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Imagining a Post Pandemic World

How might a post-pandemic world look and feel? Let’s imagine a creative team at a New York City advertising agency pitching a campaign in 2050 for a new perfume (more than most products, perfumes are sold by attaching to the dreams and aspirations of their times).  The Big Apple, ...

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Afterword to the softbound edition.


The Octopus and the Orangutan
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Silent Partners
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Why Corporations Will Soon Embrace Kyoto


This ran in TIME.com a while back under the headline, "Who's Going to Pay for Climate Change." The essay has renewed salience as concerns about changing climate surface once again. By EUGENE LINDEN The Bush administration, so warlike in response to terrorism, has revealed a pacifist streak in its approach to the threat of climate change. At meetings on the Kyoto Treaty last fall in New Delhi, U.S. delegates argued that we ought to be thinking about adapting to changing climate. The administration's position seems to have gone from doubt about the science of climate change to suggesting it is inevitable without ever acknowledging that the nation might take steps to avert the threat. The new position is a clever one: By leaving moot the question of cause, and by implying that no one could have done anything about it, the administration also implies that no one is responsible. The administration underscored its genial "no fault" approach when it recently asked industry to voluntarily reduce emissions. Nice try, but don't be surprised if there are few takers for this line of reasoning. As the costs of climate change become more obvious in everything from lost crops to wrecked real estate, victims will begin pointing fingers and businesses will begin diving for cover. John Dutton, dean emeritus of the Penn State's College of Earth and Mineral Sciences, estimates that $2.7 trillion of the $10 trillion U.S. economy is susceptible to weather-related loss of revenue, meaning that an enormous number of companies have "off balance sheet" risks related to climate. This could wound corporate America in a lot of ways, particularly as insurance companies discover this new area of risk. Most policies covering natural disasters are renewable on a yearly basis. When risks become too expensive, insurers can simply walk away. Something like this happened after the Sept. 11 attacks. Insurers suddenly realized that they had vastly underpriced the risk of terrorist attacks and stopped writing new policies. This brought many big construction projects to a standstill until President Bush signed a bill in Nov. that shifted responsibility for $100 billion of future terrorism-related losses from insurers to the taxpayers. If climate change starts inflicting losses, insurers will again head for the exits. Just such insurer flight has already caused problems in North Carolina's Outer Banks and in parts of New York's fabled Hamptons, where coastal storms are eating up homes and businesses. When insurance companies quit these high-risk places, the burden shifts to banks. But they don't have the same freedom simply to cancel mortgages and loans. What will happen to the markets if banks start demanding insurance for weather-related events that is either prohibitively expensive or completely unavailable? The climate change threat that will really get the attention of executives and boardmembers, however, is the possibility that they might be liable for damages. This could happen if insurers like financial giant SwissRe start changing the insurance policies that insulate directors and officers (called D&O insurance) from the costs of lawsuits resulting from the actions of their corporations. Businesses open themselves to lawsuits when they take a position contrary to others in their industry, and in recent cases such as asbestos litigation, courts have assessed damages proportionate to a company's contribution to a problem. Chris Walker of Swiss Re describes how this might come about with regard to climate change. He notes that energy giant Exxon/Mobil accounts for roughly 1% of global emissions, and has aggressively lobbied against any efforts to reduce greenhouse gasses. "So," says Walker, "we might then go to them and say, 'Since you don't think climate change is a problem, we're sure you won't mind if we exclude climate related lawsuits and penalties from your D&O insurance.'" Swiss Re recently set the stage for such action by sending a questionnaire to its D&O customers inquiring about their company's strategy to deal with climate change regulations. Some climate change regulation seems to be coming, whether the federal government acts or not. States such as New Jersey, Massachusetts and New York are following the lead of California, imposing their own limits on greenhouse gases and presenting businesses with the prospect of a crazy quilt of regulations. Various state attorneys general are going further, exploring ways they might sue companies for climate change-related damages. And if the Kyoto Treaty comes into force, as now seems likely this spring, countries might similarly seek trade sanctions against the U.S. for its unwillingness to abide by its terms. Faced with the prospect of class-action lawsuits, states that take a "roll your own" approach, and trade sanctions, many of those executives who are opposed to the Kyoto Treaty might begin to rethink their position, and the Bush administration might find itself abandoned by its ostensible allies. For corporate executives pondering climate change, threats to the wallet may prove far more persuasive than science. -----------------------------------------------------------------------

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Short Take

Relaxing COVID-19 Restrictions will Kill, not Save, the Economy


 

[This is a more developed version of the previous Short Take}

Those who want to relax mandates on self-isolation and social distancing to save the economy have got it exactly backwards. Reopen society too soon, and we risk destroying the economy as well as public order and our shaky democratic institutions. The reason comes down to two words: supply lines.

 Supply lines for necessities such as food are already under stress. Those going to grocery stories encounter random instances of empty shelves and vegetable bins. Smithfield Farms shut down a South Dakota plant that supplies roughly 4% of the pork in the nation after over 500 of its workers tested positive for the coronavirus. Other giant meat processors such as Tyson have also shut down plants for similar reasons. Farmers in the West are having trouble finding workers to harvest the crops now reaching maturity in the fields. And even if they manage to get the crops picked, farmers are out of luck if the truckers fail to show up, or the flow of packaging for their products get interrupted. 

Right now, these disruptions are episodic, but that should be concerning because we haven’t even seen the end of the first wave. What we have seen is that vital front-line workers such as nurses, doctors, EMT’s, and other first responders have had trouble finding protective equipment and maintaining morale. Some have staged walkouts over the dangerous conditions, and these are workers with a sense of mission.

By contrast, for most of the hourly-paid workers who keep supplies made, distributed, and sold, their work is a job that pays the bills. It would be appropriate if society recognized that they played a vital role, but mostly these workers encounter demanding bosses, monotony, and surly customers. If sick, they are not going to work – nor would we want them too. And they are not likely to risk their lives if going to work exposes them to contagion.

Disruption of one link, e.g. the trucker that delivers food the last mile, could halt a supply chain. COVID-19 is a threat to every link. Should a second wave hit before there is a readily available, cheap and effective treatment, it’s a very high probability that many supply lines will be disrupted and filling the gaps could easily overwhelm the nation’s businesses. 

Even today, on the evening news, we see images of vast caravans of cars lined up to get supplies from food banks. Imagine two weeks of empty shelves in the stores that feed our cities. How likely is it that civil order could be maintained in that situation? Will people suffer in silence if they realize that they can’t buy food for their kids because our leaders reopened the economy before a treatment was available because they wanted to prop up the stock market (which is how it will be portrayed)? If we want to look analogues for what life is like once supply chains break down, they’re readily available today in cities like Mogadishu, Kinshasa, and Port au Prince. 

 Thus far, the Trump administration’s response to the pandemic seems to be a mélange of Boss Tweed, Don Corleone and Inspector Clouseau. For the next act, the administration has a choice: Churchill, who bolstered British morale during the London Blitz, or Pol Pot, who sacrificed millions of his countrymen for a bad idea. Let’s hope those around Trump can convince him that the cure for the disease is the cure for the economy.
 



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