Environmentalist Protection Racket: Sierra Club Takes the Money and Runs

Sierra Club executive director Michael Brune tells the world how painful it was for his lobbying group to stop taking millions in donations from natural gas companies. And what organization wouldn't be happy to rake in $26 million in donations?

Now the Sierra Club has decided that natural gas is just another evil fossil fuel that it getting in the way of the solar, wind, geothermal future that the organization wants to impose on Americans. And that's OK. Environmentalism as an ideology is driven by the constant need to create an endless series of monsters to fear - natural gas is now one of the newer ones. The Sierra Club flip flop on natural gas as a "bridge fuel" to the low-carbon energy economy was motivated by NIMBY concerns of local chapters and the fact that cheap abundant natural gas makes the case for expensive renewable energy sources even less economically plausible. 

Fred Smith, president of the free market think tank the Competitive Enterprise Institute, has an insightful article, Countering the Assault on Capitalism, on the puzzling fact of why corporations continue to supply millions of dollars to lobbying groups that are inimicable to their long term interests. Smith quotes economist Joseph Schumpeter's 1942 book Capitalism, Socialism and Democracy:

'[Rather than educating its] enemies, [business] allows itself . . . to be educated by them. It absorbs the slogans of current radicalism and seems quite willing to undergo a process of conversion to a creed hostile to its very existence. . . . This would be most astonishing and indeed very hard to explain were it not for the fact that the typical bourgeois is rapidly losing faith in his own creed.

[Business leaders] . . . talk and plead – or hire people to do it for them; they snatch at every chance of compromise; they are ever ready to give in; they never put up a fight under the flag of their own ideals and interest.'

As a result Smith explains:

Entrepreneurs doubt the morality of their own endeavours and accept political restraints. They internalise the accusations flung against them and become, as Schumpeter described, 'state-broken'. It need not be this way; an alternative is clear to see. Businesses spend vast sums crafting and disseminating narratives to reach consumers, to persuade them that their products and services are good and worthwhile.

Why don't businesses seek to direct their advertising narratives to gain legitimacy? They are under political attack from government regulations as well as intellectual ideologues who blame them – and capitalism – for all society's problems. As much as they employ Vice Presidents of Environment, Community Relations, Public and Government Affairs, Employee Relations and a host of other political positions, businesses should similarly hire agents to legitimise their social role.

So what to do? Instead of participating the protection rackets faithlessly run by the ideological enemies for free markets, Smith argues that business people should seek to save capitalism by supporting classical liberal intellectuals:

Schumpeter presciently warned that capitalism would create an unholy alliance of anti-market intellectuals and rent-seeking businesses. But he did not envision challengers to that view – a holy alliance of classical liberal intellectuals and pro-market entrepreneurs. Competing on a more level playing field, integrating more effectively with like-minded classical liberals offers a promising resolution to Schumpeter's gloomy prediction.

Business and free market intellectuals together could create robust strategies to encourage experiments in the private sphere. To do so, the business community must understand the scope and consequence of their value in the political sphere. Incremental reforms that remove the rocks from the path to the future are the most likely way to restore capitalism and ensure a prosperous tomorrow. Emerging concerns and resources must be evaluated in the market – the world of voluntary exchanges – rather than in the public sphere.

Being a classical liberal, it is not surprising that I would find Smith's analysis compelling. The Sierra Club episode is just one more example showing that industries cannot permanently buy protection from their ideological enemies. The (self-serving) take-away lesson to business leaders: Support your friends. 

Finally, why doesn't the Sierra Club give back the $26 million if it feels sullied by taking evil fossil fuel money?