Industrys View

A human [is] not a fallen god, but a promoted reptile. —J. Howard Moore, The Universal Kinship

Figure 10.1

How Americans rate themselves as environmentalists (National Environmental Education and Training Foundation).

Figure 10.1

How Americans rate themselves as environmentalists (National Environmental Education and Training Foundation).

America has a very productive capitalist economic system. Few Americans are interested in converting to socialism. Capitalism, combined with representative government, has produced the highest standard of living the world has ever seen. Our affluence is the envy of the world. The question we face is whether businesses that must always keep at least one eye on profitability and their stockholders can afford to spend money on environmental concerns. Is this "wasted" money that adversely affects the "bottom line"? Will it cost jobs? Is the phrase "responsible capitalism" an oxymoron?

Americans share three common beliefs about environmental regulations and the economy. One is that environmental rules cause widespread unemployment. Another is that environmental regulation has led to many plant shutdowns and aggravated unemployment at the local level. And a third belief is that environmental regulation has caused lots of companies to build new plants overseas where they can escape onerous environmental rules. However, when unemployment and economic data from the past 30 years are analyzed, all three beliefs turn out to be false. Nearly all economists agree that these three beliefs have no basis in reality.

Table 10.1

What the American public believes about existing laws that deal with environmental problems

Type of environmental problem

Table 10.1

What the American public believes about existing laws that deal with environmental problems

Type of environmental problem

(%)

Protecting wild or natural areas

(%)

Protecting endangered species of plants and animals

(%)

Have not gone far enough

72

62

48

44

41

Have struck about the right balance

19

24

32

27

33

Have gone too far

4

8

13

15

21

Don't know

6

6

7

14

5

Source: National Environmental Education and Training Foundation.

Source: National Environmental Education and Training Foundation.

A good example of the attitude of industry through most of the twentieth century is provided by the response of the automobile industry in the late 1960s to the Clean Air Act, passed over their strong opposition in 1970. The industry has an important role in our economy, so any threat to it is taken seriously by legislators, who are rightfully fearful of damaging economic growth. Auto executives used this fear to manipulate policymakers. The Automobile Manufacturers Association said that "to achieve the control levels specified in the bill ... [Manufacturers ... would be forced to shut down." Lee Iacocca, as vice president of the Ford Motor Company, warned that, should the Clean Air Act become law, "We could be just around the corner from a complete shutdown of the U.S. auto industry ... " He called the Clean Air Act "a threat to the entire American economy and to every person in America." He added that the emission standards were "in two words: IM POSSIBLE." As a final comment, he said "We've got to pause and ask ourselves: How much clean air do we need?"1

Despite Iacocca's prognostications, which, of course, were mistaken, the Clean Air Act, now recognized as an essential cog in the wheel of environmental protection and cleanup, became law. However, the automakers subsequently convinced Congress and the EPA that limits could not be met and the automakers were granted extensions. These extensions were granted to American automakers at the same time foreign manufacturers were meeting and exceeding the EPA's requirements.

Many American companies are starting to realize the falsity of their assumptions about the effect of environmental rules on their financial health. They are beginning to build environmental considerations into their business plans. They spend over $1 billion a year on out-of-house media advertisements, and those that deal with the environment aim to convince the public of their leadership in the area of environmental sensitivity. There is more recognition by companies that there may be an economic advantage to reducing emissions of greenhouse gases.

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