The entire capitalist system is outmoded.

Question: How much do subsidies distort market forces?

Gus Speth: Well, they've been-- you have two ways that this economic expansion is subsidized by the environment. One is just the, sort of, non-market consequences, mostly notably, say, greenhouse gas pollution. All of us who use that pollution, but those who sell it to us, particularly, are responsible for a huge environmental impact that they are not paying for. But they're also, that problem is compounded by the addition of subsidies by governments. And there's one estimate that the environmentally perverse subsidies, internationally now, amount to, perhaps, at least $800 billion a year. And this is in energy, it's in agriculture, it's in transportation. And that further distorts the price mechanism. And as a result, we have these environmental dishonest prices. This basic system, then, is compounded by three other things. First, it's an enormous-- it's the way the corporations are set up. We've now charter corporations and established corporate law that says, in effect, the overwhelming duty of the corporation is to maximize the wealth of the shareholders. This is the so-called shareholder primacy, best interest of the corporation principle. It's totally outmoded, in my view. I mean, we ought to be exploring rigorously a system where the corporation is governed by and beholding to all of those that contribute to the wealth that this corporation produces and that would include local communities, it would include workers. So it's a fundamental change in the way that corporations are set up and the incentives that they operate under. The second pillar of this is us, is our pathetic capitulation to consumerism. And that, of course, is manipulated endlessly by advertisers and marketing and we succumb easily. And off we go. And that is certainly a huge pillar of the system. The third is government itself, the state. The state can raise extra revenues without raising tax rates by growing. It can keep social issues on the back burner by pointing to the expansion of the economy as a solution to social problems. Growth enhances the projection of power in a competitive international system. So governments are deeply hooked on growth. So this is the basic complex and it's enormously powerful and environmental community is simply unable to cope with a full burden of that system.

Question: What will the shock to the economy be if subsidies are not given out?

Gus Speth: Well, it's pretty clear that if we ahd a world that had environmentally-honest proces and, indeed, socially-honest prices, prices would be a lot higher. A lot higher. Both in general, so the reaction of people would be to shift their activities out of the market, which in many ways is a wonderful thing because it would mean we would be spending much more time with our families, more time with our communities, more time with the natural world. And it would also mean that activities that are environmentally destructive would cost a lot more, a lot more.  And the effect of this is to, you know, shift our consumer patterns towards things that are environmentally regenerative or benign.  But there are huge equity issues here.  And that's why, in the book, I really go approach in several ways, the length between dealing with our environmental issues and dealing with the social justice issues in our country.  We have a crisis in social inequality in America as well as an environmental crisis.  Soaring executive pay and earnings is the top one percent of the country, and a widening gap between the very rich and the rest of the country.  Poverty rates at an all time high.  Over ten percent of the public facing hunger, still, in our country if you can believe that.  One percent of the adult population in jail.  Failing schools, unprecedented proportion of the society without health insurance, and just tremendous social insecurity among most people in the country.  Half the families in the country make less than about $45,000 a year.  A family could be pretty big and the average of that, half is well below 45 of course.  So basically, you know, we have a society with tremendous wealth and tremendous capacity, but it's very concentrated and it's spent on-- it's not spent on promoting social well-being in our society.  And the environmental picture is no prettier.  So what we really have is a system that cares profoundly about profits and reinvesting a large share of them and growing.  It doesn't really care much at all about people, society, or the natural world in which it's embedded and that's why it's up to us as citizens to use the main tool that we have, which is government, to inject real values, other values, human values, long term values,caring values, compassionate values, natural values into the system.  And that's where we fail too often.  And failed in a big way because our politics are so enfeebled today and the corporate control of our politics is so strong that we're failing.  But the point is that we're all similarly situated.  Those who are trying to succeed in projecting values for about future generations and about the natural world into that system are failing just for the same reasons that those who are trying to project into that system or inject into that system values of about social justice and social well-being and social cohesion in our country.  And the same-- and so we all have a-- we're communities of shared fate and yet we're not talking to each other.

Recorded: 3/23/08