Productivity vs. Efficiency

Why capitalists find it hard to inhale clean air

by Bryan Zepp Jamieson

09/27/03

http://www.zeppscommentaries.com/Science&Environment/pve.htm

The White House Office of Management and Budget just released a report that concludes, according to the Washington Post, that "that the health and social benefits of enforcing tough new clean-air regulations during the past decade were five to seven times greater in economic terms than were the costs of complying with the rules."

The report – and let me reiterate, this is from the OMB, which is part of George’s White House – states that between 1991 and 2001, industry spent some $23 to $26 billion on regulatory compliance. There are quite a few corporations that made at least that much in net profit alone over that ten year period. Bill Gates ALONE could have covered the costs, and kept half his fortune. This week’s report replaced a previous report that was found to have been factually deficient, or, in technical terms, "A great steaming load of GOP bullshit."

The economy produced some $70 trillion in goods and services over that period, and a quick glance at the stock market over that period will show that about a third of that went to profit. Which means that regulatory compliance took about one tenth of one percent out of net profits. Something to keep in mind the next time some greedhead yammers that regulatory burdens are why he’s shipping his factories overseas to some southeast Asian hellhole where labor costs $5 a day. Oh, and could we please keep spending $300 billion a year on our military so we can cover his ass incase the locals get fed up with him, and nationalize his plants or something?

The report discussed something else: it mentioned the BENEFITS of regulatory compliance. The Washington Post described those this way: "The value of reductions in hospitalization and emergency room visits, premature deaths and lost workdays resulting from improved air quality were estimated between $120 billion and $193 billion from October 1992 to September 2002."

That’s just the national respiratory benefits.

The concept that environmental regulations more than pay for themselves isn’t a new one, of course. It’s just that we get an endless barrage of propaganda from AM talk radio, libertarians, industry leaders, and the GOP about how government regulation is destroying productivity and efficiency, making America incapable of competing in the "global market place." This propaganda is a lie.

A joint task force of the EPA and industry concluded in 1999 that the economic impact of the Clean Air / Clean Water Act was a net SAVINGS since 1973 of FIVE TRILLION ($5,000,000,000,000) dollars. That report included the same list of health benefits the OMB used, along with the actual improved operating costs of the various industries that had to retrofit, upgrade and renovate.

It doesn’t take much in the way of common sense to realize that clean industry is more efficient than dirty industry. A factory’s efficiency can be measured by the amount of waste material it puts out, and the amount of waste heat. If a factory is designed from the start to minimize that waste, then it can’t help but be more efficient, requiring less raw material, less energy to run, less down time, and yes, even less labor.

If you hadn’t heard of that joint EPA / Industry report, and if the most recent OMB report quickly vanishes from sight, if your local media bothers to report it at all, don’t be surprised. Billions have been spent on convincing the public that environmental regulations are wasteful, unnecessary, illogical, and detrimental to America. They put out stories about farmers who get fined immense amounts for plowing their fields, or how thousands lose jobs because of snail darters, spotted owls, or salmon, and opine through AM radio and the editorial pages that environmentally safe cars are more expensive and less safe than gas-guzzling SUVs. (Studies show that SUVs are actually LESS safe, if only by a minuscule amount, then the typical four-passenger sedan).

So why would this tiny coterie of industrialists, ideologues and demagogues spend the billions they do each year to convince you that clean industry is bad?

Simple: the net savings would go to ALL of us, and not just that small set of groups. Having to share the benefits is bad enough, but in most cases, industries don’t want the benefits because they represent deferred profits. Compliance with regulations might save a company a couple of million a year, but if the cost of being compliant is $5 million, that means either no profits for two and a half years, which causes the shareholders to all flee, or profits reduced for ten or twenty years, with the extra cost of the loans factored in. (Not mentioned in these plaintive wails is that the taxpayer usually picks up the tab one way or another because the interest on the loans is usually 100% tax deductible, and in some instances "greening" results in a return of 50 or 75 percent on the principal, since federal and state governments underwrite a lot of the improvements required for environmental benefits.

It’s a sweet deal for them. The trouble is that in the short run, it’s an even sweeter deal for them to simply fight the regulations and, at the first opportunity, move to some third world country where labor is dirt cheap and nobody much cares if the company poisons the neighborhood, all the while blaming it on our fetish for healthy air and clean water. Why do you think they fought so hard for "free trade"? They wanted to have the taxpayer underwrite moving to these places, as well!

It’s definitely worth it for them to convince us to vote against our own best interests.

In the same vein, they are fighting hard to keep medical coverage entirely privatized (that way, we have to pay for the illnesses we get from their pollution) and are also fighting to limit the amount of damages we can collect when we sue them ("tort reform"), and even make it impossible to sue in the first place.

In return, they promise higher productivity, which, they assure us, is an unalloyed blessing. Productivity is nothing more than the amount of revenue and profit produced in comparison to costs. A factory that pays its workers $35 an hour isn’t likely to be as "productive" as one that pays its workers $5 a day. A factory that can simply dump waste material into the air and water is going to be more "productive" than one that doesn’t – even if it’s much less efficient, and in the end, is going to lose money.

"Productivity," the way the right uses the word, reminds me of the Proctor and Ward comedy routine of the law firm Dewey, Scroom and Howe, whose motto was "We cheat the other guy and pass the savings on to you!"

Unless you happen to be one of the fortunate 1% of the population who own 60% of the stock market and nearly 50% of the entire American economy, you are not the one getting the savings; you are the "other guy;" you are the one getting cheated.

For the rest of us, we get our wages undermined and our families sickened, because that makes for better productivity, and we live in a mad and self-defeating economy where efficiency is actually regarded as being bad for productivity!

It’s a sweet deal: they get rich, and we get screwed.