Paul Craig Roberts and Noam Chomsky
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Rob: Now, my next question, well, is going to be about climate change. What role will climate change play in the future of economics and world power balances? Why don't you keep going Noam.
NC: Well, if current tendencies persist, we are reaching a point where there'll be a substantial rise in sea level, inundating coastal planes -- that could mean millions of people dying in Bangladesh, inundating cities -- most major cities are coastal cities -- in Boston, New York, San Francisco, others...
NC: Yeah, Miami -- much worse in the global south typically. We're already at a level of species extinction that is comparable to what happened 65 million years ago when a huge asteroid hit the earth and ended the age of the dinosaurs and opened the possibility for small mammals to survive...ultimately us. That level of species extinction is now being matched and it's going to increase. All of these are really catastrophic consequences, unpredictable in fact. You can't even talk about the global economy -- it's going to have far more harmful consequences than that. And it's not that far off. We're marching toward the precipice.
Rob: I have to wonder, will...there are some people and companies that seem to want this to happen. What will happen to the economy, to the world, and the power balance in the world?
NC: Well, I think this goes back to a point that Paul made. Take say, Exxon Mobil...you know, biggest energy corporation. I mean, it's not that they want these catastrophes to happen. It's that the logic of the institutional framework in which they function is almost compelling them, unless there are external pressures, to march toward that precipice. They have recently announced, Exxon Mobil, that they are going to intensify their focus on fossil fuel extraction instead of alternatives because it is simply so much more profitable.
Chevron, another major energy corporation, had a small sustainable energy program that was doing ok -- it was profitable, but they just shut it down because the profits are so much greater on extraction of fossil fuels. Within the given institutional logic, you can't really blame the managers and directors for choosing these options -- they simply have no choice within that framework, or very little choice. There was a day when Henry Ford could manage the considerations that Paul was talking about -- he could see I've got to pay the workers $5.00 per hour or else there won't be anybody to buy my cars. But there aren't...the contemporary institutions don't allow that.
PCR: Yes, I can remember when I was going to university, we were taught that corporations had responsibility to shareholders but also to employees, to customers, to the communities...and that they had to balance those. But what happened, I can't remember exactly when, but all of the responsibilities were eliminated, except to shareholders. And so, as Noam Chomsky said earlier, if you get pressure to move jobs offshore where the labor costs are substantially slower and the profits rise, and you resist, then Wall Street simply says 'if you resist we're going to finance a takeover, and we'll have somebody there who will move them.'
So it's this sort of short-run focus on profits that makes it hard, or in fact I would say impossible, like Chomsky believes, for these kinds of issues to be responsibly dealt with. So if everyone is operating on a short run basis, focused only on return to executives and shareholders, then you destroy the system. And what surprises me is how many corporate interests fund groups and economists to go around saying that there is no global warming -- they still deny it as a climate problem. This is very prominent among what they call free market economists. It's seen as some sort of government propaganda in order to takeover business or to limit growth.
If you look at economic theory even, it supports these kinds of notions because the science is built up on a production function known as the Stiglitz Solow Production Function -- two Nobel Laureates. And the assumption is that man-made capital is a perfect substitute for Nature's capital. And so what that says is you can never run out of resources. And so the whole notion of depletion or depleting the sinks in the environment...they can absorb waste -- it's difficult to get economists to even think about that. So you even have, on top of the other failure, you have this sort of major intellectual failure.
Rob: It seems like...
NC: If I could make one suggestion. I'd suggest that you invite Bob Solow on the program because I'm pretty confident, though he would understand the logic of what Paul just described, he would not accept the consequences. That'd be interesting to hear why.
Rob: Well we can work on that. It seems like both of you agree that it's basically the nature of the corporation that is causing the problem.
PCR: It's the incentive...it's the incentives placed before them.