Regulatory Elephants

I had an apostrophe today. It wasn’t nearly profound enough to be called an epiphany, but for me it was pretty clarifying. I’ve been thinking a lot about various ‘global’ environmental issues and environmental regulation in general, and wondering in this era of companies ‘going green’ and spouting about ‘corporate responsibility’ why do we still have to go down the path of behemoth regulatory messes in order to get anyone to do anything about environmental issues?


I’m sure I’m oversimplifying, but I wonder if part of the issue isn’t that in economics, as currently practiced, it’s very common to discount the social and environmental costs of the business decisions we make. From an economic standpoint, we really haven’t learned the lessons of the last 50 years, or even the last 5. Just look at the continuing debacle that is Wall Street. Is the environmental industry any better?

Minimizing future liability is a nice idea, but it’s a difficult thing to justify in a real time way. Sure, the bigwigs understand that they don’t want to contribute to a Love Canal (Superfund was a great teacher, folks) – but do they understand how their actions contribute to say the acidification of the ocean, or global warming? Do we have a clue what the social and economic impact of these types of potentially huge ecosystem shifts could have in the future? How much ‘human impact’ are we willing to tolerate as ok and how much are we going to pay a price for?

These are fundamental questions that I would challenge anyone to tackle. These are the issues that behemoth regulatory bureaucracies are built around in this country. Gone are the days when a single point source of pollution could be pointed at as ‘the bad guy.’ Now, we’re all bad guys. Individually, each and every human, like it or not, has a carbon footprint, and contributes in a real, bottom-line way to the changes occurring in our environment.

I went to a technical conference yesterday. It was a very good program, and had a lot of great topics on ‘going green.’ But I had to laugh when the guy from the ‘solutions’ arm of the electric utility conglomerate got up to speak. He spoke of the work being done to implement alternative renewable energy sources, many of which, particularly in Ohio, are just not very ‘economical.’

He spoke proudly of an old coal-fired plant where one of the burners is being converted over to biomass fuel, and said that even that wasn’t really ‘economical’ but was being done under consent decree. But what I’m really curious about, now that I think about it, is what does ‘economical’ mean in this context? Compared to coal? Compared to how the plant was historically run, which apparently caused problems if it’s under consent decree? Compared to the cost of continuing to run coal into the future until the fuel source dries up? Compared to the cost of relocating coastal communities in 50 years when the oceans rise, and millions of homes are underwater? Economical is a tricky word to be throwing around when you look at the big picture.

I personally will think about that the next time I'm considering the need to limit future liability. Corporate responsibility, like personal responsibility, only goes so far as the bottom line. Until the economics of future impact are truly integrated into our economic decisions on a routine basis in this country, we’re going to continue to have regulatory elephants entering the room.

What do you think?