International regulations should oblige Texaco to invest in new technologies and new cleaning facilities to support local communities and clean up the polluted regions. Some of this involvement is primarily generous, while other community affairs with which business becomes involved pays a direct return to the company. It is not easy to separate one from the other because, in most instances, both community and business reap positive rewards from any business participation in community affairs. It is important to recognize that pollution is, unfortunately, in most cases, a by-product of everyday living.
The operation of a “free market” system may fail to serve the best interests of society because of the inability of the market to adjust itself independently and adequately to certain kinds of side effects such as pollution. Also, the buyers and sellers in the marketplace often lack the quantity and quality of information essential to undertake effectively and efficiently the proper transactions to optimize the side effects for the best interests of both parties involved. Under a free-market economy, private industry, local governments, and county, state, and federal governments can, and do, sometimes relieve themselves of certain costs associated with the disposal of waste materials by using the atmosphere, oceans, lakes, rivers, and landfills, as free waste receptacles. If it is to the economic advantage of the particular emitter to do so, it will normally take advantage of this free resource.
The control mechanisms should be introduced by local governments and the state in order to ensure public and environmental safety. The general theory behind much of it is that business participating in community affairs makes the community a better place in which to live. By making the community a better place to live, it helps improve the community for all those who live there and as an inducement for hiring new employees from distant communities, possibly needed experts from other cities. By being able to bring in needed key people from other localities, the business will be able to remain competitive, increase sales and profits, and make more money for the stockholders and the IRS.