Gore's New Sustainable Capitalism Manifesto

Read the article in the Economist.

Shining a light on the linkage between the short term and long term profitability, particularly when short term actions reduce or obliterate the long term, is the critical point.

One curious aspect is that discussions about carbon pricing are often conducted as if humans have the choice! As any economist knows, there is no free lunch. We either fully reflect real prices in the human economy and pay as we go or we pay some other way, usually less desirable, in the future. In the case of climate change, our sons and daughters will pay with the end of life on the planet as it has been known historically as the biosphere crashes under the weight of normalized highly variable extreme climatic conditions. The problem is, as with any inflationary bubble of production/consumption of goods now under the promise of future payment for which the capacity does not exist, is that we have already incurred the costs but we have not yet paid. We cannot avoid paying. The only question is the manner of payment (the opportunity costs of not consuming stuff we'd like as we pay the higher prices for the natural capital we already consumed but did not pay for, or the pain, suffering, and death of the biosphere and life as we know it. Our choice!

The problem is two-fold as a result. First, the long delay in reflecting the real price of carbon and other natural capital liquidation has increased the cost to the point where actually reflecting the full cost in the human economy would likely create big shock. This shock is needed but potentially damaging in the short term. Policies may be devised to soften it somewhat or harness it for greater growth from a lightening fast trasnition to a sustianble economy. Second, the longer we wait, the bigger the shock and the more likely recovery will not be possible.

Beyond but including carbon, the human economy runs in large part by liquidating natural capital (nonrenewable resources and the infrastructure/process of environmental services) that produces a range of critical non-substitutable inputs to the human economy. The human economy systematically reduces the capacity of the biosphere, the environment, nature, to support life on the planet, including the human economy. As with any business, this economy-wide business model cannot continue without coming to the logically foreseeable dire conclusion.

The fact is, that the short run and long run are already linked in the human economy. They are simply linked now in a way that creates an invisible big problem. They are linked based on ignorance and lack of understanding that makes the risks and costs of our human economy vis-a-vis natural capital invisible. Investors are the point people, the individual actors in the system, who take on the risk. Once they understand the risks they are invisibly incurring, they may (will) act differently. Once they do, watch out because the devaluation/revaluation cycle will be forceful and dramatic.

Maybe investor education in Natural Capitalism is the real key that would drive needed change soon and quickly based on our existing system and without no other structural or regulatory changes and trickery?!