The Nation, February 7, 1994
IF YOU THINK creating enough well-paying jobs to retain America’s current living standard is challenging, it’s child’s play compared to what Paul Hawken says we must do next: Convert to an economy that sustains rather than destroys the earth. This next conversion is not just a matter of shifting government priorities, of spending less on missiles and more on job training or civilian infrastructure. It’s a matter of redesigning the way we do business.
Hawken—who’s played the business game with some success—defines a sustainable economy as one in which the demands placed upon the environ- ment by people and commerce can be met without reducing the capacity of the environment to provide for future generations.
That’s far from the economy we have today. At the rate we’re burning fossil fuels—and moving carbon from beneath the ground to the atmosphere—we’ll double-glaze the planet by early next century, with unknowable consequences. By about the same time, our heirs will be dealing with greatly increased levels of ultraviolet radiation and a vast accumulation of man-made toxins and nuclear wastes. We’ll also have harvested most of the forests on earth, depleted most of the topsoil and dried up most of the aquifers.
The root cause of this march toward ecological oblivion is our much-hailed market system, which does a fantastic job of churning out goods but fails to pay the social and environmental costs of this production. Now that statist economies have been exposed as inefficient, ugly and demoralizing, no one dares challenge the primacy of the market. What, then, are we to do?
Hawken’s answer is to preserve what’s best about the market system—its relentless drive to innovate—and fix what’s wrong: its habit of ignoring “external” costs, or shifting them to taxpayers and future generations. He would correct this flaw by gradually replacing our current cacophony of income, payroll and corporate taxes with virtuous taxes on nonrenewable resources, emissions, toxins and other “bads.”
The real purpose of these “green taxes” would not be to raise revenue for government (although they would do that) but to make the prices we pay for everything reflect the full social and environmental costs of production. These newly internalized costs would be like trim-tabs, steering private economic activity toward sustainable practices. Businesses would do the right thing, ecologically speaking, not out of altruism but because it would be in their bottom-line interest to do so. Jobs would sprout in energy conservation and renewable energy, organic farming, recycling and remanufacturing, and other nondestructive activities. Human ingenuity would be applied to living lightly on the earth instead of devouring our natural inheritance. In Hawken’s blueprint, green taxes would be phased in over twenty years to give businesses time to adjust and innovate.
I LIKE Hawken’s vision a lot. It has utopian undertones, but is just pragmatic enough to offer long-term hope. Indeed, I can’t find any other way to envision the future that doesn’t lead quickly to despair. Yet, as with most grand visions, the problems lie in getting from here to there. Green taxes are not a new idea. They were proposed in 1920 by English economist Arthur Pigou, touted by many (including Amory Lovins, Herman Daly and Vice President Al Gore) since then and tried just enough to reveal how much opposition they arouse.
Consider President Clinton’s proposal in early 1993 for a modest B.T.U. tax on nonrenewable energy. The tax was quickly clobbered by lobbyists for the oil, natural gas and coal industries. Or consider tobacco, lethal not just to future generations but to millions living today. A University of California study estimated the social costs of tobacco in that state—mostly lost wages and higher health care costs—at $3.43 per pack. After many months of calling “sin taxes” an ideal way to pay for health care reform, the most Clinton dared ask for was a tax of 75 cents per pack.
Problem #1, in short, is that our political system suffers from the same myopia as the economic system we’re asking it to fix. Taxes don’t get enacted because they are morally or ecologically right; they get enacted because those who back them have economic power. Since trees and unborn children don’t write checks, they tend to be out-lobbied by businesses that do.
Problem #2 is that before we can arrive at a new economic order, we must pass through a transition. Transitions—even the gradual kind envisioned by Hawken are never painless. Jobs in old industries disappear faster than jobs in new industries can replace them—and the new jobs usually pay less than the old. Moreover, as we start paying costs that until now we heedlessly ignored or deferred, standards of living will fall, perhaps dramatically. Absent military threats, democracies don’t willingly absorb short-term pain, even if there’s a credible promise of long-term gain. Thus the herculean challenge: how to navigate a transition that is (a) opposed by powerful economic interests and (b) not very appealing to the masses.
Problem #3 is other First and Second World countries—our competitors and potential competitors in the global economy. As Hawken notes, capital now flies without a whit of ecological concern to anywhere on the planet that offers a minutely superior rate of return. It’s therefore hard to imagine the United States going down a green path if China, Thailand, Mexico, et. al., don’t tag along. Which means the fight for green taxes must be waged not only in Washington but also in Beijing, Tokyo, Moscow and scores of other capitals at the same time. The difficulty of such a global battle both daunts the mind and supports the notion that international efforts aimed at harmonizing economic policies, such as NAFTA and GATT, are essential building blocks to a sustainable world economy, however misguided they seem at the moment.
Problem #4 is the Third World—the human majority—which is rightfully resentful that the First World, having built its wealth at the expense of the environment, now asks those playing catch-up to preserve their forests and leave their cheap coal in the ground. A wealth transfer of some magnitude will be necessary to “sell” sustainable development to the poorer regions. But that raises the cost—and the political unpalatability—to the First World.
Problem #5 is the sheer scale of the costing changes that will be needed. To make the transition seem manageable, Hawken points out that a $2 per gallon tax on gasoline, which is less than most Europeans already pay, would replace about half of what Americans now pay in income taxes, and that other green taxes could easily make up the difference. But the very fact that Europeans already pay high energy prices and are still plundering the environment, albeit somewhat less profligately than Americans, underscores the reality that green fees will have to go far beyond the level needed to replace current tax revenues if they are truly to promote sustainability.
HAWKEN’s eloquent, often poetic book thus leaves many questions unanswered—but what visionary work does not? It is the point, primarily, of such books to inspire, and Hawken’s does that job well. What remain are the messier details of building political coalitions, plotting tactics, growing socially responsible businesses and altering life styles. It is from the combined momentum of such messy details that history advances.
Despite all the problems enumerated above, I do believe the economy of the late twenty-first century will resemble Paul Hawken’s vision. We probably won’t get there smoothly or intentionally or even willingly, but if we don’t get there at all it will be because we’ve sunk into a deep collective tragedy. My guess is that things will get worse—much worse, but not irreparably worse—before there’s sufficient political will to adopt serious green taxes. A defining event, like the collapse of the Soviet Union, may also be necessary—and it may be an event of tragic proportions. But capitalism is a living system that cannot stand still. It will not be overthrown, as Marx predicted; it will evolve and survive with better rules and calculi to guide productive behavior. That is the logic of nature and of history.