 Mark Thornton has a special offer for fans of minor issues, a free copy of Murray Rothbard's famous work, Anatomy of the State. This is a limited time offer, so act fast. Get yours today at Mises.org slash issues free. Hello and welcome to another episode of the Minor Issues Podcast. I'm Mark Thornton at the Mises Institute. Greenwashing is a relatively new term to describe faults and misleading claims of environmental benefits of a product or business practice. The point is that companies can advertise their efforts to be green while continuing various profitable activities that environmentalists considered harmful. The idea here is that companies are gaming the system or profiting off of well-intentioned, sustainably-minded consumers. The term was coined 40 years ago by a student in response to a hotel that wanted customers to reuse the towels in their rooms in order to save the environment and of course save money for the hotel. As an Austrian school economist, I can agree here with the environmentalists to a point, but let's see how far on the other side of the bridge they are willing to go. Let's start with the idea that human beings are motivated to achieve their goals. That's true whether you are Mother Teresa trying to save bodies and souls, corporate CEOs, or a heroin addict just trying to stay drugged up. It even includes environmental do-gooders. In the words of mainstream economists, everybody wants to maximize their utility, however they want to define it, and minimize their cost. The difference between utility revenues and good feelings is set against labor, expenses, and psychic toil. No matter how or what you are measuring, the difference between the cost and benefits can be called profit, psychic, material, or whatever you want. Environmentally-minded people have put much pressure on companies, nudged them, boycotted them, and turned their dollars over to companies with green profiles like Patagonia. Those people have also put pressure on politicians to do the right thing. Special interest groups have likewise put pressure on politicians. In the case of governments, bureaucracies, and NGOs have also created additional pressure in the form of propaganda, pseudoscience, red tape, legislation, etc. Please note, I am not saying that everything environmentalist about science is wrong, far from it. But at the same time, no one can deny that scientists have fudged and defrauded the science and revealed themselves as a group of biased and unscientific people, particularly those scientists who are dependent upon government research grants. Industry scientists also have a green agenda. They want to get more electricity out of every lump of coal. They look to conserve resources, that is, costs, for all the products they are involved with, subject to what consumers actually want. That is why I have heard many Austrian school economists describe themselves as conservationists in contrast to environmentalists. This is based on the idea that the free market does the best job at conserving and allocating scarce resources, particularly over time. Deviation from this constrained agenda hurts consumers, businesses themselves, employment, pensions, etc., and very often hurt the environment as well. Those losses and harms are difficult to see, but imagine a hypothetical situation where Apple iPhones have been giving off a toxic pollutant that eventually causes blindness, and what that might do to the stock price of Apple if that information was revealed. Do incentives work to protect the consumer most of the time? Of course they do. Businesses have had their profit agenda sort of genetically modified by the green agenda. Environmentalists can see greenwashing, but they cannot see the damage that the green agenda does to the environment itself. The direct cause of this mutation is regulations, rules from the bureaucracy, carbon taxes, ESG ratings, etc., designed to protect the environment, but that ultimately promote the waste of resources and the diversion of resources in inefficient directions. Efficiency is a turnoff for many, but it is directly related to environmental concerns. It's also what causes greenwashing. Hence, businesses are indeed gaming the system, trying to profit an environment that is deluged with green constraints, and I agree it's not good for the environment.