Green EyeShades, Green Values
Grand attempts to reconcile economics and environmental interests typically fail, and these two groups often become opponents in the public arena.
Economists try to get environmental activists to develop "the economic way of thinking," while ecologists attempt to convert "green eyeshade" economists to softer, environmental values. Now is the time for a different, more modest approach to developing common ground between the two - both of whom are genuinely concerned with improving public policy.
We could start by identifying the activities - public or private - that are condemned equally by those concerned with the environment and those worrying about the state of the economy. Such an effort could focus on economically inefficient government programs that also waste natural resources and increase pollution. Reversing those government policies would generate a "twofer" - enhancement of the environment and the economy. Examples include reforming government agencies that sell power, water, timber, and grazing rights below market prices.
Then there is the "stockpile of strategic and critical materials." Since 1939, the federal government has maintained inventories of minerals, metals, and other materials that might be needed for a traditional "world war" type of situation. The stockpile includes 89 materials with a market value of $6.4 billion. The Pentagon reports that practically none of these items is necessary for the military contingencies it is planning for. Only three materials worth $24 million are needed. The surplus includes 45,000 short tons of asbestos, 3.9 million pounds of cobalt, and 16 million pounds of bauxite.
Of course, it's not practical to dump the entire $6.4 billion in excess material on the market all at once. Such drastic action would be catastrophic to our mining industries. But it also doesn't make sense to continue digging for those minerals and metals at the current rate. Gradually selling off the unneeded items surely would mean less environmental damage while reducing the federal deficit.
Similar opportunities for promoting environmental and economic objectives exist throughout the federal budget. A host of provisions in the Internal Revenue Code artificially encourages the use of natural resources while eroding the revenue base. Owners of mineral deposits and independent oil and gas producers are allowed to reduce their taxable income by a percentage of revenues, rather than being limited to deducting the costs incurred. Profits on some sales of coal, iron ore, and timber are taxed at the lower capital-gains tax rate - rather than as ordinary income. In each of these cases, by arbitrarily increasing the returns to investment in natural resource extraction, the special tax benefits reduce federal revenues.
But these subsidies also pull private investment out of other, presumably more environmentally benign sectors of the economy. On the expenditure side of the budget, expensive agricultural price-support programs encourage excess production of numerous crops - much of which rots in warehouses and granaries while the Treasury picks up the tab for subsidizing the entire activity. The adverse impacts are far more pervasive than generally realized. For example, by encouraging the excess production of cotton, the federal government has indirectly supported extra use of pesticides and insecticides. The runoffs that result often disrupt the aquatic life in nearby streams.
During this period of great concern over maintaining ecological values and reducing budget deficits, proponents of a stronger economy have a rare opportunity to join forces with advocates of a healthier environment to achieve the common good.
*Murray Weidenbaum is chairman of the Center for the Study of American Business at Washington University in St. Louis.