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In the Mean/Time

Why Ignore The Threat Posed By Global Warming? Ask Aesop

Aesop’s fable of the Emperor’s New Clothes has been whispered in the corridors of power for more than a thousand years. It’s a perennial distraction for courtiers and an impertinent irritant for their masters. In fact, the fable holds the human race up for ridicule. Its hero is a guileless, wise-mouthed child.

The tale resurfaced while I was reporting on the 1991-92 United Nations Conference for Environment and Development, the run-up to the fabled 1992 Earth Summit, an expensive photo-op in Rio where George H.W. Bush and other world leaders half-heartedly endorsed an overly optimistic template for saving the planet. Called Agenda 21, it was the largest single document the UN had ever produced.

The fable again holds particular relevance for the statesmen and courtiers who will gather in Copenhagen in December, 2009, for another attempt at forging a common approach to implementing Agenda 21, as well as tackling the very immediate threats posed by climate change and global warming.

Agenda 21 is a noble endeavor. It forced the world’s leaders to recognize that global warming, climate change and environmental harm caused by unrestrained development and unsustainable growth are serious, perhaps irreversible issues. It’s not a scenario anyone in their right mind would exploit for personal gain: betting against the house that shelters and supports all of us? The repugnant moral hazard would turn most investors off, unless they were cold blooded sociopaths. Imagine a market rally driven by policies that cause whole populations to starve or flee in terror while a small group of men strip their native resources to feed a market restricted to holders of paper credit. Hitler, Stalin and a bevy of Third World gangsters and their investment partners come to mind. An economy with a ratio of $1 in trade in goods and services vs. $25 dollars derived solely from the trade in financial (i.e., paper) assets will not serve to check the impending crisis.

Agenda 21 offers ways to manage, if not reverse, many environmental problems. It is also a litany of the world’s ills, by and large the result of the greed and excesses of its wealthiest inhabitants, obsessive compulsive consumers all. Who else to blame for shameless overproduction of not-so-cheap throwaway shoes, bottles, bags and other “disposable” by-products of the petroleum and chemical industries. Bankers and traders are blind to the trash-filled, toxic environmental disaster they’re funding. Someone will clean it up. Think New Orleans: create thousands of taxpayer-subsidized no-skill, low pay jobs; let politically connected, unregulated private sub-contractors hire and fire. To give the story balance, blame the poor for overpopulating the planet and failing to pursue MBAs.

U.N. veterans sardonically called Agenda 21 “a wish list,” since implementing the recommended solutions would involve a coordinated international effort, requiring governments to regulate international finance and commodities markets. Trade in goods and natural resources would need to be regulated wherever they adversely affect the environment, social and economic order, or public health, safety and welfare -- concessions most conferees regarded as impossible to achieve.

Most of the world’s leaders lack the moral courage needed to convince their constituents the threat is real, or the political will to stifle the sociopaths cooking the books and funding the mess. Sociopaths are risk takers first and foremost: In a risk/​reward society capitalized largely through financial speculation, risk-takers rule -- no matter how reckless or crazy they are. Rewarding risk and the ability to spread the risk far and wide without liability are the twin pillars of corporate law and financial market governance. It’s a win-win situation if you turn a blind eye to naked truths.

That’s why bureaucrats often seek solace in the tale of the Emperor’s New Clothes. In case you’ve forgotten, here’s how it goes: Two con men convince a vain monarch they’ve produced a miracle fabric visible only to an honest man’s eyes. It’s invisible to crooked pols. The emperor orders an entire wardrobe; he can’t wait to see which of his counselors lack the necessary vision. At the final fitting the emperor is dumb-struck: he can’t see or feel the fabric; he lacks the vision thing. He asks his most trusted ministers for an opinion. They love the new wardrobe.

The naked emperor brazenly parades through town. The citizens can’t believe their eyes. Are they all dishonest? A child bursts into laughter: “But the emperor is wearing nothing at all -- he’s naked!” The adults join in. The emperor is naked, but like most politicians, he’s thick-skinned: he marches on. The moral is in the eye of the beholder.

Meanwhile, statesmen sign treaties built on complex cap-and -trade financial formulas, betting these new derivatives will fare better than their sub-prime cousins. Surely the market’s “invisible hand” will yield across-the-board reductions in carbon-based pollutants. Sadly, an invisible hand won’t stem the rise in sea levels. Nor will it be seen by hundreds of thousands of refugees fleeing from flooded coastal plains and island nations.

The lords of finance are not remotely interested in developing environmentally sustainable commodity markets, or investing in goods and services that would benefit local, self-contained economies in flyover countries far from financial capitols. Profits reinvested locally are fly specks on trading screens.

People close to power know that unless the levers of the global market are pried from the hands of vested interests and their financial partners, every flyover community on the globe remains subject to market forces in which they have absolutely no voice. International financial law is generally drafted by lobbyists and based on the American corporate model: an unassailable “legal fiction” that maintains corporations are persons, possessing the same rights, usually more, as an individual taxpayer. Governments cede control over financial markets because bankers and traders have the means to stall financial sector reform and fight government to a draw.

Back in 1991 in New York, before Rio, I wheedled my way into to the very last (closed) meeting of the U.N. Commission on Transnational Corporations. The commission was being disbanded as part of a compromise on U.N. reforms engineered by the first Bush administration. The commission’s final act was to approve a letter offering its opinion of Agenda 21. The commission’s panel of experts made its case in less than six paragraphs: Agenda 21 is bound to fail unless it incorporates “full cost accounting” principles into its plans, rather than rely on the 500-year-old double entry, profit and loss, debit and credit method that remains the world standard.

Full cost accounting measures the environmental, social and economic costs of doing business in today’s world. Calculating a business’s value -- and its liabilities -- in terms of its cost to society seems logical and fair, but logic plays a diminishing role in a world without vision.

The commission’s opinion was, of course, ignored. Without taking environmental and social costs into account, the public will never know how much more a business extracts from a community compared to the taxes and jobs the community gets in return. Full cost accounting standards and the tools needed to measure and enforce them are available in university libraries or through the U.N. A full cost audit would show whether a company’s business practices are an asset, a liability, a debit or a credit to society.

Without taking these things into account, there can be no agenda for cleaning up the mess we’re in. It‘s a vision thing. Ask any child.

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