Moving Beyond the Tired 'Economy vs. Environment' Debate

Moving Beyond the Tired 'Economy vs. Environment' Debate

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. But this is what we need if we are to move beyond the stale debates that plague our politics, our boardrooms, and our chattering classes.

Image CC licensed by sxc.hu user LeWy2005.