Identity Politics and the Roaring 2020s Death Spiral

Humanity is faced with an existential crisis and only 58% of the US public believes that climate change is mostly human-made! Even worse 90% of the population doesn’t know there’s a scientific consensus on global warming. (Source: Climate Change in the American Mind)

Tribalism, identity politics and marketing are very powerful forces for spreading disinformation. Unfortunately, most people's beliefs are now tied to the political party they identify with instead of taking an unfiltered look at the facts available.

Conservative or Liberal?

I think it's silly to apply a conservative or liberal label to an individual. Let's face it though, people are obsessed with categorizing everything. She is a "blank, blank, and blank", therefore she must think "X".

You should be proud of who you are and your beliefs. However, it's important to be aware that stereotyping and labeling isn't actually productive. It just leads to dehumanization and more polarization.

In the current political environment and in the media, the goal is to divide and conquer. However, polls consistently show that Americans are actually aligned on most of their commonsense values. Sadly, the environmental issue, which I believe is the biggest issue of our time, has been lost in the shuffle.

A Fox in the Henhouse

We now have an administration that has waged war on basic environmental protections like combating climate change, keeping the air clean and our water safe all in the name of industrial profit. The Environmental Protection Agency is now headed by a former lobbyist hellbent on destroying these basic protections we took for granted. 

Part of the administration's strategy is to spread conspiracy theories to combat the mountain of scientific research and evidence showing that human activity has caused climate change. If there is a book titled Authoritarianism 101, this would be in the first chapter.

Merchants of Doubt

One powerful book I recommend checking out is Merchants of Doubt by Naomi Oreskes and Erik M. Conway. The book describes in great detail how a few of the same lobbying firms and "scientists" have used propaganda over the past 50 years to protect dangerous industries such as tobacco and big oil.

The problem the authors point out is that scientists can’t say with 100% confidence that anything is true. They can’t say without doubt that the sun is going to rise tomorrow, even if there’s a 99.9% chance it will.

So you're telling me there's a chance?

The book shows how a few of the same contrarian scientists, funded by industry think tanks, have made lucrative careers out of creating doubt about the hole in the ozone layer, the effects of DDT, the links between tobacco and cancer, and more recently, human-made climate change.

Most scientists get destroyed when they try to debate public relations experts. Scientists tend to skew analytical and actively avoid attention. They are paid to uncover the truth, not to create a spin. It’s no surprise, then, that they aren’t really good at swaying public opinion.

Ever see a scientist debate a PR person on TV? It usually goes something like this:

Thank you for smoking

In Thank You for Smoking, the protagonist, Nick Naylor, is a deeply flawed but relatable lobbyist for big tobacco. He works for the Academy of Tobacco Studies, funded by tobacco companies, which hasn’t found a link between tobacco and cancer. The 2005 comedy is probably more relevant in today’s era of disinformation than when it was released.

In the 90s, more people believed in human-made climate change than today. It didn’t come packaged with a political litmus test. The oil industry took notice and funded a massive marketing effort to discredit the scientific and empirical evidence. The industry took a page out of big tobacco’s playbook, spending millions lobbying and actually employing the same PR firms to instill doubt among the public.

Eventually, the truth will catch up to the public, and when it does, it's better to be a step ahead. What can you do to help expedite the truth in making its way into the world? One way is to stop investing in the companies spreading the disinformation.

divesting = Better performance

Divestment from fossil fuel companies is gaining steam. The amount of institutional money divested now totals over five trillion dollars. This has damaged and will continue to erode the share prices of these companies.

What? How does it hurt oil companies? Well, the stock market is built on supply and demand. If you take out the demand side of the equation, the stock price will inevitably drop.

Every dollar has an opportunity cost. If you’re investing 6% of your portfolio (that’s the amount in the S&P 500) in fossil fuel companies, that’s money that could otherwise be invested in companies pushing for positive change. Most people don’t even realize they are supporting companies that go against their values.

Some people say that divesting will just provide a better bargain to other investors, but I’ve got to call BS. The fact is that fossil fuel companies have been one of the worst investment choices over the past five years. The energy sector has eeked out an annualized return of a measly 2%, while the S&P 500 has enjoyed a 15% annualized return from 2012 to 2017.

avoid the roaring '20s Death Spiral

My view (and hope) is that fossil fuel companies will enter a death spiral over the next ten years as alternatives continue to exponentially gain traction. I've dubbed this the "Roaring '20s Death Spiral". I believe we will see trillions of dollars in market share wiped out thus changing the political and economic calculus in very interesting ways.

A good question to ask yourself is why you are being complicit in helping to prop up companies that don’t align with your values or goals. Especially when they have been terrible investments. Why not be more intentional with your money?

Why am I writing about divestment and not all the other things you can do to combat climate change? Well, I think those things are important too. I just happen to be an investment advisor who is deeply concerned about the environment.

Sustainable Investing

My firm, Impact Fiduciary, is 100% divested from fossil fuel companies. We also avoid investing in gun companies, big tobacco, factory farms, private prisons and other ethically challenged industries. The funds that would otherwise be invested in these areas instead go toward supporting profitable companies actively trying to solve some of humanity's biggest problems.

This includes solar power and windmill manufacturers as well as utilities harnessing geothermal energy. What’s the advantage these companies have over oil? Well, it’s hard to compete with limitless, free resources such as the sun, wind, or heat generated by the earth.

It’s also a bad idea to invest in things masses of people are actively trying to disrupt and destroy. I’ve heard some people make fun of solar panels and electric cars, but I don’t see anyone actively protesting them.

I encourage you to take a stand and be more intentional with the dollars you invest. Your future self will be richer, and your grandkids will thank you for it.

Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Patrick Dinan, and all rights are reserved.