Thursday, December 15, 2011

Al Gore on How to Save Capitalism (Really)

Luckily, Al Gore is no longer in a position of political power, so his manifesto for "sustainable" capitalism need not scare too many business people. It does, however, provide insight into the minds of those who would really prefer capitalism didn't exist at all. Here's the point which stood out most to me.
Identify and incorporate risk from stranded assets. "Stranded assets" are those whose value would dramatically change, either positively or negatively, when large externalities are taken into account—for example, by attributing a reasonable price to carbon or water. So long as their true value is ignored, stranded assets have the potential to trigger significant reductions in the long-term value of not just particular companies but entire sectors.
Translated into English: Write down your capital assets that will be made essentially worthless from the imposition of carbon taxes and emissions limits. You might as well do it now, because you are just ignoring the inevitable reasonable pricing that our policies will impose imply. In other words: We will bury you, so dig your own grave while you can. It'll cost you less in the long run.

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