-sum situation with the planet, in which our taking of a legacy resource involves the planet’s loss of that resource. In this light, any protected land should be hard to tamper with, exacting a high cost.

Certainly this Forest Service rule is a wrong action, but how wrong? What are the impacts, what are the true costs? These are questions that economic analysis is tasked with answering, and I would love to see a balance sheet view of this, a spreadsheet of right and wrong action.

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Sustainable Economics Ends Political Corruption — Ross Hunter - Hunter & Associates
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