“Money On My Mind” is a monthly column by Jay Mandle. The views expressed here are those of the author (not necessarily those of Democracy Matters) and are meant to stimulate discussion.
By Jay Mandle
As Hurricane Irma roared toward Florida, the head of the Environmental Protection Agency, Scott Pruitt, famously told CNN this was not the time to talk about climate change. But he was wrong. The time is right now.
Discussions of global climate change distinguish between “mitigation” and “adaptation.” The first refers to efforts to reduce, or at least slow, the pace of global warming. Most often this refers to reducing carbon dioxide emissions – the principle, but not only, green-house gas. Mitigation also includes the use of renewable energy. Adaptation, on the other hand, accepts that it is far too late to avoid the serious consequences of climate change. Instead, it is concerned with efforts to minimize damage. Examples include enhanced defenses against sea rise, strengthening building codes to resist increased storm intensity, and the protection of eco-systems.
The need for mitigation and adaptation has its source in a giant market failure. Economic development has provided a cornucopia of goods and services. However, the production of many of those products results in environmental pollution. That problem arises because producers do not include environmental damage in their production costs nor in the prices they charge. As a result, more harmful products are purchased than would be the case if the cost of the environmental injury they do were included in the product price.
In economic theory, the response to this kind of market failure is straight-forward. Taxes should be raised on the producers of polluting products in order to cover the costs of environmental harm. The effect of doing that would be to reduce the consumption of such goods.
However, this common sense response involves politics. The required taxation could be legislated, though not without a struggle, if the decision only involved the merits of the argument. But in a political system dependent on private financial contributions, that is not how legislator’s votes are decided. Wealth is more powerful than merit.
This is dramatically the case with regard to policies concerning green-house gas emissions. According to the Center for Responsive Politics, coal mining, oil and gas, and natural gas pipeline firms taken together made political contributions totaling $129 million during the 2016 electoral campaign. During roughly the same years (2013-14) it is estimated that fossil fuel industries in the United States received subsidies in excess of $20 billion (billion with a b!). These subsidies were larger than that of any other country, with the exception of Russia. (1)
In short, polluting industries in the United States have been heavily subsidized instead of being taxed.
Enter the Trump Administration, and its assault on both mitigation and adaptation. With regard to the first, the President announced in June that the United States intended to withdraw from the internationally agreed upon Paris Agreement on Climate Change Mitigation. And with regard to adaptation, the administration rescinded President Obama’s executive order that placed disaster preparedness tools on line and that required new infrastructure to be built to withstand floods. That neither the Paris Accord nor Obama’s executive order went far enough to protect the country is true. But they at least were actions in the right direction.
The tragedy for the environment today is that Trump’s recent actions were not only the consequence of his idiosyncrasies. Congress too is complicit. It could have, but did not, resist those setbacks.
What ties all of this together is the power of private wealth to subvert the public interest. Economic theory does not teach that markets always function perfectly. What to do about the market failures that give rise to climate change is well understood. But those solutions are not being implemented because polluters in our privately funded system use their wealth to secure legislation that codifies their tax avoidance.
The basic principle that has been breached is the need for a rigid wall to exist between the political and economic spheres. With markets, economic inequality to a greater or lesser extent always will exist. But the political sphere, if it is to be democratic, must be a region of maximum equality. That is the only way to prevent an economic elite from setting the rules for their own, as opposed to society’s, advantage.
We are living with an environmental tragedy that only threatens to get progressively worse. But even now, it is possible at least to contain that damage. The Paris Accord did commit countries to mitigation and the Obama Administration pointed the way to effective adaptation. Those efforts can be restored and improved upon. But we will get there much more rapidly when we adopt the reforms to ensure that rich people do not provide the funds that political office-seekers require.
(1) Elizabeth Bast, Alex Doukas, Sam Pickard, Laurie van der Burg and Shelagh Whitley, Empty Promises: G20 Subsidies to Oil, Gas and Coal Production (London and Washington: Overseas Development Institution , and Oil Change International, 2015) p. 41.