Why Enlightened Self-Interest Doesn’t Rescue the Environment

You would think that enlightened self-interest would cause corporations, like individuals, to avoid doing things that would be unsustainable in the future, since that would nix their ability to continue in that line of business. So, for example, you would think a corporation would avoid over-cutting a particular forest, and manage it for the long-term, so that they could continue to cut it and make profits from it in the future. However, avoiding environmental damage (as any enlightened farmer would do for his fields) is not a guiding star for corporations, who often don’t own the environments they wreck, but even when they do! Socio-political thinker and novelist Kim Stanley Robinson explains it succinctly in his novel Antarctica (1998):

“Say a company owned a forest that it had harvested selectively for generations, delivering its shareholders a consistent ten percent return. Meanwhile the world financial markets were offering bonds with a fifteen percent return. Lumber prices dropped, and the company’s returns dropped, so the traders dropped it and its shares plummeted, so the shareholders were angry. The management, on the edge of collapse, decided to clear-cut the forest and invest the profits from that lumber sale immediately into bonds that yielded a higher return than the forest had. In effect the money that the forest represented was more valuable than the forest itself, because long-term value had collapsed to net present value; and so the forest was liquidated, and more money entered the great money balloon. And so the inexorable logic of Gotterdammerung capitalism demolished the world to increase the net present values of companies in trouble… simply the logic of the system.”

Add to this scenario the fact that it’s not a self-owned lumber company. That company is among thousands of companies some transnational mega-corporation owns, and they are into everything: lumber, cement, films, cars, oil, wind energy, toys, music, insurance, housing, aerospace technology and munitions. If some of their companies aren’t returning good quarterly profits, they take a tax write-off and liquidate the company at a loss. Thus, cutting the forest to the ground and not re-planting, and then walking away from lumber altogether is simply a decision made at a desk in a cubicle at a Manhattan (or Toronto or Tokyo or Berlin) skyscraper, and the man whose office looks out across the city with the windows never even knows the decision was made, besides some numbers on a spreadsheet.

So, thinking that the common sense of wanting-to-have-a-planet-to-live-on-in-the-future-that-isn’t-a-wasteland would naturally cause companies and corporations to make sensible, long-term, sustainable, healthful decisions… is simply not how our world system is set up to work. Those mega-corporations are not looking out for your interests. So how do you fix that? U.S. President Theodore Roosevelt, (president from 1901-1909), whom the United States can thank for the vast majority of the National Forests and wildlife sanctuaries that exist, did not believe the timber barons and mining barons of his day could be trusted with American’s forests and lands. He believed vociferously in the free market and personal freedom and property, but he also believed capitalism had to be reined in by the government on behalf of the people, or the logic-of-the-system (and those who became powerful within it) would wreck the world around us. He did not allow the giant corporations to do whatever they wanted nor to take over the world. Maybe we should go look at and think about his insights again in our day. Because current events have demonstrated for quite some time now that just hoping common sense will cause smart decisions ISN’T protecting the Earth’s environments for the future.

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Poverty and Capitalism in SE Asia

I’ve been in our new location in SE Asia for the last week, driving around the city and nearby countryside. What I’ve been seeing has sparked thoughts about poverty, capitalism, free markets and international trade.

It’s clear that free market capitalism has benefitted industrious people here in absolutely huge numbers. There are beautiful – and not small by U.S. standards – homes everywhere; very very nice homes, inhabited by people whose parents lived in shacks a generation ago. The ability to start a business from the ground up (selling vegetables or plastic household goods, for instance, along the roadside to the burgeoning population), and then develop that business into a successful wealth-generating income, stands as a classic example of why people argue for free market capitalism. The evidence is all around me. As I stand on my balcony looking across the neighborhood in the morning, the homes are beautiful, incredible. And I do not live in a wealthy area… this is considered middle class. In a local setting, “the invisible hand” can provide a context for a lot of good.

At the same time, if you know about the Toronto debacle regarding the hire-local, produce-local solar panel scheme, it’s clear that in terms of international trade, “the free market” is a laughable myth, an insult to thinking people. The WTO successfully sued Toronto, declaring that a city cannot prefer local goods over foreign goods. Essentially this simply makes sure the Donald Trumps and other transnational corporate empires are free to dominate every single market, and a local community cannot make choices about its own labor and industry at all. There isn’t anything free or invisible about what happened in Toronto, it’s clear the market is stacked, channeled, constrained and controlled by mega-size forces who get laws written to protect their ability to accumulate more fortunes. I don’t begrudge Trump his wealth; I detest the idea that we act so ridiculous as to say that “free markets” and “an invisible hand” are enshrined values in international business. Nothing could be further from the truth.

The tax code and other tools have always channeled markets when governments got involved, and let’s not act like we are protecting freedom for the little guy, when we are actually protecting transnational giants who dominate the world in breathtaking ways rarely seen in human history.

So, two thoughts: 1) a free market can be a very valuable help to a local population. 2) What’s going on in international trade law is the furthest thing from a free market.

Next time I’d like to share some thoughts about what is poor and what is not.