I fear Ed, that you are trying to individualize a systemic problem when you
quote Pogo. Also, you fails to ask "why" the regulatory agencies are allowing
the oil companies to get away with such low costs. Is it lack of political
will, or is it that free trade agreements and the WTO etc give the oil
companies a huge bargaining advantage - at the very least reguating
govenrments
risk huge court challenges to regulatoins that go beyond the international
norm. Are governments willing to get together and hash out higher regulatory
standards? Well, we've seen what happens when governments try to enforce even
existing rules (the HPB - Monsanto story again).
So, I submit that it IS the oil companies' fault. As part of a system that
will
fight every attempt to regulate it with all the resources at its disposal,
with
high ranking civil servants being interchangable with high level corporate
execs, with international trade agreements that impede even the most modest
attempts at regulation, the transnational corporations are indeed at fault for
looking to their bottom line before taking into account the true costs of
doing
business. It is these corporatoins which have engineereed and supported the
trade agreements which clearly act in their short term interests to reduce
government interference. It is hypocritical then to blame govenments for not
imposing sufficiently high costs of doing business.
It's a bit like blaming the poor for being unemployed.
David Burman
At 10:40 AM 25/10/98 -0500, Ed Weick wrote:
>
>>
>> VIctor Milne:
>> �
>> I quite appreciate that when we start off from a small base, a large
>> percentage rate of increase is insignificant. We are, however, talking
about
>> the Big Five in Canada. If they (and all the other big banks in the world)
>> were to achieve a 64-fold multiplication of profits in 50 years, the impact
>> would be far from insignificant. I agree that they are not going to do it,
>> but that is what they are trying to do with no regard for the effects it
>> will have on society and the environment.
>> �
>> Weick: A couple of points here: One is that there is a difference between
>> trying and doing.� In the long run (which, as I'm sure you know, is not the
>> same as "a long time"), it is not likely that any type of business will be
>> able to increase its profits, or grow, more rapidly than the growth of the
>> economy unless, of course, it cuts into the growth and profits of other
>> types of businesses.� In the case of banks operating in any one country,
the
>> question I would ask is whether their growth and profitability is being
>> driven by rapid economic expansion - that is, the demand for the kinds of
>> products they provide - or whether it is driven by increasing market
share.�
>> In the case of Canada, I'm not sure of which is the foremost reason.� I
>> would, however, suggest that our growth has been relatively unspectacular,
>> so increasing market share must play a role.
>> �
>> My other point is, where is government in all of this?� Surely one of the
>> outstanding functions of government is to ensure responsible business
>> behaviour.� It is the business of business to grow and be profitable.�
It is
>> government's responsibility to ensure that business does not grow at the
>> expense of the environment or consumers.� All too often, it fails to meet
>> that responsibility, and in fact abandons it.� I worked for a very large
oil
>> company years ago.� It hired some very good environmental scientists and
had
>> a much broader understanding of environmental issues than the government
>> agencies it had to deal with.� The government agencies had little data of
>> their own and were in fact relying on the industry to provide information
>> which would then form the basis for regulating the industry -- a little
like
>> trusting the fox to guard the henhouse.� Currently, at least in Canada, the
>> capacity of government agencies to ensure responsible business behaviour is
>> pretty close to zero -- witness the mess in the Health Protection Branch.
>> �
>> Currently, the government of Canada is in trouble for pepper spraying some
>> protesting students at the University of British Columbia.� This is
probably
>> the best thing that could have happened for the government because it
>> focuses attention away from the fact that has arrived at a point where
it is
>> virtually incapable of doing anything but pepper spraying.
>> �
>> Milne: I apologize for giving my comments a misleading focus on banking
>> alone, which I had not intended to do. As I see it banks are at the top of
>> the industrial food chain. All the other industries want to increase their
>> profits by 10 per cent per year or whatever their industry standard is. So
>> the point about the banks' profits is just that it is an indicator of what
>> is happening throughout all industries.
>> �
>> Take an oversimplified chain. We focus first on a manufacturer of widgets,
>> who wants to increase his profits by 10 per cent per year. Upstream from
>> this is the machine tool manufacturer who wants to increase his profits and
>> beyond that the steel company supplying the raw material for both widgets
>> and machinery to make widgets. Downstream from our widget manufacturer is
>> the trucking company transporting the widgets and the retailer selling
them,
>> all wanting to increase profits. Helping to finance all of these operations
>> are the banks. What is the impact on the environment of all this? Are we
not
>> accelerating towards the Limits to Growth--if we have not indeed already
>> passed them.
>> �
>> Weick:� My point, again, is that there is a tremendous difference between
>> what business would like to see happen, and what will actually happen.�
>> Everybody wants profits to grow at 10%, but if the economy actually only
>> grows at 2%, very few firms will realize their profitability objectives,
and
>> many will in fact lose money.
>> �
>> And I would again point out that, when it comes to Limits to Growth, it is
>> not profits that we should focus on, but costs and revenues.� By "costs" I
>> mean all of the resource inputs that a firm must use to undertake
>> production.� In the case of some types of business, such as the production
>> of oil and gas, the environment itself is an input.� For a very long time,
>> it was treated as a free input.� Now increasingly, there is a cost attached
>> to it and that cost is rising.� It has already begun to act as a drag on
>> economic activity -- e.g. try to get anything done in the northern Canadian
>> environment without an army of lawyers!� That it has not risen high enough
>> to stop us from using the environment indiscriminately is, I would suggest,
>> the fault of regulatory authorities, not the oil companies.� I would argue
>> that costs need to go much higher and need to be reflected at the gas pumps
>> before some real responsibility works its way into the system.
>> �
>> In the case of revenues, I refer to the demand for end products.� As J.K.
>> Galbraith and many others have pointed out, this is not independent of
>> costs: the more the oil industry spends on advertising, the more likely we
>> are to put tigers in our tanks and buy every energy using gizmo that the
>> engineers can design.� However, my concern is what we do with all of the
>> stuff.� As Jay Hanson has pointed out ever so many times, we are extremely
>> wastefully garbage producers, true agents of entropy.� By being good and
>> gullible consumers, we pollute the air, ruin the oceans, and generally make
>> the planet less inhabitable.� Once again, I call on Pogo the Possum: "We
>> have met the enemy and he is us!"� We will either have to change our ways
>> ourselves or we will be forced to do so by a radical change in our
>> circumstances.
>> �
>> Ed� Weick
>> �
>> �
>
