Expanded Environmental Regulation Should Be

¶ … expanded environmental regulation should be imposed upon America in order to build a more prosperous and competitive economy.

The premise sounds very attractive: by investing in clean and green energy, America can become part of the next economic wave of prosperity and change. However, this premise is based upon a faulty understanding of both economics and environmental science. First of all, America is not the world's largest polluter, and will certainly not be the world's largest polluter in the future, if current development patterns continue. Environmental waste is not a local problem: it is a global problem. If environmental hazards are not dealt with by the world in a holistic fashion, it will not matter if one nation becomes 'greener' than other nations.

The developing world has less of an incentive to regulate economic activity than the developed world. Its lax regulations regarding labor and environmental hazards have enabled many First World corporations to use nations such as China and India as sites for off-shore manufacturing factories. Furthermore, there is a great deal of Third World resentment regarding First World attempts to demand compliance with environmental regulations. The First World has profited from industrialization and has been the primary source of the current stratospheric increase in global temperatures.

Economically, if environmentally beneficial products are not seen as producing notable improvements, the consumer enthusiasm for using them will quickly die. Thus, an effective worldwide environmental improvement campaign is essential, mounted by government officials internationally rather than based upon domestic efforts. Also, international regulations must be strong enough to resist domestic calls for environmental laxity. The American capitalistic system is predicated upon consumer demand. Consumer demand for green products that are actually effective in fighting global warming is notoriously fickle. The increased concern over the safety of hybrid vehicles combined with lower gas prices has dampened the initial enthusiasm for smaller and more fuel-efficient cars. Green products are also more expensive, which is of great concern to consumers at all times, but particularly during recessionary periods. According to the law of demand, as price increases, consumer demand tends to decrease. Although the demand for organic produce, environmentally safe cleansers and products made from recycled materials has gone up, it is not enough to make such products of comparable cost to non-green products.

Another way to increase the incentive to supply green products is through government subsidies and incentives. Through providing tax incentives for greater research and development in green technology, the American government might be able to encourage corporations to explore green technology and reduce the costs of producing and investing in such technology, even in the face of inconsistent consumer demand. But while a worthwhile investment, and potentially a positive stimulant for a lagging U.S. economy, this domestic effort is no panacea for improving the environment.

Another way to spur greater investment in green technology is through regulation. This is intended to force companies to become more creative in dealing with environmentally beneficial policies such as emissions limitations. The classic example of using regulation to stimulate growth and improve the environment is manifested in the actions of Toyota and General Motors during the 1990s. General Motors, along with the other major American automotive manufactures, fought attempts to instate more stringent emissions requirements upon vehicles. Toyota worked on its hybrid fleet, using research and development to answer the challenge posed by environmental regulators. Ideally, this is the response of companies to regulation, and the prosperity of Toyota and the failure of GM was once viewed as a cautionary tale. As consumers do not always buy what is 'good for them,' and good for the environment, regulatory pressures are required to eliminate or tax products and foods that harm the environment, such as gas-guzzling cars, corn-fed beef and pesticides. This makes using these products either illegal or more expensive and costly for consumers, thus creating an artificially higher demand for more environmentally-friendly products and increasing the incentive for companies to provide other products.

The problem with viewing regulation as a solution to environmental and economic problems, however, is that R&D does not always yield the expected returns on investments. Toyota's efforts to create hybrid cars now seem overly hasty. Regulatory efforts to improve the American diet have met with political roadblocks, as advocates of conventional farming and subsidies for American cash crops have powerful interests in Congress. Additionally, simply because regulations are put into place does not mean that effective new technology will come and consumers will alter their habits quickly enough for a satisfying short-term payoff of environmental improvement and economic expansion.