Sustainable Economy

The task of politics is to create an environment in which society and the economy can thrive. That is, if there is consensus about which direction to take. In democracies, this means much to debate and argue about. In doing so, people often find a solution that many can get behind. What can be very irritating, however, is when a handful of politicians start ignoring consensus and do what they think is best over the objections of most citizens and almost all scientists.

Interest groups may likewise try to influence decision-making. Their attempts have been with us since the days of Rome, long before business representatives began intercepting politicians in the hallways, or lobbies, of the British Houses of Parliament. And sometimes, their efforts to gain legislative support have paid off: In February, the German Government Accountability Office said that the national auto industry had “played a pivotal role in the government’s decision to create an electric vehicle incentive and wielded much influence over how the program was designed.”

In short, there is consensus, not only in Germany but around the world, about the need to implement policies that will curb fossil fuel consumption and protect our environment from the effects of human intervention. Some heads of governments may beg to differ. But in light of recent population growth, smog and extreme weather patterns, it seems to be the only sensible path.

Yet, some businesses, even large corporations, have – or at least appear to have – a different opinion. The chief executives of those may deep down agree with the majority. But they are often paid a hefty sum to make and defend decisions that will have the opposite effect. One of their responsibilities is to put representatives in lobbies to try and persuade politicians to pour cash into the coffers of whoever has them under their sway.

Considering the above, it seems quite fitting what Tesla’s chief executive, Elon Musk, wrote in a letter in August, when trying to explain why he wanted to delist the electric carmaker (see Tesla or the Path to and from Privatization):

“The reason for doing this is all about creating the environment for Tesla to operate best. As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter but not necessarily right for the long term.”

He added, “We are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we’re all trying to achieve.” He was seeking to accomplish an outcome that allowed Tesla to be “free from as much distraction and short-term thinking as possible.”

By trying to buy his company back, Musk again proves that he is an unconventional thinker. And even though there are legitimate questions about how much thought he had put into his privatization idea, his letter could be a starting point to pondering and debating if some kind of long-term strategy could be more sustainable and reasonable than the approach taken by other automakers, which are clinging to diesel and combustion technology to protect their shareholders’ dividends.

That is, until those shareholders miss the opportunity to sell their stock in a company that is going the way of Kodak*, which probably didn’t intend to end up where it did several years ago.

*In 2012, Kodak filed for bankruptcy protection because of its inability to see digital photography as a disruptive technology.

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