The horizon is not so far as we can see, but as far as we can imagine

Refreshing Honesty About Bank Loans & Environmental Destruction

I actually appreciate this, from the HSBC AM Global Head of Responsible Investing, Stuart Kirk:

“At a big bank like ours, what do people think the average loan length is?” he asked. “It is six years. What happens to the planet in year seven is actually irrelevant to our loan book. For coal, what happens in year seven is actually irrelevant.”

That’s honesty. People in the financial industry are trained to follow the incentives. Their bonuses (most of their income for seniors) are based on financial results and internal power in the company. The more they make, the more they can give themselves.

To expect people whose entire careers are based on following financial incentives to not follow financial incentives is insane. While I’m generally down on incentives for control of behaviour, these are folks who are hyper-optimized for them. They don’t know any other way to operate, and if individuals were to try they would be replaced by people who do follow them.

This is why I’m a radical: I believe we need change from the roots. You can’t get a man or woman trained like Kirk to act any other way than he is acting.

Oh sure, you can try and change the incentives, and you should, but better is to create a system; a society, where financial return isn’t the most important thing. If it isn’t environmentally appropriate there should be a hard stop, an absolute ban. It should be unthinkable and anyone who does it should never be allowed to have any power ever again.

A capitalist system can’t do this. It simply cannot. It cannot “think” far enough ahead, because people are mortal, and they figure they can avoid the damage. In the run up to 2008 there was a saying on wall street, IBG, YBG—”I’ll be gone, you’ll be gone.” In other words “we’ll both get the rewards and we won’t be here when the shit hits the fan.” (And if we are, well, we’ll still keep most of the money we made with this shitty fraudulent deal.)

Kirk’s a product of very close to a pure Skinner-box environment, trained to obey his conditioning till there’s little left but that conditioning. Oh, he has rationalizations, you can and should read them, but at the end of the day, he’s following the rewards.

People tend to do the right thing if they are mostly disinterested better than if you’re manipulating them with rewards and punishments. We don’t believe that, because we’re all warped. The warping started in school with grades, or perhaps with our parents and it continues till many of us know no other way of living.

But if we continue like this, we’ll burn the planet down. Oh, humanity will probably survive, but at the end, we’ll have genocided half the species on earth and reduced Earth’s carrying capacity massively. There’ll be less good agricultural land, few rivers with less water, most aquifers will be drained and poisoned, and large parts of the world where humans live now will be effectively uninhabitable for months every year.

That’s insanity, but it happens after six years and hey, if you’ve made enough money, you figure you and your kids will be able to live in one of the remaining good places.



Week-end Wrap – Political Economy – May 22, 2022


We Are Going To Go Thru Hell, So What Now?


  1. Trinity

    Totally agree.

    This is about values, and whoever has the power makes the value system. But I make no excuses for any of them. I guarantee they knew exactly what they were doing when they chose their job. I’m tired of excuses from people who should (and do) know better. This is just whitewashing.

    Even more important, these are the EXACT same people who are the ONLY people who can change it. They are insiders, and they choose not to.

    I imagine it’s a spectrum, where a scant few of them don’t sleep well at night, and get out (wealthy) as soon as they can. At the other end are the hardcore faithful, who lose no sleep at night at all and who worship the golden calf. The latter ones are the most alienated from their humanity.

  2. Mark Pontin

    Apparently, honesty is the worst policy!

    ‘HSBC suspends banker who joked ‘who cares if Miami is underwater’ and about ‘nutjobs warning of the end of the world ‘ in climate change speech that had been AGREED with bosses two months earlier’

  3. Willy

    Exxon quit lying about climate change when one of their yahoos sold their execs on carbon capture. Er… the money that might be made doing carbon capture. Maybe the bankers just have a ways to go yet. Before figuring out how to cash in that is.

  4. Jeff Wegerson

    Oh not that Kirk, a different one. I mean your articule kept making sense even as I imagined Captain Kirk a product of a system not incentivised by money unable to act differently and replaced in the event he did. But then a number of paragraphs further and the parallel worlds diverged so much I had to return to the top to see where I had missed your introduction of a Star Trek example.

    Oh Kirk, a bank exec. Well never mind, I continued to try to imagine a Kirk in a now Skinner-box flight deck experiment, trained to obey his conditioning…

    And little surprise, it kept working.

  5. Ché Pasa

    You could take the Alt-Captain Kirk analogies quite far, no? Think about why he was the way he was, what the Federation was (both ideal and actuality), what this exploration for “strange new worlds” was all about, who benefited, who did not, what kind of progress had allowed/enabled the Federation of Planets to come into being and persist and what kind of environmental destruction and rigid authoritarianism was left in its wake, and on and on.

    Stuart Kirk, of course, is not the Captain of the Starship Enterprise, only the “responsible investment” head of a criminal banking enterprise. And his responsibility ends at the jots and tittles of his loan book. That’s it. What they produce — electronically no less; there is no “real” money involved; nothing actually changes hands — for his bank and shareholders. What happens before and after is irrelevant.

    What’s produced that sort of “responsibility” that sees no farther than tomorrow’s or even tonight’s closing bell? Conditioning, sure. But success, too. It works for what they set out to do, bulk the profits of the enterprise, an enterprise which actually does nothing, produces nothing, is in essence nothing.

    So one has to ask, if one follows the Alt-Captain Kirk analogy, how many planets in the Federation were reduced to smoking cinders in wars of conquest? How many were stripped bare to build the superstructure and infrastructure that enabled the Federation starships to go exploring and destroying, much as Britain and Ireland were deforested to build the ships of the Empire which ran rampant over half the Earth? What sort of human (and alien!) commerce and slavery were required?

    The ideal was one thing, but the reality?

    The reality is that this Kirk, Stuart Kirk, doesn’t (probably) know and doesn’t care what led to what and where he is and what he does, and he doesn’t consider or care about what comes more than a few moments after. He has a specific moment, now, to maximize the profit of the enterprise he serves; period, end of consideration.

    And that is not far from the momentary considerations of pretty much all our overlords.

    And they would have a perpetual empire of nothing but.

  6. Chipper

    I tend to think that blaming the individuals in these positions implies that all we have to do to fix the problem is get rid of “a few bad apples” (or even bushelfuls of apples) when the problem is actually systemic. Yes, there are psychopaths out there who are not going to care about people and consequences no matter what, but the vast majority will, as our host has said, “tend to do the right thing if they are mostly disinterested.”

    This is why voting in progressives isn’t working, because they get coopted by the system they are in. The few people who manage to keep speaking out (Bernie, Howard Dean, Paul Wellstone) are suppressed and sometimes destroyed. As much as I wanted Bernie to win the presidential election, I knew that he wouldn’t stand a chance at actually changing things except at the margins, because the whole of the system (which includes the government, and the press, and the millionaires and billionaires with so much power) would have (continued to) work against his aims.

    Blaming the individuals (“Bernie sold out by endorsing Hillary!”), obscures the problem by making it seem that we can just change the individuals and fix the problem, when it is the systems that must be changed.

  7. Ché Pasa

    No, quite clearly changing the individuals in office rarely fixes the problems in large measure because the highly resistant system of governance remains in place and almost entirely unchanged.

    Even a civil war doesn’t necessarily fix the underlying problems that led to it.

    But we are strongly conditioned to believe that the problems are due to the individuals in office and that changing who is in charge or the party in charge will — magically — fix it.

    Why is that, do you suppose?

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