Apolcalypse Addicted:

An Owner's Perspective on Environmental Issues

(The excerpts you will read here use Canadian examples, but the issues and ideas revolving around working and middle class ownership of big business apply to all developed countries.)

Your comments, please! This is a draft version of a chapter, provided here for the purpose of getting reader feedback. This feedback will be incorporated into the final version.

The Famous Bet

In October, 1980, two implacable academic foes agreed on one thing: That they would settle their big argument with a bet using real money. No more trying to convince each other of the rightness of their positions through sniping sound bites or academic theories.

The challenger was the late Julian Simon, an economist and a prominent critic of environmental ideas and methodologies. He taught at the University of Maryland, and before taking on the environmental movement, distinguished himself with a best-selling book on mail-order marketing.

The other contender was Paul Ehrlich, a zoologist at Stanford University, and a man so consumed by the population issue that he and his wife agreed to have only one child. Ehrlich successfully managed to be both an academic and a populist, explaining complex ideas about the environment. Most notably, he frequently appeared on the Tonight Show with Johnny Carson.

Ehrlich also found great success, including status as a best-selling author, with a 1963 book titled, The Population Bomb. Chillingly, the book opens with, "The battle to feed all of humanity is over. In the 1970s the world will undergo famines – hundreds of millions of people are going to starve to death."

The year 1963 also saw publication of a book with a much different perspective, Scarcity and Growth, by Harold J. Barnett and Chandler Morse. The authors looked at commodity prices as far back as 1870 and made a decidedly exciting discovery: Prices of all natural resources were lower than they were in almost a hundred years earlier. They might drop in fits and starts, but the trends were clear: Everything from grain to coal to oil cost less in 1963 than it had in 1870 (even in inflation-adjusted dollars).

For an economist like Simon, well-versed in the concept of supply and demand, the message was clear. Supply of natural resources had grown faster than demand, despite the seemingly breakneck increase in population over the same period and a finite supply of resources. Although that idea seems counterintuitive, it does make sense when we consider how we all react to shortages; we conserve and we find substitutes. When whale oil, for example, became scarce in the middle of the 19th century the price went up and entrepreneurs went looking for oil under the ground rather than under the sea. And, as we know, they found it. 

And, don't forget our old friend productivity. In the 19th century, most of the population had to work in agriculture because if they hadn't, everyone would have starved. Now, think of modern prairie grain farms, where one person can farm literally thousands of acres and still have time to bowl and curl and take winter vacations in the tropical sun. In essence, then, every shortage can have a self-correcting solution.

Contrast that with the Malthusian orientation of environmentalists, who subscribe to a zero-sum world. As you'll recall, a zero-sum game is one in which the number of resources at the end is exactly the same as it was at the beginning. The Reverend Thomas Robert Malthus wrote in 1798, "The power of population is indefinitely greater than the power in the earth to produce subsistence for man", a sentiment many of us will recognize among environmentalists of today, as well. It's the underlying rationale behind such ideas as Peak Oil, the belief that we have or will soon face irreversible, dwindling oil production. It's not surprising, then, that Ehrlich should write, in The Population Bomb, "...before 1985 mankind will enter a genuine age of scarcity," and "...the accessible supplies of many key minerals will be nearing depletion."

To Julian Simon, such statements reeked of the absurd, and may have been one of the factors that prompted him to post his now famous challenge in 1980: He would take on all comers, allowing them to pick any natural resources and any future date. If the resources really became scarcer, then the prices should rise, too. For his part, Simon said he would take the other end of the bet, putting his money on the proposition that prices would go down, indicating the resources were less scarce than they had been when the bet was placed. 

Ehrlich and two of his colleagues at the University of California, Berkley decided to take up Simon's challenge. They chose five common metals, in amounts worth $200 each at that time, and set a 10 year time frame. If the five metals were worth more in 1990 than they were at that time, as they firmly expected, then they would win and Simon would have to pay the difference.

During those 10 years, the world population grew by at least 800-million. And during those same years, Simon and Ehrlich continued to rant at each other.

And after 10 years? A clear victory for Julian Simon. Paul Ehrlich and friends had to write a cheque to Simon for $576.07; they enclosed the cheque in an envelope without a message and mailed it. Simon responded with a thank-you note and an offer to raise the bet to as much as $20,000 on any natural resource, at any time in the future. Simon likely wasn't surprised when he received no response. (This section based in part on Betting the Planet, New York Times Magazine, December 2, 1990)

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Here's a puzzler to follow up: In opinion poll after opinion poll, Canadians show themselves to be positively pro-environmental. Polls have routinely shown strong support, and in some cases, support of 60% or more, according to awareness of specific issues.

Yet, on election days, in the polls that matter most, getting Canadians to vote for the Green Party is like selling chainsaws to the Sierra Club. In numerous elections, both federal and provincial, the Green Party has lagged far behind the three established parties.

Not that an environmental curse affects just the Green Party. In the 2008 federal election, voters took a chainsaw to the Liberal Party of Canada, giving it the lowest vote count it had received in more than a hundred years. During that campaign, one of the party's few new platform planks was the Green Shift initiative, which would impose carbon taxes on carbon dioxide emitting companies. Even the Liberals themselves were uncertain about the policy, both pushing and backpedalling the idea at the same time.

So, if Canadians won't vote for parties that champion environmental issues, are we two-faced in our commitment to environmental protection? Or, do we see commitment that varies according to the issue? Ultimately, the latter makes more sense; in this chapter we'll explore the distinctions among issues, and at the same time brief ourselves on business and the environment from an owner's perspective.

Apolcalypse Addicted

Those of us old enough to remember the disco years, may also remember the global cooling years, which came along at about the same time and enjoyed the same kind of long-term viability. But, for a while, it seemed to have staying power.

"Climatological Cassandras are becoming increasingly apprehensive, for the weather aberrations they are studying may be the harbinger of another ice age." reported Time magazine on June 24, 1974. The article went to say, "Whatever the cause of the cooling trend, its effects could be extremely serious, if not catastrophic. Scientists figure that only a 1% decrease in the amount of sunlight hitting the earth's surface could tip the climatic balance, and cool the planet enough to send it sliding down the road to another ice age within only a few hundred years."

Another ice age? In light of what we've heard for the past 20 years, the prospect of another ice age seems absurd. Yet the environmental movement pushed that idea as forcefully then as it has pushed global warming over the past 20 years. 

Call it the first big apocolyptic scare, or perhaps the second if we include fallout from Rachel Carson's 1962 best-seller, Silent Spring. Whatever the case, we were bombarded constantly with The Message: the end is near. 

Then, as now, industrialization got the much of the blame. Sunspots and farming activity also were mentioned in the Time article. Today, few environmentalists would assign much responsibility to farmers, although a few do complain about farting cows.

Alas, like the farts from discontented cows, global cooling dissipated and disappeared. But, staunch environmentalists weren't yet prepared to call off the apocalypse. They kept alive the promise of Armagedon, later if not sooner, and revised the threats that might cause it.

Among the new threats was one we met in the introduction to this chapter, the population bomb (later escalated to capitalized first letters with Paul Ehrlich's book). Thanks to Ehrlich's book, the environmental movement even got what's called an Impact formula, described this way in a Wikipedia article, "It states that the impact a community has on the environment can be calculated by multiplying the community's population by its wealth and how developed it is. Ehrlich thus argued that affluent technological nations have a greater per capita impact on the limited resources of the earth than do poorer nations." (The Population Bomb, Wikipedia.com) 

Of course, the starving-population apocalypse failed to materialize, as had the global cooling catastophe. In 1968, the year Ehrlich's book appeared, also marked the 25th anniversary of the Green Revolution, a grassroots movement that had massively transformed the productivity of agriculture, particularly in the developing world. The Green Revolution gave farmers new and better cereal grains, synthetic fertilizers, effective equipment, pesticides, and improved practices. The results were dramatic. In India, for example, rice production roughly tripled, while the price to consumers fell by more than 50%, and in fact, helped India become a net exporter of rice. An astounding turnaround, considering that India feared mass starvation in 1961.

And, then there was the running-out-of-resources apocalypse, which we've already discussed. We're not yet sure (in 2010) when the global-warming apocalypse will go the way of cow farts, but we do note that the emphasis among environmentalists has started to shift from global warming to Climate Change (with capital letters). As Julian Simon noted, "As soon as one predicted disaster doesn't occur, the doomsayers skip to another...."

The Wallet Connection

So, why, you might ask do environmental organizations, individual environmentalists, and even scientists keep predicting imminent apocalypses, given their track record? Actually, it makes a lot of sense if we follow the money, as the detectives say on TV.

Take a look at the Greenpeace website, for example. In addition to the warm and fuzzy thoughts, idealistic ideals, and bumpersticker logic, you'll find a request for your donations. Yes, you. After all, as they say, Greenpeace doesn't accept government or corporate money, so the future of the planet is in your hands (well, at least it will be if one of your hands reaches for your wallet).

On the Donate page (all website information as of July 10, 2010), you'll see a lovely picture of a polar bear, and alternating with a picture of a nice child, and below the photos, this message, "Our Climate is at risk, the oceans are in crisis and 80 percent of the forests have already disappeared." and what's more, "We depend on individual supporters like you to give us the consistent support we need to protect the planet from environmental degradation....". You can donate by credit card, or if you want to save a lot (save the planet that is, not your money), you can put Greenpeace in your will, "You can stand up for the environment your entire life. Or even longer. Have you considered remembering Greenpeace in your will?" 

But, before we donate, let's check out a couple of other organizations that also aim to protect the environment. Over at the World Wildlife Fund, you can donate $50 dollars and receive a panda T-shirt, or you could ‘maximize' your donation by not taking a gift. And, that's not all; the fundraisers at the WWF are no slouches when it comes to getting your donation: monthly giving, gift memberships, memorial donations, tribute donations, legacy gifts and gift planning, matching gifts, panda pages, gifts of stock, and more. Not so many choices over at the Sierra Club of Canada's website, but a donation of $20 or more can get you a membership. If you like, you can also receive a charitable tax receipt.

Those are just three of the many organizations to which Canadians can contribute if they support the environmental movement in general. Of course, while many Canadians tell opinion pollsters they strongly support environmental issues, far fewer actually belong to these organizations or donate to them. A small pool, we might say, with many fishermen angling for the few trout. 

So what's a smart organization to do, to land one of those few donors? Follow the lead of business, obviously, and get serious about marketing. Let's look again at that first sentence from the Greenpeace donations page: "Our Climate is at risk, the oceans are in crisis and 80 percent of the forests have already disappeared." Obviously, lots at stake. Now, would you feel any urgency to donate if they told us how well things are going environmentally?

At the Sierra Club's website, you will see this excerpt from a SEE magazine article, "Greenpeace has been a vocal opponent of Alberta's reliance on oil, publicizing and protesting Alberta's environmental track record.... But look right and you'll see the inevitable counter-argument: for starters, it would be wildly unrealistic to expect anything close to closure of the oil sands." Hmmm, maybe I should donate to a more realistic organization, like the Sierra Club. 

Not to be outdone, the World Wildlife Fund website notes, "A new approach to conservation is required, and WWF is innovating at every step to ensure our programs bring about positive, lasting change." Okay, so maybe I should give the WWF my VISA number instead.

The competition for funds among scientists is no less intense than it is for organizations. For scientists, the goal is research grants, and getting enough funding to undertake projects that enhance academic reputations. In his book, The Hockey Stick Illusion: Climategate and the Corruption of Science, A. W. Montford writes, "One can almost detect the germ of an idea forming in the minds of the scientists and bureaucrats assembled in Geneva: here, potentially, was a source of funding and influence without end. Where might it lead?"

The Wisdom of Canadian Crowds

All told, then, the wisdom of Canadian crowds takes us only so far along the environmental path. Canadians do support such initiatives as recycling, which only makes sense in a world where no one wants a garbage dump within a thousand miles of their home, and civic governments try to keep down the costs, as well as the volume and stench of such facilities. 

Canadians also want generally clean air and water. In that sense, we're like people the world over, who begin to care about their environment after their income rises to a certain level. For example, one study notes, "Among 50 nations with extensive forests reported in the Food and Agriculture Organization's comprehensive Global Forest Resources Assessment 2005, no nation where annual per capita gross domestic product exceeded $4,600 had a negative rate of growing stock change." (Pekka E. Kauppi, Jesse H. Ausubel, Jingyun Fang, Alexander S. Mathers, Roger A. Sedjo, and Paul E. Waggoner; Returning forests analyzed with the forest identity; Proceedings of the National Academy of Sciences of the United States of America, 2006). In other words, in all 50 nations where average gross national product per person was more than $4,600 per year, more trees were planted than harvested.

What Canadians don't want are schemes that push too far or too fast, schemes such as carbon taxes. Carbon taxes go under many names, including cap-and-trade, but essentially all of them do, or would do, the same thing: Reduce the income and likely the profits of key Canadian companies and industries. Few of us know we're the owners of these companies, but most know our jobs and prosperity are tied to them.  

Overall then, we're prepared to make incremental changes that protect or even enhance our environment. But, we're not about to make sweeping, radical changes in response to apocalyptic predictions from a movement that's been wrong more often than it's been correct.  

This wisdom of the crowd makes sense for several reasons. Let's start with the issue of misallocation of resources. When governments tax a productive sector (such as resource extraction) and transfer it to a less productive sector (such as green power), funds for long-term investment are squandered, and all of us -- both companies and individuals, as well as government -- have to settle for less. Some carbon tax schemes would also see capital redistributed among nations, again from more productive nations to less productive nations.

Literally trillions of dollars could be at stake, enough to significantly affect the standard of living in this country. Canadians aren't likely to endorse any scheme that would be such a drag on our economy without full and complete proof that we really do have an imminent environmental problem of catastrophic proportions. As the Climategate incident (leaked email messages among proponents of the global warming theory) prominent scientists pushing the theory have uncertainties. In addition, several key elements and anecdotes in the Intergovernmental Panel on Climate Change report (a United Nations initiative that had many governments considering carbon tax measures) have recently been debunked. All things considered, it appears global warming is about to follow global cooling and cow farts into oblivion.

An Owner's Perspective

As owners of big business -- not to mention as citizens, taxpayers, consumers, and maybe even employees -- we will collectively determine how corporations and other companies will interact with the environment. If we don't do it in the boardroom, then we'll do it at the cash register or in the ballot boxes.  

Generally, it appears we have made a reasonable accommodation that works for most of us. By law, companies have to clean up their own messes, and the pressure of consumers and employees pushes most firms to do what they can to lessen their impact. Just as recycling makes sense at home, it also makes sense at the office. What we haven't asked of our companies, and seem unlikely to ask of them in the near future at least, is to pay sharply higher taxes to address problems that may or may not exist.  

Environmentalists may argue we're betting the planet, but with the exception of Paul Ehrlich and his colleagues in their lost bet with Julian Simon, environmentalists usually bet with someone else's money, not their own.

Next...

Watch for a new chapter, to be posted soon, or to the Table of Contents

Please send me your comments and questions. Send an email to wordengines@gmail.com . Thanks!

Bob Abbott

People, Profits, & Pensions: The Ownership Revolution, Copyright Robert F. Abbott 2010