Note to Randy Olsen: Money is persuasive

Listen, I know this will come as a shock, but money talks. Generally the obvious doesn’t bear repeating, but Randy Olsen, an influential biologist and film maker, recently published a post on Shifting baselines.org that tries to argue that money is a poor way to motivate people. He cites a New York Times op-ed that talks about how the New York Yankees insulted Joe Torre by offering him a World Series bonus in his new contract. The op-ed argues that the bonus implies that Torre isn’t trying his hardest to get to the World Series, so he needs a the possibility of extra cash to motivate him. I can see why Torre was insulted and turned it down. He took the clause to imply that he wasn’t trying his hardest to reach the World Series, and a little more money might motivate him. Torre, an indisputably classy guy, decided he had money and championships enough, and walked.

Olsen seems to feel that financial incentives for solving environmental problems are equally insulting. Sorry, Randy, but the analogy collapses. Unlike Torre, the American people are certainly not trying their hardest to solve environmental problems. Decades of wheedling, cajoling, and begging by the environmental movement has only changed American consumption on the margins. Generally we still buy an awful lot of crap made by children in polluting factories in foreign countries.

Therefore, we need to consider other tools. Regulations is one. Regulation has the advantage of forcing everyone to take up a new behavior, at the same time, whether its the entire population or all the businesses in a given industry. By forcing everyone to do it, at the very least no one is put at a competitive disadvantage. James Surowiecki demonstrates my point in his New Yorker piece on raising mileage standards.

Then there’s the financial incentives lever. We know these work in part because businesses by their very nature, want to make money, and saving money is very much like making it – a penny saved is a penny earned, and all that. Acting on its own, the hotel industry has begun a massive shift from traditional hot water washing to cold water washing. Does Olsen think they’re doing it because it’s right? The hotels may say as much in their press releases, but they do it because they dramatically reduce their energy costs by using cold water laundry – and hotels do a lot of laundry. And using less energy means saving money. So why not create incentives for people and businesses to do things they wouldn’t want to do otherwise? Raise deductions for electric vehicles, or even subsidize them. Improve incentives for producing solar panels. Create a rigorous standard for organic food and then offer a tax break to producers who meet it. People will respond to these incentives far faster than they will to yet another ad campaign.

Luckily, it seems like even the regular folks on the left – meaning outside the chattering classes – rare starting to catch on to this idea. In recent weeks I covered a series of rallies by listeners of the local progressive talk radio station, KLSD. Clear Channel, the station owner, wanted to change the format to all sports, and the loyal listeners tried to save it. They held old-school rallies, yes, but they also flooded the sales team with leads for ads, and they held up signs proclaiming that they do business with the station’s advertisers. It didn’t work – the station will change formats in November – but it suggests to me that the liberal left may finally, at last, be getting a handle on how the world goes round. If only Olsen would join us.

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