Negative Externalities are when a group of people knowingly make a choice to privately profit by damaging the public. Examples include cigarette companies knowingly selling a product that causes lung cancer, manufacturers who dump waste into streams, and private equity groups that load up businesses with debt and sell them.
The cause of this issue is that executives at these companies can make money by causing damage or taking risks at others expense without themselves having any personal risk. Why don’t these executives have to take personal risk? Because of the Limited Liability Corporate structure.
I recommend eliminating limited liability for owners, directors, and executives at private companies. You will immediately see a dramatic change for the better across most businesses.