Is Coronavirus And Its Economic Impact A Taste Of What’s To Come With Climate Change?

Up until recently, the stock market has been skyrocketing while our planet is visibly sinking under the weight of human consumption. Thus, it is fascinating to watch the correction taking place under the weight of the deadly COVID-19 this week, though arguably nowhere near as economically severe as the consequences of climate change in the coming decades.

Why this incoherent situation?  Because the financial markets and the financial drivers for executives have become beholden to quantitative easing, tax cuts and short-term gains instead of the long-term sustainability of businesses based on real-world factors like unit economics, profitability potential or, climate science.  Meanwhile, the resilience of most businesses will depend on the ability of people to live, prosper, and be able to purchase goods and services in a stable physical and political environment.

There is no denying that we, humans, are a fascinating, dichotomous species with our ability to rationalize as our biggest strength, and perhaps proving to be our largest vulnerability.

At our core, we want to extend our lives on Earth as long as possible, and yet, we are letting the fragile balance that allows us to live here collapse. Why and how could we let this happen? Particularly in a supposedly world-leading country like the United States with such ingenuity, rugged individualism and collective resources? Perhaps, this is actually part of the problem.

To solve this impending frog in the pot, physical and financial catastrophe, collectivism is what is needed; to come together and address problems for the greater good of society. This does not come naturally to Americans though, as we still appear to be fighting an emotional version of the conflict with our former British overlords that is now 250 years old.  The culture spawned by this initially real, and now tired emotional war is the very thing that keeps us divided and unable to address problems collectively, and we call it our individual liberty and freedom. The freedom to carry a gun in case the government comes back to take our land. The freedom to burn as much fossil fuel as we want and drive as far, wide, and recklessly as we wish with little personal cost.  In fact, the individual freedom and liberty culture is actually very much rooted in freedom from responsibility towards our fellow people, and our planet. 

This culture has broadly manifested itself in two visions for the United States: 

#1) An open, melting pot with concern for our collective health, well-being, and equitable opportunity + a sense of personal responsibility  

#2) A pull yourself up by your bootstraps, every person for themself, a dose of paranoia about government, + if I make a mess (or my company profits from it), everyone else can clean it up and pay for it via… the government (who we disempower).

With the federal government firmly embracing #2 and fiscal + environmental recklessness, it is incumbent on cities and businesses to pick up the mantle of the 30 year, long term, full-cost impacts of decisions made by government itself, and of the private sector, operating in our communities and on our public streets. The alternative, or inaction, one could argue, could create the ultimate welfare state. 

An example of what this would look like is here, where we have started to work with cities on developing standards for all investments or programs to gauge the fully loaded cost-benefit of initiatives before moving forward. There is a reason that the United States is #1 when ranked by gross domestic product (GDP) but 19th in happiness, according to the World Happiness Report. Perhaps most fascinating, is that our 2nd lowest score out of all categories is freedom, the very thing we are fighting for and think we have.

For capitalism to continue to thrive, and societal and political wellbeing to increase, vs. collapse, we need to:

1. Look long term (30 year plus) at outcomes and impacts and total return on investment versus a 3 month financial impact lens, or just political viability
2. Look at GDP as only one component of success, with health & wellness, environment, equitable access etc. as equal components
3. Build fully loaded social cost/benefit models to decide what initiatives go forward and projects get funded by governments and private companies as well
4. Pilot initiatives with the express purpose to gather data to feed into the model for larger decision making (scooter programs to road projects to health care systems)
5. Do not assume that a seemingly more efficient digital solution will drive happiness

If you are a government, put a social framework in place and make dispassionate decisions, clearly express desired outcomes, and work with partners in the private sector to change or collaborate on responsible solutions.  If you are in the private sector, and are playing to win the long game, assume the new standards and lead with social responsibility as your #1 North Star versus just following interim financial gain. Do so, and in the new world of public-private collaboration for the social good, you will have an opportunity to play, and win. COVID-19 will pass, but our climate challenges are the issue for this century and likely beyond if we are able to get there.