The capitalist system (along with the institution of public corporations) is set up so that the heads of corporations want to maximize shareholder returns. This is usually a good thing, requiring companies to innovate, be efficient and thrifty, and produce products or services they can sell at a profit (i.e., that people need or want).
Like I said, a good system (that the left hates). That is until government distorts the incentives (which I hate).
Now 10 large industrial companies have announced this week that they are getting on the "carbon cap" bandwagon. As SmartMoney reports [links original]:
Ten industry giants — with business operations spanning the utilities, manufacturing, chemicals and financial-services sectors — joined forces with four environmental groups to pressure the Bush administration to set mandatory limits on carbon dioxide emissions.
The coalition is aiming to reduce greenhouse-gas emissions by 10% to 30% over the next 15 years.
But don't be fooled. It wasn't their concern for polar bears, but their desire to make more money at the expense of the taxpayers, their competitors, and their customers. Gives a whole new definition to "going green."
As Kimberly A. Strassel reports in The Wall Street Journal (free here):
Democrats want to flog the global warming theme through 2008 and they'll take what help they can get, even if it means cozying up to executives whose goal is to enrich their firms. Right now, the corporate giants calling for a mandatory carbon cap serve too useful a political purpose for anyone to delve into their baser motives.
The Climate Action Partnership, a group of 10 major companies that made headlines this week with its call for a national limit on carbon dioxide emissions, would surely feign shock at such an accusation. After all, their plea was carefully timed to coincide with President Bush's State of the Union capitulation on global warming, and it had the desired PR effect. The media dutifully declared that "even" business now recognized the climate threat. Sen. Barbara Boxer, who begins marathon hearings on warming next week, lauded the corporate angels for thinking of the "common good."
How are they going to enrich their firms? Ms. Strassel enumerates their various plans:
Four of the affiliates--Duke, PG&E, FPL and PNM Resources--are utilities that have made big bets on wind, hydroelectric and nuclear power. So a Kyoto program would reward them for simply enacting their business plan, and simultaneously sock it to their competitors. Duke also owns Cinergy, which relies heavily on dirty, CO2-emitting coal plants. But Cinergy will soon have to replace those plants with cleaner equipment. Under a Kyoto, it'll get paid for its trouble.
DuPont has been plunging into biofuels, the use of which would soar under a cap. Somebody has to cobble together all these complex trading deals, so say hello to Lehman Brothers. Caterpillar has invested heavily in new engines that generate "clean energy." British Petroleum is mostly doing public penance for its dirty oil habit, but also gets a plug for its own biofuels venture.
Finally, there's General Electric, whose CEO Jeffrey Immelt these days spends as much time in Washington as Connecticut. GE makes all the solar equipment and wind turbines (at $2 million a pop) that utilities would have to buy under a climate regime. GE's revenue from environmental products long ago passed the $10 billion mark, and it doesn't take much "ecomagination" to see why Mr. Immelt is leading the pack of climate profiteers.
CEOs are quick learners, and even those who would get smacked by a carbon cap are now devising ways to make warming work to their political advantage. The "most creative" prize goes to steel giant Nucor. Steven Rowlan, the company's environmental director, doesn't want carbon caps in the U.S.--oh, no. The smarter answer, he explains, would be for the U.S. to impose trade restrictions on foreign firms that aren't environmentally clean. Global warming as foil for trade protectionism: Chuck Schumer's dream.
Big business is always fast to swing with the political air currents like a GE-built wind turbine. And if they can use the government to restrict competition, increase demand for their products, or use taxpayer money to update their equipment, all the better. Meanwhile, the Democrats have an environmental issue they can flog Republicans with through '08, using Big Business as part of their coalition.
Always be wary when big government combines with big business. The solution of course, is only to have small government.
But no such luck.
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