New Bottom Line Volume 6.4 – Green Scissors: Cutting the Fat From Left and Right

February 12, 1997

Mahatma Gandhi was visiting England, the story goes, when a reporter asked him, “What do you think of Western Civilization?” “I think it would be a very good idea,” he reportedly replied.

I’m often tempted to say much the same about “The Free Market.” It’s all too easy to find staunch defenders of the free market with their own hands out for the handout. As Noam Chomsky has often observed, business isn’t opposed to subsidies, it’s just opposed to subsidies to the truly needy.

US House Budget Chair John Kasich offered a refreshing note of ideological consistency and — dare we say it? — political integrity recently when he observed that it would be unconscionable to push welfare reform for the poor while leaving corporate welfare untouched.

I have long felt that there is a new political alignment gestating between true believers of both left and right–between progressives more committed to justice and social well-being than to statist solutions and conservatives more committed to individual freedom and, well, conservation, than to corporate power.

A new coalition of environmentalists and deficit hawks is putting that alignment to the test. The Green Scissors coalition, a joint effort of Friends of the Earth, Taxpayers for Common $ense, and the U.S. Public Interest Research Group (U.S. PIRG) has proposed cutting some $36 billion dollars of federal projects that are destructive environmentally and bad investments of public funds. Looked at alongside the US budget deficit, that ain’t hay.

The Green Scissors coalition claims “major victories over special interests, working with a

bi-partisan team of Congressional backers to kill 11 projects targeted in earlier reports. Total taxpayer savings: Nearly $20 billion.”

This year, three quarters of the programs named in early February as targets in Kasich’s campaign against corporate welfare were listed in last year’s Green Scissors report, and appear again in Green Scissors ’97.

The target programs are varied, in both size and scope. A few examples:

  • the Animas-La Plata Project in Southwestern Colorado, that would pump half the water now flowing in the Animas River 1,000 feet uphill – using enough energy to power a city of 60,000 people – to irrigate low value surplus crops. Federal officials estimate the the $710 million project will return only 36 cents in benefits for every dollar it costs. You don’t need an MBA to know that’s not a great investment.
  • “pork barrel” water projects such as the $119 million Yazoo Backwater Pumping Plant in Mississippi, a which just happens to be supported by Senate Majority Leader Trent Lott — who by the way hails from Mississippi.
  • a plan to sell off $31 million worth of federal irrigation works to local landowners for just $2.6 million — while exempting the new owners from environmental reviews.
  • $40 million dollars in tobacco price supports. ’nuff said.

Economic development specialist Stephanie Neumann wrote some time ago: “If a company really needs [incentives], why is government subsidizing a business that the market says it doesn’t need. If it doesn’t need them, why are we giving them? Usually, the answer is ‘because large corporations know they can extort it from communities who have entered bidding wars.’ ”

Defenders of subsidies claim they are necessary because the international (or interstate, or intercity) playing field isn’t level. Well it isn’t, and never will be–and will never be leveled by jurisdictions competing to see who can offer more “pork.”

Behold the myth of the free market: riddled with subsidies that have less to do with return on investment than with political influence, skewed by the deep disconnect of price and cost (since our price system doesn’t accurately reflect the biological reality that we conveniently dismiss as ‘externalities’), and hailed by business leaders (not all, but apparently enough) who would rather be coddled by taxpayers — pushing risk down to us and profits up to them — than really play survival of the fittest.

Neumann also suggested “A piece of Trial Knowledge: All economic advancement is due to more efficiencies or to innovation.” I’d amend that: “All universal economic advancement is due to more efficiencies or to innovation. Local/sectoral economic advancement is sometimes due to externalizing costs, rather than truly minimizing them.”

What does this have to do with environment? or with business strategy? How do you do successful bidness w/o whining “Maaaa, all the other kids are doin it”? You stay focused on the real keys to business success — building value and building relationship.

At the firm level, recognize that the laws of physics trump the laws of economics, and plan accordingly. At the policy level, consider that it may be far more effective to focus on removing subsidies for the bad than adding them for the good.

[For a copy of Green Scissors ’97 contact Friends of the Earth, 202/783-7400 extension 239.]

(c) 1997 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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