This article in last October’s Business Week is heartening to the logical reader right down to its second-to-last paragraph. Auden Schendler, a pioneering corporate environmentalist, has seen the darkness, and it’s in the barrel of a gun.
Having practiced his craft in an undeniably sincere, energetic, and ingenious manner for well over a decade, he has now “turned” to expose the fraud of corporate environmentalism in centers of influence all over the world, including Congress and in this article, whose wonderful title is “Little Green Lies” (shown on the magazine’s cover, where at first I took it to be an article about fiat currencies).
Over two thousand fascinating words later as the end of the article approaches, one expects the clarion call of freedom to ring out from the trumpet of this remarkable champion of truth, justice, and the Environmental Way.
And what do we get instead? Well, yes – we do away with all those millions of little green lies. But the Big Lie he replaces them with will more than deflate you.
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Joe, it’s clear from the article that Schendler doesn’t so much think that renewable energy credits (RECs) (created in response to state regulations requiring energy producers to include renewables in their generation mix) are a “fraud” (that’s your opinion) as he thinks that they have only a weak market impact in calling forth additional “renewable” energy generation or in altering energy demand by industrial or commercial consumers.
If you wish to push your conclusion of fraud, then you’ll need to make your own arguments, starting with state legislatures. However, I think you’ll have a difficult time arguing that there is anything wrong with a wide array of energy CONSUMERS choosing to satisfy their own preferences by voluntarily increasing their costs by purchasing renewable energy credits.
Futher, while you perhaps accurately discern that Schendler favors direct regulation of carbon emissions, nowhere does the article say that he calls for such regulation. Instead, it notes that he thinks that “companies won’t make serious progress without regulation of carbon emissions—a departure from his earlier faith that abundant, profitable green projects will transform the way business operate.”
As an analytical matter, while one may oppose direct government regulation of carbon (or governmental interference in other “environmental” issues, in contrast to a greater reliance on and enforcement of private property rights), it seems obvious that Schendler is right that rather low renewable energy portfolio standards for producers and purely voluntary transactions for everyone else will have much of an impact on man’s rising emissions of GHGs, their growing atmospheric accumulation or the climate or oceanic effects.
One can agree with this conclusion and still be a libertarian or an Austrian. As Walter Block has noted:
http://mises.org/Etexts/Environfreedom.Pdf
Rather elementary, isn’t it?
The thesis of the article is that Auden Schendler has discovered that free market environmentalism is not profitable. His solution is to use the power of government to force people to do things his way.
It is not about the virtue of RECs, it is about the vice of government force.
“The availability of capital is not infinite,” says Donald Schuster, vice-president for real estate.
That’s the most intelligent statement in the article.
David, if you grant Schendler his premise – that human economic activity is changing the climate in ways that adversely affect our own interests – then what do you suggest to him (and others who agree with him)?
Do you say that you understand the problem, but argue that the best way to deal with it is to allow our government (and all others around the world) to do precisely nothing, but to insist that people and voluntarily-formed groups like corporation figure out ways among themselves to overcome all issues of transaction costs to reach a globally binding an effective solution, regardless of the time involved and consequences of delay – because of the risks of acting through governments? Do you talk him through his concerns and frustrations about delay, and explain that your preferences are correct, even though there is no single government acting by fiat, but mutliple countries trying to reach a shared solution ( like ranchers closing a range) , but each doing its best to serve the interests of its own citizens (and rent-seekers)?
Or do you suggest nothing, and simply tell him (and all others who share his concern)that his “solution” is unacceptable?
Or, like Joe, that you distrust his motives, and that he should back away from his “Big Lie”?
Or, like our blog fundy, tell him that he simply has noting intelligent to say?
Roy Cordato says:
The focus of the Austrian approach to environmental economics is conflict resolution. The purpose of focusing on issues related to property rights is to describe the source of the conflict and to identify possible ways of resolving it. …
If a pollution problem exists then its solution must be found in either a clearer definition of property rights to the relevant resources or in the stricter enforcement of rights that already exist. This has been the approach taken to environmental problems by nearly all Austrians who have addressed these kinds of issues (see Mises 1998; Rothbard 1982; Lewin 1982; Cordato 1997). This shifts the perspective on pollution from one of “market failure” where the free market is seen as failing to generate an efficient outcome, to legal failure where the market process is prevented from proceeding efficiently because the necessary institutional framework, clearly defined and enforced property rights, is not in place. …
[C]onflict, that similarly cannot be resolved by the market process, gives rise to catallactic inefficiency by preventing useful information from being captured by prices. …
[I]rresolvable inefficiencies, i.e., inefficiencies that cannot find a solution in the entrepreneurial workings of the market process, arise because of institutional defects associated with the lack of clearly defined or well enforced property rights. In a setting where rights are clearly defined and strictly enforced, plans may conflict but the resolution to that conflict is embedded in the exchange process. …
In the absence of clearly defined and strictly enforced property rights this process breaks down and the conflict becomes irresolvable through the market process. Under … Austrian approaches to welfare economics, therefore, the solution to pollution problems, defined as a conflict over the use of resources, is to be found in either clearly defining or more diligently enforcing property rights. …
This is not to suggest that the clear definition of property rights is an easily achievable goal in all situations. It is not. But, while the Austrian approach to solving pollution problems may face implementation problems at the margin, i.e., with certain “tough cases,” defining and enforcing property rights already stands as the fundamental way in which interpersonal conflicts of all kinds are avoided or dealt with. This approach is clearly operational as it has been in operation, to one extent or another, throughout human history. The challenge for Austrians is to explain how we apply the theory in certain tough cases, not to explain, in reality, how it can be applied at all.
Is Cordato wrong? Or has everyone here concluded that the work is too difficult, so the best approach is to finding solutions on environmental issues is to NOT TRY, and to simply hate enviros (and everyone else who thinks there’s a problem)?
TT
For clarity, from “Roy Cordato says” until my last paragraph are all quotes from him.
Quote from TokyoTom: “David, if you grant Schendler his premise – that human economic activity is changing the climate in ways that adversely affect our own interests – then what do you suggest to him (and others who agree with him)?”
How about: That they should do whatever they wish to themselves, or with the people that agree with them. And then that they should not force people that do not agree with them to do things they don’t wish to do, either through the force of the government or other coercive methods.
Large parts of the world do not agree with the premise (i.e., “that human economic activity is changing the climate in ways that adversely affect our own interests”). But those that do agree with it feel that somehow they should be able to force those that don’t to do all manner of things.
Keith, thanks for your fairly reflexive response, which ignores the past 150 years in which courts and government, as noted by Walter Block, have favored corporations over enforcing property rights. Being in favor of doing nothing is to ratify these past violations of property rights, as well as to ignore the consequences of continued cost shifting by economic activities.
“Large parts of the world do not agree with the premise (i.e., “that human economic activity is changing the climate in ways that adversely affect our own interests”). But those that do agree with it feel that somehow they should be able to force those that don’t to do all manner of things.
The first is wishful thinking; the second is not only a strawman, it ignores the fact that the status quo gives a free right to GHG emitters to force an altered climate on all of us.
If you are seriously interested in examining how Austrian principles may be applied to climate change, you might be interested in this recent essay by Edwin G. Dolan (editor of the classic “Austrian Economics as Extraordinary Science”):
“SCIENCE, PUBLIC POLICY, AND GLOBAL
WARMING: RETHINKING THE MARKET-LIBERAL POSITION, http://www.cato.org/pubs/journal/cj26n3/cj26n3-3.pdf.
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