Corporations have been quick to accuse activist groups of playing "Chicken Little" with their predictions of environmental gloom and doom and their use of fringe science to justify calls for stricter regulations.
But while those accusations are often justified, a report earlier this year by the Stockholm-based International Chemical Secretariat (ICS) makes it clear that industry is capable of crying wolf just as loudly as its opponents, matching the junk science presented by those opponents with its own junk economics.
The ICS conducted an analysis of cost estimates presented by various industry associations in an effort to combat new regulations, and compared those estimates to the actual cost of compliance. In most cases, the estimates were at least double the actual costs.
The most widely used strategy for inflating cost estimates is to assume that industry does not adapt to changes - an approach known as the "static model." According to the ICS report, "The static model is a surefire way to show that any regulation will incur unacceptably high costs for industry. It is also an insult to the decision-makers within the industry because it assumes they are dimwits who are totally incapable of adapting to new situations."
In the US, for example, industry studies warned in 1990 that revisions to the Clean Air Act would cost the US between $50 billion and $90 billion a year and that between 20,000 and 4 million jobs would be lost. But a recent White House study estimated the actual 10-year cost to industry was no more than $26 billion, compared to benefits of at least $120 billion. And employment actually increased in the sectors most affected by the changes.
But industry groups continue to use inflated cost estimates to fight regulation, in part because their numbers are rarely challenged (and are often welcomed by politicians ideologically opposed to increased regulation) and in part, perhaps, because they feel they must exaggerate the economic impact in order to balance the environmental hysteria of their opponents, who tend to overstate the damage done by corporate activity and the potential benefit of restrictions placed on that activity.
The temptation to combat hype with hype is quite understandable, but it should be resisted. Like it or not, the general public views NGOs as more credible than their corporate foes. The way to redress that balance isn't to mimic their scare tactics, but to throw it into stark relief by offering calm, rational, and credible information to refute it.
Companies need to hold themselves to a high standard of honesty and accuracy. Because in this age of transparency, there's always someone who will come along to highlight examples of dishonesty and inaccuracy.