Mov­ing be­yond the tired 'econ­omy vs. en­vi­ron­ment' de­bate

The Pak Banker - - Editorial5 - Ja­son Scorse

The "econ­omy vs. the en­vi­ron­ment" de­bate is as old as the en­vi­ron­men­tal move­ment. De­spite hold­ing lit­tle ex­plana­tory power, the de­bate sur­vives be­cause the lead­ers in cer­tain highly-pol­lut­ing in­dus­tries do not want to see their prof­its di­min­ished by stricter reg­u­la­tion. They lack the cre­ativ­ity to think be­yond 20th cen­tury tech­nolo­gies, and op­pose en­vi­ron­men­tal reg­u­la­tion with ev­ery means at their dis­posal.

The anti-reg­u­la­tory forces pour mil­lions of dol­lars into mis­in­for­ma­tion and pro­pa­ganda cam­paigns, and fi­nance politi­cians and po­lit­i­cal groups that fan the flames of fear and para­noia to de­feat com­mon-sense en­vi­ron­men­tal goals. These groups find their fullest ex­pres­sion in the mod­ern Repub­li­can Party, which has taken a rad­i­cal anti-en­vi­ron­men­tal and anti-sci­ence bent, but they also tar­get key Democrats in fos­sil-fuel de­pen­dent re­gions.

In­dus­tries that pol­lute have the right to op­pose reg­u­la­tions they deem an­ti­thet­i­cal to their eco­nomic in­ter­ests (though not to lie about them). Un­for­tu­nately, their anti-reg­u­la­tory fer­vor has crowded out rea­son­able de­bate about the proper role of govern­ment in en­vi­ron­men­tal pro­tec­tion.

The bot­tom line is that govern­ment has a strong role to play in reg­u­lat­ing pol­lu­tion, the worst forms of which oc­cur be­cause of per­sis­tent mar­ket fail­ures. There are le­git­i­mate ar­gu­ments for se­verely re­strict­ing the govern­ment's role in given mar­kets (e.g., hous­ing). At the same time, top econ­o­mists the world over have come to rec­og­nize that most mar­kets can­not pro­vide ad­e­quate en­vi­ron­men­tal pro­tec­tion. Mar­kets can do some things ex­tremely well, but op­ti­miz­ing pol­lu­tion lev­els is not one of them.

At this time of great en­vi­ron­men­tal chal­lenges, it is im­per­a­tive that re­spon­si­ble busi­ness lead­ers play a more con­struc­tive role in the dis­cus­sions over en­vi­ron­men­tal pol­icy. They can be­gin by ac­knowl­edg­ing that govern­ment has an ac­tive role to play, and help steer govern­ment pol­icy in the most ef­fi­cient, trans­par­ent, and eq­ui­table di­rec­tions.

We hear a lot these days about how un­cer­tainty is bad for busi­ness. This is true, but it's no rea­son for busi­ness lead­ers to al­low the anti-reg­u­la­tory forces to dom­i­nate the de­bate. When this hap­pens, ev­ery­one loses: so­ci­ety gets higher lev­els of pol­lu­tion and en­vi­ron­men­tal degra­da­tion, and busi­nesses re­main un­clear about the reg­u­la­tory fu­ture. And with­out fail, in the ab­sence of Con­gres­sional ac­tion on large is­sues such as cli­mate change, more com­mand and con­trol style reg­u­la­tions (which are of­ten less ef­fi­cient be­cause they do not al­low for max­i­mum flex­i­bil­ity) be­come the de­fault po­si­tion as reg­u­la­tions are left to the EPA.

Make no mis­take, the jobs of to­mor­row will in­creas­ingly come in the green technology arena. When the coal, oil, and gas in­dus­tries cel­e­brated the death of cli­mate change leg­is­la­tion in the U.S., the loud­est laugh­ter came from China and Ger­many. China alone plans to in­vest more than $750 bil­lion in clean en­ergy technology in the com­ing decade, and Ger­many con­tin­ues to move ahead with sig­nif­i­cant in­cen­tives for its al­ter­na­tive power sec­tor.

It's true that emerg­ing economies are will­ing to tol­er­ate higher lev­els of pol­lu­tion in ex­change for higher rates of eco­nomic growth, as all the ad­vanced economies once did. All the same, given their pop­u­la­tions and the pace of their devel­op­ment, their lead­ers know there is no way they can mimic the his­tory of Europe and Amer­ica with­out turn­ing their na­tions into un­liv­able waste­lands. They re­al­ize they will have to leap-frog technology-just as they did with cell phones over land lines-with re­spect to en­ergy and other nat­u­ral re­source in­dus­tries.

The com­pa­nies that de­velop the world's first low-cost so­lar pan­els, low-cost wind tur­bines, low-cost elec­tric cars, low-cost wa­ter pu­rifi­ca­tion plants, and most en­ergy-ef­fi­cient in­fra­struc­ture will en­joy al­most un­lim­ited mar­ket po­ten­tial. Amer­ica could be­come that leader, but we are al­ready fall­ing be­hind. The profit mo­tive is suf­fi­cient to keep Sil­i­con Val­ley and many cre­ative lead­ers pour­ing bil­lions into new green-tech projects, but this must be com­ple­mented by sound en­vi­ron­men­tal pol­icy at the state and na­tional lev­els. Ide­ally, this pol­icy would place a con­sis­tent and in­creas­ing cost on pol­lut­ing be­hav­ior. It would also chan­nel govern­ment re­sources (which could be sup­ported by the fees on pol­lu­tion) into ba­sic R&D in a va­ri­ety of tech­nolo­gies, in or­der to re­main un­bi­ased against nascent tech­nolo­gies.

It will take coura­geous busi­ness lead­ers to stand up and buck the anti-reg­u­la­tory trends sweep­ing the nation, and call for a se­ri­ous and sus­tained com­mit­ment to en­vi­ron­men­tal reg­u­la­tion that is in the nation's in­ter­ests. It will take courage to look be­yond the short-term bot­tom line and en­vi­sion a dif­fer­ent way of do­ing busi­ness that leaves a smaller eco­log­i­cal foot­print, and pro­duces value through ef­fi­ciency, ser­vice, and niche mar­kets in­stead of mass con­sump­tion de­pen­dent on nat­u­ral re­source ex­trac­tion.

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