Perhaps nothing better illustrates the backwards nature of our time than the drive for reparations. This includes not only payment for race discrimination, but also for the impacts of climate change. In both cases, it’s the West’s middle and working classes who will foot the bill.
Historically, compensation went to those who directly suffered from gross injustice in their own lifetimes. Descendants of concentration camps, whether in the Holocaust or the less lethal, but also unjust imprisonment of Japanese Americans during World War Two are prime examples. Their children and grandchildren, however, generally do not make any claim.
California, unsurprisingly, leads in reparations mania. The state legislature is now considering a proposals from the Reparations Task Force for compensation of around $569 billion, with $223,200 per person – estimates of a national reparations bill could top $14 trillion. This despite the fact that about the only people who could claim the legacy of slavery in California are Native Americans, who should send the bill to Madrid rather than Sacramento.
The legislature is pushing a proposed bill to revive affirmative action – a longstanding policy based on the logic of reparations – which was resoundingly voted down in 2020 by allowing “exceptions” to the rule. Corporations, too, are being dragooned to make up for past sins through gender equality mandates. Venture capitalists under a new law signed by Newsom are expected to report the racial and gender breakdown of their funded companies as well as for the jobs created.
Unfortunately, what starts in California rarely stays there. The Biden Securities and Exchange Commission is considering ways to follow the state’s lead. A 490-page SEC rule proposed in 2022 compels federally-regulated public firms to disclose all GHG emissions from virtually any source, including obscure upstream suppliers, and downstream customers. This is the most contested proposal in the commission’s history. Brookings, a powerful establishment thinktank, has also proposed climate reparations to American minorities, essentially doubling down on reparations.
These policies are also part of the European and UK climate change agenda. It’s a guaranteed jobs boom for climate professionals that reporting firms must engage at the expense of other employees, service providers, and consumers. Corporate social responsibility reporting studies in countries as diverse as China, Denmark, Malaysia, and South Africa show that disclosure laws primarily boost demand for “assurance services” and raise the cost of engaging high-quality auditors and consultants.
Already accounting, climate-oriented software, environmental consulting and legal firms are flooding media outlets with disclosure law explainers, warnings about climate “disclosure gaps”, and have even commissioned disclosure cost surveys to prompt new reporting regulations by state and federal officials and induce business from covered firms.
Corporations around the world may be abandoning their embrace of Environment, Social and Governance standards (ESG), but they have fostered a climate of acquiescence to progressivism’s demands. This will impact smaller firms that lack the resources to do such close accounting. The SEC estimates that the proposed federal disclosure rule would increase company compliance costs by $6.35 billion per year, a net change nearly double the current cost of about $3.87 billion.
Rather than focusing on innovation or profits to shareholders, corporations are being dragooned into becoming partners, or vassals, of the state bureaucracy.
This, of course, is an appellation for corporate leaders and regulators who consider themselves “progressive.” In reality the reparations regime is, by definition, regressive in that they focus on the past rather than the future. They are also not necessarily working in the interests of the working and middle classes.
The negative effects of climate counting would disproportionately hurt blue collar manufacturing, logistics, agriculture and construction sectors. In contrast it’s a boon to accountancy professionals or large corporations who can escape draconian regulations by moving operations to places like China, India, or Mexico.
On a global scale, the implications are massive. Proposed climate reparations target Europe, UK and North America. Green doomerists are now projecting costs of up to $171 trillion from the “rich” European and American economies but not the countries – most notably India and China – now ramping up their greenhouse gas production.
Rather than account for every evil of the past, natural or racial, we would do better to seek ways to increase growth and productivity that would provide opportunities for all citizens. At the same time, buoyant EU, UK and US economies are critical to provide the markets and technology for developing regions.
The reparations regime , of course, will be embraced both by the non-profit superstructure and the kleptocrats of the developing world. But it will do little to improve actual conditions on the ground for the vast majority of people. The road to a better world lies not in obsessive accounting of the past, but a greater focus on practical steps to make prosperity more universal in the future.