Tag Archives: free market

A Positive – and EcoOptimistic – Outlook

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I recently came across this great post citing the reasons 2015 will be the year that changes the socio/economic/political world of energy production and thereby undermines climate denial. The post is by Paul Gilding, author of The Great Disruption, and presents some convincing evidence that it isn’t the politicians (though he cites the US/China deal) or the public, but the business world that will come around.

There has been a lot of discussion about not just climate denial but science denial. We’ve tried for years, starting perhaps with Al Gore’s Inconvenient Truth, to convince the public by using science – and sometimes by using fear — that climate change is real. Many people have indeed been convinced, but it’s still less than a majority.

In Gilding’s post, he writes: “…science is now largely irrelevant in this process [of convincing people]. If the scientific evidence was going to shift the system, it would have done so by now….” He continues “What we have to look for instead is evidence of shifts in the human response, not the ecological one.”

The cover of the March 2015 issue of National Geographic

The cover of the March 2015 issue of National Geographic

He goes on to cite six reasons that the human – and especially the business – response is changing. I’ll list them here, but you should go to his post to read the explanations:

  1. The US China Climate deal – how change really occurs
  2. Collapse in oil prices [Which would seem counterintuitive, but many, including Gilding, have argued otherwise.]
  3. Solar price falls set to continue
  4. Market prices reflect economic disruption
  5. The political power of big business starts to shift sides
  6. Physical impacts accelerating and driving economic and security impact

While this list, without his explanations, seems a bit vague and jargon-y, it basically amounts to an EcoOptimistic outlook, that the economics of energy will cause businesses to come around to the realization that fossil fuels have no future economically as opposed to environmentally. “[W]hile many climate activists focus on the political power and influence of the fossil fuel industry, I see an industry scrambling to defend itself against overwhelming forces that will see it destroyed – not in a mighty moral crusade but something far more brutal and fast – the market turning on it.”

According to a Treehugger post, even the National Bank of Abu Dhabi — yes a Middle East bank heavily invested in fossil fuels — has concluded that “‘fossil fuels can no longer compete with solar technologies on price’, and that the majority of the $US48 trillion needed to meet global energy demand over the next 20 years will come from renewables.”

This goes to the core of EcoOptimism: that, contrary to the public perception, there is a synergy between economic and ecological goals.

There is much more in Gilding’s post. Though he doesn’t refer to it, the issue of our unfortunate inability to think in the long term lurks in the background. We humans concentrate on short term needs and issues. Long term ones are too often not considered in our decision making, especially when that long term is intangible and may not be in our lifetimes. This explains why some environmentalists now emphasize what the impacts will be on our children.

Businesses, too, driven by quarterly profits and reports, tend to think in the short term. But they’re now beginning to see the long term issues. When your primary resource appears destined to become what Wall Street calls a stranded asset, that gets the attention of board rooms.

What Gilding does discuss is another barrier: realizing the scale of an issue, but not being able to cope with it and, therefore, ignoring or even denying it. “This is not climate denial but an example of “implicatory denial”, the rather bizarre ability of humans to accept a risk but then stop processing the implications, just because those implications are so overwhelming.” That’s where the economic influences take over. If convincing the public (and Republican electeds) through either science or fear isn’t working, perhaps newly enlightened businesses – especially those that contribute to political campaigns – can.

Fracking and the Precautionary Principle at Work

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Image: Inhabitat

Image: Inhabitat

I’ve written about the Precautionary Principle before (here and here), but because it’s a rare occasion when it gets applied in this country, it’s worth noting when it does find its way into policy.

The Precautionary Principle basically says that things should be proven safe before they are allowed. That’s generally the rule in Europe, but here in the U.S., chemicals and products and such are given the benefit of the doubt in an innocent-until-proven-guilty approach. Since there isn’t money to test every chemical, and there’s no incentive for companies to do so themselves, the safety of the vast majority of them is unknown.

So in the case of fracking, where there’s significant concern and doubt about its safety, the onus has been on the government to prove its dangers.

Happily, New York State has just gone the other direction and banned fracking precisely because we don’t know its impacts on air and water. Governor Cuomo’s health commissioner, Dr. Howard A. Zucker, determined that fracking could pose dangers to public health. Zucker is quoted in the New York Times as saying “We cannot afford to make a mistake. The potential risks are too great. In fact, they are not even fully known.”

This bears repeating because it is a significant policy approach: The potential risks are too great. Zucker went on to say that there was insufficient scientific evidence to affirm the long-term safety of fracking.

That’s the Precautionary Principle at work; public safety first, business interests second. A war on business, I’m sure the political right will claim. Anti-jobs and all that. But what use is a job when you or your family are made sick? The New York Times article said Cuomo was apparently convinced when he asked Drucker if he would want to live in a community that allowed fracking and his answer was no.

And applications of the Precautionary Principle yesterday were not limited to Cuomo, but included President Obama, who banned future oil and gas drilling in Alaska’s Bristol Bay (though he didn’t ban mining there). At stake was a huge salmon fishery that supplies the country with 40% of our wild-caught seafood. Obama said energy development in the region could endanger an environmentally sensitive waterway and imperil vital fisheries. [Emphasis added]

Some may say it was a financial decision to save a $2.5 billion dollar industry but, according to the Pew Charitable Trusts, the energy reserves there vastly outweigh the fish, totaling $7.7 billion.

For a change, the oil industry lobbying interests didn’t prevail. Let’s hope the Precautionary Principle is applied to mining there as well. And, oh yeah, let’s also apply it to the Keystone XL pipeline.

Laissez-faire: the environmental version

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I tend to write a lot about messaging and sound bites [here and here, for two], sometimes with the simple sounding proposal that the environmental movement needs better and catchier phrases. (For instance, something less dull and abstract than “the environmental movement.”) So a sentence in a current post in one of my most favorite and least catchily-named blogs, The Center for the Advancement of the Steady State Economy, caught my eye: “Laissez-faire takes on a new meaning — it is the ecosystem, not the economy that must be “left alone” to manage itself and evolve by its own rules.”

What a neat twist on the religious-like belief in conventional laissez-faire, the doctrine that the so-called free market, if “left alone” – which is a near literal translation of the term — will provide the best outcomes.

A reasonable response to that orthodoxy is: the best outcomes for whom? Herman Daly, the renowned economist and author of that post, similarly turns the laissez-faire idea on its head by suggesting that it’s the environment, not the market, which should be left alone.

A closer translation of laissez-faire is “let do.” And that interpretation, I think, is even more suitable as an approach to the environment because, from our human point of view, it is what the environment does that is critical to our existence. Interfering in the environment’s ability, honed over millennia, to do things like purify water and air, and maintain the exquisitely balanced temperature of the troposphere, is in the interest of neither us humans nor that free market that supposedly makes our lives better.

So how can we co-opt the phrase or come up with our own (preferably in the authoritative tones of a foreign language)? Any of you French-speakers out there have suggestions? At the risk of trivializing another powerful slogan, and since I’m bound by my fluency only in English, my dangerously off-the-cuff first thought is “let my environment do.”

OK, I withdraw that suggestion. Contain your sighs of relief. But I stand by the idea, or rather Herman Daly’s idea.

The Growth Schism: Could a Sound Bite Save the World?

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This being election season (good thing it’s also the season for apples – I’m partial to Macouns — and pumpkin pie or I’d have to call it my least favorite season), let’s pose this topic with a relevant question. Suppose you’re a political candidate with both an economic and an environmental agenda – and want to not just make a statement but have a real chance at election. Your environmental background tells you that growth, as in economic growth, is a huge issue. You understand that continuous growth on a finite planet is a physical impossibility that will inevitably lead to a human disaster. (So much for EcoOptimism, or so it would seem.)

But you also know that growth, because it ostensibly leads to much needed jobs, is a political given. That’s why you’ll never hear a candidate come out against growth.

Is this dilemma resolvable?

If that candidate has studied growth as taught in conventional economic circles, she’s been told that growth is the solution to virtually all economic problems and that, because of the way the “free market” works, resources are in practice not finite, that pricing factors will always lead to substitutes and alternatives.

On the other hand, if she has studied environmental economics, she’ll be aware that not only does the market not have the ability to break the laws of physics, but perhaps more relevantly, growth does not solve all economic problems and, in fact, does not even improve lives.

We’ve known this for a while. Yes, growth is indeed necessary and a positive force – up to a point. When the members of a society don’t have adequate shelter and sustenance, growth is critical to achieving those essential needs. But there’s a diminishing returns curve here and, after a point, growth no longer makes us happier. I thought this observation was so important that I found a way to include it in my book on sustainable design despite it not being – directly at least – about design.

 

 

 

 

 

You wouldn’t know it from political discussions (see dilemma above), but there has been a slew of research and books on this topic of late. I mentioned a few of them in an earlier post.  Most of them are discussing growth in the context of developed countries, where fundamental human needs, for the most part, have been met. Assuming one accepts the premise that growth is necessary until that point has been reached, a question that follows is: what is that point?

We may have a partial answer in the form of research by a team of economists from UCLA and USC. Summarized in a recent New York Times op-ed by Richard Easterlin, a member of that team, they found that a quadrupling of per capita consumption in China over the past 20 years was accompanied by a decrease in life satisfaction.

Image source: icis.com

 

 

 

 

 

 

 

 

 

Of course, there are several possible reasons for this and it’s not correct to automatically assume that the unhappiness is due to growth and increased consumption. Easterlin sees it in terms of socio-economic causes. “In China,” he writes, “life satisfaction declined as output and consumption rapidly expanded. The difference shows that economic growth is not enough; job security and a social safety net are also critical to people’s happiness.”

However, a mountain of evidence shows that, at least in developed regions and countries like the U.S. and Europe, growth is not the panacea that most politicians believe it is. Or perhaps they do realize this, but know that it is just too complicated an idea to explain in sound bites. Coming out against economic growth would leave any candidate vulnerable to easy pickins.

Image source: Adbusters

Which brings us back to the superficial tactic of finding a way to pose the idea in a positive light. If “no growth” or “antigrowth” are non-starters for a political platform, well we need to find a way to recast the idea in a way that illustrates the reasons we should, in fact, desire the end of growth. As with several previous EcoOptimism posts, we’re drawn back to the issue of communication. In this case, the problem is how to communicate that growth – such a positive sounding goal – is not actually good. Or smart. Or even possible, at least not in any version of our finite planet.

I hate that it comes down to spin, to PR essentially. But we know we can’t promote “no growth” as a goal. The snappy retorts are just too easy. This one took me less time to come up with than it takes for a conservative to spot voter fraud: “No growth, no way.”

“Post-growth” has been suggested by a number of people and it has potential. I fear, though, that it begins to evoke post-apocalyptic associations. I’ve pondered “regrowth,” but I think it still requires too much explaining. It may be that we need a term that sidesteps the problem by not evoking growth at all. Juliet Schor’s Plenitude is one attempt; however it doesn’t make the cut in terms of being popularly self-explanatory either.

So we do indeed have a dilemma. It’s a critical one for EcoOptimism: how to make a counterintuitive idea appealing? Facts and figures we have aplenty. It’s the sound bite we’re missing.

News we like

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Focusing on the optimism aspect of our blog here, my usual late night tour of the interwebs caught a slew of headlines that left me in a better mood than I started – indications that the business as usual status quo is being questioned, sometimes in high places, and principles of EcoOptimism are getting more attention. Here, for your end of the week boost, are a few of them.

From The Economist, a realization that growth unfettered is not necessarily good:

“A new form of radical centrist politics is needed to tackle inequality without hurting economic growth”

Some quotes (taken out of order):

In America the share of national income going to the top 0.01% (some 16,000 families) has risen from just over 1% in 1980 to almost 5% now—an even bigger slice than the top 0.01% got in the Gilded Age.

[I]nequality has reached a stage where it can be inefficient and bad for growth.               

Even the sort of inequality produced by meritocracy can hurt growth. If income gaps get wide enough, they can lead to less equality of opportunity, especially in education.

Here’s the positive take-away:

The priority should be a Rooseveltian attack on monopolies and vested interests, be they state-owned enterprises in China or big banks on Wall Street.

 

From Grist.com:

“The greener the industry, the higher the job-growth rate”

 

 

 

 

 

 

 

According to a new study from the Economic Policy Institute, “Industries that support a higher number of “green” workers who are making goods and services more environmentally friendly have experienced a higher rate of growth over the last decade than industries with fewer green jobs.”

The 2010 result: “3.1 million green jobs nationwide in renewable energy, water management, recycling, and various positions that help improve the efficiency and environmental footprint of a company or institution.”

From Greenbiz.com:

“Natural capital accounting gets a push at Global Green Growth Forum”

image source: ForumForTheFuture.org

 

 

 

 

 

 

 

 

One of the positive outcomes achieved on the sidelines of the Rio+20 conference, as highlighted by Jo Mackness at GreenBiz on June 26, was progress made on natural capital accounting. Fifty-seven countries and 86 companies, for instance, signed a World Bank-organized communiqué committing signatories to account for the value of clean air, clean water and forests in their decision-making.

 

From ThinkProgress.org:

“Federal Reserve Official Calls For Placing Limits On The Size Of Big Banks” 

image source: Huffington Post

 

 

 

 

 

 

 

 

 

[Federal Reserve Board Governor Daniel ]Tarullo said that, in order to keep big banks from growing so large that they threaten the entire financial system, they should be limited in size to a certain percentage of the overall economy.

“[T]he Fed should block any merger or acquisition this group of big banks attempts to make,” which it is allowed to do under Dodd-Frank.

 

The string of positivism actually began a bit earlier in the week with a post from The Atlantic’s new site Quartz:

“Does Ben Bernanke want to replace GDP with a happiness index?”

image source: Redefining Progress

 

 

 

 

 

 

 

In a prerecorded talk for a conference this past summer, Bernanke said, ”…we should seek better and more-direct measurements of economic well-being, the ultimate objective of our policy decisions.”

Rather, Bernanke suggests that survey measures of happiness and life satisfaction should take their place alongside GDP as measures of how a nation is doing. In doing so, he joined current British Prime Minister David Cameron, who said ”it’s time we focused not just on GDP but on GWB—general wellbeing” and former French Prime Minister Nicolas Sarkozy, who said he would ”fight to make all international organisations change their statistical systems by following the recommendations” of the Stiglitz report. He refers to Nobel Prize winning economist Joseph Stiglitz’s committee’s work proclaiming “the time is ripe for our measurement system to shift emphasis from measuring economic production to measuring people’s well-being.”  The emphasis is in the original.

It’s good to end the week on an up note. Would be great if I could make a habit of this….

Planets Are People, My Friends

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Let’s try this out and see where it takes us. In the blogworld a few days ago, I came across a post about a river in New Zealand being given official legal personhood. Elsewhere in the world, animals and nature are being awarded human-like rights. And just last week, a group of prominent scientists including Stephen Hawking declared that there is no unique difference between humans and other animals.

Call that point #1. Point 2: In the US, as we all know, corporations are people. (Some would say corporations are animals, so I guess that makes sense, though a few would say that’s an insult to animals.)

All this makes it but a minor leap to conclude that, if animals, rivers, forests and corporations have legal rights, why not the planet? You know, Gaia, Mother Earth and all that. This, of course, could profoundly change how we see ourselves — legally and morally — in relation to the other occupants, both living and inert, of this planet.

But I’ve got another reason for contemplating this vast, to put it mildly, extension of the definition of personhood. I’ve written elsewhere in this blog about the fundamental economics explanation for pollution: externalities. A decent definition of an externality is “an effect of a purchase or use decision by one set of parties on others who did not have a choice and whose interests were not taken into account.” A classic example would be the evil factory dumping its effluent into a river.  The cost of that pollution is borne by the people and governments downstream. Similarly, when a fossil fuel burning power plant dumps carbon dioxide into the atmosphere, its owners don’t pay for the resulting climate disruption. Want a more tangible example? Look at the towns whose water sources are being polluted by nearby fracking.

But what if nature – the planet – had rights and, furthermore, had standing in court? What if nature could sue for damages? Would that, in effect, lay the economic and legal groundwork for internalizing those externalities? Among other outcomes, we could have the equivalent of carbon pricing – without involving the government so it wouldn’t be vulnerable to attack as a tax.

We can take this idea – odd as it may sound – further and say that the Earth owns all the natural resources “onboard.” You want some steel? First you have to buy the ore from Earth Inc. (Notice that twist? If the planet becomes a corporation, it has rights through that legal standing as well.) Same for baby seals (unless the seals themselves are granted rights), or for oil or the Amazon rainforest.

 

 

 

 

Logo by Lori Greenberg/Bergworks

There is at least one major problem, aside that is from figuring out who the signatories on Earth Inc.’s checking account are. Mother Nature would be the biggest monopoly imaginable. OPEC’s oligopoly would seem like an unfettered free market in comparison. And imagine an antitrust suit against the Earth.

Could this be a conservative’s dream? A solution based upon free market principles and an expansion of both individual (if you can get your head around seeing the planet as an individual) rights and property rights.

Yeah, there are a lot of details to be worked out in this hypothetical monetizing of the Earth. Some ethical ones, too. Would it amount to commoditizing nature? That’s bad, right? Right? Is it worse than assigning no value to nature, which is essentially what the market does now?

Corporations, of course, have shareholders. I propose that every person on the planet be granted a share in Earth Inc. (Yes, I know. What about animals and rivers and forests? If they have personhood rights, shouldn’t they have shares in Earth inc. as well? Yes, they should, but the problem is figuring out who represents them, as well as who their signatories are.  I didn’t say this would be simple.)

So if the planet’s resources are polluted or drawn down, compensation is paid to the shareholders. Now that sounds really odd. The effect would be higher prices for many industrial processes and products as those companies had to pay fees to Earth Inc., but those fees would be redistributed back to us, the shareholders. Many things would be more expensive, but we’d get money back in the form of dividends. In theory, we’d be no worse off financially, but we’d be paying the true cost of things and making our consumption choices more accurately.

In a modern context, all of this evolves from philosophies of animal rights. Kant said treating animals well is “good practice” for treating humans well. (Not trying to show off here and I’m certainly no Kant expert. It’s part of the material I cover in one of my Parsons courses.) “We can judge the heart of man by his treatment of animals.” In his world, though, animals were considered non-sentient (which, in case you’ve been mislead by Star Trek episodes, means non-feeling, not non-thinking) and soul-less, barely more than the mechanical vessels described by Descartes.

Just as there are varying beliefs as to what constitutes a soul, there are ethics and religions that believe the Earth has a soul. But that isn’t the issue here, at least as long as we’re defining corporations as people; I don’t think anyone could argue that a corporation has a soul.

Could this possibly work? I’m treading here into the realms of economics, law, ethics, religion and who knows what else. But maybe this type of fundamental re-envisioning is just what we need.

Why doesn’t environmentalism bridge the political divide?

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No one expected to hear anything about the environment or climate disruption at the Republican convention. So it has been no surprise that the words climate or carbon or, say, endocrine disruptors are not even footnotes, let alone headliners. (Note: I wrote this before Romney’s spectacularly ill-received joke about Obama’s promising to stop rising sea levels.)

Nor am I holding my breath in anticipation of their resurgence at the Democratic convention. In a way, that makes the whole topic non-partisan: neither party is talking about it. The Republicans have given the issue such a pariah-like image that even the formerly supportive Dems have been cowed into believing it’s a non-starter politically. Of course, that isn’t actually the case and I wrote recently about how this political strategy may not be accurate.

The evolution of environmentalism from a grass roots populist movement to being cast as anti-jobs and anti-capitalism has been well documented. (Less frequently noted is that environmentalism used to be a Republican platform, dating back at least to the days of Teddy Roosevelt.) Lost in this is the observation that environmentalism is really a partisan issue only in the eyes of the corporate interests who fear (often incorrectly) that they are threatened and in the mouths of the candidates who perceive those interests as the voice of the populace.

 

 

 

 

 

 

 

 

 

Republican Teddy Roosevelt was famously taken camping in Yosemite by John Muir, founder of the Sierra Club and father of preservationism. Though Roosevelt later sided more with conservationists, who advocated “wise use” of resources rather than the stricter approach of preservation, there’s no doubt that his tenure as president established the validity of government’s role in environmental issues.(Photo source: Library of Congress via Wikipedia)

But a basic tenet of EcoOptimism is that environmentalism and the economy are not at odds, that the portrayal of the issues as a tradeoff of one for the other is not only a false dilemma, but is just flat out false.

Rhetoric, as has been widely acknowledged, has taken the place of fact and discussion — a carbon tax is patently bad because it is both a tax and, we are repeatedly told, an anti-jobs extremist idea. (Repetition of something often enough, even if it’s your own words, makes it true, right?) Never mind that there are demonstrable ways to set up carbon pricing that are capitalist in nature (no pun intended), that will increase employment and diminish the deficit, perhaps while being “revenue neutral.”

The description revenue-neutral , combined with the benefits just listed, should make carbon pricing a point of non-partisan agreement, especially when it has the potential to include a reduction in income taxes and perhaps a simplification of our ridiculously convoluted tax code (which often includes “perverse incentives” that favor investments in unenvironmental activities and essentially lead to a double whammy of reduced government income and increased government expenses to repair the damages incurred). But “revenue-neutral” is not going to make anyone’s top ten bumper sticker slogans. How else can we bring intelligent discussion to the topic?

If environmental initiatives can help fix our current economic woes and can do that utilizing capitalist approaches, why aren’t they political no-brainers? (Yeah, I know, “political no-brainers” opens the door to all kinds of comments. I’ll resist.)

The painfully obvious answer, of course, is that it would, in the short term, upset the corporate apple carts, especially those belonging to fossil fuel interests. And since money is now equated with free speech, theirs is now the free-est.

There are numerous companies, both existing and startup as well as those not yet envisioned, that would benefit from such a correction to the free market. (In a true free market, one of the necessary conditions is accurate pricing and, when polluting or causing harm to others is free, that’s a strong indication that the free market isn’t working as it should. Even conservative icons Adam Smith and Milton Friedman would agree with that.) Unfortunately those companies do not have the financial or political clout to outshout the “big boys.”

Nor do non-profits. Even if they did have equivalent resources, they are characterized as fringe groups interested only in destroying American enterprise. Which brings us right back to the point that doing this will not destroy the economy or capitalism or “American exceptionalism.”  More probably it will save and improve all of these things.

Yes, I know Citizens United made this imbalance of power far worse. But still, there has to be a way (I’m drawing here upon the optimism part of EcoOptimism) to convey such a broadly appealing “morning in America” message. What’s the path to convincing a climate change skeptic that carbon pricing (staying on that one topic for a moment) is a good – or great – idea even if it turns out all those scientists are wrong. How does a win-win solution become tagged as a loser?

I’m writing this the day after Paul Ryan’s nomination acceptance speech, a speech which has been condemned even by Fox News columnists for being built on lies. So I may be somewhat less than my EcoOptimistic self in wondering how distortions (“you didn’t build that”) and lies can be overcome. Or how, when protesters are kept so far from the candidates that their (less funded) viewpoints can’t be seen or heard, voices can be equaled.

Simply shouting louder is not the answer when you don’t have the stage. Environmentalists certainly didn’t have any part of the stage at the Republican convention and aren’t likely to have much of one at the upcoming Democratic version. Corporate Republicans built their own stage in the form of Fox News. Democrats have occasionally tried (did anyone ever watch Current TV or listen to Air America?), but they’ve lacked the corporate “free speech” money.

They’ve also lacked the unrelenting, single-minded, take-no-prisoners clarity of messaging, truthful or otherwise, that Fox and Republicans hew to with a military-like oneness. Should Dems and environmentalists copy that method? That’s probably a rhetorical question given the nature of the participants.

If the only viable path, given the lack of regulation on campaign contribution and lobbying, is to seek corporate money and major contributors, why don’t we  seek to show the signatures behind that money that we’re not their enemy, that the pursuit of win-win environmental/ecological solutions will be in their interests. Even oil companies, if they remain focused on that one energy source, will find themselves dead-ended in the long run. (We’ll save the issue of short-term financial tunnel-vision for another time.)

All the Patagonias and Ben and Jerry’s in the country can’t come close to the financial clout of an AT&T or a Murdoch or the misleadingly named US Chamber of Commerce. Does our only route involve gaining their ears (and wallets)? I don’t want to think so – I want to believe rational thinking and persuasion can win the day on their own — but it certainly seems as if we need to alter the political equation. And surely there are ways to convince the entrenched interests that the path they are pursuing is not, in fact, in their interest. It’s not a false choice between capitalism and the environment. It’s an opportunity – one that we pass up at the risk of losing everything and that we take to open the way to a world in which individuals, nations and capitalism can flourish. The downsides and disruptions, though there, are temporary, short-term and relatively small while the rewards are huge and continuing.