The Republican congressmen Louis Gohmert and Paul Gosar adopted such extreme, conspiracy-tinged positions, even before the US Capitol attack, that a fellow member of the rightwing Freedom Caucus thought they “may have had serious cognitive issues”.
The thing that I seriously don’t understand is that if capitalism is supposed to bring us the best of all possible worlds due to profit, why don’t these giant energy companies see themselves as energy companies as opposed to oil companies. Chevron knew that the carbon emission from their products was going to lead us to where we are now with climate change 50 years ago, but decided to hide their data and analysis, and find ways to drill deeper and farther offshore and keep us using gasoling and diesel fuel. They knew that it’s a finite resource, they knew that eventually they will have to rely on despotic governments to make contracts for drilling on their land. They knew that there are other sources of energy, and extraction is an engineering problem that could eventually be less expensive than drilling under 500 feet of water, or in the Arctic. Shell, BP, and these other giants make the commercials that this is spoofing, and promote all the wonderful things that their engineers are doing to find ways to protect the environment while giving up nothing from our mobile lifestyle.
But they continue to fight to keep it the way that it is through fracking, mountaintop removal, using ice roads to get drilling rigs over the Arctic, build drilling platforms in the North Sea and off of the Carolina coast (subject to hurricanes,) just to maintain an oil and coal based energy economy.
I’m not a commie, don’t worry. But, I’m also not a capitalist cheerleader. It’s short-term thinking when long-term was needed. I think Adam Smith was wrong.
Don’t blame Adam Smith! Although he’s usually invoked in discourse today as standing for the principle that The Market Always Gets It Right, he did not in fact believe that, and wrote about negative and positive externalities that would justify government intervention. I can’t easily find a reference to Smith himself using pollution as an example of a negative externality, but that’s certainly a classic example that gets taught in Econ 101.
Smith doesn’t easily map on to 20th/21st century ideological debates. A lot of his advocacy for free markets was about getting rid of government-granted monopolies, which were the sort of thing we might today call “crony capitalism” that the left denounces much more than the right.
Anyway, that’s a digression off your excellent comment. I’ll just add that there’s another economic principle, the principal-agent problem*, that is probably at work here. Although corporations, having infinite life spans, are supposed to be making their decisions while taking into account what will happen 50 years from now, the actual human beings making those decisions (CEOs, directors) are generally judged on a much shorter time frame, i.e. next year’s earnings and stock price.
*- this may be the first time I’ve had to use “principle” and “principal” in a sentence that isn’t specifically about distinguishing the two
In my Economics 101 class, I didn’t hear anything that was remotely interpreted as critical of capitalism, but we also didn’t get much deeper than an Economics 101 class gets.
When I took Environmental Economics (graduate level), things were different. The prof was a cheerleader for capitalism, flat out. He used graphs that were openly and blatantly showing something different than he said they were showing, and if anyone in the class besides me caught it, I am not aware of it. He instructed us to use short term thinking. “Because of discounting, that stand of trees will not be worth as much in five years as they are today, so leaving them standing is a poor decision.”
If I went into the class with any respect for Economics (I may have had a little), it was gone by the time it was over. I thought…oh, it’s just the prof. So I looked through the book; I thought I could find answers to the silly propositions. But the book did the same things…graphs mislabeled without shame…graphs where the axes clearly state that they are about one thing, and the caption makes it about the opposite. How could they do this? Very few students ever read their book. A lot of them never open it unless you give homework assignments that they have to flip to page 17 to do. Then they open them at page 17, do the assignment, and forget about it until the next homework. Since our homework assignments in Economics were not from the book, these students never had to open the book. They could accept what their prof told them without thinking about it.
Yeah, short term thinking. Economics is all about that.
Like. It made me bitter laugh, then sob.
The Republican congressmen Louis Gohmert and Paul Gosar adopted such extreme, conspiracy-tinged positions, even before the US Capitol attack, that a fellow member of the rightwing Freedom Caucus thought they “may have had serious cognitive issues”.
Some folks have been able to keep their eye on the ball. They’re mocked and derided for decades.
The thing that I seriously don’t understand is that if capitalism is supposed to bring us the best of all possible worlds due to profit, why don’t these giant energy companies see themselves as energy companies as opposed to oil companies. Chevron knew that the carbon emission from their products was going to lead us to where we are now with climate change 50 years ago, but decided to hide their data and analysis, and find ways to drill deeper and farther offshore and keep us using gasoling and diesel fuel. They knew that it’s a finite resource, they knew that eventually they will have to rely on despotic governments to make contracts for drilling on their land. They knew that there are other sources of energy, and extraction is an engineering problem that could eventually be less expensive than drilling under 500 feet of water, or in the Arctic. Shell, BP, and these other giants make the commercials that this is spoofing, and promote all the wonderful things that their engineers are doing to find ways to protect the environment while giving up nothing from our mobile lifestyle.
But they continue to fight to keep it the way that it is through fracking, mountaintop removal, using ice roads to get drilling rigs over the Arctic, build drilling platforms in the North Sea and off of the Carolina coast (subject to hurricanes,) just to maintain an oil and coal based energy economy.
I’m not a commie, don’t worry. But, I’m also not a capitalist cheerleader. It’s short-term thinking when long-term was needed. I think Adam Smith was wrong.
Mike H,
Don’t blame Adam Smith! Although he’s usually invoked in discourse today as standing for the principle that The Market Always Gets It Right, he did not in fact believe that, and wrote about negative and positive externalities that would justify government intervention. I can’t easily find a reference to Smith himself using pollution as an example of a negative externality, but that’s certainly a classic example that gets taught in Econ 101.
Smith doesn’t easily map on to 20th/21st century ideological debates. A lot of his advocacy for free markets was about getting rid of government-granted monopolies, which were the sort of thing we might today call “crony capitalism” that the left denounces much more than the right.
Anyway, that’s a digression off your excellent comment. I’ll just add that there’s another economic principle, the principal-agent problem*, that is probably at work here. Although corporations, having infinite life spans, are supposed to be making their decisions while taking into account what will happen 50 years from now, the actual human beings making those decisions (CEOs, directors) are generally judged on a much shorter time frame, i.e. next year’s earnings and stock price.
*- this may be the first time I’ve had to use “principle” and “principal” in a sentence that isn’t specifically about distinguishing the two
In my Economics 101 class, I didn’t hear anything that was remotely interpreted as critical of capitalism, but we also didn’t get much deeper than an Economics 101 class gets.
When I took Environmental Economics (graduate level), things were different. The prof was a cheerleader for capitalism, flat out. He used graphs that were openly and blatantly showing something different than he said they were showing, and if anyone in the class besides me caught it, I am not aware of it. He instructed us to use short term thinking. “Because of discounting, that stand of trees will not be worth as much in five years as they are today, so leaving them standing is a poor decision.”
If I went into the class with any respect for Economics (I may have had a little), it was gone by the time it was over. I thought…oh, it’s just the prof. So I looked through the book; I thought I could find answers to the silly propositions. But the book did the same things…graphs mislabeled without shame…graphs where the axes clearly state that they are about one thing, and the caption makes it about the opposite. How could they do this? Very few students ever read their book. A lot of them never open it unless you give homework assignments that they have to flip to page 17 to do. Then they open them at page 17, do the assignment, and forget about it until the next homework. Since our homework assignments in Economics were not from the book, these students never had to open the book. They could accept what their prof told them without thinking about it.
Yeah, short term thinking. Economics is all about that.
[…] a comment by Mike Haubrich on Cue the stirring […]
Re: Economics & Discounting
Here is a look at what discount rate you choose does to the decisions you make based on that rate.
https://thoughtscapism.com/2019/11/05/decarbonisation-at-a-discount-lets-not-sell-future-generations-short/