On capitalism, environmentalism and a bit on California

John Robson from The Ottawa Citizen has a nice piece, Capitalists saving the planet, in which he describes the many ways that capitalism is really the main driver of environmental advancement.

This will come as a surprise to many committed greenies who see capitalism as the cause of all of the world's evils and especially the current Climate Change Bogeyman. The mistake they make is to see capitalism and Big Business as one and the same thing rather than understanding capitalism as being the enabler of not only business but also the advancer of society, as well.

In a recent post I described how anti-progress economic systems such as socialism cannot innovate, as there are no venture capitalists willing to risk their money on developing new products. A Sony Playstation or your mobile phone or your wide-screen TV or the myriad of other products are all the result of the investment evolution enabled by capitalist economics.

So back to the main point. Capitalism creates a competitive environment in which the company that can bring a product to market at the lowest cost survives while the others either die or lower their own cost. A major cost of manufacturing comes in the form of energy. If companies can lower the amount of energy consumed in either the manufacturing of the product and/or the operating of the product (in the case of electronic devices) then they have a competitive advantage. In the process, any impact on the environment in the manufacture or use of the product is reduced.

It's opera. My wife is listening to opera while jogging. The heroine will, one assumes, come to a tragic end. But the batteries won't, because she's using a digital player. On which, I trust, I can record the sound of environmentalists applauding the technological advances capitalism brings.

...Permit me, then, to wipe it off deftly by pointing out that self-interest is what's driving this greener technology. Most of us value the environmental benefits to some extent. But for all of us, digital technology means going green without suffering. Which will displease some in the organic-hair-shirt crowd.

It will upset others that companies are succeeding where governments often fail. The European Union's environment commissioner just admitted that biofuels promote rainforest destruction. Legally mandated efficient light bulbs may give some people skin problems. The failure of governments to build nuclear plants has contributed massively to greenhouse-gas production. But over there in the private sector, it's just progress progress progress. Wretched, isn't it?

Continuing the theme is Glenn Milne in The Australian:

The great thing about visiting California is that it gives you a sense of where Australia is probably headed. In the context of the climate change debate, this assertion stands, only more so.

So to come here and see some of the political and economic hurdles that are emerging out of the market forces unleashed by global warming, and the political response to it, is to understand that while Kevin Rudd still basks in the warm afterglow of ratifying Kyoto, just a little way down the track substantial domestic challenges loom.

Remember, California Governor Arnold Schwarzenegger is something of an environmental pin-up boy for Rudd. During the election campaign, Rudd repeatedly used Schwarzenegger's embrace of an 80 per cent reduction in greenhouse gas emissions below 1990 levels by 2050 to justify his own approach to target-based policy.

The thrust of Rudd's argument was that if California, one of the biggest and most successful economies in the world, could adopt such an approach, why couldn't Australia?

...Schwarzenegger's thinking is crudely simple and effective. He believes that Californians want urgent action on the climate-change front and he feels compelled to respond to this democratic impulse.

The strategy is to set mandated targets and then for the Government to simply get out of the way.

In other words, Schwarzenegger is using the sheer mass of the Californian economy and, critically, its venture capital base to crash through any resistance on the climate change front.

Again, the key point is that governments can't achieve the same level of positive progress as private enterprise and financial incentive.

Milne does get a bit carried away, though, in his description of California's economy. Its liberal policies have seen it go through completely unnecessary financial difficulties and it is currently many billions of dollars in debt. That doesn't seem like much of a model for new Australian prime minister Kevin Rudd to aspire to.

As usual, the great Victor Davis Hanson gets it right:

Our poor state is $14 billion plus now in the red, and the Governator has promised no new taxes, wise inasmuch as our sales and income taxes are already among the highest in the country. The University of California system is panicking and sending out emails to us alums, to march en masse on Sacramento for redress!

But lost in the furor is any self-reflection, such as why would UC Davis recently pay John Edwards, multimillionaire trial lawyer, $50,000 plus to give a brief lecture on poverty? Such questions are never answered, much less raised, since the problem is always framed as a matter of a shortage of income, never a surfeit of unnecessary expenditure.

We in California, given the past budget implosions, know the script to follow. We expect that police, fire, prisons, parks, etc. will be threatened with cut-backs and closure while the state-funded "Center for this" and the "Department of that" will remain untouched, since cutting the essential while protecting the politically-correct superfluous is the only way to scare the voter and achieve higher taxes.

At some point we Californians should ask ourselves, how we inherited a state with near perfect weather, the world's richest agriculture, plentiful timber, minerals, and oil, two great ports at Los Angeles and Oakland, a natural tourist industry from Carmel to Yosemite, industries such as Silicon Valley, Hollywood, and aerospace — and serially managed to turn all of that into the nation's largest penal system, periodic near bankruptcy, and sky-high taxes.

(Nothing Follows)