We are using failed strategies to fight climate change

Now that we are in the middle of a banking crisis the environment and climate change has been largely ignored while we ponder on whether the steps being taken around the world will prevent the world’s economy from falling into a long period of depression. Will the policies that we are using to fight climate change end up as unsuccessful as the financial policies have been?

Governments are trying to safeguard the money of depositors, much of which has been speculated away by bankers, as though they were fledgling visitors to a casino with a pot of other people’s money as their stake. For every winner there is a loser. As a result, losers tend to be those institutions that depended on very high liquidity in the financial markets. Players like Northern Rock and Bradford & Bingley always assumed in their business plans that the financial markets would forever have plenty of liquidity. Other players, like the so called investment banks were betting one way and their competitors were betting the opposite way; guess which banks lost their trousers.

Of course Governments must do their best to correct the present imbalance in the financial markets, and they are doing their best to make up for ten or fifteen year’s worth of insufficiently regulating them.  So we see that some banks are being taken over by others, many famous banking names all over the world are ceasing to exist as independent businesses and trust, that cornerstone and foundation of banking, seems in such short supply that Governments are hoping that by underwriting certain banks and transactions, people will trust governments now more than they trust banks and thereby regenerate banking with trust and confidence.

Although these banking difficulties are more than a distraction, they have taken attention away from climate change, a more pressing long term problem. Interestingly, the present difficulties of the banking and financial sectors have been created using the very same strategies that governments throughout the world are trying to use to prevent irreversible climate change – carbon trading, carbon offsets, and similar financial instruments.

These failed strategies are:

1.      Reliance by governments on markets to solve fundamental problems

2.      Lack of proper and effective regulation by governments

3.       Failure to adhere to the prime duty of an enterprise or organisation

Markets exist to make profits. They can be powerful mechanisms for achieving certain things but the profit motive can also prevent the market from solving fundamental problems. Fundamentally, banks were taking risks that they did not understand. With climate change we are fundamentally producing too much greenhouse gas. In each case the markets create the problems, not the solutions.

Banks were effectively regulated throughout the world “with a light touch” because Governments felt that the banks knew what was in their best interests and those best interests coincided with the broader interest of society. Emissions are regulated with a very light touch, because it is felt that the reduction of emissions is best done voluntarily. In the case of banks stricter regulation would have prevent most of the present mess.  In the case of climate change we will only reduce emissions with strict regulation.

The prime duty of a bank is to safeguard its depositors’ funds. They should lend them out wisely. Banks ignored this prime duty in a frenzy of speculation. The prime duty of a government is to safeguard the welfare and well being of its people. In many ways governments are indulging in a frenzy of climate change speculation.

We have to hope that the lessons of the banking failure will be applied to climate change. I am sure that when the banking dust settles we shall see a whole host of lawsuits, as institutions try to recover banking losses from advisors and intermediaries; some of these may be successful.

When the climate change dust settles there may well be no one left to sue.

2 Responses

  1. […] is the original: We are using failed strategies to fight climate change Tags: energy, financial, global-warming, india, northern-rock, propaganda, religion, travel, world […]

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