Post Format

Paris, France

I’ve just met Max and Stacy of KarmaBanque. I’m interviewing Max on Wednesday. I’d quite like to interview Stacy as well, but today it was Max doing most of the talking. That’s how it is on the radio as well. He has a lot to say. Here’s a summary, from memory, so all quotes are approximate:

The best thing the world could do to improve the environment would be to increase the price of money. The price of money is artificially low. As a result America can borrow money almost for free to fight its wars, Exxon can borrow money almost for free to prospect for oil, Morgan Sachs can borrow money almost for free to do whatever it is they do. The Bank of Japan has an interest rate of 0.25%. So there’s free money there, if you can afford to pay the interest on the minimum amount they let you borrow, $50 million, Max thought, so that would mean to borrow that for a year you’d have to pay $125,000 (about £63,000) but then you could invest the $50 million you have in something with a guaranteed return of 10% or so, which is not so hard to find, and you’ve made yourself a virtually risk-free $5 million.

It’s alright if you’re rich. If you’ve got money it’s easy to make more, but if you’re living on $1 a day and your water supply is being polluted by the Coca Cola company what can you do about it? Apparently there’s a big campaign in India against Coke. There’s a big campaign against Coke in Nunhead as well, home of the Boycott Coca Cola Experience. And rich investors are also taking an interest. That’s what’s hard to believe. Rich investors becoming activists? And activists becoming investors. This is not politics, Max said. This is economics. Investors have come to realize that boycotts can have an effect of share prices, and share prices are the only things they really look at. If they can see a boycott pushing down the share price of a particular company then they’ll put their money into a hedge find that’s betting on that company’s shares going down.

The thing is, I tried to say but didn’t say it very well, you have to get people not to drink Coke, and for most people the economic argument is not going to be very persuasive. I’m getting confused by it myself and I’m a highly intelligent individual, so what of those Coke drinkers not blessed with my great intellect, perhaps because their brains are too full of sugar and caffeine? Wouldn’t it be better to persuade them via the Coke poisoning Indian children argument?

This doesn’t go down well with Max and Stacy. If you say this company is doing bad things, and some other company is also doing bad things then you get into arguments over which is the worst. The reason for boycotting Coke as far as they’re concerned is not because the things it’s doing are any worse than the things other companies are doing, but it’s because the Coca Cola company is the most vulnerable to a boycott. By not drinking Coke you can really hit them hard. The things Exxon are doing are probably worse, but at the moment they’re not vulnerable to a boycott so it would be a waste of time activists campaigning against them.

The trouble is activists don’t tend to think like that, but they’re starting to come round to our way of thinking.

I got the impression KarmaBanque were aiming their ideas more at activists than ordinary people. They run the hedge fund that can make boycotts effective and which will plough its profits back into the activist organizations, but it’s up to the activists to run run the actual boycotts. That’s not their role.

We’re probably doomed environmentally. The next 10 years are going to be crucial, but global warming now has such a momentum behind it that it doesn’t look like we’re going to turn it around, but we can at least try to make things less bad than they might otherwise be.

Why are these corporations acting suicidally then? Max mentioned that the insurance industry now takes global warming seriously, so why are companies like Exxon paying any climate scientists willing to publicly cast doubt on it? They’re living in a state of denial, Max said. They’re just looking three months ahead, thinking if they can just get through the next three months, and then the next three, then they’ll be okay.

We talked about American politics, particularly Barack Obama’s chances of becoming president. They believe America is a deeply racist country, Stacy said that that’s why Americans don’t want universal health care: the whites can’t abide the idea of paying for black people’s health care. But, she said, the US government spends twice as much per person on health care as the UK. That’s because they have to treat people when they’re seriously ill, such as when a diabetic has an attack the hospital has to treat them and if they don’t have health insurance the government picks up the bill. But many diabetics (and there are many of them in America) have attacks because the government won’t pay for their insulin, since that would be socialism. So not giving free health care is actually more expensive than giving free health care.