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The Biggest Loser

I'm republishing this article on the anniversary of its publication in 2020, amidst the first pandemic lockdown. Its content remains as relevant today as it was then. It discusses our society's biggest challenge going forward: balancing the needs of our capitalist economic system with the environmental "tragedies of the commons" that we are witnessing, increasingly, everywhere around the world on a daily basis.

Drought, famine, flooding, powerful storms and hurricanes, massive species extinction, whole societies stuck in decades of constant war, and a dramatic increase in what are called "failing states," countries that are no longer really countries at all, but just large parts of the world held in place by violent authoritarian regimes and tribalism. These societies have little time to think about the planet when their citizen's biggest threats are starvation and being murdered.

Last month, the IPCC came out with its most alarming global environmental assessment, yet, but it barely made the national news for more than a soundbite. When I asked an acquaintance, who has two master's degrees and a high-powered job in finance, "What do you think about the IPCC Report?," her response was, "The what?"

The public is being lulled into a dangerous complacency by promises of "Green New Deal" environmental spending, exaggerated claims by electric car makers and solar panel vendors, and wildly improbably predictions of technological breakthroughs to fix everything, while the true cost of making even a small dent in the negative, global environmental impacts of our financial system's addiction to never-ending growth would be hundreds of times the amounts being discussed or would require changes in our economic models (how we measure success) so profound that it would equate to that much in redistributed valuation.

Meanwhile, the "profits" from our wasteful consumption-driven, throw away economy are driving the ridiculously unsustainable valuations of our securities markets, which are being enabled by a government underwriting frenzy of equally unsustainable debt, none of which is properly reflecting our aging demographics and decades long falling productivity and productive investment. (most companies, today, "invest" more money buying back their own shares--to goose their stock option values--than they do on R&D) And in California, in particular, we are doubling down on environmentally unsustainable real estate development, with policies that promote growth at any cost, using last century's building methods that neither their union backers or the real estate development industry want to change. (it would hurt the bottom line too much)

Our planet, our home, our life support system remains the biggest loser.

This past year, the Amazon rain forest switched from net sequestration of atmospheric carbon dioxide, to being a net producer of greenhouse gases, for the first time in modern history.

Enough said.

“When the tide goes out, you get to see who’s been swimming naked” ~ Warren Buffett

That these are challenging times remains an enormous understatement. Logically, our initial response to the Coronavirus was to focus on the health risks, to lockdown, and worry about other consequences later. It’s not as if we really had a choice. But the socioeconomic consequences of a prolonged shutdown--something we’ve never done in our 244 year history—are obvious. So, we are beginning a grand experiment of reopening in order to avoid a self-feeding domino effect that could do serious long-term damage to everything in our lives.

The economic risks are very real and, thankfully, the Federal Reserve recognized that early on. Likewise, the US Treasury has fired up the printing presses. But there is only so much money they can print, or at least one would think.

As tragic as this pandemic is, pandemics are by their very nature short term events—even a period of years is relatively short in the scheme of things. However, the choices we make in the short term will have a profound impact in the long term. Putting all our efforts into getting things “back to normal” also means underwriting “business as usual,” and if that’s the case, then our socioeconomic shortcomings and the livability of our planet will continue to be the biggest loser.

Ironically, that outcome may end up having even greater public health and economic consequences long after this pandemic is over. And nowhere will this be more true than in California.

Without warning?

Decades of warnings about the possibility of a global pandemic have fallen on deaf ears. But now the pandemic is here and it will continue to inflict significant personal and economic hardships--business bankruptcies, loss of jobs, and cuts in government services—for years. We can blame a lot of what’s happening on the virus. But that’s not the whole story. The US socioeconomic system was looking more and more like a house of cards long before this crisis.

In 2019, while the stock market was making new all-time highs almost daily, credit card and auto loan defaults began rising, a symptom of people living above their means. Now they are in free-fall. Pre-Covid-19, the “cap rates” on real estate (the anticipated return on investment) were getting very skinny (interpretation: people were over paying). Now there’s a national rent strike and landlords and real estate investment trusts (REITs) are teetering on insolvency. Junk rated bonds and even so-called “investment grade” corporate bond pricing was out of whack long before the pandemic and still is: evidence of desperate money chasing “yield.” And stock valuations, based on the Price Earnings Ratio on forward earnings, have been near historic highs for a while. Yet, interest rates continue to be driven lower to induce even higher stock prices, with deflation now being a bigger concern than inflation.

It’s also been no secret that personal, corporate, and government debt and financial obligations (i.e., inflation-indexed salary and retirement benefit increases for public employees) have been running at dangerously unsustainably levels for years.

Again, the handwriting has been on the wall but it’s been ignored.

The pandemic is a natural disaster. But against our current socioeconomic backdrop the negative impacts are multiplied many-fold. Our economic circumstances are like the proverbial grasshopper who played all summer, instead of putting away acorns like the thrifty squirrel, then ends up out in cold when the winter winds blow.

Sorry, Green New Deal, we lost your inheritance at the track

When the idea of a “Green New Deal” was first proposed, the instant blow-back in Washington DC and by big business was that it was too disruptive, too impractical, and mostly just too expensive. There was no way our country could afford to spend “trillions of dollars” on that.

There’s no doubt that the original projected estimates were staggering but at least they were in investment in transformation, re-education, jobs creation, and environmental and health benefits.

Now, because of the legitimate need to save our economy, the trillions we are now spending just to tread water are dramatically reducing our ability to contemplate any kind of “Marshall Plan for the environment” like the Green New Deal.

The Los Angeles Times reports that America has already lost 600,000 clean energy jobs amid the coronavirus outbreak. Regulations such as air quality standards are also being removed to bow to economic demands. But will these be easily reinstated in the years ahead or will the original battles to establish these policies need to be fought all over again?

It makes you wonder. If we’d started getting our house in order, decades ago, when all these warning signs were starting to appear, if we’d implemented policies so that working people make a living wage, if we’d reined in the criminal “gambling” and gross excesses of unregulated global markets and a predatory banking system, back in 2008, when we had the chance, and if we’d started to seriously invest in healthcare, education, 21st century jobs’ training, environmental technologies and policies, might we have been better able to withstand the impacts of our current situation and be living in a healthier, wealthier, and more financially and economically stable world?

We will never know.

Meanwhile, as things stand, overall “affordability” challenges for Americans remain unaddressed and are rapidly increasing in severity, along with accelerated environmental degradation, while environmental protection, preservation, and conservation considerations are falling further and further down our list of priorities.

The Guardian recently reported that

“During the Covid-19 lockdown, US federal agencies have eased fuel-efficiency standards for new cars; frozen rules for soot air pollution; proposed to drop review requirements for liquefied natural gas terminals; continued to lease public property to oil and gas companies; sought to speed up permitting for [unregulated] offshore fish farms; and advanced a proposal on mercury pollution… that could make it easier for the government to conclude regulations are too costly to justify their benefits.”

Writing for Nature, Jeff Tollefson recently wrote,

“The EPA has targeted more than 80 rules for revision or elimination in just over three years, without providing any evidence that the underlying science has changed.”

And the New York Times reported that

“The Environmental Protection Agency on Thursday announced a sweeping relaxation of environmental rules in response to the coronavirus pandemic, allowing power plants, factories and other facilities to determine for themselves if they are able to meet legal requirements on reporting air and water pollution.”

As a consequence of years of science and environmental denial in Washington (ironically, led by “conservatives”) and the current global pandemic, the US has lost decades of progress in addressing environmental degradation and species extinction, to the point that now, in many ways, it is too late to remedy.

Although it’s legitimate to blame this on anti-science and anti-environmental ignorance and self-dealing motives of those on the extreme right in our nation’s capital, in California, an equally powerful assault on the environment comes from the extreme left.

The slow and painful death of CEQA

The simultaneous founding of the federal Environmental Protection Agency (EPA), by the Nixon Admiration, and the passage of the California Environmental Quality Act (CEQA), under the Reagan Governorship, both in 1970, were the seminal pieces of legislation that legitimized and memorialized the environmental movement in this country and the world. Their significance and the aspirations they embodied cannot be understated. However, today, both are only shadows of their former selves.

CEQA, for example, has been steadily deconstructed for decades since the anti-environmental assault began in earnest with Darryl Steinberg’s SB 375, in 2008. This was the first time environmental protections were summarily dismantled in the name of protecting the environment. This slick marketing approach ("high density development is good for the environment) opened the door to an avalanche of legislation in Sacramento that remains unimpeded to this day. What started as a trickle is now a raging river of legislated license to ignore environmental consequences.

The legacy of SB 375 and its decedents, such as SB 35, is an odd cabal of so-called “affordable” housing advocates (highly paid, young professionals, and highly profitable “nonprofit” developers), major banking interests, and rapacious mega-corporations, whose billionaire owners continue to demand more and more taxpayer funding to pay for the privilege of their presence in California and to support their need for public services.

Their dogma has been very effective and regularly denigrates single family zoning, small town character, CEQA, and any environmental concerns as an evil obstacle to the righteous urbanization of the world… in the name of environmental preservation.

The fact that this vision of “New Urbanism” (aka gentrification) is not backed by legitimate scientific research or even common sense assessment appears to be irrelevant to its desirability. The fact that cities, as we continue to develop them, remain our worst greenhouse gas polluters and energy wasters and are statistically our most dense centers of disease and mental afflictions appears equally irrelevant. Mounting evidence that having open space, personal outdoor green space, lower density, and development integrated with nature is good for us is summarily ignored by high density advocates and our legislators in Sacramento.

All exhibit a great failure of curiosity and imagination.

Environmental science on the extreme left, in California, now consists of cherry-picking policy-driven studies to support political goals. Local voices, community values, and historic neighborhoods are now all labeled racist and impediments to progress.

Much to the delight of the progressive left, in the past ten years, considerations about significant impacts on traffic, parking, aesthetics, schools, infrastructure required, and lack of public services have been removed from the development approval process, which has now been streamlined near anything that loosely qualifies as “public transportation” (e.g., a bus stop is now a “transit rich zone”). CEQA requirements are waived for low income, infill development in certain zoning designations. And, the list of categorical exemptions to CEQA review has grown exponentially with each legislative action.

Livable California, a San Francisco based nonprofit organization working for sustainable development, lists dozens of these current legislative proposals, coming forth just this year.

We certainly need to address "affordability," but it is an extremely complex issue, and if we address it at the expense of the environment, any solutions will be unsustainable.

The Dystopian cult of technology

The fashionable cultural delusion we suffer under in order to deny reality is that technological innovation will make everyday concerns about our health, education, democracy, and our planet, irrelevant. If the CEOs of major technology companies had their way, we’d all live in a virtual world of gaming, streaming, memes, gig-speed Netflix binging, online ordering, home delivery, and Zooming —an endless feedback loop of distraction, “sharing,” and emotional catharsis. According to the ethos, even extinct species will be brought back by biotech and we will vacation on Mars.

I have nothing against technology. I embrace it and the productivity enhancements it’s provided are a Godsend. But it’s all just tools and in the wrong hands it’s not automatically a positive thing. A hundred years from now, if we’re still around, they will probably laugh at how ridiculous and intellectually dim our culture was. Still, at the moment, it’s all wildly profitable for a very select few, which brings us full circle back to our real problems.

Swimming naked

It is human nature to think short-term. We are essentially emotional creatures. But emotions are fleeting things, while long term consequences are enduring. And when it comes to environmental consequences, our future is presently running on fumes. We’ve been squandering our real capital and our natural capital for far too long, and are fast approaching the time when we will need them the most, but there will be none left for us to draw upon.

And for what?

Why are we working harder and harder just to sustain an illusion of equality and progress, while so many of our societal failings go unaddressed? Will the economic impacts of coronavirus pandemic be the last nail in the coffin of our environmental stewardship?

The news laments the fact that people may not buy as much “stuff” in a post-Covid-19 world, which they equate with economic disaster. But our increasing addiction to growth and consumption and extracting as much profit as possible out of every ounce of financial and natural capital is leading us down the wrong road… yet it seems to be all we know how to do.

Right now, it’s all about economic survival and, by necessity, everything else will be thrown under the bus. Those at the bottom will be hurt the most and be helped the least. But are we really willing to sacrifice the planet just to keep the” ball in the air” a little bit longer?”

Like it or not, we’re slowly finding ourselves in a tighter and tighter box. Doing the right thing means changing our priorities and empowering individuals over top-down interests, which entails economic risks. But if we don’t to the right thing, the rich will get a whole lot richer, everyone else will further into a life of indentured indebtedness, and the environment will deteriorate, even more rapidly.

Time to make some decisions?

Bob Silvestri is a Marin County resident and the founder and president of Community Venture Partners, a 501(c)(3) nonprofit community organization funded by individuals and nonprofit donors. Please consider DONATING TO CVP to enable us to continue to work on behalf of California residents.