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Economy & Ecology: The Inconvenient Truths

Capitalism, as its conceived and conducted today; capitalism

that relies on globalization, unbridled consumerism,
deregulation and perpetual economic expansion, is
irreconcilable with a livable climate. Naomi
Klein, Capitalism vs. The Climate

Economy and Ecology: Disclosing the Inconvenient Truths
By SB Veda
September 21
, 2014, The Global Calcuttan Magazine, www.globalcalcuttan.com

CALCUTTA This week we feature two articles on the conflict between capitalism and the environment:
One describes the mysterious set of illnesses affecting children in the village of J adugora in J harkand,
India, the sight of Indias first major uranium mine (now closed); and the second is an interview with left-
wing author and thinker, Naomi Klein on her new book, which was published, yesterday
called Capitalism vs. The Climate
The two, which ought to be read together, put me in mind of my student days.

As a post-graduate student in at McGill University, Montreal, when I was part of a group of friends who
felt called to change the world for the better, I wrote a paper combining two of my fields of study:
Environmental Sciences and Finance. Then, as now, my politics agreed with those of Klein and others of
her ilk. But I was not necessarily convinced that political solutions could resolve the problems of

I did not feel then and do not still feel that the profit motive, itself, is wrong. I believed that irrational
decisions were being made by capitalists in search of short term gains because accurate information on
long-term costs were not being properly communicated, for damage to the environment has an economic
cost either borne by companies people or both. It was clear to me that the system of financial reporting
needed to be reformed to take this into account.

Despite being a lefty, I was influenced by the work of Milton Friedman (believe it or not) who had written
that the social responsibility of a business is to make money that when a company such as The Body
Shop pays their South American worker higher than market wages, for example, they might think they are
doing a good thing but should other companies follow suit, the resulting inflation would be uncontainable.
This, in turn, would have severe consequences on those very people that The Body Shop was trying to

He had also written that most socially conscious business practices were little more than marketing
ploys, attempting to affect consumer choice with factors other than quality or competitiveness. If a
business chucks some loose change in the general direction of a charitable cause (sometimes the cause is
their own foundation) then their economically inefficient product or service is supported by the consumer
subsidy of the do-gooder buyer.

But what if doing good made money? In fact, arent environmentally sound products and services
economical in the long run? Accepting Friedmans premise, I came to the view that investors, in general,
make economically irrational decisions in the long run because the financial information being provided
to them is flawed.

So, I endeavored to develop a set of financial statements that substantially estimated and accrued
environmental liabilities. By way of example, I studied the oil and gas industry, and found that every
twenty-five or so years a traditional energy company like Exxon incurs a major environmental disaster
and, mind you, this is aside from all the minor events, which we dont hear about in the news because
such companies cut deals with governments to clean up their messes.

I asked a peer a probability statistician to put a value on a present-day valuation the contingent liability
resulting from these environmentally damaging events. Arriving at the view that the costs attributed to
such liabilities were virtually certain to be incurred an essential conclusion to justifying accruing these
costs to the numbers in the financial statements, I reflected them in an environmentally adjusted set of

I posited that with the true costs of conducting business having identified, rational investors would be
economically swayed to invest in environmentally cleaner companies.
Great? Not really

I found myself sandwiched between environmentalists, who told me, Your work is an admission of
defeat, and business, which said, we cant implement this in an increasingly globally oriented

Environmentalists said, ultimately, youre working to try and reform a corrupt system one that places
value on a tree only after it is dead and made into saleable products like furniture but what about the
value of it to the ecosystem as a living organism?

As a scientist, I could not ignore the validity of the argument: indeed, trees in the ground are more
valuable than anything they can be made into. They contribute oxygen to the atmosphere and mitigate the
effects of global warming not to mention, giving a habitat to a multitude of species of plants and

I went back to the library and did some more research. Then, I began to look at the whole thing as an
Eco-Eco balance sheet between the Economy and Ecology. A tree cut down, incurs an ecological debt
that could be repaid by a certain number of trees planted in replacement accruing the basic
environmental costs of doing business to the other costs of conducting that business and then weighing
them against the revenue brought in; I added to the equation the concept of environmental revenue, the
notion that value could be created by burnishing eco-systems.

Now youre getting it right, said the environmentalists.

The reaction of the business community, however, was predictable: Its too airy fairy! I thought you
were a hard numbers guy. Still, they admitted some elements would be useful with one caveat: assuming
we do something along those lines whos going to implement this in India and China? You need a
worldwide system, total harmonization. The more stringent reporting standards you put on North

American businesses the less able they are able to compete with those in other countries whose standards
are lacking. And, theyre the ones putting more of the CFCs in the atmosphere, today not us.
But we put the overwhelming mass of them up there, in the first place, I countered. And, International
Law recognizes that we have a common but differential responsibility to environmental problems: since
the West put the most CFCs in the environment through centuries of industrialization, The West had a
disproportionately large responsibility towards cleaning them up. It being a matter of survival even of
the business community why shouldnt the business community in North America lead their
counterparts in China, India and the rest of the world out of the wilderness?

Not our responsibility, they said. Tell that to the family of the worker Ill have to lay off when our
offices close down.

OK, at least the conversation had caused the men in the boardroom to find their inner-worker. Of
course, I knew they were employing a time-tested tactic to beg off the point. Though increasingly
influential in society as well as the economy, it seemed they had to be dragged kicking and screaming into
the 21st Century.

Surely, it was the role of government to do the dragging. After all, all peoples of the world have a shared
a common interest in the long-terms survival of the species; in democracies, our elected representatives
ought to act on those concerns. However, I found reception from governments to be lukewarm at best.

This is good work but it needs to be studied further, was the common refrain.

The problem is that bureaucrats are generally averse to change, and politicians see the future only in four
or five year increments, the period between elections. And when people go to the polls, they are more
concerned with short-term gains and losses.
Klein, in her new book, talks about the ecological debt, which I
explored in my work, only she calls it climate debt, and takes it in
national aggregate, framing it not as an economic issue but a political
one. She, perhaps rightly, pegs it as one that ought to be on the table of
items discussed between nations. Certainly, it is an issue that is relevant
beyond borders.

However, the solutions, which Klein outlines seem unlikely.
Core inequalities need to be tackled through redistribution of wealth
and technology, she told The Toronto Star, last week. And this was
explained to me as a chance to heal the world; to heal some of the deepest and most lasting wounds left
by colonialism. And I suddenly saw that though this crisis continues to be existentially terrifying, it could
also be a catalyst for really inspiring change and social justice.

The existential terror to which she refers is not being communicated effectively by the media. In part, the
issues can be complex (especially where environmental accounting is concerned) and with media
concentrated in the hands of a few corporate houses, the likelihood of environmental issues taking highest
priority is slim that is, until we actually are on the brink of annihilation as a species. And then, it may be
too late.

Nuclear Poisoning in Jharkhand
It is already too late for many of the children of J adugora, born with birth defects, destined to develop
cancer. The story is one of ignorance, lack of adequate regulation, and finally a total breakdown of
institutional responsibility within the Indian republic.

In fact, the owner of the Uranium mine situated in the village, The Uranium Corporation of India Limited
(UCIL) is owned by the Government. UCIL, instead of acting in the peoples interests, systematically
dumped nuclear waste, ending up in J adugoras water supply. This is water used to drink and wash, water
that grows the vegetation consumed by the villagers and their livestock. They are literally consuming and
bathing in nuclear poison.

It is no wonder that the defeated UPA government under Manmohan Singh, sought to export liabilities
from nuclear mismanagement to potential foreign suppliers after India became a member of the Nuclear
Suppliers Group (NSG). In India, the government seems to have abdicated its responsibility to effectively
regulate the civil nuclear industry to safeguard the people.

The Department of Atomic Energy (DAE) owns UCIL and its operations are covered under Atomic
Energy Act, which makes accurate information about the mine extremely arduous to obtain. There is no
requirement for public participation at any stage of the process of sighting, designing or building nuclear
facilities. In an article for the Bulletin of the Atomic Scientists (1999), T.S. Gopi Rethinaraj writes: The
department [of atomic energy] has happily exploited the ignorance of Indias judiciary and political
establishment on nuclear issues. In the past, it has even used the Atomic Energy Act to prevent nuclear
plant workers from accessing their own health records. While nuclear establishments everywhere have
been notorious for suppressing information, nowhere is there an equivalent of Indias Atomic Energy Act
in operation. Over the years, in the comfort of secrecy, Indias nuclear establishment has grown into a
monolithic and autocratic entity that sets the nuclear agenda of the country and yet remains virtually
unaccountable for its actions. (Source: http://jadugoda.jharkhand.org.in).

Even lawyers at the legal aid society whose responsibility it was to advise the victims of the
environmental calamity of their rights and recourse are named as defendants in the public interest suit
brought on behalf of the afflicted. Everybody, it seems, was bought and paid for in the oligarchic legacy
left by J awaharlal Nehru that is The Republic of India.

Nehrus views on the nuclear industry are revealing. The former Gandhian Satyagrahi, wrote to his
defence minister shortly after independence that not only did the future belong to those who produce
atomic energy, but Defence (was) intimately connected with this. He was at the ready to fund atomic
research the first Asian government to do so, and his surreptitious plan for a nuclear defence was carried
to the next generation and revealed in the misuse of civilian nuclear technology imported from Canada by
Indira Gandhi for purposes of defence. This caused all nuclear cooperation between the two nations to
cease until recently.

The BJ P may have taken the nuclear defence programme out of the darkness, making India a declared
nuclear power but it also did little to clean up the civilian nuclear power industry.
Getting back to bribery though more flagrant in India, is also present in Western democracies as Klein
pointed out in her interview: Both by . . . bribing politicians and serving as (an election-campaign)
disciplinary force for politicians you get the money if you do the right thing. But if you dont do the
right thing from the perspective of the oil companies then that same money is used to attack you in
television ads and so on.

Manufactured Complacency
The facilitators of our collective slide to environmental devastation is Big Media. Owned, globally by a
few corporate houses, they are failing miserably in their job of informing the public. This is an essential
function as democracy is premised on the notion that the electorate are informed. If problems are not
given due attention in the media, politicians find them easy to be ignored.
J ust as investors cannot take rational decisions on investing without proper information, how can the
public take rational decisions about their future if information is withheld or they are simply distracted by

In the last Indian general election, political parties ignored environmental issues, which is alarming
considering the problems India faces:

The World Bank estimates that environmental degradation costs India 5.7 per cent of its annual gross
domestic product, and causes a quarter of the countrys 1.6 million deaths among children each year.
Indias major rivers have become clogged with
garbage, sewage and industrial runoff. The countrys
air is now the worlds dirtiest, according to a study
by environmental research centres at Yale and
Columbia universities and the nation is the worlds
third-worst emitter of carbon dioxide behind
China and the United States, even though a third of
Indians still lack electricity. Ironically, an effectively managed and properly civilian nuclear industry
would help clean up CFC emissions while bridging the electricity gap.

This year, World Health Organization confirmed that Indias capital, New Delhi, has the most polluted air
in the world, according to data reported by 1,600 cities in 91 countries.
Potable water is becoming increasingly scarce while adverse weather conditions such as floods ravage
areas previously untouched by such havoc.

Analysts say Indian incomes and the countrys future stability depend enormously on a healthy
environment. Some 65 per cent of the countrys 1.2 billion people work in farming, while hundreds of
thousands rely on forests for clean water, food, firewood and medicinal plants.

The media has been largely ignoring these stories, focusing on the sensational and the salacious, for such
stories sell papers, attract TV Ad buys.
I might add that this is a failing of all media not just Indias: In a study by the American Society of
Newspaper Editors, eighty percent of the American public said they believe journalists chase sensational
stories because they think it will sell papers, not because they think it is important news. Another 85
percent of the public believes that newspapers frequently over-dramatize some news stories just to sell
more papers. Over 80 percent believe sensational stories receive lots of news coverage simply because
they are exciting, not because they are important.

In the meanwhile, companies still keep their environmental information out of their annual reports to
investors as a recent study out of Australia by academics, Bikram Chatterjee and Monir Zaman Mir
suggests. They concluded, although there are no regulations enforcing the disclosure of environmental
information, mostcompanies provided more environmental information on their web sites compared to
the information provided in their annual reports.

Some fifteen years after my experiments with telling environmental truths, the stories remain hidden
under a smog-filled cloud.