Cybrpnk's Rantings

I recently had a conversation with a good friend of mine who is fairly conservative. Part of what we talked about was the question of use of governmental regulation to enforce environmentally friendly policies in manufacturing. His argument is that the market should be allowed to sort this sort of thing out. If people care about such things, he argued, then they will be willing to pay a premium for them, and manufacturers will adjust their practices to accommodate this change in market preference. A perfectly coherent argument, but one which is deeply flawed. The most obvious problem is the vigorous battle fought by most manufacturing segments to prevent consumers from having access to the information necessary to make such choices. Another problem is the over-reliance on people's ability to make good long-term decisions; a requirement that seems to fly in the face of common-sense, academic research, and history. Finally, the foundation of this argument comes back to that old canard, the ability of the market to sort things out, which treats the market as some sort of omnipotent force of nature. Let's tear down these illusions.

First, the problem of market opacity. Current law requires labeling of country of origin on products that are sold, but that is the only requirement. At the point of sale there is no information at all about environmental record of the manufacturer, how much fuel was burned getting the product to market, conditions and salary for workers who made the item, etc. While some manufacturers choose to put some of this information on their labels, most do not. Furthermore, there are no standards for what the phrasing on the labels means. Try this experiment: go to a clothing store, try to figure out what was made by sweatshop labor, and what was made by people making a living wage. Can't be done. You certainly can't tell by country of origin. Apparently a visiting group of Chinese garment workers were horrified at how bad the working conditions in Los Angeles sweatshops are. Unless you know the practices of a particular company you have no information at all to go on. Next, go to a furniture store and try to find a wooden item that is from sustainably forested trees. Difficult, possibly impossible. Again country of origin is not useful information. One can have good forestry in Brazil, horrific forestry in America, etc. And try looking at the websites of some of the companies that you buy from. Very few companies, other than niche marketers, seem to feel that there is any use to providing consumers with this sort of information. If businesses really believed that consumers were fine with them exploiting their workers and despoiling the environment, why are they so cagey about what they are really up to? And how can they claim that all that consumers care about is low prices when they are unwilling to give consumers information about anything but price? This seems to me far more like cowardly avoidance of real issues in the name of accumulating wealth, the one thing that markets are clearly good at facilitating.

Second problem: the known inability of most people to make decisions based on long-term thinking. The financial community itself is a shining example of this. There is an obsession on breaking things down into quarters and valuing a company based on how well it does short-term, and resultant structural impediments to any company really planning for the future. And that's just in terms of the company's future. A company that wants to plan for the future of the planet is even more suspect. Under current business law the officers of a publicly held company can be sued if they pursue a policy of environmentally sound manufacturing if it can be shown that they are weakening the companies financials in the process. How crazy is that. Of course, the company that cuts corners at the expense of dumping toxic waste into a river, or leaving their employees dependent on publicly-funded (read: financed by us taxpayers) health care, is rewarded for its sound financial performance. And these are the people who expect consumers to make a conscious decision to discover whether or not the $3 they just saved on a new shirt translates into polluting a river on the other side of the world? Sure people care about the environment in the abstract, but most of us are in deep denial about how our everyday decisions are damaging the very thing we claim to value. So, the very people who are clearly themselves incapable of thinking long-term defend themselves by saying that they would behave differently if everyone else was thinking long-term and made them? Seems like a pretty absurd position to me.

Why does the market fail here? Because our economy is set up to assign no cost at all to pollution. At least outside of government regulation, which is so fervently attacked as being insensitive to business. Isn't it time that we attacked the status quo because it is insensitive to our ability to live on this planet? As far as I can tell, given the current functioning of our economy, there are three reasons that account for almost all improvements in environmental or labor practices at large corporations: cost-savings, regulation, and catastrophic negative PR. The ability to save money is always a powerful incentive in our system, so all that first item says is that in general companies are more interested in saving money than in polluting, so at least that rules out claiming that they actively desire to destroy the ecosystem. The second one really isn't any new information, except that it seems to support the belief that external coercion can bring about change. As for the final one, here's the rub. It's not consumer pressure that leads to most changes, it's someone getting caught doing something so horrible that they can't talk their way out of it. Frequently companies will respond to consumer pressure, or bad publicity by spending money on marketing to explain why it is that everything they are doing is fine. Only when there are horrific images (such as pictures of dying animals, or clear-cut forests) do corporations end up eventually abandoning their PR campaign (still their first reaction) and actually make changes.

So, to sum up, corporations want to be able to spend as much money as they can confusing consumers about what their true practices are, as little money as possible communicating what they are actually doing. They want government to leave them alone to behave as badly as they choose to, and they want us to believe that enough consumers will be able to fight through their influence on the mass media to start demanding that they change how they do business? Why am I not filled with confidence that this approach will lead to a healthier environment and better treatment of workers? Isn't it time that government stopped worrying so much about what is best for corporations (secrecy, ability to pollute, disorganized workers, etc.) and start talking about what is best for society? How about requiring full disclosure of environmental and labor policies by all companies? Sure we can have an exemption for the small, local operators, but let's make corporate America tell us what they are really up to. Let's make them label their products with real consumer information: where was this item made? How much was the worker paid? How many hours a day, and days a week, must the worker work. What is factory ventilation and safety like? How green are the processes used? And so on. Let's change the balance of our economy (and this is a theme you'll be reading more about here): let's create a system in which people who do the right thing are at a competitive advantage, and people who do the wrong thing are at a disadvantage. Today we have this exactly backwards, and virtually everyone is worse off for it.