A Clear-Headed Look at NGOs

Colorado Environmental Law Journal Colorado Environmental Law Journal

Manuscript 1447

A Clear-Headed Look at NGOs A Clear-Headed Look at NGOs

Dale A. Oesterle

Dale A. Oesterle*

I. INTRODUCTION

Nongovernmental organizations (NGOs) are the darling of the left' at the moment. These citizen-run and citizen-sponsored organizations, like the Worldwatch Institute, Greenpeace, Friends of the Earth, and the World Wide Fund for Nature, are ubiquitous. Spreading warnings of environmental and social problems, they are given prominence in the media, and they have shown increasing success in exerting political pressure on elected representatives and federal agencies.

The extent of the influence of NGOs is their bold demand to be included at the table in the decision-making apparatus of major international organizations, such as the World Trade Organizations (WTO), the International Monetary Fund (IMF), and various agencies of the United Nations. Claiming to be the true representatives of "the people" or more ambitiously "all future peoples," NGOs have asserted their right to be included in the power structure of major international organizations. NGOs argue that the only real debate should center on how to microstructure their involvement.

The demand is immediately suspicious because it carries the heavy burden of proof that NGOs are more representative of the world's people than the official agents of elected governments. The decision-makers of the WTO and the IMF, for example, consist almost exclusively of appointments of elected governments. An obvious rebuttal to the NGO position is the question: Why should we not ask you to participate in the

political process of the constituent governments, as all other private groups do?

The NGOs' response to this question is a tenuous attack on all existing governments and their international organizations. They claim that governments are overly influenced (or corrupted, in the lingo) by the dominating influence of powerful multi-national corporations; NGOs at the table in the international organizations would counter this nefarious influence. There is, of course, a real issue on the accuracy of this charge, assumed by NGOs and demonstrated by an accumulation of horror stories, some correct and some not (have you heard about the market for cashews in Mozambique?2). Evidence of proportion in the big picture is hard to gather and is thus skimpy.3

But there is another answer to the question of why we should not give NGOs a privileged position in international organizations, an answer that does not depend on the defense of existing governments nor on the role of international private capital investment. The second answer is a look at the incentive structures of the NGOs themselves. Who are these folks and where do they get their funding? To answer this question, one must follow the money.

II. FOLLOWING THE MONEY

There are many different NGOs representing numerous causes. All generalizations about NGOs are suspect unless understood to be claims on average. Several high profile NGOs follow a repeating pattern. Wellintentioned, socially active folks organize and seek funding to support their activities. They discover that funding comes with notoriety; their group must be in the news. Name recognition, just as in the business world, has real financial value. Foundation grants, private individual donations, and government subsidies come with notoriety.

NGOs that aspire to influence also discover that notoriety comes easiest from acts or claims that grab people's attention. And for this, bad news works better than good. Acts or claims that shock and dismay people get press attention and they also create concern and alarm among a new pool of potential donors. An NGO press release that is careful or balanced or puts things in a broader perspective does not make news.

And NGOs compete with each other for funding and press. So within our NGO competitive group, those people who are willing to take the more extreme positions can out fundraise and outlive those who attempt to have more balance. Not only must positions be extreme, but they must be out first in order to attract the press before the claim becomes yesterday's news. This rewards people whose positions are extreme and based on scant evidence. Wait for proof and some other NGO's representatives have made the talk shows rounds already.

One would hope that NGOs who are shown to be incorrect on their shrill claims would pay a reputational cost; that is, after the fifth or sixth mistaken alarmist claim, the NGO's funding would dry up. Experience has shown this not to be the case. There are several reasons. First, the media, and therefore the public, has a very short memory. The media's rush to put new news before their viewers means that they court those who create news. The media rarely reminds viewers of the track record of any NGO when they interview its representatives. Second, NGOs never apologize. When a past claim is shown to be false the NGO has already made several more and there is no apology or recantation.4 There is no need. And third, the NGO takes advantage of a reservoir of suspicion against the powerful (that the NGO itself may have helped create).

When opponents to the latest environmental scare show the NGOs claim to be questionable, or even downright false, NGOs whisper that the rebuttal is not credible. According to NGOs the claim is really true; the powerful have merely lied to us (through their nefarious control of the media or government or whatever) in the rebuttal. NGOs benefit from the underlying suspicion that powerful interests are yet again attempting to manipulate and control public opinion. The message: Send in your dollars to counterbalance the powerful forces of greed. Or, more charitably, NGOs admit a failure of proof not a failure of truth; the claim is true even though NGOs have not yet technically proven it. The message: Send in your dollars so we can do a better study.

As an additional matter, folks who listen to NGOs should note that NGOs are occasionally at the front of a political coalition. Members of that coalition may have other more self-serving goals. Environmental NGOs worried about the contaminating potential of factories in IndoChina, for example, partner with national labor organizations who worry about wage competition from those same factories. Similarly, NGOs concerned about genetically modified organisms (GMOs) in crops part-

ner with organic farmers and whole food retail chains,5 as well as foreign companies and countries who do not have, and do not want to pay for United States technology. These partnerships are not always transparent. We do not know who contributes to NGOs, nor do we know who their partners are in their claims and activities.

III. UNSUBSTANTIATED CLAMS: NGOS AND GENETICALLY MODIFIED FOODS

Let's take a closer look at the political debate over GMOs, a common target of NGOs for the past ten years. NGOs successfully renamed food consisting of GMOs, "Frankenfoods." The promises of crops made with GMO products are huge, but so are the potential problems. GMOs could greatly increase the world's food supply while reducing our need for the intensive use of chemical fertilizers, pesticides, herbicides, and fungicides. But GMOs pose the risk of unintended negative effectsincreasing foods to which people are allergic, displacing natural food strains, decreasing biodiversity, and so on. The controversy surrounding this scenario reflects what occurs with most scientific discoveries; once we learn something new about our natural surroundings we face moral decisions about how to make use of that new knowledge. Consider three of the GMO scares successfully milked by NGOs-Brazil nuts, monarch butterflies, and StarLink Corn.

In 1996 a private company, Pioneer Hi-Breed, considered a genetic combination of beans and Brazil nuts.6 The firm thought that they could fight malnutrition by improving the nutritious quality of the bean to aid societies whose diet consists almost entirely of beans. The experiment was cancelled when the research found that many people were allergic to Brazil nuts. NGOs were quick to condemn the GMO research as potentially disastrous. Of course, the research did not create the allergy but merely quantified the cause. We all know more as a result of the research. The press gave prominent coverage to the potential threat, and back page coverage to the responsible behavior of Pioneer in canceling the project.

Ever since, NGO representatives have been warning of the dire consequences of potential allergic reactions to GMOs. There is such a risk, but it is small.7 Moreover, the risk should be balanced against possible gains. Well-known natural substances cause almost ninety percent of all food allergies. Ironically, the new GMO technology offers a promising way to breed out the undesirable genes from plants that produce allergens naturally. In other words, the use of GMOs could reduce human allergies to common foods, not the reverse.

NGOs have also generated and played on the fear that GMOs would harm natural ecosystems. In 1999, a group of researchers tried to assess the effect of so-called Bt corn on the monarch caterpillar. Scientists had engineered Bt (Bacillus thuringiensis) corn to contain its own toxin to ward off members of the lepidopteron order of insects (including the In a lab test the researchers fed the Bt corn to caterpillars corn borer). and half of them died. This was front-page news.

A coalition of sixty environmental groups and organic farmers, with Greenpeace in the lead, petitioned the Environmental Protection Agency (EPA) and threatened to sue if the EPA did not ban the substance. Later studies in the open field failed to sustain the claim. Moreover, some scientists noted that the monarch caterpillar is itself a member of the order lepidoptera; it was no surprise that the targeted toxin would affect it. They further noted that corn sprayed with Bt toxin (a natural insecticide promoted by none other than Rachel Carson) would kill the monarch caterpillar in larger numbers than a crop of Bt corn. If one is spraying Bt toxin on corn rather than splicing the toxin into the corn, the spray deposits more toxins on the plants than is present if the toxin is internal to the plants themselves. The cultivation of Bt corn may in fact save huge numbers of monarch butterflies. Again, the rebuttal has had only back page coverage while the initial monarch butterfly scare was front-page news.

For my last example, consider the taco shell.9 We have recently been exposed to the scare of contaminated taco shells. The Food and Drug Administration has not approved the use of Bt corn, now called StarLink corn, in food products for human consumption. After farmers admitted commingling Bt corn with approved corn in shipments to grain co-operatives, scientists testing taco shells found the toxin in some of the shells that were sold in supermarkets in the United States. The story made the six o'clock national news: "Don't eat taco shells purchased in grocery stores."

Calmer minds later revealed two facts. First, the evidence of human allergic reaction to Bt corn was extremely skimpy. Of seventeen potential instances in which persons claimed an allergic reaction to Bt corn, all the symptoms were explained by other causes except in one case, and the credibility of the complainant in that case was very questionable. In essence, there is no substantial evidence of any human allergic reaction to Bt corn.'° Second, the amount of Bt corn that made it into any one taco shell found on grocery store shelves was infinitesimally small. Even if one was allergic to the StarLink corn, there was not enough of the corn in any one shell to trigger an allergic reaction. Again, the conclusions of the calmer minds never made the national news and were in the back of newspapers, if present at all."

In each of these modern scares did the NGOs retract their earlier statements or apologize for misleading the public on the seriousness of their claims? Of course not. They are on to the next bit of advocacy.

IV. CONCLUSION

I am not saying that NGOs do not provide a useful function; they do. They are the loyal opposition. But we must not be blind to the institutional incentives at work behind NGOs. We have been made fully aware (often by NGOs) of the potentially corrosive effect of the profitincentive on major American corporations; corporations are heavily regulated as a result. Indeed, if senior officials of American corporations

make public statements on corporate matters that turn out to be false or even technically true, they will be sued, and lose, under federal securities laws. 12

NGOs themselves also have a potentially corrosive incentive-the need for funding to survive. NGOs are not free from financial pressures, and yet, NGOs are very lightly regulated.13 I am not advocating that we apply Rule 10b-514 standards to NGO officials nor that we apply mandatory disclosure rules15 to their contributor lists. I am merely asking that we take NGO pronouncements and their bona fides with a grain of salt. It is by no means clear that NGOs better represent "the people" than do our elected officials.

--- FOOTNOTES ---

Part of the Environmental Law Commons

* The Monfort Professor at the University of Colorado School of Law, where he teaches International Business Transactions, Mergers and Acquisitions, and Regulation of the National Securities Markets.

1. There are, of course, NGOs that lean to the right. The most notable are those In any event, the NGO moniker seems largely

known as "Conservative Think Tanks." reserved for the liberal-to-left crowd.

2. See Paul Krugman, A Real Nut Case, N.Y. TIMES, Apr. 19, 2000, at A23 (describing the cashew controversy, used over and over by anti-globalization NGOs to support their case, is overblown).

3. But see BJORN LOMBORG, THE SKEPTIcAL ENVIRONMENTALIST: MEASURING THE

REAL STATE OF THE WORLD (2001).

4. See Michael Fumento, Not Worth a Pile of (Soy)beans, WASH. TIMES, Sept. 6,

2001, at Al3, available at 2001 WL 4161337.

5. See EPA OKs Continued Use of Biotech Corn: Alfalfas' Founder Says Bt Corn Can Cause Immunization to Natural Insecticide, DAILY CAMERA (Boulder, Colo.), Oct. 17, 2001, /I 71corn.html.

at 2B, available at http://www.bouldemews.com/science/environment

6. See Leighton Jones, Genetically Modified Foods, 318 BRIT. MED. J. 581 (1999), available at http://www.bmj.com/cgi/content/full/318/7183/581 ?maxtoshow=&HITS (discussing the genetically modified food controversy).

7. The entire issue of allergic reactions to GMO foods is devoid of context. We have long known that there can be significant allergic reactions to organically grown foods (the natural fertilizer can leave bacteria), and that there are allergic reactions to herbal drugs and vitamins. Yet these reactions get little or no mention from NGOs. It would seem that NGOs are not worried about allergies per se; allergies are just a method of attacking the technology in GMO foods. This narrow exploitation of the fear of allergies demonstrates that their views are political, not scientific.

8. See Environmental Protection Agency, Biopesticides Registration Action Document: Preliminary Risks and Benefits Sections: Bacillus thuringiensis Plant-Pesticides, (low probability for adverse available at http://www.epa.gov/scipoly/sap/2OO0/october effects of Bt corn on monarch larvae); New Studies Suggest That Bt Corn Has Little Harmful Effect on Butterflies, 24 INT'L ENV'T 845, 845 (2001) (summarizing six studies published by the National Academy of Sciences).

9. See Andrew Pollack, EPA Rejects Use of a Gene-Altered Corn in Human Food,

N.Y. TIMES, July 28, 2001, at C4 (summarizing the taco shell controversy).

10. See, e.g., Andrew Pollack, No Altered Corn Found in Allergy Samples, N.Y.

TIMES, July 11, 2001, at C8.

11. Rebecca Goldburg, a well-known scientist from Environmental Defense Fund, gave her entire talk at the conference on the risk of human allergies from StarLink Corn. Now that we have no evidence of any such allergies from any studies or from any tests, we do not have a comment from Ms. Goldburg in moderation of her remarks; she did not submit a paper for publication.

12. Federal consumer laws also apply. 13. General anti-fraud doctrines apply to the advertising funding of NGOs. 14. Rule lOb-5 is a rule of the Securities and Exchange Commission that, among other things, holds businesses and their senior executives liable for misleading statements to the investing public. 17 C.F.R. § 240.10b-5 (1998). The Rule prohibits affirmative misstatements and technical truth, when a business omits material information from a statement so as to make the statement misleading. The law does not hold NGOs to this high standard of truthfulness, even though NGOs do broadly solicit funds.

15. The federal securities acts also require publicly traded companies to make full periodic reports of their business activities to the investing public. See, e.g., 15 U.S.C.S § 78m(a) (2001); 17 C.F.R. § 240.13a-l (2001); 17 C.F.R. § 240.13a-13 (2001). NGOs that broadly solicit contributions are not subject to these kinds of detailed legal disclosure requirements.