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Business executives understand as well as other educated elites that the world is heading toward environmental catastrophe if no serious steps are taken to avert it. Nevertheless, they are dedicated to bringing about this result. They put huge efforts into convincing the public to reject what they know to be true and ominous. And they are successful, as polls illustrate. An enormous business-backed propaganda campaign is surely a factor in the very sharp decline of concern among Americans over global warming, to the point where by late 2009, barely one-third believe that it is influenced by human activity.

The standard explanation for the willingness of business executives to dismiss the fate of their grandchildren and even to destroy what they own is that short-term profits outweigh long-term considerations. But the answer is incomplete. Once again, the choice results from fundamental market inefficiencies: the pressure to ignore the impact on others in undertaking transactions, if one wants to stay in the game. In this case, the externalities happen to be the fate of the species, but the logic is the same.