Energy Policy: Hopefully Not Keeping Up With General Jones
I had known that General James Jones had, since retirement, involved himself in some kind of Chamber of Commerce energy project. I didn’t have great hopes for a Chamber of Commerce energy project, but I hadn’t realized what a real stinker it was until I read Brad Johnson’s writeup. It’s some bad stuff. Presumably Jones will have his hands full doing the National Security Advisor’s job and let’s hope folks with sound views on climate and energy get picked to do those jobs.
Meanwhile, it’s worth noting how odd it is that the United States has the kind of highly ideological and deeply shortsighted business community. There’s no way a serious climate policy could be anything other than bad for oil companies and catastrophic for coal companies. But for most companies? Well, there shouldn’t really be a general problem. Firms whose operations are more carbon intensive than the average firm would be put at a competitive disadvantage, but by the same token firms whose operations are less carbon intensive than the average firm would be given a leg up. And there should be half of each. You can see why the business community might have good reason to quibble around the margins with the green community about the desirability of using carbon pricing revenue for green investments versus doing a straight rebate or something. But there’s no particular reason, other than sheer solidarity with the adversely effected minority of businesses, to want to take a blinkered attitude to climate/energy policy in general. After all, Florida being under water isn’t going to be good for business.
But the business community rarely acts in a farsighted and roughly rational manner about this kind of thing. You saw during the 1994 health care fight that business leaders across the board preferred to stand shoulder-to-shoulder with anti-reform interest groups even though most businesses would benefit from a better health care policy. The ideological battle against progressive governance is seen as more important than the practical stake big business has in seeking reasonable policy outcomes. That’s not a universal attitude, but it’s definitely the predominant one.
34 Responses to “Energy Policy: Hopefully Not Keeping Up With General Jones”
Register
RSSLogin
Topic Cloud
ArchivesBlog RollAbout Matt YglesiasContact Me
Donate
December 1st, 2008 at 3:19 pm
Well, there shouldn’t really be a general problem. Firms whose operations are more carbon intensive than the average firm would be put at a competitive disadvantage, but by the same token firms whose operations are less carbon intensive than the average firm would be given a leg up. And there should be half of each.
How do you figure? Let’s take the example of, say, a software firm that is less carbon intensive than the “average” firm. Green policies are going to make electricity more expensive, or force them to buy more energy efficient equipment, or prompt their employees to demand higher salaries to afford their now larger bills for groceries and heating fuel. All of these effects will raise the cost of doing business, and crimp profits. Sure, a steel mill may suffer a greater percentage decline in profits, but that’s little consolation.
The short sightedness of the business community is no mystery at all. Green policies threaten profits. That’s why we it is the public sector that has to take the lead.
December 1st, 2008 at 3:20 pm
Corporate officers are judged and compensated on whether their earnings meet quarterly expectations. At larger companies, if you can get and hold a high level corporate job for a few years you can make enough money that neither you nor your children or grandchildren will ever lack for material needs. I don’t understand why people are constantly shocked that people operating under this system tend to think short term.
December 1st, 2008 at 3:26 pm
If an expense isn’t on a company’s balance sheet it doesn’t exist. Like it or not, business leaders don’t get promoted by worrying about environmental/health care/etc. consequences that don’t affect their balance sheet in the short term.
December 1st, 2008 at 3:43 pm
Perhaps it’s not that the business community is short-sighted but rather that the institutions that represent it in Washington and on public-policy issues are short-sighted because they are prone to capture by those with the strongest views on a given subject. I don’t know anything about the Chamber of Commerce’s internal workings, but I could speculate that it is set up in a way that gives energy companies de facto control over what the Chamber says about energy policy. This sort of structure might not best represent business concerns, but it might be the most effective way to create a fund an organization to represent business concerns.
December 1st, 2008 at 4:31 pm
Al and Jasper seem to be assuming that prices won’t adjust (including the prices for the goods or service that the relatively energy efficient firm produces.)
December 1st, 2008 at 4:33 pm
Virutally all companies would be negatively affected by a carbon tax (either a direct tax or passed through cap-and-trade costs). Some less so than others, but they’ll all pay more, meaning profits will be lower.
In your world, do the taxes collected get buried in a hole in the ground? And do you posit that no companies will see any benefits from addressing global warming? It seems odd to run a cost-benefit analysis that ignores the benefits.
December 1st, 2008 at 4:34 pm
I’m with Pickandroll.
Even at smaller, privately-held companies, business owners rarely think in terms of what’s best for us 50 years from now (or even 10 years from now).
As for Matt’s point about businesses being negatively affected: I think he means that pretty much every company in the world would be negatively affected if global warming destabilized entire nations.
There are some wider social issues that the business community is vested in from time to time (I do think healthcare reform actually is one. School desegregation in Atlanta actually was embraced by the business community because they were afraid of local instability a la Birmingham and Montgomery.) But global warming just doesn’t hit home.
December 1st, 2008 at 4:36 pm
But for most companies? Well, there shouldn’t really be a general problem.
This would be true if whatever policy impacted firms based just on carbon intensity; that’s not the case. The basic problem is that it will disadvantage every firm in the US relative to every firm in China, India, Europe, etc.
December 1st, 2008 at 4:47 pm
Clever that in liberals’ fantasy world, “oil companies” (=bad) are completely distinct and separate from “(natural) gas companies” (=good). In reality, the fact of the matter is that “big oil” is really “big oil and gas;” and gas would be so advantaged under a carbon regime that it’s not really clear to me that these firms would be any worse off.
December 1st, 2008 at 5:17 pm
But there’s no particular reason, other than sheer solidarity with the adversely effected minority of businesses, to want to take a blinkered attitude to climate/energy policy in general.
Like SamChevre (#10) says, which I’ll paraphrase to mean “my cost of business will go up.”
Another, perhaps parallel view might be that the scions of big business are acting as a class.
December 1st, 2008 at 9:56 pm
This comment thread has focused on global warming, which I agree is hard to see benefits to most companies, but what explains the opposition to government health care? It doesn’t make sense. I’ve talked to silicon valley entrepreneurs and one of their big problems is that they have a hard time competing against the big companies in the job market because of health care costs. But they still don’t support govt health even when it would probably add directly to their personal wealth! It isn’t a rational position, it is a core principle built into a lot of rich guys. The thinking is, “I made it by working hard, all these other people are lazy and stupid and they don’t deserve a handout”
December 1st, 2008 at 10:02 pm
Re: saw during the 1994 health care fight that business leaders across the board preferred to stand shoulder-to-shoulder with anti-reform interest groups even though most businesses would benefit from a better health care policy.
I don’t think that’s right. It was more the case that business groups (other than the small business lobby) was simply MIA during the healthcare reorm effort in the 90s. In some ways that makes sense, because the Clinton plan did next to nothing to improve the bottom-line of businesses that already provided healtcare benefits.
December 1st, 2008 at 11:24 pm
I think the problem is that while energy-intensiveness may vary a lot from industry to industry, it doesn’t really vary much within industries. So there are few firms that would see a significant advantage vis-a-vis their imediate competitors as a result of carbon pricing. At the same time, as others have pointed out, all companies use fossil fuels or fossil-fuel derived electricity as an input, and so they see climate legislation as raising their costs. The cost effect probably dominates the competitive advantage effect for all but a few firms, allowing the business community to maintain solidarity on the issue.
December 2nd, 2008 at 1:25 am
What, you’re suggesting Randian capitalists aren’t purely logical economic actors and carry their own cultural biases that blind them to greater issues? But it’s communism to say that they are led by cultural resentment!
December 2nd, 2008 at 9:30 am
Krugman, NYR Dec 18, on the financial crisis, but with broader applicability:
December 6th, 2008 at 2:20 pm
STILLWATER — Oklahoma State scratched a seven-year itch in Travis Ford’s second game as head coach. For the first time in seven years, three OSU players scored 20 or more points on the same night. James Anderson scored 28 points, Terrel
January 19th, 2009 at 10:36 pm
February 27th, 2009 at 10:23 am
I just found your blog on google. I really liked it and now I will share it with my friends.
March 1st, 2009 at 5:01 am
viagra
I bookmarked this site. Thank you for good job!
March 2nd, 2009 at 4:30 am
levitraI bookmarked this site. Thank you for good job!
March 11th, 2009 at 4:14 am
Excellent site. It was pleasant to me.
March 11th, 2009 at 6:09 am
This is not bad advice, unlike a lot I have come across.
March 12th, 2009 at 10:46 pm
I want to say – thank you for this!
March 14th, 2009 at 4:58 am
Incredible site!
xanax
March 16th, 2009 at 9:09 pm
sry i just know how to write my name in arabic
) anyway however my english not that good but i think i get the point. thanks
March 22nd, 2009 at 5:53 am
tramadol
Excellent site. It was pleasant to me.
March 22nd, 2009 at 10:44 pm
hello
just thanks
March 22nd, 2009 at 10:45 pm
bookmark it
March 23rd, 2009 at 4:20 am
viagra
If you have to do it, you might as well do it right
April 2nd, 2009 at 4:54 am
Very interesting site. Hope it will always be alive!
buy cheap viagra
April 3rd, 2009 at 3:59 am
Incredible site!
cheap brand pfizer viagra
April 9th, 2009 at 4:43 am
If you have to do it, you might as well do it right viagra
April 9th, 2009 at 4:48 am
If you ever want to see a reader’s feedback
, I rate this article for four from five. Decent info, but I have to go to that damn msn to find the missed parts. Thank you, anyway!
April 19th, 2009 at 9:00 am
VoXVRA hnrclyqxjuza, [url=http://qdrjxlqkiivr.com/]qdrjxlqkiivr[/url], [link=http://sssycfempyiy.com/]sssycfempyiy[/link], http://sqgpllszaeip.com/