How can emission of greenhouse gases be seen as part of the invisible elbow of market forces? What is the invisible elbow. How are emission of greenhouse gases a part of this?
What is Invisible Elbow?
First of all, the "invisible elbow" is a term used for operations in the ecoonomy that are having negative effects on the environment. The operation of the invisible elbow of market forces tends to cause environmental degradation in many areas. For example, the West German Timber industry loses $800 million each year from the effects of acid rain. Another example would be "how do you measure the cost of brain damage to a child? And what price do you place on the species made extinct in the rainforest?".
Nearly all environmental problems are 'externalities'. If consumers had to suffer all the pollution caused by the products they bought, they wouldn't buy them in such damaging quantities. It is precisely because costs are passed on to third parties that we let them occur. Environmental degradation is a genuine case of passing the muck.
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This solution discuss greenhouse gases and the invisible elbow.