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New Bottom Line Volume 3.18 – How Can You Have Your Cake and Eat It Too When You're Talking Out of Both Sides of Your Mouth?

September 19, 1994

I have a confession: for some reason, I continue to expect a certain ideological consistency in political debate, and I’m always a bit nonplussed when advocates for the right, or the left, abandon the carefully wrought ideology to switch sides for mere self-interest. I must be naive, since this happens all the time.

Case in point: the battle royal being waged–largely outside the attention of the major media–between leading US environmental organizations and what they describe as “an all-out effort [by ‘polluters’] to weaken our most important environmental laws.” The outcome of this battle royal could have profound impact on the future course of environmental law–and on the profits of the businesses that must respond to it.

As a letter from 15 leading environmental organizations notes, “The opponents of strong environmental laws… have reduced their arguments to three simple but misleading anti-environment messages.” We examined the arguments over “Takings” and “Cost-Benefit Analysis and Comparative Risk Assessment” in previous weeks. This week, the question of “Unfunded Federal Mandates.”

As always, there is a legitimate concern behind the attack. State and local governments struggle with agonizing budget shortfalls, and face near impossible allocation decisions. Federal funding to state and local government for environmental protection has dropped over the last 15 years (in part, the environmental coalition asserts, due to the Reagan Administration’s “deliberate effort …to gut environmental programs”).

Many local and state officials have attacked what they call “unfunded federal mandates,” either saying they can’t enforce environmental laws without additional federal funding, or in some cases attacking the environmental laws themselves. There are even proposals in Congress to exempt state and local governments from any federal regulations that the federal government does not fully pay for.

It’s a simple argument, but a peculiar one at the same time–sort of robbing Peter to pay Peter. All levels of government–federal, state and local–represent us, tax us, spend funds on our behalf (though we could argue long into the night about how well). All are charged with implementing a clear public commitment to clean air and water and a healthy environment. Most people, and a growing percentage of businesses, are willing to pay for these benefits; it doesn’t matter a great deal whether they pay through local, state of federal taxes.

The solution, says the environmental coalition, “is not to roll back… environmental laws. It is to shift… budget priorities to pay for programs supported by the American people. Also, environmental bills should be paid for by polluters, not the public at large.”

It’s strange isn’t it (I confessed I’m naive), that free-market advocates should want the public to pay for pollution, sacrificing the free-market elegance of the Polluter Pays Principle. Or that the anti-big-government forces waging this attack are in effect proposing to eliminate local sovereignty by channeling all tax revenue through Washington. But of course the battle is not really about free markets; it rarely is.

” ‘Funded un-mandates’ are the real problem, not ‘unfunded mandates’,” according to David Roe, senior attorney with the Environmental Defense Fund. “The right wing argues that there should be no federal strings without federal money to pay for them. Well, there are lots of places where the same people are getting federal money without strings, and they seem happy to take it.”

For example, some 25% of public lands is used for livestock grazing, and ranchers are charged only 20-50% of the going rate charged for private grazing land. About $1.7 billion in hardrock minerals is being taken from federal land each year, with the federal government receiving little or no money in return. (In just one recent example, public rights to some $10 billion worth on public lands in Nevada was turned over to a Canadian mining company for less than $10,000.) The federal timber sale program lost $5.6 billion during the 1980’s in below-cost sales.

It’s an interesting system: public lands and resources are conveyed to private companies at below market costs. The companies extract resources, paying below-market royalties or rents; and the public picks up the environmental costs that the private operators are not willing or “able” to pay for. But even more interesting is the masquerade that the advocates of this system–including many western senators whose states benefit–are great defenders of the “free market.”

The real defenders of the free market–and its future success stories–are the businesses that are deciding to clean up their operations, accept responsibility for the real costs of their products and activities, and compete effectively on that basis.

(c) 1994 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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