Who’ll Cool a Warming World Quicker, Capitalism or Socialism?

Today, global warming is a challenge to us all, regardless of where we live or under what system for everywhere on this planet temperature keeps rising.  

The question is which type of society will best combat climate change.  Will it be a democracy like ours where free enterprise flourishes, or a socialist society where rulers dictate like in the People’s Republic of China?  Which is best able to rapidly overhaul energy production, transportation, heavy industry, and agriculture to prevent the truly catastrophic effects of global warming?

The jury is still out on whether such a quest for green energy can succeed within the constraints of an economic system as focused as capitalism is on short-term incentives, on those quarterly gains or losses reported on Wall Street.

Still, my Planetary Lifeguard™ is betting capitalism will adapt and ultimately lead the world to greener energy pastures with environmentally safer, healthier, cleaner products and processes.

Until now the stock market, corporate governance and executive compensation all incentivize quarterly performance, but that short view better expands before climate change cooks us.

Companies must begin to walk away from products and services that are good for the bottom line in the short term but bad for global warming in the long haul, such as fossil fuels, and instead invest in low carbon tech, which takes longer to pay off.

Oil and gas producing countries are set to lose the most as they are not acknowledging the kinds of climate risks they’re causing, yet ironically the Middle East region is probably the most vulnerable.

While they’re making tons of money now, they are falling behind on what they need to do to address problems caused by climate change, and at some point the very products they are betting the house on will start to lose steam.

The winners will be places that see what’s needed this century and support it full throttle like China’s big bets on batteries and solar in which they’ve built thriving industries.  And now we in the U.S. and Europe are worried about cheap Chinese batteries ruining our auto industries and their solar panels ruling over our roofs.

So, what’s needed, says Planetary Lifeguard™, is longer-term thinking than the quarterly habit that’s so engrained in our democracy or we’ll be losing out.

Today there are signs politics may dent progress by playing an assuaging role to get votes like new Biden administration’s standards slowing adoption of electric vehicles in the U.S. seen as a win for legacy automakers GM, Ford and Stellantis. 

Was the intent to capture more votes from auto union workers than carbon? 

Now, as litigation moves through the courts, the U.S. Securities and Exchange Commission has issued a stay on its new climate disclosure rule.  While environmental groups felt it didn’t go far enough, the new rule passed by the SEC last month, prompted a slew of lawsuits both from energy companies and Republican attorneys general who thought it was too onerous.

Still, balancing that legal quagmire is the U.S. Department of Energy’s $6 billion for 33 projects across more than 20 states to decarbonize energy-intensive industries, reducing industrial greenhouse gas emissions, and of course, naturally supporting good-paying union jobs.  So, despite a few dents, there’s visible progress. 

The Biden administration also announced a regulation designed to turbocharge sales of electric trucks, although truckers worry a flurry of unworkable environmental mandates could put dents into Mom-and-Pop businesses.

So, can capitalism combat climate change and improve the lives and livelihoods of impoverished people in the developing world without creating hardships?

The incentive or ability to move trillions of dollars of investor money sitting in rich countries like ours to developing countries is not working out, but without that, there may be no way to make this transition.

While it looks grim right now, the U.S. has always been resourceful and enterprising.  Yes, that spirit of competition still flows in our blood, so there is solid basis for hope we can transition to the longer-term thinking it takes for the switch to greener energy.

Increasingly, making money and bending the curve on planet warming emissions are not mutually exclusive as there is growing evidence that suggests even short-term profit incentives can deliver long-term change.

Even in our existing economic system, although it has worsened climate change, capitalism is still showing it can tackle the climate problem.

And while doing that, still deliver profits as Bloomberg News climate reporter Akshat Rathi, spells out in his new book “Climate Capitalism.” 

While such win-win thinking can sound Pollyannish, the very profit motive that got us into this mess can help get us out.

At least that’s what my Planetary Lifeguard™ believes and prays will happen! Author, publicist and investor Tom Madden, CEO of TransMedia Group, also enjoys picking stocks paying dividends, but lately he’s worried that maybe we shouldn’t be so overly focused on quarterly results, especially when it comes to combatting climate change.  Solutions may take longer than we’re used to but will pay huge dividends like keeping us all healthy and alive.  That’s why he created Planetary Lifeguard™ to motivate and inspire us to think longer term for our own good!