A conflict of interest on the grandest of scales

Drought, floods, air pollution and political unrest. That is just part of the climate change nightmare we are leaving to future generations, as described in an important report issued late last week by the US government.

Most of the conflicts of interest discussed in this blog over the past six years have been individual COIs – where a person has interests that are actually (or apparently or potentially) at odds with those of her employer or other principal. To a lesser extent, we have also covered organizational COIs – where an entity (e.g., a health care provider or investment bank) has interests that conflict with those of persons or firms to whom they owe a duty of loyalty (as a matter of law or otherwise).

Far less common in our prior posts than either of these is a COI type that might be called a societal – meaning a set of circumstances where an individual or entity with relevant decision making power has interests that diverge from those of society as a whole (or least much thereof). Of course, if taken literally such a condition could be attributed to almost any individual or entity, but a societal COI analysis should focus on the cases of the greatest peril to society.

The most worrisome societal COIs (at least to me) are those where the interests of decision makers today do not align well with those of the people who will be affected by the former’s decisions in the future. Deficit spending is a good example of this. But the mother of all societal COIs is undoubtedly climate change.

What does it mean to be faced with a societal conflict of interest? As with any COI, affected decision makers should respond with a heightened sense of ethical duty – including demonstrating an appropriate tone at the top, being humble as well as virtuous, maintaining an alertness to risk and deploying compliance and ethics “tools” (e.g., communications, checking) as warranted.

But by their nature and size, societal COIs are much more difficult to mitigate than are other sorts. Ultimately, the most effective response is structural – meaning taking measures addressed to modifying the underlying COI conditions themselves.

However, this can be a daunting task. Given the political nature of some societal COIs, mitigation should (in my view)  be bi-partisan/moderate in nature to have real chance of succeeding. Moreover, as a matter of not just politics but also economics, I believe that such solutions should be as market based as is reasonably possible.

So, is it possible to do all of this?

Only time – of which we may have too little – will tell, but a very promising approach is the Carbon Fee and Dividend proposal by the Citizens Climate Lobby  (“CCL,” about which I have blogged before). As described on that organization’s web site: “A national, revenue-neutral carbon fee-and-dividend system …would place a predictable, steadily rising price on carbon, with all fees collected minus administrative costs returned to households as a monthly energy dividend. In just 20 years, studies show, such a system could reduce carbon emissions to 50% of 1990 levels while adding 2.8 million jobs to the American economy.” In short, this policy would help reduce the societal COI – as today’s decision makers would bear the costs of their undesirable actions, rather than continuing to push the burden almost entirely to the future, as is currently the case.

But does the plan have the potential to succeed in these bitterly partisan times? Importantly, CCL’s efforts are bolstered by those of the Climate Solutions Caucus in the House of Representatives consisting of 30 Republicans and 30 Democrats. Moreover, the fact that, unlike some other climate change proposals, this one is revenue neutral and market based gives it a real chance to secure support from across the political spectrum,

There is a lot more information about the Carbon Fee and Dividend on the CCL web site and I encourage you to read it and consider joining the organization, which seems to offer a solution that is as good a vehicle as any for mitigating this vast and potentially calamitous conflict between present and future interests.

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