Two conflicts of the apocalypse

The COI Blog has, since its launch in 2011, examined a host of different types of conflicts.  (For those new to the blog, you can explore this “parade of horribles” through the various tabs and sub-tabs to your left on this site.)  But, of course, not all conflicts should be of equal concern. Rather, and as described in this earlier post,  worrisome conflicts typically involve one of several types of “market failures,” as those are the conflicts  for which market mechanisms provide insufficient corrective capacities. Indeed, that is only part of the picture, because while a market failure analysis can explain the likelihood  of an unaddressed COI, the possible impact of a COI is important too. And, at the risk of drifting into the realm of politics (which I have tried to keep this blog out of in its young life) there seem to be two areas involving COIs that could have a  truly apocalyptic impact on our society, both politically charged.

One of these is public debt, and particularly the conflict in saddling future generations with an insurmountable debt burden.  Indeed,  two of the principal areas of focus of this blog are highly relevant to the risks here: behavioral ethics, and particularly the phenomenon of overly discounting the future; and moral hazard (i.e., present generation takes the risks, future generations bear the costs).

But in addition to these two structural conflict-like challenges in dealing with public debt there are also plain-old COIs to be identified and addressed.  As noted in an article last week in the NY Times – in discussing an investigation by New York’s financial services superintendent into COIs in the handling of the state’s pension funds – COIs may have played a role in leading Detroit to what is clearly a financial apocalypse: the city’s “municipal pension fund suffered severe losses on real estate investments, among other problems, and now that the city is bankrupt, investigators are trying to find out exactly what went wrong. In some cases, certain Detroit pension trustees were taken on junkets dressed up as investment site inspections. And in one instance, an investment promoter paid a bribe to win pension money for real estate projects in the Caribbean but then spent the money building an $8.5 million mansion in Georgia.”

Of course, whatever COIs may have existed or still exist in any state or municipality likely cannot explain more than a small fraction of the entity’s debt.  But conflicts can undermine the trust and sense of shared sacrifice that will be needed to work our way out of these debts – in the same way that a COI can undermine the sense of organizational justice needed to promote compliance and ethics generally in an organization, as discussed in this post.  Another way to think about this is that COIs not only directly cause individual harms but they can make it harder to prevent and remediate a broad range of harms. For this reason, COIs in the public pension area seem to deserve an extra degree of attention, and investigations like that now taking place in New York are, in my view, worth pursuing.

The other area where – given the potential harmful impact at issue – we need to be extra careful about COIs is, of course, climate change.  Here the prospect of an apocalypse dwarfs even that in the area of public debt.

The principal COI issues here concern the science of climate change, and particularly the extent to which those speaking to those issues as experts have conflicting interests.  This recent post on the web site of the Union of Concerned Scientists– while clearly weighing in on one side of that issue – makes a lot of sense to me, and I urge readers of the COI Blog to read it.

Of course, I’m not a scientist and am in no position to say anything meaningful about the science involved in climate change.  But I do know something about conflicts of interest, and when – as the above post describes – scientists who have no financial interest in the issue are accused of COIs by climate change deniers who receive fossil fuel industry funding, that to me suggests not only a flawed ethical analysis but a strategy of deflecting attention from the merits of the scientific issues at hand.

More generally, given what is at stake in getting such issues right, those involved in all sides of the climate science debate have a particularly important obligation to get the ethics right. And that includes avoiding spurious charges of COIs, which can have the same trust-destroying harmful impact that actual ones do.

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