Robinson Meyer’s Atlantic piece, “An Outdated Idea Is Still Shaping Climate Policy” led me to “Prisoners of the Wrong Dilemma: Why Distributive Conflict, Not Collective Action, Characterizes the Politics of Climate Change” by Michaël Aklin and Matto Mildenberger. I think the implications are profound.

Climate change looks like a tragedy of the commons. Most people stand to lose a great deal as the earth’s climate heats up. However, to prevent or mitigate that process, substantial numbers of individuals, companies, and countries would have pay or forego benefits. Each party will want the others to bear the burden and not make voluntary contributions by itself.

One classic solution to such dilemmas is a top-down rule that alters everyone’s incentives–in this case, a tax on carbon. However, the United Nations can’t tax anything. Each country’s carbon tax costs its own economy without (by itself) solving the climate crisis. Thus the tragedy reemerges at the international level and predicts that satisfactory carbon taxes will be hard to enact. Although 64% of Americans agree that “the U.S. should reduce greenhouse gas emissions regardless of what other countries do,” the theory suggests that this belief is soft and not likely to support ambitious policies. I’ve even made a simple online game to simulate this problem in teaching.

However, evidence seems to be building for a different model. Some people gain tangibly and immediately from decarbonization. Consider firms that build solar panels, low-carbon farmers, individuals who teach environmental science in high school, environmental engineers, and even residents of cities that are powered by renewables and compete with cities that depend on coal.

If some gain while others lose, it is no longer a Tragedy of the Commons. It is regular game in which the winners obtain benefits and the losers bear costs. Aklin and Mildenberger call this a “distributive conflict.”

In a mixed economy, the winning is side is likely to be more numerous (with more votes) and richer (with more buying and investing power). The size and wealth of both sides may change over time.

A distributive conflict makes new solutions appear possible. Governments can borrow or tax and spend the revenue to expand the size and power of the coalition that favors decarbonization. They can also compensate the losing side for reasons of equity or to reduce opposition. The game is rivalrous but not strictly zero-sum; everyone can gain in important respects even if some pay more than others.

According to the Tragedy of the Commons model, spending money will not solve climate change. This model views both costs and benefits in a static way: each dollar reduces carbon by a certain amount. The results are not necessarily very impressive, and they face a limit. There is still a lot of carbon under the ground; it has market value; and subsidizing renewables does not make the carbon worthless. Thus it will be burned. Besides, governments will surely–and perhaps rightly–fail to use spending to minimize carbon emissions. Since they will also be interested in other goals (jobs, health, equity, or ensuring their own reelection) they will not buy as much carbon reduction as they could.

But the alternative model offers hope that spending may be dynamic. Dollars invested in renewables, a new power grid, R&D, an electric car for one’s family, and even environmental education build constituencies for decarbonization. As these constituencies grow, they will use their economic and political power to demand more decarbonization–including the harder solutions of taxes and regulations. In that case, subsidies have leverage.

See, for instance, Liu, Lixia, Yuchao Zhu, and Shubing Guo. “The evolutionary game analysis of multiple stakeholders in the low-carbon agricultural innovation diffusion.” Complexity 2020 (2020). See also: public event on Governing the Commons: 30 Years Later with discussion of policing and climate change; A Civic Green New Deal; a Green recovery; taxing and spending are more compatible with democratic values than regulation is. And see our Civic Green project.

Here is a sample of articles published within the past week alone: “The Right’s Anti-Business Turn“; “The GOP-Big Business Divorce Goes Deeper Than You Think“; “Republicans Will Regret Their Breakup With Big Business“; “Existential Threat-Or Politics as Usual,” and “Is the Business Community At Last Falling Out of Love With the Republican Party?“

The situation is fluid and hard to interpret. Our predictions are inevitably influenced by our assumptions about how business generally relates to politics in the USA. In that spirit, I’ll disclose my own premises.

First, businesses influence government. There is no consensus among political scientists that campaign contributions and paid lobbying matter very much. It’s certainly not evident that companies can decide who wins elections. The main source of influence is what Charles E. Lindblom called the “privileged position of business.” The basic idea is that businesses create jobs in a capitalist economy; politicians want jobs to be created; therefore, politicians cater to business. Direct communications from corporations to politicians are effective mainly because they convey information that politicians are eager to hear. Although companies may exaggerate the costs of taxing and spending, politicians take their predictions seriously because they think their own interests are at stake. Compared to other politicians, liberal Democrats are more skeptical of business and more likely to want to hear from labor, but even most liberals listen hard when a company is deciding whether to move in or out of their own district. This dynamic is built into a mixed economy (or what Lindblom called, following Dahl, a “polyarchy”).

However, people see the world through ideological frames. We do not just behold the truth and maximize our self-interest (profits for firms; reelection for politicians). Instead, we use conceptual frameworks to interpret the world. A politician who believes in “free markets” is primed to assume that a tax increase will cost jobs even if it won’t. At the same time, a business that sees itself as a fair and inclusive workplace is primed to see xenophobic rhetoric as bad for the bottom line (even if it isn’t).

The dominant framework in corporate boardrooms is pro-market, pro-technology, meritocratic/elitist, cosmopolitan, and self-congratulatory about the business’s own fairness and inclusivity. This is partly because of the demographics of the corporate ranks: heavily “coastal” and international and highly educated. The most coveted employees and consumers–the ones with the most buying power–share those characteristics. Businesses observe politics through this lens.

At the same time, businesses do not particularly want to engage with politics. Government can be helpful, particularly if you want big government contracts. But it also presents risks. Politics is controversial, so involvement can hurt your reputation. The last thing you want is to be targeted by boycotts from several directions. Politicians can also extract rents. Businesses contribute to candidates not only to get benefits but also to stave off harms. A stable policy that is fairly expensive to business (such as a higher corporate tax rate) may actually be preferable to a rapidly changing and highly contested policy environment.

Finally, it is much easier to advocate a narrow policy, particularly one that has low public salience, than to try to steer the whole ship of state.

As a result, most businesses probably prefer outcomes in this order:

1. A particular politician of any party and persuasion who champions their highly specific interests–a given tax break, an import permit, etc.
2. Traditional Republicans who instinctively favor business interests, focus on economics, and don’t court controversy.
3. Moderate Democrats, who are practically tied with #2.
4. Quite liberal Democrats, as long as they are forced to compromise. If Sen. Sanders could write the tax code, that would be expensive for corporate America. If he has a seat at the table, it’s OK.
5. Trump. He’s a loose cannon. He’s protectionist. Business doesn’t like his explicit stances on race and immigration; and he may hurt traditional Republicans against Democrats. For instance, with a different Republican president on the ballot in 2020, the GOP would probably control the White House and at least one house of Congress. right now Sanders and Ocasio-Cortez would be in the minority party now, rather than the majority. This means that Trump presents, overall, a bigger problem for business than Bernie does.

If this ranking is correct, then the relationship between business and the GOP is fraught; however, corporations’ calculations are complicated, and they will surely hedge their bets.