Endgame

Private Profits, Public Costs

by George Draffan

Most studies of corporate subsidies (click here for a list) estimate that they cost American taxpayers about $100 billion per year. But direct taxpayer expenses touch only the tip of the iceberg by ignoring the less easily tracked costs of health and safety problems for workers and consumers, toxic waste clean-up and other pollution costs, and white collar crime -- not just employees stealing from their bosses, but corporations stealing from their communities.

David Kortenís The Post-Corporate World points out that all U.S. corporate profits are about $500 billion per year, yet a conservative estimate of the externalized costs of industry runs to about $2.5 trillion per year. Thus corporate profits are dwarfed by externalized costs by a factor of 1 to 5 -- not a very efficient economic system, even from the point of view of providing goods and services.

The $2.5 trillion dollar estimate of corporate subsidies is itemized in corporate accountant Ralph Estes' book Tyranny of the Bottom Line (Berrett-Koehler, 1996, pp. 177-178).

Below is a summary of Estesís annual costs in $ billions, adjusted to 1991 dollars:

Costs to workers, customers, communities, and the nation

in $ billions

Costs to workers

 

Discrimination

165.1

Workplace injuries and accidents

141.6

Deaths from workplace cancer

274.7

Other workplace illness and disease

?

Other workplace costs (sexual harassment, abuse, etc.)

?

Subtotal of costs to workers: over

581.4

Costs to customers

 

Cost of price-fixing conspiracies, monopolies, deceptive advertising

1,166.1

Cost of unsafe vehicles

135.8

Cost of cigarettes

53.9

Other product injuries

18.4

Health/injury costs of personal, health, & food products

?

Subtotal of costs to customers: over

1,374.2

Costs to communities

 

Stationary source air pollution:

 

Health costs

225.9

Architectural damage

13.3

Household soiling

17.3

Vegetation damage from acid rain

5.9

Mobile source air pollution:

 

Health costs

1.7

Crop losses

3.1

Corrosion and other material damage

1.1

Additional impairment in property values

2.6

Water pollution:

 

Impairment of recreational activities (fishing, boating, swimming,
and water fowl hunting)

10.9

Loss to commercial fisheries

2.4

Damage to health (morbidity and mortality)

1.1

Damage to fixtures and appliances

0.3

Aesthetic cost

2.2

Hazardous waste:

 

Cleaning up existing sites

20.0

Cost of waste generated currently

?

Noise pollution

?

Aesthetic pollution

?

Subtotal of costs to communities: over

307.8

Costs to the nation

 

Defense contract overcharges

25.9

Other corporate crime:

 

Income tax fraud

2.9

Violation of federal regulations

39.1

Bribery, extortion, and kickbacks

14.6

Other crime costs not estimated

82.5

Subtotal of costs to the nation: over

165.0

Total (1991 dollars)

$2,428.4

 

That's a quantified version, carefully compiled by corporate accountant Ralph Estes, now director of The Stakeholder Alliance (http://www.stakeholderalliance.org)

 

See also:
Muller, Mendelsohn, and Nordhaus. 2011.
Environmental Accounting for Pollution in the United States Economy.
American Economic Review, 101(5): 1649Ė75.

O.J. Simpson trial: $200 million.

"Security" industry: $40 billion per year (before 9-1-1)

Gambling: $50 billion per year.

Divorce: $20 billion per year.

Prozac sales: $3 billion per year.

Dieting and weight loss: $32 billion per year.

Car crashes: $57 billion per year.

Crime accounts for 7 % of the gross domestic product.


Sources include:
U.S. News & World Report, Oct. 21, 1996
Ronald Colman, How Do We Measure Progress? Shambhala Sun, November 1999

 

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