Message From the President: Unsustainable Policies

Message From the President: Unsustainable Policies

March 31, 1996

In March the President’s Council on Sustainable Development (PCSD), made up of governmental, environmental and business leaders, presented to President Clinton its final report, Sustainable America. Impressed by this document, the New York Times reported a truce between environmentalists and businessmen over environmental issues. Apparently, both agree that the GOP freshman are too radical and that Congress should not roll back environmental regulation.

Ever the font of pro-government conventional wisdom, the Times fails to realize that industry often finds government regulation desirable. In fact, most lobbying efforts are designed to secure regulation which improves a firm’s or an industry’s competitive advantage over its rivals. For example, the Archer Daniels Midland Company pressed hard for a rule in the Clean Air Act that would guarantee a market share for ethanol, despite the lack of clear environmental gains from such a rule. The book Environmental Politics: Public Costs, Private Rewards exhibits several examples of such rent-seeking behavior.

That said, the PCSD report serves two primary purposes. First, it gives credence to a whole array of discredited and failed welfare state programs. For example, the council calls for an adequate minimum wage, more federal job training, greater federal involvement in education, more foreign aid, an expansion of Medicaid, more funding of family planning services, greater federal involvement in agriculture, increased daycare programs, etc., all to ensure better environmental protection.

Second, the report recommends new environmental programs which would further exacerbate the anti-competitive and anti-growth features of environmental laws. Particularly objectionable is the recommendation for extended product responsibility. Under this system manufacturers, suppliers, users, and disposers of products share responsibility for the environmental effects of products and waste streams.

This proposal would lessen rather than expand responsibility. In the market, the books are cleared at each stage of a product’s life-cycle, allowing each agent to consider the costs of his or her own actions. Extending liability throughout the life-cycle would force each agent, when determining costs, to consider a whole range of possible costs imposed by others, as well as the associated probabilities. The result would be a dramatic increase in uncertainty, blurring the lines of responsibility, rampant litigation, and a decrease in risk-taking by entrepreneurs. Even though the PCSD claims to work toward economic growth, environmental health, and social justice many of its recommendations would destroy economic growth without advancing the other two goals.

The PCSD has called for extensive use of the Precautionary Principle. It states that Even in the face of scientific uncertainty, society should take reasonable actions to avert risks where the potential harm to human health or the environment is thought to be serious or irreparable. Many of the most notorious environmental scares -- dioxin, alar, asbestos, etc. -- prompted such precautionary measures. Government’s pursuit of perfect safety in the absence of reasonable scientific certainty has led to policies that are irresponsible, extremely costly and in some cases, even deadly.

Finally the report is completely devoid of any discussion of the institutions property rights, contracts, and the rule of law which have made sustainability possible. This oversight is indicative of the anti-market, pro-government bias throughout the report.

There are some redeeming qualities. The PCSD does call for the elimination of environmentally damaging subsidies. The report also constitutes a rhetorical move toward the market. However, in reality it is a thinly veiled excuse for extensive government intervention into the market. As such it should be rejected.

--Fred L. Smith