Beggar thy neighbour

Modern economics has developed the concept of so-called external effects. The oldest version of it might also be referred to as “beggar thy neighbour”, as it was coined by Adam Smith the founder of classical economics. This describes an economic policy which does not care to make your neighbours worse off by enriching yourself. Applied to environmental economics or to regions, cantons or neighboring countries, this means a ruthless pursuing of investments, which are known to shuffle a large part of the costs onto other regions through damages, might be pursued nevertheless. This might be a valid hypothesis to test how the investment in skiing at high altitudes, increases the risks of flooding at the lower altitudes of rivers or valleys. There is scope for a redistribution of wealth from one region to another. The poor neighbor, however, is in a rather weak position to claim compensation as the link between the 2 events is hard to establish scientifically and mediated by an abstract form of overall climate change. The recent example from Switzerland adds to an increasing number of natural disasters, which are in fact man-made following a beggar thy neighbor rationale. (Image newspaper reading room in Stabi Berlin with NZZ from 2024-6-24).