In SWSX last weekend I watched a very passionate talk by Al Gore where he spoke mostly about (guess what?) global warming, nicely mixed in with a bit about his book on (guess what?) global warming, and a bit more about his book and global warming !
His main thesis is that we should put a tax on carbon to ‘internalise the externality’, in economic jargon terms. An externality is where a free market fails to allocate resources according to their true cost or benefit. In other words there are ‘external’ costs or benefits that the system doesn’t cater for so we have market failure. Adam Smith’s invisible hand is hacked.
Of course this theory is not new. The big question is measuring that externality and implementing the right fixes in tax policy which in practice is no small feat. And doing it without hampering long term growth.
But speaking of externalities – and at SWSX no less ironically – no mention was made by Mr. Gore of the external benefits today’s startups bring to the economy. That if anything is the mother of all externalities and so much more relevant to the audience. Startups today add a hell of a lot more value to the ecosystem than the collective value to their individual stakeholders (employees, customers and shareholders). There is a knock-on effect and a symbiosis, which created a startup community we could have never dreamt of even 5 years agocontinue reading »