AndyMannle.com

Andy Mannle        Environmental Leader        July 20, 2010

In 2008, I published an article titled “Why the Wall St Meltdown is a Tragedy of the Commons.” Now in 2010, as oil washes ashore in five states, we are witnessing another great tragedy of the commons, and the similarities are scary. Can we use this crisis to create systems which protect our shared resources in a way that is fair, transparent and profitable for all of us? Here’s why we must try.

Haven’t We Seen This Before?

In the fall of 2008, the founder of AIG said essentially: “I would never have believed it could fail, never in a million years.” Now it’s the oil companies who are saying they never believed this could happen – in fact, they assured the government that the probability for such a disaster was 0%, which is why their budgets for disaster prevention in many years have been exactly zero dollars. Yet it has happened, and is still happening.

And just like the financial industry benefited for years from deregulation and cozy relationships with government agencies before their major meltdown, the top five oil companies generated over $1 trillion in profits in 2009, while the government rubber-stamped safety plans containing references to protecting walruses and contact information for deceased government officials.

When Wall St. melted down I wrote, “while our economy and our population have grown, our planet has not. We are digging up and melting down everything we can get our hands on to feed this enormous economy we have created. And while this has created jobs, and brought millions out of poverty, it has also funneled increasing amounts of wealth into increasingly few hands.”

Fast forward to 2010, and nothing has changed. Our major economic engines still exploit public resources, and risk public safety in the name of private profit. As the familiar story of lax regulation, safety short-cuts, and inept clean-up response unfolds in the Gulf it is clear that the corporate system has failed us once again. As Obama takes to the Oval Office to proclaim that we must wean ourselves off foreign oil, and pundits produce clips of every president since Nixon saying exactly the same thing, it is clear that our political system is also unable to address the enormous challenges we face on energy and the environment.

As I wrote back then:

“The modern capitalist system is the most effective motivator the world has ever seen. It is the most efficient system ever designed for transforming natural resources into goods and shipping them around the world, where they are quickly reduced to waste. It is a cycle of constant demand, and it is incredibly successful. Unfortunately, the more successful a flawed system, the more spectacularly it fails. But whereas the wins of the system were private, the losses are now being made public. Because the economy is a commons, in the end we either all win, or we all lose.”

Wealth and Illth

As oil continued to pour into the Gulf, the BP disaster is a stunning example of how we all lose under our current system when something inevitably goes wrong. And it is also a reminder of how much more there is to lose in the next inevitable disaster. Lives, livelihoods, coastlines, and wildlife are all at stake here. The reality is that our current system produces profits by taking things from nature, but there are two sides of the economic coin: wealth and illth. We all know what wealth is, but what is illth? This is the term economist John Ruskin gave to the negative effects of an economic system; what economists refer to as “negative externalities” – like poverty, pollution, disease and desperation. The concept of externalities is a good reminder that economic systems operate within larger social and ecological systems. The problem is that while the economic profits are private, the social and ecological illth is public.

The question is – what can we do about it? There is an ongoing struggle between political power and corporate power that has gone on for years. It is a cycle in which money leads to political influence; highly-paid lobbyists fight for lax oversight; risky profits are prioritized over safety; and the result is a crash, disaster, or failure. Then the inevitable public outcry spurs outraged politicians to drag recalcitrant CEO’s to Capitol Hill; apologies are accepted, new rules are written, and the cycle quietly starts all over again.

But what if we could design institutions that would protect natural resources from both the fickle winds of politics and the relentless profit motive of corporations? Institutions that would combine the transparent legal structures and revenue-generating potential of business, with the mission of politics to protect the public interest? And beyond that, institutions that could also represent the needs of other species, ecosystems, and future generations? Thankfully, these institutions already exist.

Three Types of Commons

As Americans, we are familiar with the famous words of our founders that we are endowed by our creator with certain unalienable rights. But we are also endowed with certain irreplaceable gifts. And these gifts are the common assets handed down to us that we all share.

In his book Capitalism 3.0 – A Guide to Reclaiming the Commons, author Peter Barnes describes three categories of shared gifts: natural gifts like seeds, topsoil, minerals, wetlands, and solar energy; community gifts like streets, playgrounds, holidays, museums, capital markets, laws, and money; and cultural gifts like language, religion, music, science, the airwaves, and open source software. These common gifts allow our social, political and economic systems to function. Indeed, without the gift of natural resources, we wouldn’t survive at all.

This means we have a shared responsibility to preserve these gifts for other species and future generations. Or as Bill McDonough says, we have a responsibility to design a system which works for “all children, of all species, for all time.”

Whose Oil is it Anyway?

The first step in designing this type of system is to re-envision our roles in society. As citizens we are not just consumers and employees. We are also co-owners of America’s forests, minerals, and coastlines. As citizens, we are the owners of our parks and plazas, our freeways and waterways. We are the owners of our airwaves, our public universities and our intellectual property. And as taxpayers, we are investors in the future of these shared resources.

In the wake of the oil spill President Obama committed BP to setting up a $20 billion escrow account to provide for the victims. But what if we had public trust funds not just for the victims of the disaster, but for the owners of these natural resources in the first place?

As Congressman Markey pointed out in a recent hearing, “Right now every single one of the companies here today and dozens of others are drilling for free in the Gulf of Mexico on leases that will cost American taxpayers more than $50 billion dollars in lost royalties.”

And Big Oil is not the only industry that uses government influence to generate enormous profits at taxpayer expense. In Barnes’ book he offers numerous examples:

• The timber industry spent $8 million in campaign contributions to preserve a logging road subsidy worth $458 million.
• A pharmaceutical company invested $1.2 million in campaign contributions to get a patent extension worth $1 billion.
• The tobacco industry spent $30 million in political donations for a tax break worth $50 billion.
• Broadcasters spent $5 million in campaign contributions to secure free digital TV licenses worth $70 billion.

These tax breaks and subsidies represent profits not just of 30% or 100%, but 5000 percent, 100,000 percent or in the case of broadcasters – “an incredible 1,400,000 percent return on their investment.” Time Magazine’s recent cover story “The Best Laws Money can Buy” details how lobbyists were paid $15 million to fight for a provision in the financial reform bill that would save the firms who hired them $10 billion in taxes.

This type of influence dominates the system of politics no matter which party is in power. It’s really no wonder that oil companies can generate trillions of dollars in profits, maintain billions of dollars in government subsidies, and spend virtually nothing on ensuring public safety or investing in renewable alternatives. Because this is how corporate power has designed the system to work.

Clearly, we need a new system.

Common Assets: One Person – One Share

As the world becomes a common global culture, and addresses shared global challenges like climate change, we must develop institutions that serve the common good and protect our common assets. In addition, we must develop an economic system that protects – rather than ignores – the interests of other species, ecosystems, and future generations; because their collapse threatens us all. (As I’ve argued in the past, Mother Nature is definitely “too big to fail.”)

One way to do this is to establish legal structures that pay people dividends – one-person-one-share – of the revenues generated by these common assets. Thankfully there are many such models in existence. The Alaska Permanent Fund is a prime example.

In the 1970’s the Republican governor of Alaska pushed for a system where 25% of the state’s oil revenue flows into the Alaska Permanent Fund, “to be invested on behalf of all Alaskans equally.” Since the 1980’s the fund has grown to over $30 billion dollars. Invested in stocks and bonds, it will continue to pay out annual dividends to all Alaskans even after the oil runs out. Barnes writes, “Economist Vernon Smith, a Nobel laureate and libertarian scholar at the Cato Institute, has called it “a model [that] governments all over the world would be well-advised to copy.”

What if we were to adopt such a system nationally?

The Cantwell-Collins CLEAR act takes a step in this direction by introducing a “cap-and-dividend” approach to pollution pricing. I wrote about this recently in “Why Congress should take a CLEAR approach to Climate Change.” This system would pay all Americans equally for the profits generated by putting a price on carbon – which economists unanimously agree is the first step toward weaning ourselves off fossil fuels. As Bill McKibbens writes in On The Commons, “Cap-and-dividend makes sense to people— it sounds fair. It also sounds post-partisan: It’s a new way of thinking about taxation that should appeal to conservatives as easily as liberals.”

Creating institutions that reward all citizens equally for their stake in stewarding natural resources would go a long way toward overcoming the political stalemate we face on weaning ourselves from fossil fuels and investing in clean energy.

Beyond natural resources, there are many other valuable common assets that could also be used to create a public trust fund, including our regulated stock markets, our patent and copyright protection, and our digital bandwidth. If corporations wanting to use these assets paid a small percentage off the top to the owners – we the people – then an “American Permanent Fund” worth trillions of dollars could be established to protect common assets, manage them profitably, and distribute the dividends equally.

As the nation watched – impotent to stop the oil gushing from that broken pipe deep in the Gulf – we must know that unless we act, we will be powerless to prevent the next accident as well. And the next disaster might not be in our financial or energy systems, but in the systems we depend on for food and water.

If we do nothing more than swab the beaches and pay financial reparations, it’s inevitable that we will see more environmental and economic disasters, and we will again be asked to bear the burden and bail out the perpetrators. If we don’t make the effort to establish a new set of institutions to protect our common assets, then they will continue to be privatized, consumed, and destroyed.

To prevent future disasters we must look beyond the blow-out preventers and cynical CEOs, and redesign the political and market systems that continually create these crises. To fight global warming and create a clean energy economy we must develop blended institutions that give every citizen not just a vote, but an actual share in the system.

And we must do it soon, because the next Tragedy of the Commons is only a matter of time.