By David Callahan
Sunday, August 8, 2010; B01
So the blown-out oil well in the gulf has finally stopped gushing, plugged with heavy mud and awaiting the ultimate "kill" by a relief well. Yet, even with the largest oil spill in the nation's history in the background, what seems to have been killed much more quickly is Washington's will to take meaningful action on the environment. After axing climate-change legislation in late July, the Senate is now taking up a modest energy bill -- and even that effort may go nowhere.
Hopes for a pivotal BP-driven eco-moment -- remember President Obama's call in June for a new "national mission" to get America off fossil fuels? -- have dissipated, seemingly confirming the common view that powerful energy firms, and corporate America more broadly, stand as the sworn enemies of any bold new environmental rules and that they have the clout to get their way.
Except that old view is no longer quite right. In fact, big business is more divided on energy and the environment than ever before, and the growing rift reflects major power shifts in the economy. On one side are business leaders and shareholders who derive their wealth from resource extraction, fossil-fuel-based power generation and energy-intensive manufacturing -- they are the "dirty rich." On the other are business leaders who run knowledge or service companies that generate very little pollution -- the "clean rich."
The dirty rich are dying off, and the clean rich are coming of age.
Of course, the dirty rich still have enough juice on Capitol Hill to kill bills they don't like, or to neuter the federal watchdogs who oversee deepwater drilling in the Gulf of Mexico and coal mining in West Virginia. ExxonMobil, for example, is not just the second-largest American corporation; it also has the some of the deepest pockets for lobbying, spending $27.4 million on such activities in 2009, more than any other company.
But the larger transition is clear: America is witnessing the twilight of the dirty rich and the inexorable move of economic power to the clean rich. What's more, environmental values are spreading fast through affluent America, with more super-wealthy individuals putting their money behind green causes and more upscale voters expecting government action to protect the planet. Climate legislation may be dead for now, but if big money really talks in America, the long-term prospects for tougher environmental rules would seem quite good.
It is hard to understate how dramatically the sources of business wealth have shifted in the past half-century. Of the top 20 companies on the Fortune 500 list in 1960, 16 were engaged in heavy industry, such as U.S. Steel and DuPont, or resource extraction, such as Texaco and Mobil. This year's list includes just six such companies in the top 20. And two of them, GM and Ford, have been in decline for years.
Meanwhile, the dirty rich are fading from the Forbes 400 list of the wealthiest individuals. When the list was first published in 1982, 38 percent of its members had made their fortunes in oil and manufacturing, and 12 percent in finance and technology. By 2006, those ratios had nearly flipped: 36 percent of the richest Americans made their wealth from finance and tech, while 17 percent earned it from manufacturing and oil.
The dirty-rich billionaires on the Forbes list are mostly on the older side -- such as industrialists David and Charles Koch, both in their 70s. In March, one of the nation's richest oilmen, pipeline magnate Dan Duncan, died at the age of 77. Among recent newcomers to the list, few have been from dirty industries. More typical is Facebook founder Mark Zuckerberg, who made the list in 2008 at age 24.
Even Texas doesn't have as many dirty rich as it used to. Fewer than half of the state's billionaires made their money in oil or energy, a major departure from earlier patterns. The two wealthiest Texans today are not oilmen; they are Alice Walton, an heir to the Wal-Mart fortune, followed by Michael Dell, a computer entrepreneur. Dell doesn't live in either of the traditional oil-money cities, Houston and Dallas; he resides in Austin, which has grown more influential in the state's cultural and political life as it has become home to numerous high-tech entrepreneurs. Dallas still has plenty of conservative oil money, but the city's economy is now powered by tech, finance and services. If the primetime soap opera "Dallas" were remade today, J.R. Ewing would probably be a telecom magnate.
The same pattern holds elsewhere. The great fortunes of Colorado used to be made from oil or mining, and the state's politicians were often creatures of these industries and unfriendly to environmentalists. Now the state's super-rich are a very different breed, including satellite TV mogul Charles Ergen and Quark founder Tim Gill. In the early 1980s, the only Forbes 400 member from the Pacific Northwest was a timber baron. Today a half-dozen billionaires live in the region, and most made their money in technology. California's Santa Clara County, which covers Silicon Valley, now has more millionaires than Manhattan.
This seismic shift in who gets rich is fast changing where politicians get their money and whom they listen to. A torrent of new cash has flowed into politics from the finance, tech and entertainment industries, and especially from the legal profession, which gave twice as much to national candidates in 2008 as any other sector. Dirty industries that once wielded enormous clout on Capitol Hill -- such as autos, steel and mining -- aren't the players they once were. Political contributions from the entire coal industry amounted to $3.5 million in 2008, while Microsoft employees contributed $3.3 million.
In 2008, John McCain far outraised Obama among employees of energy and natural resources companies, pulling in $4 million from this group. Not bad, except that Obama bested McCain in the communications and electronics sector five to one, raising $25.5 million. Until the 2002 election, the oil and gas industry -- long a deep well of GOP cash -- was consistently among the top 10 sources of money for federal candidates, according to the Center for Responsive Politics. In 2008, it ranked 16th. That same year, the entire energy and natural resources sector gave $77 million in campaign donations -- compared with $234 million given by lawyers.
The picture looks quite different when it comes to money for lobbying, with dirty industries still among the biggest spenders in Washington. But the winds may be shifting in this area as well: The once-feared automotive industry is now so weak that Detroit could barely swing a bailout last year and watched helplessly in late 2008 as its greatest champion in Congress, Rep. John Dingell (D-Mich.), was ousted from a powerful chairmanship by Rep. Henry Waxman (D-Calif.), a strong environmentalist.
Of course, new-economy giants such as Hewlett-Packard have faced withering criticism of their environmental records, and the pollution from high-tech products can certainly be serious. The difference, however, is scale. While Google's servers gobble up vast amounts of energy, its products exist mainly as pixels on a screen. BlackBerrys and iPhones are pocket-size, and desktop computers, which are among the larger products of the Information Age, weigh a few hundred times less than an automobile.
Other knowledge industries, such as the legal profession, are about monetizing cognitive skills and have little to do with the old-economy model of converting natural resources into wealth. So some of the fastest-growing and richest parts of the economy aren't much affected by environmental laws -- which is why a growing slice of America's business elite has little incentive to battle them.
What's more, an ever-larger contingent of clean-tech entrepreneurs and investors will score big if Congress acts to push up the price of carbon. Last year, George Soros pledged to make $1 billion in renewable-energy investments. Other billionaires, including Warren Buffett, Bill Gates, John Doerr and Vinod Khosla, are also placing major bets in this sector.
Apart from self-interest, many of the clean rich care about the environment. They tend to be highly educated, and quite a few have scientific training. They understand that climate change is real and must be addressed now. Google, which is run by three computer scientists, set out to be carbon-neutral several years ago and says it has achieved that goal. The company even helps employees to buy hybrid vehicles. Intel co-founder Gordon Moore -- a chemist by training -- is giving hundreds of millions of dollars to help preserve fragile ecosystems.
But the roots of the clean rich go deeper. The modern environmental movement emerged in the 1960s, fueled in large part by the spread of affluence and education. There is a logic to that link: Once your material needs are met, you can turn your attention to other concerns, whether saving polar bears or the Amazon. "Postmodern values give priority to environmental protection and cultural issues," University of Michigan political scientist Ronald Inglehart has written, "even when these goals conflict with maximizing economic growth."
Inglehart bases this conclusion on decades of research through the World Values Survey, which has tracked changing attitudes in 97 countries. His findings consistently show that rising incomes and more wealth lead to environmentalism. That certainly seemed the case in 2006, when Californians voted on Proposition 87, which would have taxed oil companies to fund alternative fuels. The initiative, which failed overall, passed in higher-income counties, such as Marin and Alameda, while losing by huge margins in some of the state's poorest counties. In Modoc County, a rural area with the one of the lowest household income levels in California, only 24 percent of voters supported the initiative, compared with 72 percent in prosperous San Francisco County.
It is hardly news that affluent liberals often fret more about the environment than working-class voters. But this class divide is poised to have a larger political impact. One reason the Republican Party can blithely block attempts to address climate change, one of the gravest threats facing humanity, is that its political base is heavily weighted with less-educated and less affluent voters who live in rural areas and small towns -- and who aren't keen on government activism to protect the planet. A poll last year by the Pew Research Center for the People and the Press, for instance, found that support for legislation to limit carbon emissions was 16 points higher among college graduates than those with a high school diploma or less.
Yet if the GOP is to build a durable majority, it will have to move beyond this constituency. Even if Republicans take control of the House this fall, that won't change the fact that the Palin and Limbaugh wing of the party has badly hurt GOP fortunes by alienating affluent and educated donors and voters -- as witnessed most dramatically by Obama's crushing fundraising edge over McCain. Wooing back these natural allies, especially the clean rich, will require tacking to the center. And climate change, an issue driven by scientific evidence and with appeal in this newly influential community, is a great candidate for a softened stance. Its time will come soon -- and could come even faster if a few far-sighted Republicans recognize their plight and decide to hasten that transformation.
David Callahan is a senior fellow at Demos, a nonprofit public policy group, and the author of "Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America."