The Ethics of Externalities

You may have never heard of an externality, but engineers (as well as nearly everybody else) deal with them all the time without realizing it. The term comes from economics, and means an effect of an economic transaction that happens to somebody who was not directly involved in the transaction. That's pretty dry, so let me give a juicy example.

In the early nineteenth century, the chemical called sodium carbonate (washing soda) was obtained by burning a type of seaweed found off the coast of Spain. But when Napoleon ticked off England so much that the British blockaded French ports, that cut off France's supply of soda from Spain. The French government thereupon offered a prize for the best process of making soda without seaweed. A chemist named Le Blanc found that if he heated ordinary table salt with sulfuric acid, he got an intermediate chemical (sodium sulfate) that was easily transformed into washing soda. Le Blanc won the prize, the French were able to wash clothes again, and eventually the Le Blanc process took over as the main commercial way of making soda.

The trouble was that a by-product of the process was hydrochloric acid. At first the manufacturers just let it go up the chimney, but nearby farmers began to complain that it was killing their crops. This effect was an externality to the economy of making, buying and selling soda. Eventually chemical engineers found a way to capture the acid and sell it too, but not all air pollution problems are so easily solved.

One of the major externality issues these days is the problem of carbon dioxide emissions. Every time anyone burns a carbon-bearing fuel (coal, especially, but to some extent gasoline and oil as well), the resulting carbon dioxide goes into the air and plays some role (exactly how much isn't totally clear) in global warming. The prophecies about what consequences global warming will have if we don't do something about it range from the negligible to the apocalyptic. This fuzziness about how much carbon dioxide does what amount of damage is one of the classic problems with externalities. In a straighforward economic transaction between informed parties, the price paid says a lot about the relative value of the commodity. If the price goes up or down, that represents information that buyers, sellers, and even economists can use about the thing being traded. But the person harmed (or occasionally helped) by an externality doesn't spend any money, and therefore the economic equivalent of the externality is much harder to determine in many cases.

What have externalities got to do with engineering ethics? A lot, as it turns out. Many externalities are hidden, often from the traders and sometimes even from the third parties being affected. Returning to environmental externalities, such infamous incidents as the terrible ground pollution in the Love Canal area of Niagara Falls, New York came about because standard practices at the time allowed chemical companies to dump toxic waste into the ground with only minimal precautions, and nobody gave much thought to the possibility that someone in the far future might want to come along and build a school on the former toxic waste dump site.

Once you start looking for externalities, you'll see them everywhere. Anyone who buys a piece of new electronic gear is creating a future externality that arises when the thing is no longer useful: where does it go then? Into a landfill? A landfill next to whose property? Or maybe it goes off to some third-world reprocessing facility—then what? As the saying goes, "you can't just throw things away anymore because there is no 'away' anymore."

Even the cyberworld has externalities. Say some online game clogs up a server so much that other people just trying to get their work done experience slowdowns. That's an externality, and one that's hard to evaluate as well.

Just knowing about an externality doesn't mean that it's easy to deal with. Economists say you can pass laws or tax externalities to right the potential wrongs they represent. But that assumes you can put a value, either economic or moral, on the externality. Obviously, if a third party is injured or inconvenienced by some transaction that he or she has no control over, there is at least the potential for injustice, and in a just world such things wouldn't happen. Then you have to ask whether in the grand scheme of things, this particular injustice due to the externality is worth worrying about or fixing compared to everything else that's going on. This is the problem known as life, and we don't do life guiding here.

All I wanted to do in today's blog was to let you know about a concept that I have found useful in thinking about a wide variety of engineering ethics problems. Perhaps the most important thing about externalities is to recognize them when they occur. Depending on how serious they are, the ethical engineer may or may not want to address the issue, but if you don't see it, you'll never be able to do anything about it.

Sources: Wikipedia's article on "externality" is helpful, although it concentrates mainly on the economics of the concept. The story of Napoleon's washing comes from a modern reproduction copy of Asher & Adams' Pictorial Album of American Industry, 1876, p. 19.