The Insurance Man Knows What Rick Perry Doesn't About Climate Change
There is a point in the climate change debate where theory turns into money, and Rick Perry may help us all get to that point sooner.
It's a reality that hasn't had time to filter down to Main Street, but the people at the top of the money tree know all about it. It so happens that I write about it this week in my column, which is about flood control in Dallas.
The ultimate market discipline is the planet itself -- its limits. That discipline is translated back into our more prosaic Main Street markets through the medium of insurance -- well, re-insurance, to be more precise.
Whether he knows it or not (or cares), Perry is pushing right up against the pointed sword of re-insurance with his drill-baby-drill jobs policy, unveiled earlier this week in an op-ed column signed by Perry and published in the New Hampshire Union Leader.
The core of Perry's message is his campaign-trail mantra that climate change is a hoax and we need to abolish environmental laws and protections, starting with the shuttering of the EPA.
"As President," he writes, "I would roll back the radical agenda of President Obama's job-killing Environmental Protection Agency. Our nation does not need costly new federal restrictions, especially during our present economic crisis. I would also oppose federal restrictions on natural gas production, including hydraulic fracturing, which is successfully regulated at the state level, and will deliver the energy needed to spark our economic recovery."
Perry says it's as easy as a stroke of the pen:
"Much of my plan can be accomplished by changing the occupant of the White House and removing the liberal, anti-job activists running regulatory agencies in Washington. With the stroke of a pen, I will initiate a review of all Obama-era regulations, begin a comment and review period, and work to eliminate onerous rules that kill jobs with little benefit to the environment."
There's sort of a hitch, though. This is the stuff I write about in my column on the Dallas Trinity River levee system. The lords of insurance -- the re-insurance industry -- disagree with Perry. In congressional testimony and elsewhere, the people who insure the insurance companies have been shoulder-to-shoulder with scientists and government agency executives explaining that the numbers add up, and they just don't lie. The frequency of extreme and destructive weather events is going up up up. The testimony is no longer merely that man has an effect on the weather; it's that there is no longer any weather that is "natural" or not driven by man-made factors.
That's something the insurance industry has to take into account. And they are. They are calculating the increase in claims that can be anticipated as a result of climate change.
Their challenges are not caused exclusively by climate change. They also are trying to make a calculation for cultures that are too dumb to understand and prepare for climate change, and will therefore continue to do things to make it worse, mainly through vulnerable construction and shoddy public works, but also by polluting. They have an informal term for it in German: Faktor K, where K is for Kultur.
Rick Perry's jobs plan is right in there. The idea that we can get rich by ripping down the weak environmental protections we have in place now is definitely Faktor K.
I like the way the insurance thing works. It's sort of like, "Oh, please, yes, do get rid of your environmental agency, and go right ahead and borrow tons of money to create more flooding and cancer. But for all of your business insurance, life insurance, medical insurance and property insurance, we're going to have to triple your rates. Possibly quadruple. Please don't be late with the payments, and we prefer cash."
Capitalism, in other words, works. It just doesn't work the way some of the people who call themselves capitalists want it to work.