Climate Change Bites Big Business

by MANUEL GARCÍA, JR.

“Electoral politics is not the solution to the Earth-threatening problems we face.”

– Jeffrey St. Clair, 10 August 2018, Counter Punch

There is now no non-violent way to reverse climate change. Even with morally unrestrained action, it is probable that there is now no physical possibility of reversing climate change. The time for action was 1973-1979, the time of the two oil embargoes (the post Israeli War – against Egypt and Syria – Arab Oil Embargo of 1973; and the related-to-the-Iranian-Revolution vengeful price gouge oil embargo of 1979). This was the period of the Watergate-climax finale of the Nixon Administration, the Ford Administration, and the Carter “energy crisis” Administration. Politically, the election of Ronald Reagan in 1980 killed the possibility of US climate change action.

From Reagan through Bush I, Clinton, Bush II and Obama to Trump, the mentioning of climate change – as one of government’s highest priorities, as one of corporate America’s foremost concerns (to be addressed, not suppressed), and as one of mainstream media’s primary and continuing focuses and leading stories – was minimized if not altogether absent. If anything, climate change denialism was heavily promoted by corporate and partisan (right wing) media, and by legions of corporate agents, flacks and factotums masquerading as elected representatives in federal and state governments. That has now changed.

Climate change is now all over the front pages of the newspapers and is the headline story of the mainstream mass media, primarily because of the massive fires in California whose smoke has even reached New York City. Why this new overt and blaring mainstream news attention to climate change, a subject that was officially hush-hush, trivial and fake news so recently in the past? Obviously because climate change has begun costing big money to major sectors of American capitalism.

In the case of the 2017-2018 California wildfires, one of the costs to capitalism is the financial threat of bankruptcy via liability suits against Northern California’s regulated monopoly utility company, Pacific Gas & Electric (PG&E), which is being held responsible for causing the Sonoma and Napa Counties fires of 2017, because electric power lines swung into too-near tree branches during high winds setting off sparks that ignited fires that raced across the dry countryside, incinerating many communities and much industrial infrastructure (e.g., for telephone, internet and TV distribution, and also numerous small business facilities, croplands and vineyards).

A second set of costs to capitalism from California’s vast wildfires of 2017-2018 are the high losses to fire insurance companies, prompting their threats to leave the California insurance market, which in essence would mean a very sharp increase of fire insurance rates for California residents, homeowners and businesses. It seems unlikely to everybody that multi-countywide wildfires like those of 2017 and 2018 are a fluke unlikely to reoccur next year and thereafter.

Companies offering flood, tornado and hurricane insurance along the Gulf and Atlantic coasts of the United States, and in Puerto Rico, may now also be smarting from the increased damage caused by more frequent and more powerful hurricanes, and the drenching and flooding rainstorms of the last few years. As with the vaster wildfires and longer wildfire season in the West, the more frequent and extensive flood and tornado disasters in the Great Plains and Gulf and Atlantic coasts have likely seeded thoughts of insurance flight and massive rate increases, and loan rate increases, in the minds of the moguls of the liability underwriting industry and the investment banking industry. 

Higher insurance and loan costs hamper any business operation, and dampen real estate construction and sales activity, as well as adding usually unproductive costs to the living expenses of homeowners and renters seeking to buy a little security against unanticipated personal catastrophes.

It is good to remember that the reason the nuclear power industry (for electric generation) is dead is because the insurance industry worldwide rates nuclear power as an infinite liability and thus an uninsurable risk. Nuclear power can only exist where government assumes 100% of the liability in perpetuity. Insurance companies are starting to get the queasy feeling that perhaps wildfires in California (and probably the Great American Desert west of the Mississippi), as well as hurricanes along the Gulf and Atlantic coasts of the United States, are growing into potentially bankrupting infinite liability insurance risks.

A true and honest free market zealot would say: “So what, if companies like PG&E are at fault for wildfire apocalypses then let them get sued into bankruptcy. Another set of entrepreneurs will take their place as providers of electricity and natural gas for consumers, and profit as they deserve for providing safe and reliable service. Also, if some insurance companies are too scared to underwrite the risks of wildfires, hurricanes, tornadoes and floods, then let them run away or price themselves out of the market, because newer entrepreneurs will become new insurance providers who will take advantage of capturing an underserved market by offering affordable insurance, and thus profit by gaining a large customer base that would then dilute their aggregate risk.” Yes, zealot, but “true and honest” does not usually pair with “profit” when we are dealing with Big Money operators. So, what is more likely to happen? 

In the official postmortem of the 2017 Northern California wildfires, PG&E was pointed to as the primary (essentially only) culprit because of the arcing contact between live electric cables and dry tree limbs during the high winds preceding the fires. PG&E is required by regulations to maintain a set clearance between its power cables and all trees near them. That clearance was obviously insufficient, either because of an inadequacy of the state regulations, or an insufficiency of tree trimming maintenance by PG&E’s tree trimming contractors, or both. Fingers will point, courts will be busy.

However, the idea of thousands of burned-out wildfire victims suing PG&E into bankruptcy will not happen because the state of California would then have the colossal headache of finding a new enormous and technically competent business entity to seamlessly take over the operations of producing and distributing electric power and natural gas to many millions of Californians populating a large and geographically diverse terrain. So, California state government will revise old laws or craft new ones to provide too-important-to-fail utilities like PG&E (and Edison International, and San Diego Gas & Electric) with some legal protection from the financial threat of bankruptcy over the liability of causing wildfires. (See the citation at the end for the legalistic details.)

The FIRE combine (Finance, Insurance and Real Estate; and their meshing as Wall Street speculation), along with the War Industries Complex, has a stranglehold on today’s U.S. Government. Recall that FIRE owned the political career of Barack Obama, who dutifully protected them from justifiable prosecution and punishment for the greatest robbery of all time, in 2008; and that military-related expenses and subsidies consume over 70% of the federal budget (our taxes). While American Big Business includes many other rich and politically powerful sectors, like Big Pharma, I think that FIRE and the War Industries Complex are the largest forces in American capitalism today.

It seems to me that now that climate change is biting Big Business in a big way, the mainstream media is excited to report all the lurid details of catastrophes spawned by climate change, because it is echoing the fears of their prime and patronizing audience: the loss of big money by Big Business, and its fear of the loss of future certainty of uninterrupted profitability. Big Capital is now openly scared about climate change, and that is what we are now seeing as headline news.

We will also be seeing urgent promotions – presented as mass media news and commentary – for varieties of government subsidized protection for those sectors of Big Business that feel most financially threatened by the biting furies of climate change. The little that California state government is now doing for moderating the potentially infinite liabilities of its wildfire-haunted electric utilities is only the beginning of what we can expect in the way of publicly subsidized climate change insurance for Big Business.

I think that the pretense of climate change denialism by the Big Money has crumbled, and we are now entering a period of overt climate change acknowledgment coupled with fanatical efforts to gain public subsidies for private interests to both insure and indemnify them against climate change-related financial losses, and to also preserve the nature of their businesses even if they are major CO2 and organic vapor polluters, like the petrochemical and coal companies.  

Note.

California Governor Taking PG&E Closer to Fire Law Changes, July 25, 2018.

Manuel Garcia, Jr, once a physicist, is now a lazy househusband who writes out his analyses of physical or societal problems or interactions. He can be reached at mangogarcia@att.net

https://www.counterpunch.org/2018/08/14/climate-change-bites-big-business/